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Global Carolina Perspectives: Fred Hochberg and the Ex-Im Bank

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CHARLOTTE, NC – Fred Hochberg, president of the Export-Import (Ex-Im) Bank, is in the midst of what could be termed a promotional tour – traveling the country to support the Bank’s programs and the Obama administration’s National Export Initiative (NEI).

And with the NEI’s goal of doubling U.S. exports in the next five years, Hochberg is busy visiting areas that serve as centers for the various industries the Bank has identified as prime for expanding exports. 

Hochberg, a former acting administrator of the Small Business Administration, has dedicated much of his efforts so far to helping U.S. exporters overcome financing problems growing out of the current economic crisis and to opening more markets to U.S. exports – two things he believes will help retain or create U.S. jobs.

His travels recently took him to Charlotte to visit the Siemens Energy plant, where the Ex-Im Bank is helping finance sales to South Korea. While in Charlotte, Hochberg talked with the Global Carolina Business Journal about the history and functions of the Ex-Im Bank, the details of his recent visit to Siemens Energy, and the opportunities for small and midsize enterprises to finance the export of their goods and services through the Bank.

Global Carolina: With the push by the current administration to double U.S. exports in the next five years through the National Export Initiative, the Ex-Im Bank will be playing an increasingly active and public role. Could you provide us a summary of the primary functions of the Ex-Im Bank?

Fred Hochberg: The Export-Import Bank was founded in 1934 during the Depression by Franklin Roosevelt. Today it exists to create jobs through U.S. exports. And it does so in two primary ways: first, by making loans to foreign buyers so they can purchase U.S. goods and services, and, second, by providing working capital loans to American companies so they can buy the raw materials and production equipment they need to produce exports. This past year, the year ending September 30, we provided US$21 billion in financing, which is up 50 percent over the prior year. And we recently just crossed the $21 billion level for this year; so this will be another record-breaking year. The first seven months of the year we’re up 17.7 percent over a year ago, which puts us on our way to doubling exports in five years. So we have great export volume, and we have banks that are more willing to do some lending.

GC: The Carolinas are well-known for the heavy presence of foreign-owned companies, many of which export their products throughout the world. With this in mind, what kind of role do you see the Carolinas playing in the NEI in general and with the Ex-Im Bank in particular?

FH: One thing that we are hearing, and it’s something that I’m seeing very clearly with my visit here, is that the Charlotte Region is very much becoming an energy capital. For example, I came to Charlotte today from Wichita, Kansas, which is a center of production for business aviation aircraft. In the Carolinas you have a similar concentration of energy production companies like Siemens Energy, where I just visited. So I think what we’re seeing is that in different parts of the country different businesses have an expertise. And many of the businesses that supply those companies pop up in those areas, and that concentration helps build innovation, a stronger workforce, and makes the area more competitive globally.

GC: You mentioned Siemens Energy. Could you elaborate on the specific purpose and goals of your visit?

FH: We at the Ex-Im Bank have identified five industrial sectors that are prime for U.S. exports. One of those five is power generation – both renewable and conventional energies. And Siemens excels in both of those. We just financed a transaction where Siemens is building some turbines and gas and steam generators that are going to Korea. These generators are being made right here in Charlotte and shipped to South Korea. So it’s a transaction that we’re very proud of at the Ex-Im Bank, because it demonstrates the strength of American manufacturing, the product excellence of Siemens, and the Ex-Im Bank’s financial expertise to make that transaction happen. So one purpose of my visit was to meet the people that have done the work and learn a little bit more about it.

GC: You mentioned aviation as being another key area of financing for the Ex-Im Bank. In light of the Boeing expansion in South Carolina and the emerging aeronautics industry here, do you see the Ex-Im Bank playing a role with that as well?

FH: Well, let me go back briefly to the five areas we’re concentrating on: we started with power generation; aviation and avionics is another of our key competencies; and the remaining three would be construction equipment, farm equipment, and medical technology. So to answer your question, I would say, yes. You are correct that with Boeing building a factory here in the Carolinas, [the aeronautics industry] would be another area of expertise that we would be involved in. Because the jobs that are being created by a Boeing are all high-paying jobs. The products the United States exports are technically advanced, and the workers who create these products have greater expertise. So in many ways higher-paying jobs are being created, and therefore we have a real competitive advantage.

GC: What are some of the other ways in which the Bank serves to help specifically small and midsize enterprises (SMEs) expand into foreign markets?

FH: We’re about creating jobs. Within that, the area that I have chosen to focus on with the bank is with small and medium-size companies. Some 85 percent of the transactions that we finance each year are for small – not even midsize, but small – companies. So they may be smaller in terms of the size of the transactions, but we have a real expertise in that area. One example of this: the smallest transaction that we have produced this year was for $8,100 for a Wisconsin company. So, as you see, we can go very small.

GC: Is working so closely with SMEs a new, or more recent, development? Or has that always been a part of the history of the Ex-Im Bank’s activities?

FH: Congress has asked us to work on the small and midsize companies; but more importantly, President Obama has made helping small and midsize companies an objective and an important goal of his administration. Before I accepted this job I was the acting administrator of the Small Business Administration. And in my earlier life in business for 20 years I ran a small company. This is something that the President has put a big emphasis on, and so we are coming up with new products, opening more offices, and improving our services to small companies.

GC: Do you see the United States meeting the goal the National Export Initiative set of doubling exports within the next five years? Additionally, what do you see as the long-term role of exports to the U.S. economy in the coming years and even decades?

FH: Currently we are actually running at a level of doubling exports in five years. So we’re on a good trajectory. Second, the United States is the largest manufacturing country in the entire world. We produce more goods and services than any other country in the world, and yet we’re the number three exporter. So I think that the President has set the correct goal; and we’re on our way to meeting it. And if we’re going to maintain the United States’ role as an economic powerhouse, it’s going to be in part driven by exports. We’ve been a consuming country for many years, but we make so many things it’s time we also started exporting more of them. And exports still are a small portion of the U.S. economy.

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