Federal bank debate hits home for Chester Co. businessman
08/27/2014 9:51 PM
08/28/2014 11:53 AM
Jay White arrived at Tuesday’s meeting at the York County Regional Chamber of Commerce in Rock Hill wearing jeans. Most of the other businessmen wore suits.
White wore jeans to make a point. There was a 50-50 chance, he said, that indigo yarn used to make the jeans was dyed on machines made in Chester County at Morrison Textile Machinery Co.
White is president of the family-owned company which has been making textile machinery for 55 years. The Fort Lawn company employs 90 people. Its subcontractors in York County alone employ about 100 people.
Annual sales range from $30 million to $50 million, but have spiked this year as export demand has increased from 60 percent to 90 percent. His machines are sold in 40 countries. To meet demand, White has added manufacturing capacity.
Morrison Textile Machinery’s export sales, and its internal expansion, would not be possible, White said, without the Export-Import Bank, the export credit agency of the U.S. government. The bank has given Morrison Textile Machinery and its customers access to money when traditional lenders would not, White said.
White’s access to the bank’s services is in jeopardy as the 80-year-old Export-Import Bank’s charter is up for renewal in Congress.
Usually the bank’s charter is extended without much debate. But this year the political debate over the bank has split Congress in unusual ways, putting tea party-backed lawmakers at odds with others in the Republican Party, and some Democrats on the side of big business.
Tea party congressmen call the bank “crony capitalism.”
“If you are favored by the administration you get credit, if you are not, you don’t get credit,” said U.S. Rep. Mick Mulvaney, R-S.C.
The bank says each proposed transaction is reviewed on the basics of objective and “transparent” criteria.
Other Republicans back extending the bank’s charter for another five years, maybe longer, because it is good for business, creating or maintaining jobs. The Export-Import Bank estimates it supports 205,000 jobs at more than 3,400 companies in the United States – more than 80 percent of them small businesses.
The debate is also giving Democrats a chance to show they’re for American companies. President Barack Obama wants the bank’s charter renewed.
The bank’s charter expires at the end of September and groups such as the National Association of Manufacturers, the U.S. Chamber of Commerce as well as state and local chambers across the country are lobbying for the bank.
On Tuesday in Rock Hill, White was joined by representatives from Boeing, General Electric and Honeywell to make South Carolina’s case for the bank.
The Export-Import Bank supports about $2 billion in exports in the state, said Otis Rawl, chief executive officer of the S.C. Chamber of Commerce. In York County, seven companies benefit from the bank, with about $6.6 million in assistance.
Morrison Textile Machinery benefits from two of the bank’s programs. The working capital program gives White access to a $3 million line of credit. Because he doesn’t have accounts receivable or inventory – two traditional measures lenders use to judge credit worthiness, “I can’t get adequate credit,” While said.
The Export-Import Bank bases its lending to Morrison Textile Machinery on letters of credit from companies buying machines from the company.
The medium-term financing program gives Morrison Textile Machinery access to financing for its customers. In some cases, the loan is not made by the Export-Import Bank, but the bank guarantees the loan.
Without the assistance of the Export-Import Bank, White estimates he would lose 25 percent of his sales to competitors in Germany, China and Italy. Losing that much business would mean a corresponding reduction in work force, sending a ripple through the economies of Fort Lawn and Chester and Lancaster counties, White said.
Mark Elam, director of state and local government relations in South Carolina for Boeing, said 80 percent of the company’s customers are eligible for Export-Import Bank assistance. If the assistance doesn’t come from the bank, Elam predicted interested buyers would immediately turn to Airbus for planes, resulting in lost jobs in South Carolina.
Mulvaney, the Indian Land congressman, said he doubts the bank will go away and its charter will likely be given a short-term extension.
But White and others at Tuesday’s meeting in Rock Hill said foreign companies would see a short-term extension as a lack of confidence in the bank and would seek other suppliers to fill their needs.
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