Just five years after GE acquired a gas engine plant in Waukesha as part of its acquisition of Dresser Inc., and less than two years after President Barack Obama spoke at the plant, GE announced that it will cease manufacturing operations at the plant, located at 1101 W. St. Paul Ave., and move 350 jobs to a new $265 million factory it will build in Canada.
GE said it is moving its manufacturing operations from Waukesha to Canada because of the uncertainty surrounding the U.S. Export-Import Bank, which provides financing for foreign buyers of U.S. goods when private financing is unavailable.
This summer, the U.S. Senate voted to reauthorize the bank, but the House of Representatives declined to do the same, so the bank for now can only service existing loans and cannot make new loans.
Supporters of the Ex-Im Bank say it provides a vital financing source to promote U.S. exports, which benefits U.S. businesses and helps create jobs in the U.S. The bank also makes money for the federal government. Last year it returned $675 million to the U.S. Treasury.
Opponents of the Ex-Im Bank say it is providing corporate welfare, in many cases to large companies such as GE, Caterpillar and Boeing. The financing from the bank provides benefits to some businesses but hurts their competitors, critics say.
Conservative leadership in the Republican-controlled House has blocked a vote on reauthorizing the Ex-Im Bank. However, Democrats and several centrist Republicans in the House support the bank. Some GOP House members are using a procedural maneuver to have the House vote on the matter over the will of the leadership.
But even if Congress does reauthorize the Ex-Im Bank, GE said its decision to close the Waukesha plant is final.
“There’s just too much uncertainty right now in the environment in Washington,” said Meghan Thurlow, a spokesperson for GE. “We just can’t be sure that that change is going to be permanent.”
Some don’t believe GE is closing the Waukesha plant because of the shutdown of the Ex-Im Bank. U.S. Rep. Paul Ryan (R-Janesville) pointed out that Canada has a significantly lower corporate tax rate than the United States.
“I’ve got to think there are many other factors (than the Ex-Im Bank),” Ryan said. “Canada taxes their businesses at 15 percent, and we tax our businesses at 35 percent. So I think there are a lot of factors why American manufacturers are not being competitive.”
But GE says in Canada, it will be able to take advantage of the export credit agency, Export Development Canada. The company said it is currently bidding on $11 billion of projects that require export financing.
GE pointed out that it is now creating jobs and giving an economic boost to other countries instead of the U.S. The company recently announced a deal with France’s export credit agency to partner on power and water projects that are expected to create 400 French jobs, Thurlow said.
“We believe in American manufacturing, but our customers in many cases require (export credit agency) financing for us to bid on projects,” said John Rice, vice chairman of GE. “Without it, we cannot compete and our customers may be forced to select other providers. We know these announcements will have regrettable impact not only on our employees, but on the hundreds of U.S. suppliers we work with that cannot move their facilities, but we cannot walk away from our customers. We continue to urge Congress to reauthorize the Ex-Im Bank for all American companies. However, we must prepare for the worst case and arrange export finance outside the U.S. Unfortunately, this will come at the expense of American jobs. In a slow growth and volatile world, we must go where the markets are and compete in over 170 countries.”
