President Trump visits the South Carolina Boeing plant that has been in the news this week for a major union defeat.  Today, it’s about the triumph of American industry and know-how with the roll-up of the 787-10, the latest iteration of the Dreamliner with capacity of 330 passengers, up from 2432 with 787-8.  The Dreamliner is becoming a very important commercial plane for the company with the second most deliveries behind the workhorse 737 which has 6,203 cumulative deliveries. 

While we cheer this development, behind the scenes there is a real battle among conservatives over the role of government in corporate financing.  There is speculation President Trump will give his approval for the Export-Import Bank which many consider a facilitator of corporate welfare.

Created in 1934 to back trade between the United States and Soviet Union, the EXIM Bank became an official agency with the Export – Import Act of 1945 and has since been renewed 16 times.  Backers say the bank helps small businesses and also levels the playing field with other nations who through their own export credit agencies (ECA) help companies compete for global business.  But critics aren’t buying that giant US corporates need the kind of “assistance.”

EXIM FY2013:

• Loan Guarantees $12.0 billion
• Direct Loans $6.9 billion
• Insurance $5.7 billion
• Working Capital $2.6 billion 

The Big Three

In FY2013 three American giants got the bulk of Ex-Im assistance:

• Boeing $8.3 billion
• GE $2.6 billion
• Caterpillar $1.3 billion

I don’t like government picking winners and losers and I don’t like government being the de facto financial backer of companies that compete directly against their American counterparts.  This is most pervasive in the airline industry where Ex-Im backs massive plan purchases for airlines outside the United States to run (cheaper) routes against American airliners.

Right now Boeing does 70% of its business outside the United States as does Caterpillar, which means its focus on new business supersedes the loss of American jobs in the airline industry.

Another recent sore point is Boeing announcing in December it would lay off 8% of its commercial aircraft workforce (an announcement earlier in the year pegged the number at 4%) while also reporting that it would raise its dividend and buy back to $14 billion in company stock because Airbus continues to take market share from the 737 sweet spot.

The dream is that the new airliner and others will bring back jobs but that could be offset by lost jobs as airlines are losing to foreign competitors funded with America’s backing.

The skies are tangled and not so friendly, after all.