Failure to reauthorize Export-Import Bank could affect Missouri companies

Wednesday, August 27, 2014 | 10:43 p.m. CDT; updated 11:34 a.m. CDT, Thursday, August 28, 2014
Fred McCabe, vice president of operations of Environmental Dynamics International Inc., gives Sen. Claire McCaskill a tour of its manufacturing facility Wednesday. McCaskill visited EDI to rally support for the re-authorization of Export-Import Bank, which has given assistance to the company.

COLUMBIA – Five mid-Missouri companies, including one in Columbia, are counting on Congress to reauthorize a federal program that expires at the end of September, or else they might have to find other ways to help finance their international business.

The Export-Import Bank of the United States acts as a credit agency for U.S. businesses that sell products overseas. Some Republicans in Congress have called for letting the Ex-Im Bank's re-authorization expire on Sept. 30 

Sen. Claire McCaskill, D-Mo., and Sen. Roy Blunt, R-Mo., have each spoken in favor of renewing the bank. Rep. Vicky Hartzler, R-Mo., whose district includes Columbia, also supports the idea.

On Wednesday, McCaskill visited Columbia-based Environmental Dynamics International Inc., which makes wastewater treatment systems, to rally support for the bank.

EDI's international shipments became larger than its domestic shipments in 2008 — that's when the company's local bank grew wary of funding it, said Fred McCabe, vice president of operations. If EDI defaults on its loans, then the bank couldn't reclaim its overseas assets; the 2008 economic crisis added to that anxiety. Some of EDI's clients were also growing uneasy.

“We had one of our large potential customers, Mitsubishi Heavy Industries in Japan, telling us specifically that they would not do business with EDI because we were not using a first-class international bank,” McCabe said.

Doing business internationally adds an extra layer of expense and complexity, McCabe said. For instance, most of EDI's expenses — its suppliers and employees — are based in the U.S., and they expect payment immediately. On the other hand, most of EDI's international clients take about 90 days to pay. "So we have a long time between the time we manufacture the goods and collect the money for those goods," he said.

Furthermore, EDI's clients typically withhold 10 percent of their payment to make sure EDI's systems work — which might take two or three years, McCabe said.

McCabe said EDI has a $3.5-million credit line with Ex-Im Bank for which it paid a  $45,000 service fee. It first drew funds from it in early 2012. If Congress doesn't reauthorize the Ex-Im Bank, McCabe said he can look for other lines of credit, but it would be costly.

Any loan EDI secures would have to be based on domestic sales, McCabe said. Since domestic sales are less than half of the firm's business, a loan covering all the firm's operations would carry significantly higher interest.

At the moment, McCabe said EDI has enough cash on hand that it doesn't need to borrow from Ex-Im Bank. "But if business gets slower in the winter time, which it always does, then we may utilize that line of credit," he said.

EDI has 105 employees in the U.S. and 35 in the United Kingdom, France, Germany, Singapore, China and India. Its international sales accounted for $15 million, and its domestic sales totaled $12 million in 2013.

The other mid-Missouri companies that have received assistance from Ex-Im Bank are:

  • Addison Biological Laboratories Inc. in Fayette.
  • Hubbell Power Systems Inc. in Centralia.
  • Glen Martin Engineering Inc. in Boonville.
  • Emergency Medical Supply Professionals Inc. in Jefferson City.

Ninety-six businesses in Missouri receive assistance from Ex-Im Bank.

Supervising editor is Adam Aton.

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