Boeing Could Be Going, Going…Offshore?
The Boeing Company is reportedly seeking alternate financing for a multi-million dollar satellite contract that was scrubbed by privately held commercial satellite provider ABS due to uncertainty about the future of the U.S. Export-Import Bank (EXIM).
Bermuda and Hong Kong-based ABS terminated its order for the satellite in mid-July, citing the expiration of EXIM’s charter on June 30, according to the several media reports.
ABS informed Boeing that it would have to consider non-U.S.-based producers to build its third ABS-8 satellite, “given the absence of U.S. export credit financing,” one of the reports said.
Boeing Satellite Systems International first announced the ABS contract in June, saying the new all-electric satellite, scheduled for delivery in 2017, would expand broadcast and enterprise services to Australia, New Zealand, the Middle East, Russia, South Asia and Southeast Asia.
Termination of the ABS satellite deal marks the first known casualty of the ongoing Congressional debate over the future of the trade bank.
The development follows comments recently made by Boeing Chairman and former CEO James McNerney that the company, the largest exporter of commercial aircraft and communication satellites in the U.S., could relocate “key pieces of its production operations” to countries that continue to offer export credits should Congress fail to extend EXIM’s charter.
Speaking before the Economic Club of Washington, McNerney didn’t offer any details about what operations could be relocated, but did say that, “we are now forced to think about this differently” and that a company “review” was currently in progress.
According to McNerney, the failure of Congress to extend the bank’s charter as part of a short-term extension of highway funding, meant the bank’s fate would now remain uncertain through September or October, adding he was “more worried than ever that Congress could ultimately fail to reauthorize the bank.”
EXIM provides low-interest loans for foreign purchases of U.S.-made goods, and, according to Boeing, is essential to help the company compete with its overseas rivals, such as Airbus, which is subsidized by the European Union.