GE’s Cynical Ruse: Pretending Jobs Are Moving Because of End of Ex-Im Subsidies

By Diane Katz of The Heritage Foundation. Excerpts:

GE corporate spokesperson Patrick Theisen told Wisconsin Rep. Scott Allen "that the decision on the Waukesha plant was made some time ago and that it was irreversible.”

"Between 2004 and 2014, for example, the number GE employees in the United States fell from 165,000 to 136,000 (a 17.6-percent reduction). During the same period, the number of GE employees abroad grew from 142,000 to 169,000 (a 19-percent increase). Ex-Im was fully operational during that interval, and GE was one of the top five beneficiaries."

"Addressing investors in 2012, John Rice, the vice chairman, president, and CEO of GE Global Growth & Operations, said, “We’ve got a pretty targeted and focused strategy … [W]e’re trying to optimize global capabilities and build on these broad, strong global strengths.” It is entirely logical, then, that GE was far more interested in building on Dresser’s global reach than maintaining its Waukesha plant.

Indeed, the new Canadian facility will be nothing like the Waukesha operation, according to GE officials. Instead, plans call for construction of a “brilliant factory”—a new breed of manufacturing plant where design, engineering, production, supply chain, and distribution are interconnected through a single “digital thread.” GE has applied the concept to factories in South Carolina, India, and Poland.

GE doesn’t need to move to Canada to tap export subsidies there. The company already has a well-established relationship with Export Development Canada (EDC), the counterpart to the U.S. Export-Import Bank. Earlier this month, in fact, the EDC approved $25 million in financing for GE exports to Oman.

The company has also benefited from a variety of other EDC subsidies for exports to Mexico, India, and Turkey, as well as support for the sale of GE turbines to China for that country’s Three Gorges Project—the largest hydropower operation in the world.

Even without the subsidies, GE does not lack access to private export financing—which is what 98 percent of U.S. exports rely upon. With a market cap of $245 billion and annual revenues of $149 billion, GE is a pretty safe bet for private investors. Moreover, GE’s Capital Corporation, which finances global sales, holds assets of $499 billion and posted net income of $7 billion last year."

"Lawmakers and the public must understand that multinational corporations do not make costly moves in a hasty manner or on the basis of a single factor. The evidence just does not support GE’s claim that it is moving American jobs because of Ex-Im.

They must also understand that the end of Ex-Im is not hurting the U.S. economy. Private financing is readily available, as reflected in the record levels of U.S. exports in recent years. And, of particular importance, export subsidies carry considerable costs to American businesses that are left to compete against foreign firms subsidized by the U.S. government."