UPDATE 3-GE to move engine plant to Canada as US export financing nixed

29 Sep 2015 | Author: | No comments yet »

GE moving jobs to Canada, blames US Congress on Ex-Im Bank.

General Electric Co. is planning to build a state-of the art $265-million (U.S.) engine plant in Canada, as it shifts more business out of the United States following the collapse of U.S. government-sponsored export financing.WAUKESHA, Wis. (AP) — GE Power & Water said it will stop manufacturing gas engines in Wisconsin and move the work to Canada, meaning the loss of 350 jobs in a Milwaukee suburb, because the U.S.

However, Export Development Canada — the federal credit body — confirmed it will provide support for the US$265 million needed to relocate GE’s Waukesha, Wisc., operation. The facility, to open in about 20 months, can be expanded and provide flexible manufacturing capacity to support other GE businesses, including engines for railroad locomotives, GE said.

Export-Import Bank, which — like EDC — provides government-backed loans for customers to purchase products from that country. “GE has a solid, long-standing relationship with EDC under which the company has participated in a number of global transactions,” the company said in a statement. In mid-September it said it would invest $26-million in an aircraft engine facility in Winnipeg, including a major upgrade to a massive wind tunnel used for testing jet engines.

In Waukesha, GE builds large piston engines generally used for electric power generation that run on natural gas or methane from landfills, many of which are exported to developing countries. The U.K. and France will also benefit from GE’s decision, with some similar gas-engine plant operations expected to be relocated to those countries as well. “We’ve had a positive relationship with GE Canada for many, many years, and this is a continuation of that relationship,” said EDC spokesman Phil Taylor. “We see this as positive for Canada.” While General Electric has its own banking arm, through GE Capital, “they do rely on export credit agencies in their financing mix,” Taylor added.’ The U.S. standoff over the export-lending agency came to a head with the decision by House of Representatives Speaker John Boehner, a strong supporter of the Export-Import Bank, to step down from Congress at the end of October. GE is making the moves because it can no longer get U.S. export financing – government-supported loans to customers so they can pay for the equipment they buy. In recent weeks, GE has announced a steady drumbeat of deals to move thousands of jobs and access government export credit from the United Kingdom, France, Hungary and China. Boehner is likely to be succeeded by House Majority Leader Kevin McCarthy, who is opposed to renewing Export-Import’s charter, which expired on June 30. “Obviously, with the Boehner resignation, we lose one important person there, so I don’t think it makes it any easier,” GE’s vice-chairman John Rice told Reuters. “In order (for companies) to be able to access export-credit agency funding, they needed to be in countries that have that in place.

The U.S. currently doesn’t have that,” Warburton told the Financial Post. “There are about 60 countries in the world that have export-credit funding. The bank’s charter expired June 30 when Republican members of Congress, who say the bank benefits only a few large corporations that don’t need government assistance, blocked a reauthorization vote.

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