Just-A-Blogger Looks Into Political Games Over Local GE Plant Closure, Is Soon Overwhelmed (Updated)

Update:

The Milwaukee Fox affiliate reports that Governor Walker considers the soon-to-be-displaced GE workers “pawns” and says he plans to get involved in trying to keep those jobs in Waukesha:

Gov. Scott Walker pledged Tuesday that state and local officials would have a “unified effort” against General Electric’s plans to eliminate 350 jobs at its Waukesha plant. …

U.S. Rep. Paul Ryan, R-Janesville, has called the program “corporate welfare,” and Walker said earlier this year that he would eliminate it if he were president.

“Unfortunately, I think (the jobs) are pawns in a larger political battle being played out in Washington,” Walker said Tuesday, declining to say whether he still believed the Ex-Im Bank should be eliminated.

“I think it’s unwise for any corporation to be making decisions on where they place work based on one particular vote in the Congress,” the governor said.

Walker said he and Waukesha city and county officials were holding a conference call Tuesday about how to convince GE to keep gas engine production in Waukesha.

Also, the Washington Free Beacon says a representative from General Electric has responded to State Rep. Scott Allen’s claims of GE’s phony motives:

GE spokeswoman Meghan Thurlow denied that the company had asked Allen to misrepresent the nature of its move.

“Scott Allen clearly misunderstood our announcement,” she said in an emailed statement. “We contacted a range of Wisconsin officials from both parties about this news and there was no confusion. This is a hard decision, but one we were forced to make in order to continue serving customers who require export credit financing.”

It was a misunderstanding, clearly. The company would never fathom playing politics to get its way. Naw.

***

The lengths that people will go to blame others for their own decisions is, well, typical.

It’s even worse when they’re drowning in cash flow.

On Monday, General Electric Power & Water’s Distributed Power business announced that it will end its gas engine manufacturing in Waukesha, Wisconsin, over the next year and a half and move its operations to Canada, eliminating 350 jobs in the city just outside of Milwaukee. GE expects to take 20 months to build its new $265 million Canadian factory where the work that’s presently in Waukesha will resume. The business giant said that the Republican-led Congress is responsible for the job losses because it allowed the U.S. Export-Import Bank’s charter to expire back at the end of June.

From the Milwaukee Journal-Sentinel:

“We believe in American manufacturing, but our customers in many cases require Export Credit Agencies financing for us to bid on projects. Without it, we cannot compete and our customers may be forced to select other providers. We know these announcements will have regrettable impact not only on our employees but on the hundreds of U.S. suppliers we work with that cannot move their facilities, but we cannot walk away from our customers,” John Rice, vice chairman, GE, said in a statement.

“We continue to urge Congress to reauthorize the ExIm Bank for all American companies,” Rice said in the statement. “However, we must prepare for the worst case and arrange export finance outside the U.S. Unfortunately, this will come at the expense of American jobs. In a slow growth and volatile world, we must go where the markets are and compete in over 170 countries.”

GE said the plant closure will be [sic] take place over the next 20 months, in phases, and that its decision will not be reversed.

Yet Rice stated that the company was “not turning our back at all on U.S. manufacturing.”

Yahuh, okay.

So even if the Ex-Im Bank should return in the next few months, GE plans to move the jobs anyway.

This move has nothing to do with Republicans. GE is using the GOP as an excuse. This is definitely not a spur-of-the-moment decision brought on by the government bank shutting down. General Electric didn’t come up with this plan to build a $265 million factory as well as coordinate getting Canadian export financing in three months. These kinds of actions are planned well in advance. GE had to have been working on this deal with Canada for some time.

This is the same plant where President Barack Obama gave a speech about U.S. manufacturing jobs two days after his State of the Union speech in 2014. GE’s polished PR video of his appearance is so heavy on the Obama admiration that you’d swear his Organizing for Action group made it themselves. Gov. Walker’s Democrat opponent in the 2010 election, Milwaukee Mayor Tom Barrett, appeared in the video. So did Congressional loon Gwen Moore. Though Waukesha is a suburb of Milwaukee, neither Barrett nor Moore are representatives of Waukesha. Those aren’t faces I would consider beneficial to promoting the company. Including extreme lefties like them only highlights how deep General Electric’s ties are with the progressive side of government. It is the essence of political cronyism.

Don’t forget that GE’s CEO Jeffrey Immelt was Obama’s jobs czar for a couple of years, so their connection is tight. GE employs around 135,000 workers in America, so eliminating a few hundred jobs here means nothing to Immelt. Stocks barely budged when news of the move broke.

The purpose of the government-run Ex-Im Bank is to assist foreign customers in financing their transactions with American businesses when private lenders don’t want to take the risk, thereby placing that risk on the shoulders of American taxpayers. This risk is supposed to help small businesses. The Ex-Im Bank touted that 90 percent of its 2014 transactions were made to help small businesses, 3,340 in all. But the Ex-Im Bank classifies small businesses as having up to 1,500 people. The Small Business Administration only classifies up to 500 employees as meeting the small business qualification.

Most of the tens of billions in Ex-Im financing dollars each year–64 percent–goes toward helping a mere ten corporations. Boeing is one. General Electric is another. Boeing made $5.4 billion in profit in 2014. General Electric made $15.2 billion.

$15.2 billion makes General Electric the 21st-highest profitable company in the world.

For perspective, stacking 15.2 billion $1 bills equals about 1,000 miles in height, which is four to five times greater than the distance from the earth’s surface to the International Space Station.

So with all that extra pocket change, what does GE need help from a government bank for? And if American jobs were so near and dear to GE and Obama’s pal Immelt, why wouldn’t they sacrifice a few bucks in profit in order to keep those jobs in Waukesha? Instead, they’re going to move those jobs to Canada as part of what the company calls a “Brilliant Factory,” which is some buzzy corporate substitute for “state-of-the-art factory.”

With all that money GE makes, with Obama giving a speech at one of their facilities where he talked about bringing back American manufacturing jobs, you’d think GE would be committed to keeping jobs here, but it’s not. Most of its 305,000 jobs belong to workers in other countries, with more and more jobs having gone to other parts of the world well before the Ex-Im Bank’s charter expired, as EXIM expert Veronique de Rugy of George Mason University explained:

According to [GE’s] annual reports, between 2004 and 2014, the number of its employees in the U.S. has fallen 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 of course fully operational during that interval, and GE was one of the top five beneficiaries.

Rep. Scott Allen, the State Assemblyman for the Waukesha district where the engines are made, wrote in a statement that he spoke with someone at GE, who disclosed that the plan to move the jobs to Canada has been in the works for a while:

In a press release, and substantiated by my conversation with GE corporate spokesperson, Patrick Theisen, this afternoon, GE wishes to blame the problem on the House of Representatives and that body’s failure to act on the U.S. Export Import Bank. Mr. Theisen was eager to connect me with his public relations department to help me gin up a press release blaming Congress and demanding they act. In the same conversation, practically in the same breath, he told me that the decision on the Waukesha plant was made some time ago and that it was irreversible.

Not only that, but it seems that GE’s Waukesha engine business didn’t rely on EXIM financing in the first place, as Reuters reported.

At the 106-year-old Waukesha plant, GE builds piston engines for power and oilfield use that run on natural gas or methane from landfills. But these engines are not typically sold with EXIM financing, so the move is more aimed at finding government export credit for other businesses, the GE spokeswoman said.

The company also acknowledged that the recent downturn in oil and gas drilling activity was a factor in the decision to end engine manufacturing in Waukesha.

Ohh, really? So the Republicans aren’t totally the ones to blame, huh? But the company figured, what the hell, we might as well use this as an occasion to take a swipe at Republicans. In the process, it’s destroying a business that has brought local employment and pride to an American community for over 100 years.

And instead of condemning corporate greed, the progs have mainly been using this to point their fingers at political foes.

For instance, the union gave its expected “extreme right-wingers hate American workers” two cents.

From the Journal-Sentinel article:

Most of the 350 Waukesha employees are represented by the International Association of Machinists union.

“The Ex-Im Bank was one of those rare government programs that worked as intended; it protected American jobs and returned a profit to the U.S. Treasury. Killing the bank means thousands of U.S. jobs will be needlessly sacrificed for an extreme political agenda,” said union spokesman Frank Larkin.

And from Reuters, the same guy said,

“I’d say the workers at Waukesha are the real world casualties in the right-wing fight to close the EXIM Bank,” said Frank Larkin, a spokesman for the International Association of Machinists, which represents plant workers.

U.S. Senator Tammy Baldwin (D-WI) took GE’s cue to strike at the Republicans.

“The failure of the House to act is now costing Wisconsin jobs,” Senator Baldwin said. “When American businesses have a level playing field, they can compete against anyone. The Export-Import Bank is an important tool that helps us create that level playing field, bringing fairness to global trade, and supporting American businesses so they can create jobs and grow. The Republican majority in the House needs to do what the Senate did nearly two months ago and take action on the Export-Import Bank before more Wisconsin jobs are lost to other countries.”

The Democratic Party went after the other U.S. Senator from Wisconsin, Ron Johnson (R), and also cited an LA Times article that blamed the Koch Brothers. Russ Feingold, the far lefty and former Democrat U.S. Senator who is trying to take back his seat from Johnson, also used the occasion to go after his rival who voted against reauthorizing the Ex-Im Bank.

While the local union also slammed Republicans over the jobs moving to Canada, it did acknowledge GE’s role:

District 10 and Local Lodge 1377 of the International Association of Machinists and Aerospace Workers are saddened to hear of the GE Power & Water plan to eliminate 350 skilled jobs from the Waukesha, WI facility. The Union members of GE Power & Water have provided a skilled and efficient workforce manufacturing world class gas engine products.

GE claims the closing of the facility is directly related to the export financing lapse of the U.S. Export Import Bank. The Republicans in Congress have been in strong opposition to attempts at reauthorizing the Bank. The elimination of these jobs is directly related to the GOP’s opposition to the U.S. Export Import Bank lead by Scott Walker, Ron Johnson and Paul Ryan. Their opposition is hurting Wisconsin workers.

While the renewal of the U.S. Export Import Bank is at the center of the Wisconsin job loss, let’s not miss GE’s position. GE is willing to sacrifice American workers for even greater financial gain.

But Representative Moore (D)–of Milwaukee–puts all the responsibility on the shoulders of the GOP:

We have seen significant job losses across the country directly related to the failure of House Republicans to reauthorize the Export-Import Bank. Now, the state of Wisconsin is feeling the brunt of their extreme economic agenda as General Electric Co. begins to move 350 Wisconsin jobs out of the U.S.

The outsourcing of American jobs was precisely the calamitous outcome I was trying to avoid when I introduced legislation, H.R. 1035, to reauthorize the Export-Import Bank. This vital financial institution levels the global playing field for U.S. workers and companies, particularly in my home state of Wisconsin.

It’s time for House Republicans to end their political infighting and focus on supporting our country’s economic well-being.

It was actually H.R. 1031, not 1035, that several members of Congress introduced, not just herself, with the intent to reauthorize EXIM until 2022 while raising its financing cap an additional $20 billion in that time. But, you know…details, shmetails.

Outgoing House Speaker John Boehner (R) is a supporter of the Ex-Im Bank. Some believe his departure means that Ex-Im should be considered dead, while others think that getting the bank’s charter renewed will be one of Boehner’s last acts as a Congressman. House Majority Leader and possible successor to Boehner’s seat as Speaker Kevin McCarthy strongly opposes bringing EXIM back from the dead.

How necessary is the Ex-Im Bank?

“The idea that there is no export financing without Ex-Im is ludicrous,” writes de Rugy. “Over 98 percent of U.S. exports take place without any help from Ex-Im—proving that export financing is readily available.”

That means a great many more American businesses have been doing just fine without the government bank’s help. And companies up to their eyeballs in money such as General Electric and Boeing certainly do not need any government assistance.

There was a time not too long ago when progressives were against the continuation of EXIM.

Anti-Wall Street people hated that giant corporations were getting preferred financing with the government’s help. Environmentalists hated that the bank assisted big carbon-footed businesses that contribute to global climate warming change.

2008 presidential candidate Barack Obama believed the Ex-Im Bank was “little more than a fund for corporate welfare.”

President Barack Obama praised the bank for helping out corporations such as Boeing and now insists that “reauthorizing the bank ought to be a top agenda for members of Congress.”

Interesting what can happen when friends with lots of money and influence talk in your earholes. Promises are quickly forgotten.

This isn’t about GE’s bottom line being affected by the GOP as much as it is about the company finding countries who will give them better business deals, and lending to foreign customers isn’t the only factor. GE also goes to countries where the taxes favor businesses better and where regulations aren’t as severe. In its annual company statement, the company makes no bones about the tax advantages it receives abroad. As one who is pro-capitalist, I don’t see a problem with that. What I have a problem with is when companies with such enormous influence use that influence to obfuscate their true motivations and connections to make a political statement, and politicians then use those statements to their advantage, too.

And what of the businesses that don’t rely on the help of the government bank? The existence of the Ex-Im Bank hurts competitiveness.

Doug Bandow of the Cato Institute wrote in 2014:

Two-thirds of the Bank’s loan guarantees last year backed Boeing sales to rivals of U.S. airlines. Delta blamed ExIm for having to halt its New York-Mumbai service after Air India expanded its flights using Bank-financed jets. Last year ExIm also subsidized an Australian iron mine in purchasing Caterpillar equipment, despite complaints from U.S. miners.

Contrary to Sen. Baldwin’s statement, EXIM upsets the playing field. EXIM changes the game. If businesses were treated equal, no one would need the help of the government. Each company would have to survive and succeed based on its own financial ability.

Bandow also pointed out:

No doubt, Exim financing makes some deals work. But others die because ExIm diverts credit from firms without agency backing. Unfortunately, it is easier to see the benefits of the former than the costs of the latter.

University of Arizona economist Herbert Kaufman estimated that every $1 billion in federal loan guarantees crowded out between $736 million and $1.32 billion in private investment. World Bank economists Heywood Fleisig and Catharine Hill figured that channeling resources to exports reduces “domestic investment, consumption, or government expenditure.” Thus, the two explained, while export subsidies will increase employment in export firms, they will do so “at the expense of employment elsewhere.”

JayEtta Hecker, Associate Director of the then-Government Accounting Office, testified before the Senate: “government export finance assistance programs may largely shift production among sectors within the economy rather than raise the overall level of employment in the economy. Hence, the jobs figure that the Eximbank reports may not represent net job gains.” Shayerah Ilias with the Congressional Research Service similarly argued: “promoting exports through subsidized financing or through government-backed insurance and guarantees will not permanently raise the level of employment in the economy, but alters the composition of employment among the various sectors of the economy and, therefore performs poorly as a jobs creation mechanism.”

So this local story of a few hundred American jobs moving to Canada is part of a much bigger deal. Corporate welfare, cronyism, manipulation of public opinion, scapegoating, excuse-making, phony accusations, billions of dollars, American jobs being lost…there are so many different aspects and effects that people should know about, ones that I never even mention. But I’m getting a headache from absorbing and trying to disseminate it all. I think I’ll stop here for now.

I’ll just add that I am somewhat familiar with the products that this plant in Waukesha manufactures, being from the same general area and having worked in the industry for a number of years. The name “Waukesha” is branded on the engines they make, so seeing this long-time staple of southeast Wisconsin go to Canada where the name “Waukesha” is rendered meaningless is a sad state of affairs. But giving the world the impression that one party is responsible for jobs moving away when it is the accusers who are responsible is a dirty and rotten move. The honchos at GE, the union, and the Democrats should be ashamed of themselves.

But of course they won’t be. They’re laughing all the way to the bank.

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