GE To Build Turboprop Engines In Europe

Turning up the pressure on Congress to revive the US Export-Import Bank, General Electric said it will open a new development facility for turboprop engines in Europe because it cannot access US export financing.

GE's move was the latest effort by a big company to raise the alarm in Washington about the closure of new financing by EXIM, so far with little evident impact on Congress.

GE said the USD$400 million turboprop project would create 500 to 1,000 jobs, and will develop, test and produce engines for larger aircraft, a new market for GE Aviation.

GE also said it will invest USD$55 million in Celma, Brazil, to build a new engine testing facility, and will spend USD$23 million on expanding its engine testing capability in Winnipeg, Canada.

Several European locations are being considered for the turboprop facility, including in the Czech Republic, where GE now builds turboprop engines for small aircraft. Talks are underway with export credit agencies in those countries for financing and loan guarantees.

GE stopped considering US locations for the new facility after Congress allowed EXIM's charter to expire on June 30, the result of a campaign by conservative Republicans against the bank, which they say exemplifies "corporate welfare."

On Tuesday, GE announced plans to shift up to 500 US power turbine manufacturing jobs to Europe and China because it can no longer access EXIM financing.

The warning shots, along with a visit by GE Chairman Jeff Immelt to Capitol Hill on Wednesday, thus far have not jolted Congress into action to revive EXIM. House Financial Services Chairman Jeb Hensarling and a vocal group of other conservative Republicans have blocked legislation to reapprove the 81-year-old bank.

House Republicans said there have been no discussions of trying to attach EXIM legislation to a spending bill needed to keep the government open past September 30.

GE has said it is bidding on USD$11 billion worth of international projects that require export credit agency financing and has started talks with several foreign export credit agencies since EXIM's lending authority expired.

Kennedy said EXIM's closure would put GE Aviation at a competitive disadvantage with its rival in the turboprop business, Pratt &: Whitney Canada, because Pratt can provide government-backed credit assistance from Canada to its customers.

GE Aviation employs 25,000 US workers, including 9,000 in the southwest Ohio area where the division is headquartered.

Those facilities are close to the Ohio district represented by Republican House Speaker John Boehner. He has supported EXIM in the past, but has been largely silent about whether he will allow renewal legislation to proceed.

"The only commitment the speaker has made is to give Chairman Hensarling the opportunity to amend any Senate-passed vehicle that may include Ex-Im," said a Boehner spokeswoman. "Chairman Hensarling asked the speaker for this consideration and he agreed to it."