David Zuckerman’s Phoenix-based company makes that kind of product that most businesses don’t even know they need.
It’s called ServerLift, which can be described as a specialized forklift that data centers use for moving around computer servers and other heavy IT equipment.
It’s recently been gaining an international presence, too. Zuckerman said 78 percent of ServerLift’s growth over the last four years is from international sales, which is now the biggest part — almost 60 percent — of his business.
The reason? The Export-Import Bank, or Ex-Im Bank for short.
“We wouldn’t have gotten this far this fast, no. There’s no way,” said Zuckerman, vice president of ServerLift. “We couldn’t have gone international the way we did.”
The Ex-Im Bank isn’t widely known among the general public, but it’s an 81-year-old government agency that steps in when businesses such as ServerLift want to sell their products abroad, but can’t get help — whether through financing or insurance — from the private marketplace.
But the bank’s charter is set to expire June 30, and it’s unlikely Congress will reauthorize it for the 17 th time in its history. That's been upsetting business owners such as Zuckerman and Alan Merrill, executive vice president of Bio Huma Netics Inc. in Gilbert, which makes environmentally-friendly fertilizer and has expanded its client-base to 25 countries and more than tripled its revenue since it began utilizing the bank nine years ago.
“It becomes also a potential loss of business to us, which means that that would impact our ability to employ people here,” Merrill said. “So, there’s a domino effect on all of this.”
The bank loans and guarantees loans to foreign buyers of U.S. products and offers purchased insurance to American businesses, such as ServerLift and Bio Huma Netics, in case their foreign clients fail to pay on a certain transaction.
Ex-Im’s spending in Arizona has also been on the rise. It made up almost 2.5 percent, or $496 million, of Arizona’s total export value last year, quadruple the bank’s share in 2011, according to Ex-Im and U.S. Census Bureau data.
That’s still a relatively small portion, but that's not so surprising given that Ex-Im is intended to be a last resort. However, critics such as Daniel Ikenson, director of the Cato Institute's Herbert A. Stiefel Center for Trade Policy Studies, said it gets taken advantage of.
“It’s not the lender of last resort, and many companies come to it first because they get subsidized rates that makes the export transactions cheaper,” Ikenson said.
That’s just one of several reasons why Ex-Im has become a political target this year.
Staunch conservatives say the government shouldn’t pick winners and losers, and describe the bank as "crony capitalism" that favors large corporations — specifically Boeing, by far the bank’s biggest client.
By law, at least 20 percent of the bank’s spending must support small business. It fell short three out of the last four years, although it historically meets that target.
U.S. Sen. Elizabeth Warren suggested raising that requirement at a Bankin, Housing and Urban Affairs committee hearing last week, but was shocked when the U.S. Chamber of Commerce, one of the bank’s biggest allies, wouldn’t go along with that idea.
“I’m a little surprised by your answer,” Warren said. “I would think that the chamber would strongly support a change that would help more than 95 percent of your membership.”
Perhaps one of the biggest arguments for the bank is that it returns any excess money to the U.S. Treasury. And historically, the bank’s maintained a low default rate on its loans — under 2 percent.
Robert Mittelstaedt, the retired dean of Arizona State University’s W.P. Carey School of Business, said that while letting the bank expire could hurt jobs and small businesses in the short term, that still may not be reason enough to keep it in the long run largely because its real economic benefit is difficult to measure — and also Boeing.
“Is there a really big benefit that you can say, clearly this was worth it, or is there really a big downside if they don’t do it? In the case of the Ex-Im Bank, I think it’s too visible that Boeing is the primary beneficiary. Again, Boeing could probably rearrange other sources of financing," said Mittelstaedt.
Zuckerman of ServerLift said he’d survive if the bank expires because he’s grown enough by now. But it’s the smaller companies, those that are in the same financial state he was in just a few years ago, that he worries about.
“The bigger issue is, how many companies are going to be able to go international or will not be able to go international because we do this or don’t do this,” Zuckerman said.
Republicans in Congress are split on the bank’s future, and it’s unlikely the issue will go to the floor for a vote before June 30. But even if the bank does expire, it wouldn’t shut down completely right away and it could get revived should new legislation be introduced later this summer.
