Chairman, President and Chief Executive Officer
The Boeing Company
"A Large Exporter's View of Small-Business Opportunities"
Exports Live! Conference
November 10, 2009
Good morning, everyone! Thank you for being here today.
And Mr. Chairman [the Hon. Fred Hochberg, chairman and president of the Export-Import Bank of the United States], thank you for your leadership at the Export-Import Bank since coming aboard earlier this year. The Bank's efforts have helped countless U.S. companies of all sizes to expand into overseas markets (and Boeing may be the best example of that). With the vast majority of the world's consumers outside the United States (and growing), that's really a big deal.
Mr. Chairman, you've also helped make the Bank a model program within the government - returning some $135 million in "profits" to the taxpayers (in the form of fees that borrowers pay) in fiscal year 2008 alone. And congratulations to you and the entire staff of the Bank on your 75th anniversary this year!
I also want to thank you for inviting me to speak today. I'm here in part to underscore the Bank's importance to Boeing, but I also want to emphasize the role it can play for your business - whatever its size.
Boeing is one of the largest exporters of manufactured goods in the United States. More than 80 percent of the backlog for Boeing Commercial Airplanes is currently for overseas airlines. That backlog amounts to more than a quarter of a trillion dollars. And through the years, the Ex-Im Bank has helped secure financing for many of our overseas customers.
Why is this relevant to you?
Well, the Ex-Im team offers the same expertise and capabilities both to large exporters like Boeing and to small businesses looking to enter the export market. The Bank just completed a record year in FY 2009 - some $21 billion of financing. And about $4.4 billion of that amount directly supported exports by small businesses. That's a good base to start from.
I know how crucial small businesses are to Boeing's success. Because of that, I want small businesses to be successful - and to become larger businesses in the process.
So I'm glad that the Ex-Im Bank is sponsoring "Exports Live." I think it's fitting that the conference is here in Chicago today - not only because of the major, multi-national companies headquartered here but also because of the vast entrepreneurial spirit throughout this region.
We see that spirit throughout this audience - people who want to take their businesses to a higher level; people who want to learn more about export opportunities and available government support; and people who want to grow and sustain American jobs.
In the current environment and going forward, business growth for U.S. companies of all sizes will come increasingly from global opportunities. So there is no reason in today's global economy that just about every company shouldn't have global ambitions and a global plan.
As I mentioned earlier, the vast majority of the world's consumers live outside the U.S. That tells us that if you have the ability and the drive, you can compete beyond our shores - no matter how large or small your company. That's why you're here today, and that's why the Ex-Im Bank and other governmental agencies are here, too.
Some of you might cringe when I say, "They're the government, and they're here to help." But you need to know that the Ex-Im Bank - a governmental organization that earned money for the taxpayer last year - really does have some great ideas to help you expand your businesses.
I'm going to leave it to the experts to give you the specifics about that, but what I'd like to do is tell you a little about how important the Ex-Im Bank has been to Boeing.
My personal history with Ex-Im goes pretty far back (including my time at GE and 3M), and Boeing's history with Ex-Im goes back 40-plus years. In that time, we've watched the Bank assert itself as a strong advocate for U.S. technology among foreign competitors; a sustainer of jobs for leading industries like aerospace; and a supplemental source of financing when commercial markets are disrupted.
In this year's credit crunch, for example, the industry saw capital markets dry up; many banks exited the aircraft-financing business. As Bob Morin, Ex-Im Bank's vice president for the transportation division, says, "This was game day for all the export banks." And Ex-Im was right in the middle of the game - a global game. We all benefitted from that.
In the commercial-aircraft realm, the Bank's support comes mostly in the form of loan guarantees, using the credit of the Treasury to stand behind loans from commercial banks. It also does some direct financing on occasion, as well.
And in a market where credit had significantly tightened, our industry counted on the Ex-Im Bank (along with the world's other export credit agencies) to buffer the financing disruption in the commercial markets by providing financing alternatives for overseas customers.
Ex-Im is also a leading innovator in the financing world. For instance, the Bank created a new bond structure that reaches a much broader investor base than the conventional banking market, which is the traditional source of investors for Ex-Im Bank. As a result, they've achieved a more durable financing solution that should be less vulnerable to the dramatic financial stress that constricted the bank market this time around and might do so again in the future.
At a time when access to trade finance is still tight, Ex-Im Bank continues to position itself at the forefront of export credit agencies. For example, the Bank helped pioneer the concept of asset-based lending, which in our case emphasizes the value of the airplanes themselves over the credit of the borrowers.
In a nutshell, the aircraft lending model for years, like a lot of traditional financing, was one based on the credit of the borrower: If an airline had good credit, it could borrow money to finance deliveries. But for those with lesser credit, the system really constrained them.
Asset-based lending, on the other hand, puts the emphasis on the value of the asset, and less on who owns it. Unlike a big building or capital project, airplanes are highly mobile assets whose value holds up well over the years. This makes them very attractive investments.
Ex-Im recognized this early on and helped pioneer this lending practice - making it possible for, say, airlines in developing nations without high credit ratings to purchase Boeing products. It's been a key to the industry's success since then.
How key? For commercial aviation alone, the Bank completed close to $9 billion in financing in FY 2009. That effort represents hundreds of very complex transactions, and that work contributed to our whole industry's success (not just to Boeing's success) - even in a financially challenging market.
The U.S. aerospace industry supports the jobs of hundreds of thousands of highly skilled people who produce billions of dollars in overseas sales for U.S. companies. Those sales are good for business, good for our workers, and good for the American taxpayer. It's clear that the returns on Ex-Im's efforts go beyond just numbers. They translate into American jobs that support countless American families.
We can all appreciate Ex-Im's efforts on our collective behalf.
But you don't have to employ tens of thousands - or sell tens of billions - to tap into Ex-Im's expertise. You just need a couple of things: first, a willingness to think globally about your potential customers and your company's future; and second, the confidence that your company and your people have what it takes to compete in the global marketplace. If you have those two things, the Ex-Im Bank will help you to expand globally and compete on a level playing field at the same time.
Especially in tough economic times, having a stable platform for access to capital is good for our customers, and it's good for our employees. Ex-Im makes this possible. It is key to our customers' success as well as to Boeing's success. And its people can help you achieve new levels of success, as well. If you are anything like the small businesses in our supply chain, I know that you can compete.
It may be a little corny to say, but it's true: Every large business was once a small business. The Boeing Company started in a little red barn on the Duwamish River in Seattle, and today we are the leading aerospace company in the world.
Along the way, the Ex-Im Bank has helped us to become a global business by helping our international customers have confidence in obtaining the financing they need.
I want to encourage each of you - whether you've already moved out of your own little red barn or not - to listen and learn today. This is a group that wants you to be successful. But that can happen only if you seize the opportunity.
For those of you who do, I'm looking forward to hearing you speak at future "Exports Live" conferences about how Ex-Im helped your company become more global and more successful.