Boeing to cut hundreds of jobs as shutdown of EXIM Bank starts to bite
The layoffs are set to be implemented by early 2016, according to Reuters, which cited an internal memo within the company. A spokesman for Boeing, Tim Neale, confirmed that the staff reductions would take place and added that the total number of those losing their jobs would be announced in the upcoming months.
He mentioned the cuts were "necessary to remain competitive for ongoing and future business."
The move by the US aerospace giant comes after they lost a major contract with Asia Broadcast Satellite (ABS) company last month. The satellite firm took the decision because of uncertainty regarding the future of the US Export-Import Bank (EXIM), which is the country’s export credit agency.
The bank was shut down on June 30 after its government charter lapsed and was not renewed. The agency used to be able to write new loans and trade guarantees, in order to help support US exports on the international market.
"While this [planned job cuts] is not solely being caused by the expiration of EXIM Bank, this is a factor for the customers who have decided to maybe hit the pause button or look somewhere else," a Boeing spokesman said, as cited by the Wall Street Journal.
EXIM Bank was shut down after Tea Party representatives and conservative Republicans voted not to renew the agency’s charter following a vote in Congress. They said that the bank provides “corporate welfare” for big companies like Boeing. Executives at the aerospace giant do not know if or when the bank will be reopened.
Meanwhile, US government officials say they are becoming more concerned about the impact that the forced shutdown of the bank will have on US companies, including small businesses.
"Not only is the GOP leaving behind the unfinished business of the bank, it's leaving behind American workers, American businesses, American competitiveness and the American economy," Representative Maxine Waters (D-Los Angeles), a major bank advocate said on June 29, as cited by the Los Angeles Times.
The move has left business leaders scathing, while the advocacy group, Exporters for Ex-Im Coalition, said the move was petty and would result in job losses in order to achieve political gains.
"It is irresponsible to think that we can boost job growth while tying one hand behind the backs of exporters and manufacturers. This dangerous practice of putting politics before policy will result in job losses, for which members of Congress will be held accountable,” the coalition said, a day before the bank was shut down.
Supporters of the bank say it helps to improve US competitiveness abroad and levels the playing field for American companies, whose rivals in other countries are able to fall back on similar trade credits to help them function.
ABS says it is still in talks with Boeing, but is looking to find other companies that have access to government trade credits.
Neale mentioned that many of Boeing’s international customers relied on funding from EXIM Bank to buy commercial planes and satellites. He added that the uncertainty regarding the bank was making buyers feel “very nervous.”
"In the absence of EXIM, Boeing may need to serve as the lender of last resort but there are real limits to how much of this the company can do," Neale concluded, as cited by Reuters.