Boeing blames hundreds of layoffs on Ex-Im Bank lapse

Much of the business downturn is attributed to recent launch vehicle failures, the havoc resultant of the slicing and dicing of military budgets and, playing a major role in the situation, the lack of financing available to interested firms from the now-defunded (by the US Congress) US Export-Import Bank (EXIM).

While Boeing is still undecided about the total number of jobs being affected, Reuters quoted Boeing spokesman Tim Neale as saying that the company will make a decision in the coming months.

[SatNews] Several hundred jobs at Boeing Company are expected to be slashed through 2015 and early 2016, due to a slowdown in the company’s commercial satellite manufacturing business. The bank has supported about 60% of satellite sales by U.S. makers like Boeing, Lockheed Martin and Orbital ATK.

He mentioned the cuts were “necessary to remain competitive for ongoing and future business.”

Asia Broadcast Satellite terminated an million contract last month, although both sides said that discussions about negotiating a new deal were ongoing.

The Exim bank, which provides loans and guarantees to companies, has ceased to write new loans after its government charter lapsed on 30 June.

Boeing has about 17,000 workers in California, where most of its commercial satellite business is based.

“While this [planned job cuts] is not exclusively being caused by the expiration of EXIM Bank, this is a factor for the customers who have chose to maybe hit the pause button or look somewhere else”, a Boeing spokesman said, as cited by the Wall Street Journal. Also, many smaller companies depended on credit ratings provided by EXIM bank, are now experiencing hard times.

After losing about 3.4% in Monday’s ugly trading session, Boeing’s shares are up almost 3% Tuesday morning at $131.00, likely due to reports of the layoffs. He added that the uncertainty regarding the bank was making buyers feel “very nervous”. “In the absence of Ex-Im, 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”.