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GE blames lack of Ex-Im Bank authorization for closing Wisconsin facility, building new factory in Canada.

M2 EQUITYBITES-September 29, 2015-GE blames lack of Ex-Im Bank authorization for closing Wisconsin facility, building new factory in Canada

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GE Power & Water said it plans to stop manufacturing gas engines in Waukesha, Wisconsin and open a new facility to build engines in Canada.

The new facility will also have back-up capacity to manufacture diesel engine components for GE Transportation. GE currently employs 350 at its manufacturing facility in Waukesha, building gas engines for compression, mechanical drive and power generation applications.

GE notified employees in Waukesha and more than 400 US suppliers of its plans. In Wisconsin alone, suppliers generate almost USD47 million in revenue from the plant.

GE plans to build a new USD265 million state-of-the-art "Brilliant Factory" in Canada that will optimize efficiency and streamline production using data, analytics and software. The factory is expected to be completed in 20 months and will be a flexible production facility that can expand over time and also support manufacturing requirements for other GE businesses.

GE will build its new facility in Canada in order to access additional support from the country's export credit agency, Export Development Canada (EDC). The agency has a strong record of export financing. GE has a solid, long-standing relationship with EDC under which the company has participated in a number of global transactions.

GE said it expects to expand its relationship with EDC in support of the company's Power & Water, Oil & Gas and Transportation businesses.

In 2014, EDC facilitated exports and investments of approximately CDN100bn. The agency actively supports global expansion for manufacturers based in Canada, supporting over 7,000 customers in close to 200 countries last year.

GE is currently bidding on USD11bn of projects that require export financing. While more than 60 other countries have export credit agencies (ECAs) that support domestic manufacturing for export, the US does not.

The authorization for the US export credit agency -- the Export-Import Bank, or Ex-Im -- lapsed on July 1. For the last year, exporters and suppliers have called upon Congress to reauthorize the US Export-Import Bank to support manufacturing jobs and level the playing field for US companies that compete globally. Most countries are hungry for manufacturing and export jobs. The US remains the only major economy in the world without an export bank.

"We believe in American manufacturing, but our customers in many cases require ECA financing for us to bid on projects. Without it, we cannot compete and our customers may be forced to select other providers. We know these announcements will have regrettable impact not only on our employees but on the hundreds of US suppliers we work with that cannot move their facilities, but we cannot walk away from our customers," said John Rice, Vice Chairman, GE. "EDC joins a growing list of export credit agencies interested in supporting GE's global business operations and customer base."

"We continue to urge Congress to reauthorize the ExIm Bank for all American companies," Rice continued. "However, we must prepare for the worst case and arrange export finance outside the US Unfortunately, this will come at the expense of American jobs. In a slow growth and volatile world, we must go where the markets are and compete in over 170 countries."

GE is the world's Digital Industrial company, transforming industry with software-defined machines and solutions that are connected, responsive and predictive.

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Date:Sep 29, 2015
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