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Tentative compromise could save Bucyrus jobs
Published June 30, 2010 - BizTimes Daily
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A tentative agreement has been reached between U.S. Export-Import Bank and Reliance Power Ltd. of India that could save 1,000 new jobs at South Milwaukee-based Bucyrus International Inc.
The Ex-Im Bank said its board is willing to enter into a memorandum of understanding in which it will provide loan guarantees to help finance the purchase of U.S. coal-mining equipment by Reliance Power Ltd of India from Bucyrus. The Ex-Im Bank had denied that support last week on the grounds that the equipment was to be used to feed a new coal-fired power plant that will create carbon-dioxide emissions.
The $600 million in financing was sought to help Reliance buy mining equipment that would be used for a coal mine that is to supply a power plant under construction at Sasan in the Indian state of Madhya Pradesh.
In a follow-up letter to Reliance chairman Anil Ambani, Ex-Im Bank chairman and president Fred Hochberg wrote, “The Export-Import Bank of the United States is prepared to consider this proposal in light of the new information and Reliance's ongoing commitment to renewable energy. I look forward to working with you on these projects with the intent to finance the sale of Bucyrus-made mining equipment and support U.S. jobs.”
The letter was shared with the BizTimes by the office of U.S. Sen. Herb Kohl (D-Wis.)
The news comes as President Barack Obama is preparing to conduct a town hall meeting on the economy in Racine this afternoon.
Pressure has been building from Republican and Democratic public officials in Wisconsin for Obama to intercede on behalf of the Bucyrus jobs.
In an advance copy of excerpts from Obama’s prepared remarks obtained by BizTimes today, the issue of the bank’s decision about the Bucyrus contract is not mentioned.
Some Bucyrus employees who were prepared to picket at the site of Obama’s speech in Racine today expressed relief that a tentative compromise has been reached to save the project.
“We’re glad as a union,” Robert Folk, recording secretary and union steward for Steelworkers Union 1343, told BizTimes. “The whole decision; for Bucyrus, for the union, for the members and for the suppliers, is beneficial for all of us and we thank Mr. Obama and the (Export/Import Bank) if they played a part in the (new) decision.”
Lynn Becker, spokeswoman for Kohl’s office, said, “Sen. Kohl is in a meeting but I checked with his legislative staff - it’s their understanding that the line saying ‘Ex-Im Bank is willing to enter into a Memorandum of Understanding…’ indicates that an outline of an agreement has been reached by the parties involved that would allow the deal to go forward, following the standard approval process.”
Here is the complete text of the letter from Hochberg to Ambani:
June 30, 2010
Anil Ambani
Chairman
Reliance ADAG
Reliance Centre
19, Walchand Hirachand Marg
Ballard Estate, Mumbai 400 038
Dear Anil,
Last Thursday, the Board of the Export-Import Bank of the United States voted not to proceed with the application from Reliance Power Ltd. to consider financing of the Sasan project in Madhya Pradesh, India.
The primary mission of Ex-lm Bank is to grow and sustain American jobs through exports. However, the Board is also required by statute to consider the possible adverse environmental effects of all transactions. This critical balance of interests requires a mutual commitment between Ex-lm Bank and its international customers to mitigate the effect of carbon emissions on our climate.
I was pleased with our conversation on Monday in which we agreed that the Sasan project should be resubmitted for Board consideration, including new information. The request will also take into account Reliance's expressed commitment to invest in the renewable energy sector
Ex-lm Bank is willing to enter into a Memorandum of Understanding to encourage Reliance's purchase of U.S. renewable energy technology. This MOU would relate to the construction of renewable energy power plants, producing at least 250 megawatts of power, which are expected to produce no carbon emissions. Further I understand this will be among the largest renewable projects built in India to date and agree that it is our mutual desire that the project be sourced from United States companies on commercially competitive terms.
The Export-Import Bank of the United States is prepared to consider this proposal in light of the new information and Reliance's ongoing commitment to renewable energy. I look forward to working with you on these projects with the intent to finance the sale of Bucyrus-made mining equipment and support U.S. jobs.
Sincerely,
Fred P. Hochberg
To read a Milwaukee Biz Blog by Metropolitan Milwaukee Association of Commerce (MMAC) president Tim Sheehy about the importance of the Bucyrus jobs, click here.
