During the last two presidential administrations, there has been a concerted focus on enhancing manufacturing in the United States as well as re-shoring and near-shoring supply chains.
Until recently, the last three decades saw a marked trend toward globalization of business and, therefore, supply chains. This tracked/fostered the rise of China as a low-cost manufacturing economic powerhouse.
However, companies leaning into China’s cost and distribution efficiencies have proven to be not without cost – that being a concentrated dependency on China’s manufacturing base. This was aptly exposed during COVID-19 and the challenge to obtain, for example, personal protection products. The result was the acceleration of what had been a slow shift away from China as the “go-to” manufacturing center.
This shift exposed the U.S. dependency on Chinese manufacturing, revealing a diminished U.S. manufacturing base and a lack of supply chain resilience.
In February 2021, the Biden Administration issued an Executive Order on America’s Supply Chains. The order directed all Federal agencies to find ways to advance U.S. manufacturing and promote resilient supply chains.
For its part, the U.S. Export–Import Bank of the United States (EXIM Bank) developed the Make More in America Initiative which sets forth specific terms by which EXIM, the U.S. export credit agency, can utilize its domestic financing capabilities.
Making More in America Initiative: Objective
To help companies make more in America – especially in sectors critical to national security – EXIM makes available the agency’s existing medium- and long-term loans, loan guarantees, and insurance to export-oriented domestic manufacturing projects.
The Initiative is open to all sectors, with financing priority available to environmentally beneficial projects, small businesses, and transformational export area transactions, including semiconductors, biotech and biomedical products, renewable energy, and energy storage.
Make More in America Initiative: Eligibility Requirements
In addition to EXIM’s standard due diligence procedures (underwriting that concludes a “reasonable assurance of repayment”) and “additionality” requirements (EXIM financing must be additional to private sector credit, not instead of), EXIM uses the following criteria in assessing project eligibility:
Export Nexus: Transaction eligibility will be determined by the “export nexus” – the percentage of production or shipments tied to exports.
- For small businesses (including minority and women-owned businesses), transformational export areas, and climate-related transactions, the required nexus is 15%.
- For projects in other sectors, 25% of output exported or expected to be exported will be required.
- The Make More in America Initiative (MMIA) is open to export suppliers as well if EXIM criteria are met regarding the export nexus standards.
Jobs Metric: The amount of EXIM financing made available for individual projects will be scaled based on the number of U.S. jobs supported, both during construction and over the life of EXIM’s financing.
- Each job-year (e.g., one job over five years is five job-years) allows for up to $189,242 in financing.
- This standard will replace the U.S. content required in traditional EXIM transactions to foreign buyers.
- EXIM’s job metric looks at construction/installation jobs (when appropriate) and jobs directly associated with operating the project or facility. EXIM will count full-time equivalents (FTEs) at contracted-out service jobs (e.g., security guards, custodial, etc.).
- However, jobs at companies that provide inputs to the project such as raw materials and goods suppliers (e.g., widgets used in production at the borrower’s project) will not be counted.
Financing Amount: EXIM support is limited to 80% of a project’s financing, lower than the 85% allowed under the Economic Co-operation and Development (OECD) Arrangement.
For further information, please contact Stephen Renna, former EXIM Chief Banking Officer steve.renna@ankura.com, or Cameron Dorsey, former EXIM Senior Advisor cameron.dorsey@ankura.com.
© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
