The Export-Import Bank’s decision Wednesday to reconsider guaranteeing a $600 million loan that will result in South Milwaukee-based Bucyrus International Inc. adding 1,000 more jobs was the result of an “all-nighter” series of negotiations, according to Tim Sullivan, president and chief executive officer of the company.
The Ex-Im Bank decided to reverse its original rejection of the request just hours before President Barack Obama spoke at a town hall meeting in Racine on Wednesday afternoon.
Sullivan said he was surprised Obama did not use the Racine town hall to discuss how the administration had intervened on behalf of Bucyrus to save the jobs.
“I know he obviously wanted to have this done before he landed, and that was part of the process that an all-nighter happened to get this done; but, I was surprised he didn’t take credit for interceding and getting this thing put back online,” Sullivan said. “He certainly was involved. The White House was involved, and I guess he really wanted to concentrate on the agenda he had prepared and didn’t want any distractions, but I was surprised. We have several employees that live in Racine and several employees there (on Wednesday), and I think he still would be trying to get people to get back in their seats for the standing ovation he would have gotten if had mentioned his participation and help in the process. It was a very popular decision.”
Once the contract is signed, Reliance Power Ltd. will receive the financing to buy the equipment from Bucyrus to mine coal for a coal-burning plant in India.
According to Sullivan, the negotiations culminated Wednesday at 10 a.m. after night-long discussions between Bucyrus, Reliance, Ex-Im Bank, U.S. Sen. Herb Kohl (D-Wis.) and officials from the Obama administration.
Sullivan said Reliance had waited eight months for the Ex-Im Bank to make a decision and told him they would have to pursue other suppliers for their project if the bank did not quickly reverse its decision.
Sullivan said he immediately called elected representatives for support and began working closely with Kohl to negotiate an acceptable agreement.
“Things really started an earnest Monday morning with The Wall Street Journal article, which gave it (the decision) national attention, and effectively a national firestorm erupted,” Sullivan said.
Nearly 24-hours after the national attention, the Obama administration stepped in. Sullivan said he did not work directly with Obama on the matter; but he worked closely with White House officials and said they were all “fully engaged” by Monday afternoon.
“I think the efforts cranked up Tuesday to determine what could be done, and we started strategizing both with the administration and the government with Ex-Im Bank and the negotiations began (Wednesday) with Reliance in India,” Sullivan said. “We were answering and fielding many questions, and there was a much deeper dive into the data in the application, what it meant as far as the jobs. A lot of information was requested about the specific jobs, where were they, what companies were involved … just much deeper dive into the details so people could fully understand what we were up against.”
Even though negotiations ended Wednesday, the financing for the project will not be finalized until approval from the Ex-Im Bank board of directors. “Effectively (it is) a done deal, but we need an official vote by the board of Ex-Im bank to rescind their vote,” Sullivan said.
“It is typically only one vote, but in the case of this project it was a two-vote process. The first vote was dealing with the environmental guidelines; the next vote will also incorporate the financial viability of the project, which is a very easy hurdle to overcome. This is a very large Indian company with a very strong balance sheet,” Sullivan said.
Sullivan is optimistic that the project will move forward but is more concerned about the approval of future projects as Bucyrus continues to manufacture equipment to developing countries.
“I talked to the chairman (Fred Hochberg of Ex-Im Bank) about that. I said, ‘I do not want to have to go through this process every time we have a project that entails a coal-fired powered power plant in a developing world.’ And he agreed,” Sullivan said.
Bucyrus has submitted a finance request for another foreign project and plans to submit three more applications for projects overseas by the end of 2010. Two of the planned projects will be in India, and the others will be in Turkey and South Africa, Sullivan said.
Sullivan plans to travel to Washington and meet with Hochberg in the upcoming weeks to determine how to move forward and streamline the process on future projects.
In addition to Obama and Kohl, Sullivan credited Wisconsin Gov. Jim Doyle and Milwaukee Mayor Tom Barrett, who is a candidate for governor, for helping Bucyrus to persuade Ex-Im Bank to reconsider its rejection.
“Quite frankly, Sen. Kohl was probably the key person, primarily due to the fact that he sits on Senate Appropriations Committee, which funds U.S. Ex-Im Bank, so he was the purse strings to the Ex-Im Bank, and obviously they (bank officials) were certainly going to listen to him as a strong voice of reason,” Sullivan said.
Liz Ramus is a reporter at BizTimes Milwaukee.
Editor’s note: To view a photographic slideshow of President Barack Obama’s town hall meeting in Racine on Wednesday, visit the latest edition of BizTimes Around Town.