Ex-Im Bank to step up support for space industry challenged by Chinese competitors
WASHINGTON — The Export-Import Bank of the United States is reaching out to the space industry and offering to help exporters take on Chinese competitors, officials said July 9.
U.S. companies in the space sector face tough competition from Chinese government-backed companies and the Ex-Im Bank now has a mandate from Congress to help level the playing field, David Trulio, a bank senior vice president said at a virtual forum hosted by Ex-Im.
Trulio, a former Defense Department official, runs Ex-Im’s “Program on China and Transformational Exports.” The program was directed by Congress when it signed a seven-year re-authorization for Ex-Im on December 20, 2019.
‘It’s a crucial mandate that we’re working to operationalize,” said Trulio. The program extends loans to foreign buyers of U.S. goods and services. The law says that loan rates and terms must be competitive with those offered by the People’s Republic of China.
Congress charged Ex-Im to set aside at least 20 percent of the agency’s financing authority — $27 billion out of a total of $135 billion — for this program. Space is one of several industries that were identified as being challenged by Chinese competition.
Kimberly Reed, Ex-Im’s president and chairman, said the staff that works with the space industry is trying to get back on track after the bank was largely shuttered for four years due to the lack of congressional authorization from 2015 until the bill was signed in December 2019.
During those four years the bank lacked authority to make loans above $10 million, which severely limited its ability to finance satellite deals.
Judith Pryor, board member of Ex-Im, said that in the decade prior to the lapse of the bank’s charter, it had provided $5 billion in financing to buyers of U.S. satellite and launch services. “It would have been more had the bank not lost its authorization,” Pryor said.
In 2020, Ex-Im is finding that the commercial space landscape has dramatically changed. “We have seen an uptick in non-geostationary satellite requests,” said Pryor. There is a higher demand for financing for low Earth orbit satellites, especially for earth observation and remote sensing, as well as for in-orbit servicing and even space tourism.
Selling services, not hardware
Companies that provide earth imaging data and analytics services are increasingly facing cutthroat competition from Chinese firms, said Robbie Schingler, co-founder and chief strategy officer of Planet, a company that operates the world’s largest constellation of earth observation satellites.
“There is a massive market opportunity to get contracts with governments around the world,” Schingler said. “But we run into challenges with predatory pricing by Chinese backed companies.”
He said Planet would consider seeking Ex-Im’s help. “There are Chinese companies going after the same products and services we’ve been offering for the last few years,” said Schingler. He would like Ex-Im to help finance purchases of data subscriptions, a service that is provided with space technology but is not the same as selling hardware.
John Serafini, CEO of Hawkeye 360, said his company would like to see Ex-Im help ease the export licensing process.
Hawkeye 360 operates a constellation of satellites that track and analyze radio-frequency signals. The data is turned into intelligence reports.
“There has to be a level playing field,” he said. “U.S. companies can’t export certain capabilities that are available from international competitors.”
Paul Estey, executive vice president and chief operating officer of Maxar, said Ex-Im should reconsider how it views “U.S. content requirements.”
Maxar, which manufactures and exports satellites, uses foreign suppliers for some components. Estey argued that even if a Maxar-made satellite has some foreign components, it should be viewed as a U.S. product.
“Maxar would like the bank to allow flexibility in U.S. content requirements,” he said. “Other export credit agencies tend to look at the net benefits to the home country rather than define a strict content limit.”
Ex-Im also should be allowed to finance foreign launches for U.S. supplied satellites, he said, “so our customers have a one-stop shop for financing.”
China Great Wall Industry Corporation has emerged as a strong competitor in the satellite marketplace, said Estey. “They offer attractive financing that generally includes full financing of the satellite and associated ground equipment, launch and insurance,” he said. “In some deals they allow the satellite operator to repay a 10-plus year loan one or two years after the satellite is launched and starts to generate revenue.”
Stephanie Bednarek, director of commercial sales at SpaceX, said the company competes frequently with Chinese-backed launch companies.
“It’s fair to say that SpaceX may view Ex-Im as an extension of our sales force and an asset that’s really critical to help us win international business,” she said.
Bednarek said Ex-Im could also assist U.S. launch providers by helping foreign satellite operators understand how to use Ex-Im as many tend to be skeptical because they are unfamiliar with how it works.