Fred Hochberg is chairman and president of the Export-Import Bank of the United States and bullish on Wichita’s general aviation.
The federal agency, which helps finance the sale of U.S. exports, has helped Wichita’s industry to compete and sell airplanes overseas. He wants that to continue.
The climate to obtain private financing for airplanes became more difficult during the U.S. recession and the economic downturn overseas.
“We fill in the gap,” Hochberg said.
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In the past two years, the Ex-Im Bank has supported $152 million in financing for airplanes built by Wichita planemakers, Hochberg said.
In all, the agency provided more than $1 billion in the financing of business aircraft and helicopters built in the U.S. since the beginning of fiscal year 2012.
A traditional bank will make the loan to the customer, and the Ex-Im Bank guarantees the principal and interest. That induces banks to lend money.
“All of a sudden, the bank is making the loan, and it’s 100 percent guaranteed,” Hochberg said.
President Obama named Hochberg to his current position in 2009.
The bank is currently focusing on developing new markets for U.S. goods and services in emerging economies that want to grow their infrastructure – places like Mexico, Brazil, Colombia, Turkey, India, Indonesia, Vietnam, Nigeria and South Africa.
Hochberg also wants to expand the global footprint of key domestic industries in the U.S., such as renewable energy, construction, farm machinery, medical technology, agriculture and avionics.
In 2012, the Ex-Im bank’s financing reached a record $35.7 billion, supported $50 billion in exports and roughly 255,000 export-related jobs at 3,400 U.S. companies, according to the bank.
Small business financing rose more than 70 percent to $6.1 billion.
Hochberg, 62, grew up outside Mount Vernon, N.Y., and earned a degree in art history from New York University. He also holds a master’s of business administration from Columbia University.
After college, Hochberg joined the family business, catalog retailer Lillian Vernon Corp., started by his mother, Lillian.
Hochberg began in its marketing department and eventually served as the company’s president and chief operating officer. He helped transform it from a company with $4 million and $5 million in sales to a publicly traded company with about $200 million in sales at the time of his departure, Hochberg said.
Hochberg worked on President Bill Clinton’s campaign and in 1998 joined the administration as deputy, then acting administrator of the Small Business Administration.
He is a past board member of the Port Authority of New York and New Jersey, the Citizens Budget Commission and FINCA International Micro Finance.
In his spare time, Hochberg likes to bike, cook and go to the theater.
Q. How has the financing for airplanes changed?
A. A couple of things have really changed since the downturn. Financing is harder to obtain. Before the downturn, about 70 percent of the sales in general aviation were domestic and 30 percent exports. When I talk to Cessna today, it’s exactly flipped. That’s made two things more important: One, there’s more foreign competition, and two, you’ve got to deal with financing issues more. It’s changed the business model.
Q. How do you come in?
A. In the big picture, what we did in Wichita is a perfect example. Certain products have more difficulty getting financed by banks. We fill in the gap when banks aren’t able to (provide financing). Maybe it’s because of their risk profile or maybe they have too much concentration of risk in a certain (area). If one of those companies in Wichita loses a sale, if it’s because they can’t get financing or their competitor has financing and they need a level playing field, that’s where we step in.
Q. Most of your work in the Wichita area has been with Cessna and the former Hawker Beechcraft. How do you help them?
A. We don’t lend them money. We lend money to their customers. So where Cessna is selling airplanes, they compete against Embraer. They compete against Bombardier in Canada. Frequently their competition has financing that comes with the package to purchase the aircraft. We’ve worked with Cessna over the years to make sure when they need it – they don’t always need it – but when they need it, we can provide the buyer with financing.
Q. You’ve financed millions of dollars worth of Wichita-built airplanes.
A. During the crisis, we did more with Cessna. They’ve been able to obtain a little more private sector funding (for customers), which we’re happy about. We want to be there when you can’t find it someplace else. In the United States, it’s not as hard to finance these planes. But in Asia, Africa, Latin America, where they’re less experienced in aviation, it’s still harder to obtain financing. Airplanes costing below $20 million, which a lot of it’s coming out of the Wichita area, are harder to finance.
Q. What’s your biggest challenge?
A. When I joined this administration, we were losing 600,000, 700,000, 800,000 jobs every month. … We’re now adding jobs every month. We’d like to add more. Here at Ex-Im in the most recent year … using the Bureau of Labor Statistics, we supported 205,000 jobs. The biggest challenge is getting more people back to work. What I feel proudest about is supporting jobs through exports and imports.