Congress-backed bank agrees to approve $600M in loan guarantees stemming from Bucyrus deal

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Congress-backed bank reaches deal in Bucyrus sale

RACINE, Wis. — Word of a deal that could save 1,000 jobs across 13 states, including 300 in Wisconsin, broke Wednesday just hours before President Barack Obama spoke about the economy at a town hall meeting.

Democrats who were pressuring the White House to intervene on behalf of Bucyrus International Inc., a South Milwaukee manufacturer, praised the decision by the U.S. Export-Import Bank to reconsider a vote that effectively killed the project. The bank cited environmental concerns last week when it voted to deny loan guarantees to Reliance Power Inc., which is building a coal-fired power plant in India.

Without those guarantees, Bucyrus would lose its $600 million contract with Reliance for mining equipment, which the Wisconsin company said would jeopardize 1,000 jobs both at its main plant in Wisconsin and at suppliers across the country.

The issue was a hot political one for Obama, who held a town hall meeting on the economy in Racine, a city 15 miles south of Bucyrus headquarters that’s suffering under 14.2 percent unemployment. A Republican candidate for governor, Scott Walker, took out a full page ad in the The Journal Times newspaper of Racine blaming “radical environmental policies” for putting the Bucyrus deal at risk.

Democrats and Republicans alike urged reconsideration of the vote, arguing that the Indian company would turn to other suppliers outside the U.S. if the loan guarantees weren’t made.

Both Democratic Gov. Jim Doyle and Milwaukee Mayor Tom Barrett, who is the only major Democratic candidate governor, said they personally thanked Obama before the town hall for the bank’s decision to reconsider the issue. Barrett said he didn’t think Obama got personally involved but White House officials had been working with the bank.

“I’m very excited they reversed their decision,” Barrett said.

Doyle said the agreement “will support good manufacturing jobs at Bucyrus and clean energy jobs, both of which are critical to driving our economic recovery.”

Obama did not mention Bucyrus during his 70-minute town hall visit.

News of a deal broke Wednesday morning just before Obama landed in Milwaukee.

Bucyrus chief executive Tim Sullivan said in a statement that he spoke with the bank’s chairman, Fred Hochberg, who told him the bank now has a broader understanding of Reliance Power’s development of other renewable power, calming concerns about the environmental impact of building the coal plant.

Sullivan said Hochberg committed to an expedited review and approval of the loan guarantees.

Hochberg issued a statement saying the bank tries to balance jobs and the environmental impact of the projects it supports.

“We are pleased that Reliance has submitted new information about its renewable energy plans that allows us to continue a dialogue aimed at sustaining U.S. jobs and promoting renewable exports,” the statement said.

The plant is under construction in Sasan, in central India, and is scheduled to be up and running in 2012.

The fossil fuel project was the first to come before the government-run bank since it adopted a climate-change policy to settle a lawsuit and to meet Obama administration directives.

Online:

Bucyrus International: bucyrus.com/