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Blog Category: Foreign Direct Investment

Assess Costs Everywhere – Now Even Better!

Under Secretary Doms (far right), leads a panel discussion with Chief Economist Sue Helper (from left to right), Hal Sirkin, Managing Director, Boston Consulting Group, and Katy George, Director, McKinsey & Co.

Guest blog post by Mark Doms, Under Secretary for Economic Affairs

Where to locate your business or a new facility for your business is a complicated decision. Many variables are involved, and if you are considering a location outside of the U.S., there are many factors that may not be obvious. At Commerce, we have been focused on making this decision and all of its moving parts easier to digest, and a major part of that is Commerce’s ACE Tool.

First released in April 2013, the Assess Costs Everywhere (ACE) tool outlines the wide range of costs and risks associated with offshore production, and provides links to important public and private resources, so that firms can more accurately assess the total cost of operating overseas.

Today we have updated the data and deepened the analysis, but the original conclusions remain as fresh as ever. Multiple costs and risks--some visible and some hidden--accompany firms' decisions about where to set up a factory and the supply chain.

I have had the pleasure of meeting frequently with business owners from across the country. They talk about where their challenges are in growing and sustaining their businesses, and they also talk about how locating production abroad hasn’t always turned out as well as they had hoped. Not surprisingly, during our current economic recovery and expansion, news reports and private consultants have repeatedly echoed that thinking. Increasingly we hear that U.S. companies that previously took their operations or supply chains overseas are now reshoring, or insourcing, bringing operations and supply chains back home to America.

The ACE Tool is intended to help businesses think through this complicated decision, and provide easy access to innovative research and thinking on issues related to site selection and supply chains. The ACE Tool is grounded in the forward-thinking work of Harry Moser of ReshoreNow.org and Rep. Frank Wolf, who called on Commerce to bring this effort to fruition. The Department of Commerce developed ACE in response to Rep. Wolf's call to help achieve our shared goals of boosting U.S. economic growth and ensuring that America remains competitive in manufacturing.

ACE explores 10 costs and risks:

Join us for the SelectUSA Summer Forum

On June 17th at the Capitol Visitor Center Congressional Auditorium in Washington, D.C.

Announcing the "Reinvesting in America, Creating Jobs at Home" SelectUSA Summer Forum on June 17th at the Capitol Visitor Center Congressional Auditorium.

From large multinational corporations to family-owned small businesses, U.S. firms are discovering that bringing manufacturing or services back to the United States makes economic sense.

Join us to learn about the latest trends, discover resources to help businesses make the move, and hear directly from companies that have reshored successfully. NOTE: This event is FREE but only registered individuals will be admitted to the event.

See the agenda and sign up today!

Driving German FDI – the U.S. as a Manufacturing & Distribution Hub, and an Export Platform

Inward foreign direct investment (FDI) stock totaled $2.7 trillion in 2012, a 6 percent increase from the prior year, which equals the average annual growth rate between 2001-2011.

Guest blog post by Amy Zecha, International Investment Specialist with SelectUSA. Her portfolio covers Central and Eastern Europe, including Germany. 

SelectUSA just finished another successful event at the Hannover Messe manufacturing trade fair – the largest in the world – and now we’re gearing up for another big event in Germany.  In September, we’ll be participating in Automechanika, a global trade show for the automotive industry.  We hope you’ll join us!

It’s been a great couple of months for German investment in the United States, and we’ve had some exciting news in the auto industry.  In a post last month, ITA’s Tradeology blog highlighted some impressive figures – including the 115% growth in U.S. auto exports of passenger vehicles between 2009 and 2013.

It is therefore no surprise to see international automakers – such as Germany’s BMW – continue to grow their U.S. manufacturing operations. At the end of March, Commerce Secretary Penny Pritzker joined BMW officials and others in Spartanburg, SC in celebrating the start of production of the X4 – and the announcement of the brand new X7. The addition of this model line will make Spartanburg BMW’s largest manufacturing facility in the world.

BMW, as a business, knows the value of manufacturing in the United States, and also the advantages of using the U.S. as an export platform. Today, BMW is one of the top auto exporters in the United States. More than half of all the cars produced by BMW at their Spartanburg plant are shipped to other markets beyond our borders. BMW has clearly harnessed the power of U.S. manufacturing and successfully coupled it with the export opportunities offered by U.S. trade agreements to maximize the potential of their U.S. operations.

This is just one case study of German success in the U.S. market. Success comes in many sizes - sometimes it's the small or medium-sized enterprise (SME) that makes the commitment to the United States, like PTF Pfuller, a manufacturer of precision parts and assemblies for the semiconductor, food, medical technology, laser and aerospace industries. The CEO, Mr. Oliver Zintl spent two years working with Jenny Trick of Racine County Economic Development Corporation, after an initial meeting at the USA Investment Center organized by SelectUSA and CS Germany at Hannover Messe 2011. PTF established its U.S. division in Sturtevant, Wisconsin in August 2013 with initial plans to start with a small sales staff – but then noted the potential to add manufacturing and a distribution center within five years, creating at least 50 jobs. PTF cited the tremendous work of Racine County and Milwaukee 7 (a regional economic development organization), as well as the central location, access to existing customers in the region, and the quality of the Gateway Technical College – which offers the potential for a nearby source of talent for the company.

U.S. Secretary of Commerce Penny Pritzker Celebrates BMW’s Investment in U.S. Manufacturing

Secretary Pritzker Speaks with Workers While Touring the BMW Facilities in Spartanburg, South Carolina

Foreign direct investment (FDI) fuels U.S. economic growth and creates good, high-paying jobs, which is why the Commerce Department is so focused on attracting more FDI to the United States. At an event today at the BMW manufacturing facility in Spartanburg, South Carolina, U.S. Secretary of Commerce Penny Pritzker applauded the German automaker for announcing an investment of approximately $1 billion in a new X7 production line at the plant.

BMW’s announcement, which is expected to create 800 new jobs by 2016, builds upon the company’s substantial commitment to production in the United States. BMW has made investments of $6.3 billion since coming to South Carolina in 1992. In 2012, the company announced that it would be expanding its Spartanburg facility to make it the largest plant in the BMW Group production network, a move that is expected to bring 1,000 new jobs to South Carolina by the end of 2014.

Secretary Pritzker delivered remarks at the announcement, focusing on the importance of FDI to the U.S. economy and job creation. The United States is both the largest recipient and source of FDI in the world. As of 2011, the most recent data available, majority-owned subsidiaries of multinational firms with U.S. operations employ more than 5.6 million workers and pay an average annual compensation of $77,600. These firms also spent more than $45 billion in R&D in the United States and accounted for 20.5 percent of U.S. goods exported in 2011. Through the SelectUSA program, which Secretary Pritzker described in her remarks, the Department of Commerce is working to attract increased investment to the United States.

U.S. Secretary of Commerce Penny Pritzker Visits iwis Motorsystems in Munich, Germany

Secretary Pritzker poses with members of iwis Motorsystems after a tour of the facilities

On her visit to Munich today, U.S. Secretary of Commerce Secretary Pritzker toured iwis Motorsystems, a family-owned company that is making investments and creating jobs in the United States. One key aspect of U.S. Secretary of Commerce Penny Pritzker’s “Open for Business Agenda” is the importance of attracting foreign direct investment (FDI) to the United States. A report recently released by the Department of Commerce and the Council of Economic Advisors found that foreign-owned companies employ 5.6 million people in the United States, so it is clear that FDI is a major driver to job creation and economic growth.

A “Mittelstand” (medium-sized) company, iwis is a leading supplier of automotive products used in a vast array of engines and vehicles, and has growing investments in the United States. The company has a production facility in Indianapolis, Indiana, and a subsidiary, iwis engine systems, in Troy, Michigan. Additionally, operations have recently begun at a new facility in Murray, Kentucky, to produce timing drive systems. This latest facility accounts for a $12.5 million investment and, when fully operational, will employ 75 people.

The Commerce Department’s SelectUSA program is working to attract even more of these job-creating investments. German firms like iwis are poised to make an even bigger impact in the United States – Germany sent one of the largest delegations to the SelectUSA Summit that President Obama and Secretary Pritzker hosted on Octover 31 – November 1. For 2012, FDI from Germany totaled more than $272 billion.

Commerce and President's Council of Economic Advisors Release Report on Economic Benefits of Foreign Direct Investment

SelectUSA logo

A new report from the U.S. Commerce Department and the President's Council of Economic Advisors spotlights the array of factors that have made the U.S. the destination of choice for foreign direct investment (FDI). The joint report, released at the inaugural SelectUSA 2013 Investment Summit, also documents the positive impact FDI is having on the U.S. economy, including job creation, higher research and development spending and export growth.

The U.S. is the largest recipient of FDI in the world, with stock of more than $2.6 trillion dollars–including $166 billion that flowed into the country in 2012. Moreover, companies around the world now consider the U.S. to be the nation with the top FDI prospects globally.

The United States has been the world’s largest recipient of foreign direct investment (FDI) since 2006. Every day, foreign companies establish new operations in the United States or provide additional capital to established businesses. With the world’s largest consumer market, skilled and productive workers, a highly innovative environment, appropriate legal protections, a predictable regulatory environment, and a growing energy sector, the United States offers an attractive investment climate for firms across the globe.

Acting Secretary Blank Speaks With Council of Foreign Relations on Increasing the Level of Business Investment in the U.S.

Acting U.S. Commerce Secretary Rebecca Blank Answers Questions After Her Remarks at the Council on Foreign Relations

This afternoon, Acting U.S. Commerce Secretary Rebecca Blank spoke before the Council on Foreign Relations about the Obama administration's initiatives to help businesses expand their investment in the United States and bring jobs back home. The Commerce Department works to attract investment across all sectors, but in her remarks Blank focused on manufacturing because that sector has added more than half-a-million new jobs since 2009, compared to the previous decade in which six million manufacturing jobs were lost. In addition after decades of watching American companies take jobs to other countries, more and more manufacturers are making the decision to keep factories and production facilities here in the United States and are bringing jobs back to the U.S. from overseas through insourcing.

Blank mentioned that the renewal of the manufacturing sector is driven by America’s quality infrastructure, skilled labor, and advanced research and innovation that are critical for manufacturers to thrive. Business leaders list a number of reasons why the U.S. looks so attractive to them right now, including the fact that domestic energy production is lowering the cost of oil and natural gas needed in manufacturing. A second reason for investing in the U.S. is a competitive edge in labor productivity. America’s manufacturing workers now produce about nine percent more each hour than they did in 2008.

Blank noted that the list of reasons that CEOs give for investing here is longer still. America has a strong rule of law and a good regulatory environment. Additionally, the U.S. has the strongest level of intellectual property protection–and our patent system is only getting better due to the 2011 passage and implementation of the America Invents Act. America has the best universities in the world, producing graduates that drive entrepreneurship and feed innovation into our private sector.

Commerce Secretary John Bryson Visits Manufacturers in Tennessee

Secretary Bryson cuts ribbon at new Whirlpool manufacturing facility in Cleveland, TN

Today, U.S. Commerce Secretary John Bryson traveled to Cleveland, Tennessee, where he visited the Whirlpool Corporation for a ribbon cutting ceremony for their new, one-million square foot manufacturing facility. The $200 million factory is the largest premium cooking product manufacturing and distribution facility in the world, exemplifying the Secretary’s mission to help U.S. business build it here and sell it everywhere. The opening of the facility marked 100 years of Whirlpool manufacturing Made-in-America products.

While in Tennessee, the Secretary also made a stop in Chattanooga to visit the Volkswagen manufacturing plant, which builds the 2012 Passat. Volkswagen recently announced that they were adding a third shift to the operation at their Chattanooga plant in response to increased consumer demand, which will create over 700 additional jobs. This development is just one more example of the continued resurgence of the American manufacturing industry.

In fact, today, the Economics and Statistics Administration highlighted data showing that automakers are contributing heavily to the success of American manufacturing. The report finds that auto sales are at the highest level since the first quarter of 2008.

Promoting Best Practices in Exports and Foreign Direct Investment to Spur Economic and Job Growth

Promoting Best Practices in Exports and Foreign Direct Investment to Spur Economic and Job Growth

When President Obama first announced the National Export Initiative (NEI) two years ago—with its goal of doubling U.S. exports by the end of 2014—there may have been some who wondered what this had to do with domestic economic development. But the answer is simple: a lot. From the worker in an auto plant owned by a foreign firm, to the many service businesses across the country selling to overseas visitors, to the U.S. companies from every sector selling their products and services to foreign buyers, America’s economic vitality is very much tied to the world market. And the benefits are many: more jobs, higher wages, and the overall prosperity that comes when we are selling to billions of consumers worldwide.

One often-overlooked element of international trade is foreign direct investment (FDI). The United States is the largest recipient of FDI in the world. Foreign-owned companies operating in the United States support more than 5.3 million U.S. jobs, and U.S. subsidiaries of foreign-owned firms account for 21 percent of U.S. exports. The total stock of FDI in the United States—$2.3 trillion—is equivalent to nearly 18 percent of U.S. gross domestic product.

But there is room for such investment to grow: the U.S. share of world FDI has been declining since the 1990s, as other economies aggressively compete to attract such investment. One impediment to FDI growth in the United States has been the lack of concrete tools and strategies available to local economic development practitioners that could help them more effectively leverage their communities’ competitive strengths to expand exports and attract FDI.

Secretary Bryson Encourages State Governors to Use SelectUSA and Attend SelectUSA Investment Summit

SelectUSA logo

Prior to President Obama attending the Democratic Governors Association Meeting, Secretary John Bryson addressed the assembled governors to discuss how the Commerce Department is working across the federal government to make every federal tool available to promote “insourcing” by U.S. companies and to attract more foreign direct investment.

Secretary Bryson reiterated the key advantages America has over foreign competitors. For example, the American workforce is among the most productive in the world. He also discussed how America continues to have the best universities, the strongest sources of R&D and manufacturing innovation, excellent supply chains, and the strongest IP protections.  He also noted that foreign direct investment rose nearly 50 percent from 2009 to 2010.

Bryson then emphasized that through SelectUSA, the Commerce Department wants to partner with more states to attract even more foreign direct investment to the U.S. SelectUSA is the first coordinated federal effort to aggressively pursue and win new business investments in the U.S. It will help investors navigate our rules and procedures and will help advocate for the U.S. when foreign businesses are deciding where to put their next facility and create jobs.

SelectUSA is already working with some city and state economic development organizations to produce results. Bryson personally invited the governors and their top economic officials to attend the 1st annual SelectUSA Investment Summit later this year. The Commerce Department will assemble companies from around the world and it will provide an excellent opportunity for states to explain why they are the best place to invest and to hire.