Foreign Direct Investment

What drives international investment in the United States?

Executives are motivated through their business strategies to complete a location-related objective.  It may be to gain entry into new markets, to gain favorable proximity to a key customer, to find better operating conditions or to access specific work force skills.  The majority of the time it is to gain access to something – talent, customers, technology, logistical advantage or consolidate operations into a central location.
 

"The United States reaffirms our open investment policy, a commitment to treat all investors in a fair and equitable manner under the law...My administration is committed to ensuring that the United States continues to be the most attractive place for businesses to locate, invest, grow and create jobs."
 
     -Barack Obama, President of the United States     


Establishing a New Market Abroad

The typical internationalization process for a company is first to export products to a targeted foreign country (for specific trade statistics between Countries, please visit www.investmentmap.org . Once market penetration and profitability reaches a certain level, the foreign company will consider this new market for additional investment.  The company will then establish a local sales and marketing office and over time may consider local production in order to lower costs and better adapt its products for the local market. 

After the foreign company has determined that the Chicago metro area (which includes Racine County, WI one-hour north of the city) is proving successful for the company’s products, the Racine County Economic Development Corporation staff can help with questions about market assessments, distributors, pricing of your product, land and building searches, tax information and incentives just to name a few—we can help you navigate through all of the resources.


According to the US Department of Commerce, Economics and Statistics Administration, a significant portion of foreign direct investment in the US is invested in the manufacturing sector. In 2011, $84 billion of FDI, or 41% of total FDI, was spent on the manufacturing sector. Within the manufacturing sector, nearly 60% of the $84 billion in foreign direct investment was in chemicals in 2011, followed by a 6% share in primary and fabricated metals. Wholesale trade also attracted considerable foreign direct investment in 2011 at $34 billion and depository institutes and retail trade investment each more than doubled between 2010 and 2011 at 141% and 135% respectively.

Please view the February 2013 Foreign Direct Investment in the United States Report for further information.

In 2010, 84% of FDI into the United States came from firms based in eight countries: Switzerland, which invested the most, followed by the United Kingdom, Japan, France, Germany, Luxembourg, the

Netherlands and Canada. In addition, 6 percent came from other European countries and 10% from other countries/regions such as the Caribbean, Brazil, Australia, Currently, the vast majority of FDI into the US comes from a relatively small set of countries.  For more detailed information, please visit the following link.

In 2011 a number of countries dramatically increased their US investments, including Norway with an investment growth rate of 1900% between 2010 and 2011 and Italy increasing their investment growth rate of more than 440% between 2010 and 2011. 

European region remains the largest investor in the US, representing 65% of the foreign direct investment in 2011. The US remains the number one destination for foreign investment.

For an analysis of Foreign Direct Investment by Metropolitan Region - select the following link.



US manufacturing remains the dominant industrial sector for foreign firms.  Manufacturing industry investment totaled $84 billion in 2011 with wholesale at $34 billion and depository institutions and retail trade investment up 141% and 135% respectively.  Within the manufacturing sector, nearly 60% of the $84 billion in foreign direct investment was in chemicals in 2011, followed by a 6% share in primary and fabricated metals. 

According to the US Bureau of Economic Analysis, the foreign owned companies in the US employ 5.7 million US workers, including more than two million employees in the manufacturing sector.


Below is a list of international manufacturing companies with operations in Racine County:

Company Name Investing Country
Air Liquide America Corp France
Saint Gobain Containers France
SCA Packing North America Sweden
Nestle USA Switzerland
Daniels Sharpsmart Australia
Dremel Germany
CNH Italy
BRP US Canada
Leman USA Denmark
Poclain Hydralics France
Bosch Rexroth Corp Germany
Putzmeister America China
Seda S.P.A. Italy
Bonetti Steel Italy
Cordstrap Netherlands
Nimco Controls Sweden

Articles of Interest

Driving German FDI – the U.S. as a Manufacturing & Distribution Hub, and an Export Platform (see excerpt below):

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.


Link to complete article

 

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