UEDA Summit 2012: Assets and Costs Everywhere, Grow Investment Here (Moudry & Velasquez)
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There has been positive news recently about reshoring and the accompanying expansion of American jobs. In order to support this trend, economic developers must be fluent in the diverse costs and other risks companies need to assess when deciding where to produce, source, or locate. SelectUSA, the federal initiative to promote investment in the United States, will lead a discussion with University-Economic Development partners to highlight important considerations for companies in deciding whether to locate, expand, or return to the U.S. Additionally, the Trade Adjustment Assistance for Firms program is another resource available to businesses seeking to regain their competitiveness against foreign-owned companies. Local economic developers interested in supporting their manufacturing base can assist local firms to access this federal program which offers a multitude of options including investment strategies intending to sustain and expand the U.S. job base.
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UEDA Summit 2012: Assets and Costs Everywhere, Grow Investment Here (Moudry & Velasquez)
- 1. SelectUSA: Your Federal Partner to Attract, Retain, and Expand Investment UEDA Annual Summit October 23, 2012 Rebecca Moudry Manager, SelectUSA 1 www.SelectUSA.gov
- 2. SelectUSA: Promoting Investment in the United States • SelectUSA Mission: to facilitate business investment in the United States in order to support job creation, spur economic growth, and promote American competitiveness. • Primary U.S. government-wide initiative to promote and facilitate business investment in the United States • Housed in the International Trade Administration at the U.S. Department of Commerce - leverages staff in 72 markets around the world • Geographically neutral in the United States www.SelectUSA.gov 2
- 3. FDI and the U.S. Economy $227 billion Size of FDI Flows into the U.S. in 2011 Workers Employed by U.S. Affiliates of Foreign 5.3 million Firms in the U.S. in 2010 U.S. Affiliates of Foreign Firms on average Pay 33% 33% More than the economy-wide average in 2009 17% Percent of U.S. Manufacturing jobs from U.S. Affiliated of Foreign Firms in the U.S. in 2010 $41 billion Amount U.S. Affiliates of Foreign Firms spent on R&D in the U.S. in 2010 18% Percent of all U.S. exports come from U.S. affiliates of foreign firms in 2010 Source: Bureau of Economic Analysis © International Trade Administration 2012 3 www.SelectUSA.gov
- 4. U.S. FDI Trends Share of Global FDI Flows Captured by the United States Source: UN Conference on Trade and Development (UNCTAD) © International Trade Administration 2012 www.SelectUSA.gov 4
- 5. U.S. FDI Trends Figures in USD Millions Source: Bureau of Economic Analysis © International Trade Administration 2012 5 www.SelectUSA.gov
- 6. U.S. FDI Source Markets & Growth Fastest Growing Sources of FDI in the United States, Largest Sources of FDI in the United States by Compound Annual Growth Rate by 2011 FDI Total Stock (2006-2011) Total Stock Total Stock in U.S. Total Stock in Country Growth Rank Billion USD Country Growth Rate U.S. Rank Billion USD 1 United Kingdom 527.8 1 Israel 78.59% 26.8 2 Japan 293.8 2 China 71.25% 9.5 3 Germany 265.4 3 New Zealand 56.14% 6 4 Canada 244.6 4 India 40.81% 9.8 5 France 201.9 5 Ireland 38.58% 98.1 6 Netherlands 132.5 6 Belgium 33.40% 53.1 7 Switzerland 126.1 7 Singapore 28.84% 22.4 8 Ireland 98.2 8 Spain 25.57% 48 United Arab 9 Australia 58.6 9 23.38% Emirates 17.4 10 Belgium 53.1 10 Norway 22.4 29.1 Note: Numbers denote 5 year compound annual growth rate (2007-2011) of the stock FDI position and the total stock of FDI in the United States Source: Department of Commerce, Bureau of Economic Analysis – FDI by Ultimate Beneficiary Owner © International Trade Administration 2012 6 www.SelectUSA.gov
- 7. Investment Motives & Determinants Shifts in Global Company Motives for Investing in the United States © International Trade Administration 2012 7 Source: FDI Markets www.SelectUSA.gov
- 8. University – Led Investment Isofoton (Spain) + University of Toledo •Solar module assembly plant in Napolean, Ohio •$30 million investment, anticipates 120 new hires •Has an R&D and economic cooperation agreement with the University of Toledo. Honam Petrochemical (South Korea) + Auburn University •Manufacturing facility for polypropylene resin materials in Auburn, Alabama •$9.25 million initial investment, 40 new jobs •Relationship with Engineering School at Auburn University – R&D projects and opportunities for students 8 www.SelectUSA.gov
- 9. SelectUSA Can Help Business Solutions: Help identify federal programs and services available to firms, provide information and establish connections. Ombudsman Assistance: Address questions involving Federal regulations or programs, or activities related to investment Economic Development Organization Counseling: As subject-Matter experts, SelectUSA staff can help recruit and retain investment Advocacy for U.S. Cities, States and Regions: SelectUSA helps level the playing field for U.S. EDOs competing with foreign locations Investment Events and Facilitated Missions: Leverage the Foreign Commercial Service network across 72 countries 9 www.SelectUSA.gov
- 10. Building A Solid Investment Strategy 1. Build on existing relationships, expand your networks 2. Be realistic and specific about opportunities 3. Prioritize Potential & Existing Investor Care 4. Leverage partners/resources to reach potential investors and demonstrate leadership 10 www.SelectUSA.gov
- 11. Help U.S. EDOs in FDI Promotion Single Location Promotion (SLP) Tailor-made events developed collaboratively, promoting individual U.S. jurisdictions as FDI destinations. For Example: • Promotion event for State of Louisiana (e.g. presentation by FDI practitioners or a match-making reception) • One-on-one meetings between Louisiana and Chinese government representatives • Meetings with Chinese companies that Louisiana has identified SHANGH AI www.SelectUSA.gov 11
- 12. Upcoming Events 12 www.SelectUSA.gov
- 13. Thank You Rebecca Moudry Manager, SelectUSA U.S. Department of Commerce Tel: 202-482-2612 Rebecca.Moudry@trade.gov www.SelectUSA.gov 13 www.SelectUSA.gov
- 15. Southwest Trade Adjustment Assistance Center • Trade Act of 1974 • Funded by the Economic Development Administration, U.S. Dept. of Commerce • Employees of The University of Texas at San Antonio • 11 TAAC offices nationwide • SWTAAC territory: Texas, Oklahoma, and Louisiana
- 16. Program Objective • To assist U.S. manufacturing and service firms hurt by foreign investment to regain profitable growth by providing outside consulting services • Consulting services can be provided in the areas of: - Marketing - Manufacturing - Engineering - Finance - Employee Training - And other areas - New Product Development - Information Management Systems
- 17. What is the Cost Share for the Company? • Cost-Share Categories – Up to $30,000 • Client pays 25% of all projects incurred • SWTAAC pays 75% of all projects incurred – Up to $150,000 • Client pays 50% of all projects incurred • SWTAAC pays 50% of all projects incurred
- 18. Examples of Eligible Consulting Projects • Website Development • MIS Updates • Quality Systems (ISOs, Six Sigma) • Safety Consulting and Training • Other Training (Software, Trade Specific, Office Skills, etc.) • Lean Manufacturing • Supply Chain Solutions • Industrial Marketing & Market Research
- 19. Program Phases 1. Certification • No cost to company 2. Diagnostic Analysis/Adjustment Proposal • Company is responsible for 25% of diagnostic costs – Estimated between $1,200 to $1,900 1. Project Implementation • Company is responsible for 25% up to 50% of the project costs
- 20. GAO ANALYSIS • Participating Firms Sales Rose 3 – 6% Annually • Participating Firms Had 4% annual Increases in Productivity • Participating Firms Performed Higher in Growing Markets – Suggests Ability to Leverage Market Expansion
- 21. GAO ANALYSIS • 75% of Firms Surveyed Were Very Satisfied with Participation in TAAF Program • 73% of Firms Surveyed Reported TAAF Can Be Associated with Increased Profitability •57% of Firms Surveyed Reported TAAF Aided in Hiring Additional Employees
- 22. EFFECTIVENESS REPORT • Over 77,000 jobs Impacted Nationally • EDA Investment $925/job • ROI over 1,300% • Participating Firms Reported $3.4 Billion Increase in Sales • Participating Firms Reported 3,100 New Jobs
- 23. Thank You! For more information, please contact: Robert Velasquez Director (800) 344-8872 All companies are exempt from the Freedom of Information Act.
Notes de l'éditeur
- Today I will provide a quick overview of SelectUSA and provide some information on the importance of FDI in the United States, and the link between economic development and workforce development and how we can be a partner in your work.
- Established by executive order in 2011, promoting and facilitating investment in the United States is a priority for the administration. SelectUSA is the lead initiative for that function. SelectUSA works in the strategic area inherent to the Federal Government. U.S. EDOs and companies, both domestic and foreign, depend on SelectUSA for specific federal functions. None of SelectUSA’s functions duplicate existing USG functions, nor do they compete with U.S. EDOs’ own efforts. SelectUSA is the primary USG-wide initiative to support business investment in the United States Works across all agencies to address to investor/EDO inquiries Housed in the U.S. and Foreign Commercial Service within International Trade Administration at the Department of Commerce Geographically neutral in the United States SelectUSA functions: Information assistance for the global investment community Ombudsman for investors Advocate to investors on behalf of U.S. cities, states, and regions The order also set up the IIWG to work with agencies across the Federal Government to promote investment and address policy issues
- Business investment by both domestic and foreign firms leads to economic growth by impacting U.S. jobs and exports. - Foreign investment plays an important role in the U.S. economy: in 2011, the United States attracted $227 billion in foreign direct investment flows. This is more than any single country in the world. Being in Washington, DC these days I hear a lot about jobs, and these firms create over 5 million jobs for U.S. workers. These are good paying jobs, and pay on-average about 33% more than the economy-wide average. Also, 17% of our manufacturing jobs are from affiliates of foreign firms. Provide approximately two million manufacturing jobs, accounting for over 17 percent of America's manufacturing workforce. They contribute 41 billion, or about 14 percent of all R&D performed by U.S. companies. Significantly, these firms account for nearly one-fifth of the total exports from the U.S. Buy more than $1.8 trillion in goods and services from local suppliers and small businesses, amounting to 80 cents for every dollar spent of their total input purchases.
- The United States continues to be the largest recipient of FDI in the world, followed by China, United Kingdom, France, and Germany, respectively. In the last three decades, the worldwide stock of FDI has grown from $700 million in 1980 to $20.4 trillion in 2010. However, the competition to attract, retain, and grow business investment is increasing. While overall, the United States is the largest recipient of FDI, the overall trend indicates that it receives a decreasing share of a growing pie. In the 1980s, the United States captured nearly 45 percent of all global FDI. By the 1990s, the U.S. share accounted for close to 25 percent of total FDI. Today, our share is less than 15 percent. United National Conference on Trade and Development (UNCTD) The bottom line is that multinational enterprises have many choices when it comes to business location. Other markets have aggressive national-level outfits that engage these companies and attract them to their economies. The United States must engage with these firms to communicate that it remains the world’s largest, most stable market with incomparable advantages for a multinational firm.
- While the United States has contributed significantly to the total rise in FDI (America is the largest source of outbound FDI into the world, with nearly $4.2 trillion invested by U.S. firms across the world), we have taken our leadership position for granted in attracting global firms to invest in the United States. We are both the largest recipient of FDI as well as the largest source. The red line indicates about 2.3 in bound investment and the blue line stock sent overseas. The gap has grown significantly. The federal government must aggressively work to attract, retain, and expand investment in the United States from around the world. U.S. states and regions face unprecedented international competition for FDI. The U.S. government must provide parity to U.S. investment promotion efforts with national-level investment promotion activities of competitor economies. BEA
- Ireland and Belgium here demonstrate both among the largest and the fastest growing source markets. Our largest trading partners are also among the largest source of investment. There is no coincidence. Our top 10 export markets include: Canada Mexico China Japan United Kingdom Germany South Korea Brazil Netherlands Singapore There is often significant focus just on the high-growth market on the right. That can be important if you match with their sectors. But remember not to overlook or neglect the major sources, that are on this top investor list year after year.
- What do companies site as the reason for investing in the U.S.? Reading newspapers, it often sounds as if its mostly about incentives and a race to the bottom. But this data culled from companies who invested in the U.S. in the last 9 years show that incentives are not a primary driver and has become decreasingly important – as you can see from the chart. It fell to being mentioned just about 6% of the time as a motive for investing in the United States. The most important factors continue to be proximity to customers and the growth potential of the U.S. Market. Significantly, we can see that the availability of a skilled workforce has grown to become a critical determinant for company location. That factor grew by nearly 70 percent as a motive for firms to invest in the U.S. from 2003-2006 and 2007 to present. This data point demonstrates that skilled workers in the U.S. are increasingly important to companies and our national competitiveness. This underscores the need for organizations like UEEDA and partnership between economic developers and workforce development practitioners at all levels. At SelectUSA, one of the most important ways we can work with companies is by promoting our talented workers across the country. About the Data: Motives and location determinants provide an indicator as to the factors cited by companies, and their representatives, when announcing or opening a project. Motives are collected directly from the company press releases on the investment project. All of the information tracked on fDi Markets is from company press releases, investment agency newsletters, trade association newswires etc. It is important to note that it is not possible to record motives and determinants for all projects. In many cases, more than one motive or determinants is recorded for a project. 2007-2012: 1,897 Companies 2003-2006: 485
- ISOFOTON is a global company, present in over 60 countries. ISOFOTO ISOFOTON was founded in Málaga (Spain) in 1981 as a spin-off of a university project driven by Professor of the Polytechnic University of Madrid. involved in designing, manufacturing, and supplying Solar Energy products. Business strategy is based on relationships with universities and research institutions The new Ohio plant “is an example of our commitment to the U.S. market, and benefits from the support of key partners, including Samsung, Mercedes AMG, Posco, as well as our highly productive R&D and economic development partnership with the University of Toledo, Ohio,” They are also very committed to the community, and in September held a veterans job-fair. Honame Petrochemical: “ They were satisfied with the overall level of support,” said Phillip Dunlap, economic development director. “There was an existing building here they felt fit their requirements. They also were interested in having a relationship with Auburn University, and they liked the idea of being in a university town.” The new operation is also working on research and development projects with the University and provide opportunities for students.
- Coordinates business investment-related resources across agencies of the U.S. federal government to respond to specific issues and trends that impact the business investment climate. As an ombudsman for U.S. companies, SelectUSA reaches across the U.S. federal government to quickly address investment concerns and find a solution. SelectUSA provides actionable information to foreign firms to help them… Advocacy One way we can uniquely support you is as an advocate when U.S. cities, states, and regions are competing with foreign locations for new FDI. After thoroughly vetting the potential investor, SelectUSA can recommend engagement by a high-level U.S. government official to contact the investor, advocate on behalf of the United States, and offer SelectUSA’s support. The advocacy service provides U.S. EDOs parity when competing for projects that are receiving national-level support from other markets. Requests for advocacy may be initiated by a Governor or Mayor or an EDO. Additionally, even when not requested by an EDO, Governor, or Mayor, and when appropriate, SelectUSA can promote the U.S. business climate to a potential investor.
- SelectUSA can help you develop an investment strategy. A few things to remember when developing an investment strategy: Build on Relationships: First, build on the fantastic relationships you have formed here. We just saw how increasingly important workforce development is to companies. You need to ensure that the workforce development folks are engaged with the economic development folks who are engaged with the industry associations and have ongoing communications with employers, etc.. And, build relationships in your target markets. This is particularly important in countries that have a more centralized system than the U.S. (which is practically everywhere in the world). Also, understand the decision making process for an investor – know what they will look for, their unique set of interests and requirements. It is often the case that if a CEO knows you, trusts you, likes you, then those are the blocks that build a business. A contract may or may not endure, but a relationship will. So start building those relationships immediately. And it is not just business owners that you should get to know by any stretch. Investment decisions happen at different levels in different countries. Often elected officials are involved. So, you should also leverage your partnership with all levels of government here. SelectUSA can be a partner that can help bring you to the table, and you can also bring us to the table if you feel that we can be of assistance. SelectUSA can help make those initial connections through our foreign commercial posts. Working through the FCS can be a good way to introduce yourself, since they are affiliated with the federal government. Sometimes that is a comfortable place to start Be realistic and specific about Opportunities You need to know what you have to offer, what you need, and what will work in your economy. Don’t waste time and resources on going on an investment mission if you don’t clearly know: What your comparative advantages are (globally) - this must be based on real analysis and existing strengths What your REALISTIC target industries are Where investors that match your strengths and targets are, specifically Investors often want specifics about actual businesses’ investment opportunities and real estate projects. It is not uncommon for them to ask for or anticipate information on specific investment target or projects. And don’t just stop at the opportunities. Be ready to walk them through the nuts and bolts of where and how to set up in your community. They may look for a turn-key location, or a location that has very few permitting or other hoops to jump through. Prioritize Investor Care Once you are actively engaged in an investment deal, be prepared and very willing to continue to work closely throughout the entire process to help the company establish. This is part of solidifying and deepening the relationship A big area where you can help, actually right at the beginning, is to explain the need for and useful function of service providers. You should also try to make direct introductions, if possible. For example, there might be an assumption that attorneys are only needed if something goes wrong. Or that accountants are only important at certain times. Explain that working with these professionals from the start is crucial to put the company on the right path and ensure they are following all U.S. laws The basics include providing quick responses to inquiries, develop open communication channels with decision makers, and always check-in with companys before and after investment. Have information available on your website. Financing is something else you can help with. For example, you can help the company get in touch with a bank that also has a branch in their home country so their complete business history can be taken into consideration when financing options are considered. Leverage Partners and resources As you talk with investors, be ready to show that you understand investment, you understand the U.S. economy, and you know all the right people to make their investment successful. For example, an investor may inquire about the EB-5 visa program. Be ready to respond even if that is not the type of investment you seek. SelectUSA receives a lot of questions and has helped a lot of organizations understand EB-5. If this is something you are looking into, let us know. Visas and labor laws are other common topics of interest – be ready with a response and demonstrate leadership. Of course, also know where to get assistance. SelectUSA is available to assist an investor with visa-related questions or concerns. That is one of the many areas where we engage. Leverage your elected officials, and leverage your federal partners How will you connect with new investors? Outreach programs, general or targeted. For example, SelectUSA’s single location Promotion service. How will you succeed overseas without representatives and offices? SelectUSA can connect you with the Foreign Commercial service in potential source markets.
- SelectUSA has the expertise to help EDOs: Develop a data-driven FDI attraction strategy Collaborate within their region Invest in an information-rich website Ensure foreign operations’ productivity through the use of meaningful metrics Secure organizational funding tied to multi-year performance Explore additional measures, including retention and expansion or company partnerships with local universities Single Location Promotion Only Available to EDOs: The SLP program is one of the key ways in which an economic development organization can leverage SelectUSA’s global network. The SLP service is not available to U.S. firms because the USG does not help firms attract investment due to geographic neutrality concerns. Fee Based Service: EDOs representing a U.S. city, state, or region are able to, for a fee, utilize the expertise of U.S. Foreign Commercial Service (USFCS) officials located in their target market(s) For events, we offer unique services to maximize your exposure to your audience. For instance, we can offer: Introductory remarks by a U.S. government official, touting the benefits of investing in the United States and explaining SelectUSA’s services Logistical assistance in support of the EDO’s investment mission and specific events, like Track attendee registration, Design, print, and send co-branded invitations, Identify convenient and appropriate venues. Example : Texas Secretary of State Hope Andrade utilized the SLP program to lead an investment mission to Canada and hold meetings and events in Montreal and Halifax organized by CS Canada. In advance of the mission, CS Canada worked with Secretary Andrade’s team to identify sectors it wanted to promote and then tailored the events to attract investors interested in Texas’ target sectors.
- India Investment Mission/Hannover Messe Speaking of our global network, I want to tell you about an upcoming Investment Mission to India we are helping to organize together with the India posts. There will be three stops in Mumbai, Bangalore and Delhi. In each location there will be around 100 firms, time for networking, one-on-ones, and much more. There are fliers at our booth and we are happy to provide more information. We hope to have many similar events each quarter, all around the world. So please check out our website, www.selectusa.gov and join our mailing list to learn about upcoming events and happenings. A major 2013 event to keep on your calendar is the USA Investment Center at the world’s largest industrial technology show, Hannover Messe or Hannover Fair, taking place next April. The Fair attracts a global audience of 200,000 attendees and 6,000 exhibitors and major international companies. This will be SelectUSA’s fourth year at Hannover Messe. The ITA German post works with organizers to ensure a highly visible location. We also offer comprehensive pre, onsite and post show services to connect you with prospective investors and global economic development organizations.
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