OFII News Update on Global Investment In America
2016 is off to the races, both in Washington and here at OFII. Below are a few updates I thought you might be interested in.
- Nancy McLernon
President & CEO
Organization for International Investment
OFII Hosts 'One-of-a-Kind' Meeting in Davos
Last week, I was pleased to lead a discussion on foreign direct investment in the United States at the OFII's second annual policy roundtable, alongside the World Economic Forum in Davos, Switzerland.
The event featured a discussion between U.S. Commerce Secretary Penny Pritzker, U.S. House Majority Leader Kevin McCarthy, Governor Greg Abbott (R-TX), Governor John Hickenlooper (D-CO) and 14 global chief executives of non-U.S. companies with significant operations in the United States. These insourcing companies – such as Airbus, Nestlé, Siemens and Zurich – represent a significant segment of the U.S. economy, employing more than six million U.S. workers and paying 33 percent higher wages than the economy-wide average.
Having senior officials from the administration and congress, as well as governors from two major states, demonstrates how important foreign direct investment is to America’s economy. This one-of-a-kind event in Davos – focused exclusively on U.S. competitiveness for cross-border investment – zeroed in on ways the United States can tap into the experience of global employers in developing a next generation skilled workforce and modernizing our infrastructure.
NEW FDI FIGURES
More than six million U.S. workers – including more than two million in the manufacturing sector – earn their living from foreign employers who have invested and created jobs in the United States. With compensation that is 33 percent higher than the economy-wide average, these insourcing companies are creating the types of high-quality jobs America desperately needs.
Late last year, the Bureau of Economic Analysis (BEA) released its Survey of Current Business, Activities of U.S. Affiliates of Foreign Multinational Enterprises in 2013.
Here are additional highlights from the FDI data:
- Insourcing companies employ 6.1 million U.S. workers, up 5.5 percent from the previous year, adding 213,000 jobs.
- Nearly 2.3 million of those jobs are within the manufacturing sector, representing 37 percent of all insourcing jobs and nearly 18 percent of all U.S. manufacturing jobs.
- Insourcing companies support an annual payroll of $488 billion – paying an average of $79,979 to their U.S. workers.
- Insourcing companies account for nearly 23 percent of all U.S. exports.
Insourcing companies spent $53 billion on R&D in 2013, accounting for more than 16 percent of all R&D performed by the U.S. private sector.
TAX TREATIES UPDATE
OFII Works to Ratify Bilateral Tax Treaties
On Wednesday, OFII joined with nine other business associations in sending a letter to Senate Majority Leader Mitch McConnell (R-KY) in support of eight bilateral income tax treaties and protocols currently awaiting ratification. Several have been stalled for more than three years. As the coalition letter points out:
“The protracted period of ratification could send a signal, inadvertently, to all U.S. tax treaty partners that the U.S. does not value the benefits of tax treaties and that the expansion, improvement and modernization of the U.S. bilateral tax treaty network is not a priority. Given the unilateral actions that many foreign governments are considering as a consequence of issues raised in the OECD Base Erosion and Profit Shifting process, this sends the wrong signal at the wrong time….
“These treaties promote good business and financial decisions based on free-market principles rather than government influence. They incorporate reforms that foster robust economic growth and build on long-term investment partnerships between the U.S. and our tax treaty partners. Their contents are the product of years of dialogue among Senate Foreign Relations Committee Members, the Joint Committee on Taxation, the Executive Branch, and interested stakeholders in the U.S. and abroad.”
Solvay makes major investment in the United States
Belgium-based Solvay recently announced its acquisition of Cytec.
“The proposed acquisition of Cytec marks a major step change in Solvay’s portfolio upgrade. It is a unique opportunity for Solvay to boost its customer offerings in lightweighting with advanced materials in aerospace and automotive, as well as to strengthen its know-how with activities in mining chemicals,” said Jean-Pierre Clamadieu, CEO of Solvay.
“Cytec is a high-growth, high-quality group with leading market positions. We are looking forward to working with its excellent teams. This acquisition will create value for our stakeholders and will support our ambition to become a leader in sustainable chemistry. This transaction will lead us to further accelerate our transformation.”
Headquartered in New Jersey with 4,600 employees across the globe, Cytec is among the world leaders in composite materials and in mining chemicals, recognized by its customers as a consistently successful innovator and provider of high-performance and value-added solutions. In the fast-growing composite materials sector, which represents two thirds of its sales, its principal market is primary and secondary structures for aircrafts.
“We are excited to be joining with Solvay, a leading player in the chemical industry with over 150 years of success. Their strategic focus is perfectly aligned with our businesses, while the technology synergies with their specialty polymers and formulations expertise should accelerate our growth. Our customers and our employees should expect to see continuity and strong support of our current strategy,” said Shane Fleming, CEO of Cytec.
IN THE NEWS
Three Chinese firms investing tens of millions of dollars in Chattanooga area
China's biggest appliance maker, Haier, unveiled plans Friday to buy the white-goods product line from U.S. icon General Electric. The $5.4 billion deal includes GE's huge Roper oven plant in LaFayette, Ga., which employs 1,600 people. If finalized, Haier will be the third Chinese business to make a big investment in the Chattanooga area in the past six months. Read more.