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United States Inward Investing Guide

Location USA is a guide for international companies looking to invest or establish operations within the United States. Location USA provides practical advice and guidance about facilities deployment, labor force skills, taxes and incentives, and more. For specific information on all 50 states, utilize the State Resources links.

The United States as a Logistics Hub for the Americas - and Beyond

The United States has the world's largest, most efficient, world-class logistics infrastructure, which is currently under-going upgrades to handle growing capacity.

Bill Luttrell, Senior Locations Strategist, Werner Global Logistics, Werner Enterprises (Location USA 2012)

The United States is at a crossroads. It is still the largest economic power in the world. The International Monetary Fund's 2011 report estimates that we are living in a $70 trillion global economy, in which the United States is by far the single largest economy at approximately $15 trillion. To put that nation's economic strength into perspective, the next three largest economies combined (China, Japan, and Germany) barely surpass the U.S. total.

The United States is also a nation blessed with abundant natural resources, a growing population, a highly educated work force, efficient manufacturing, and an aging, but still excellent infrastructure. It is still the world's only superpower. But its biggest and immediate challenge is to maintain and strengthen that position into the future. One way for the United States to maintain this position is to continue to improve its leadership position in logistics and to improve its infrastructure.

"Lean and Mean"
During the past couple of years, the significant downturn in the U.S. economy has forced corporations that want to survive to look long and hard at their internal operations. For manufacturers, this meant dissecting their entire supply chain to capture savings by cutting costs and increasing productivity. This process included re-evaluating suppliers, looking at transportation options, improving inventory controls, reassessing location and facility requirements, fine-tuning work forces, and improving material-handling and packaging methods.

Likewise, logistics service providers - trucking companies, railroads, shipping lines, air cargo firms, brokers, expeditors, software vendors, etc. - have all had to improve their own cost and performance structures to meet their clients' needs. In fact, those that could not compete were forced out of the market. From 2007 to 2010, 8,000 trucking firms went bankrupt, according to a report published by Avondale Partners. It certainly was not business as usual. It has been a major retooling for all.

As a result, most U.S. manufacturers have literally become "lean and mean," with debt-to-cash ratios the lowest in five years at 3.06 percent. Despite industrial production only being up 5.3 percent in 2010, and the fact that only half the production volume lost during the recession has returned, manufacturers are experiencing all time high profits and an abundance of cash. But profits still are not enough to overcome risk. It should be noted that transportation no longer is a sound barometer for gauging the overall economy, as the growing service sector and the Google and Facebook type companies that do not produce goods are having a much greater effect.

U.S. manufacturers are more than ready as they are reacting to the protracted slow economic growth, which is being fueled by political and policy uncertainties (risk). They are not adding employees as their productivity gains and the slowed economy have negated their need to hire, which in turn has contributed to the high unemployment rate and has helped keep consumer demand in check. In addition, as the restocking of inventory ends, production is beginning to taper off a bit. Companies are cautiously waiting for the spring-loaded economy to trigger.

Ready for Retooling
This is not the first time for a major retooling of the U.S. manufacturing economy. American manufacturing underwent a major overhaul and upgrade during WWII and during the postwar years of the 1950s and 1960s. The United States felt it was its duty to rebuild the world economy and we went about it with gusto.

The U.S. economy was going strong and the world was its market. But by the late 1970s and early 1980s, other nations started to compete with America on a more serious basis. In particular, Japan was developing into a global economic power, second only to the United States. The Japanese were building new manufacturing facilities globally that were extremely modern and efficient. For the first time ever, robotics were being introduced and the term "supply chain" was born.

The 20- to 30-year-old American facilities simply could not compete. After a period of some hysteria, America was forced to retool. And while the Japanese had made great advances on the manufacturing floor, they had failed to do so across the entire spectrum of their business.

Timing also played a part. By the 1990s, when U.S. manufacturing really started to retool, advances in computer technology and other IT-related industries allowed the United States to leap-frog to a much higher level, implementing state-of-the-art solutions not only on the manufacturing floor, but also at the desktop-level in U.S. company headquarters, back offices, warehouses/distribution centers, and even back into their suppliers and forward to their retail outlets - indeed, across the entire supply chain. In addition, the U.S. began making investments in third-party expertise, from visibility software, to creative financing and assistance in strategic planning, to third-party logistics (3PLs).

Retooling Is Not Complete
Logistics means movement, and when things physically move, you have to have the proper infrastructure. Moving product efficiently and cost competitively is essential to supply chain success. One area attracting tremendous attention is the call for extended investment in transportation infrastructure.

America's highway system is the most important nationwide infrastructure it has. Although the U.S. highway system is world-class and extensive, it is typically more than 30 years old and in need of some significant repair/upgrade to meet the needs of a growing economy. More than 70 percent of the freight tonnage in the United States moves over its highways by truck. U.S. trucking accounts for 5 percent of the U.S. GDP, and trucks are the only mode of delivering goods to more than 80 percent of the communities in the country. Trucks also account for more than 80 percent of the value of cross-border trade with Mexico and more than 60 percent of the value of trade with Canada.

Bottlenecks and congestion are of major concern, as it is estimated such lost time costs more than $20 billion annually. Funding for highway repairs and expansion is at a crossroads. The federal fuel tax, which has historically been used to fund highway infrastructure, does not produce enough needed revenue. Revenues are declining as more vehicles are becoming more fuel-efficient. The U.S. Congress must address this need on a more long-term basis. In the meantime, some $23 billion has been approved for the Highway Trust Fund and Surface Transportation Program, extending their funding to March 2012.

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About the Author

Bill Luttrell, Senior Locations Strategist, Werner Global Logistics, Werner Enterprises
Bill Luttrell is a Senior Locations Strategist with Werner Enterprise’s Werner Global Logistics division. He has responsibility for global location consulting with a specialization in domestic, cross-border, and international projects, particularly in manufacturing and warehouse distribution. Luttrell has over 25 years experience in corporate real estate and economic development. He has worked extensively in Asia and Eastern Europe, and with Disney, Exterran, Fidelity Investments, Fujitsu, and GM.

More articles by Bill Luttrell

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United States Inward Investment Location Profiles

ARIZONA

Arizona - A Great Place For Business

Arizona is one of the fastest-growing, most dynamic economies in the United States. Both Fortune 500 and start-up technology companies call Arizona home, reaping the advantages of a competitive business climate and tax structure; a skilled, knowledge based work force; and world-class innovation, cultural, and scenic resources.

ARKANSAS

Your Success Story Starts In Arkansas

Arkansas's transportation network and central U.S. location define the state as a strategic distribution center. Midway between Mexico City and Montreal, Arkansas offers a valuable distribution advantage.

Little Rock, Arkansas: A Globally Recognized Brand

For two years in a row, the Little Rock region has been named "America's Fourth Strongest Economy" by the Brookings Institution's MetroMonitor. The Wall Street Journal calls it the nation's "Sixth Best Real Estate Market," while Forbes says it is America's "Seventh Best Place for Jobs."

KANSAS

Wichita, Kansas USA - Site of Choice for Advanced Manufacturing Enterprises

Wichita, better known as the Air Capital of the World, has also been ranked #1 U.S. metro for aviation manufacturing. Wichita has the highest concentration of aircraft and aircraft parts manufacturing employment (skills) in the United States.

KENTUCKY

Kentucky Is a Global Business Center

Kentucky remains a leader in attracting foreign direct investment, with nearly 35 percent of announced new investment in 2012 due to FDI activity. Today, about 420 foreign-owned firms from 30 nations employ nearly 80,000 people in the state.

NEW YORK

Think New York for Business Opportunity

When you hear "New York" you probably think of tall buildings and Wall Street — not cows, pastures, and a state whose leading industry is agriculture. In fact, we have both, and the world is taking notice of the abundant milk supply, sophisticated transportation system, and oneday access to almost 100,000,000 consumers.

OHIO

The Columbus Region Grows Increasingly Global Each Year

The Columbus Region is a thriving 11-county area located in Central Ohio. Home to 15 Fortune 1000 headquarters, with two million people and a population growth rate of 1.3 percent annually, the Columbus Region is one of the fastestgrowing major metropolitan areas in the Midwest, and is growing more and more global each year.

The New Ohio — A Leader in New Job Creation

Profitable. Diverse. Motivated. Strategic. Global. These are the words that describe the new Ohio and make us a leader in new job creation in the U.S.

OKLAHOMA

Tulsa - Where Business Grows

Home to more than 950,000, Tulsa, Oklahoma, perfectly balances convenience and affordability with the advantages of a highly skilled work force, a central location, a pro-business atmosphere, and an excellent quality of life. It is a dynamic, growing region that offers the fifth-lowest cost for doing business in the nation and is home to some of the nation's largest companies. These assets combine to make an ideal home for progressive companies competing in a global economy.

TENNESSEE

Select Tennessee for Your Next Investment

Tennessee's ideal location, strong transportation infrastructure, low costs of doing business, and high quality work force provide an attractive setting for investments from around the globe. With most major U.S. markets within a day's drive, Tennessee provides immediate access to eight interstate highways, an extensive network of railways and waterways, and the world's second-busiest freight airport in Memphis.

WEST VIRGINIA

Plastics - West Virginia's Multi-Billion Dollar Industry

Offering one of the highest concentrations of hightech, specialty, and engineering polymer production in the world; an abundance of necessary raw materials; a knowledgeable, highly trained and productive work force; and established transportation systems; it is no wonder West Virginia is home to a vibrant and growing plastics industry.

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