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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.

Still Number One: Foreign Nations Invest More in the U.S. Than in Any Other Country

U.S. economic development agencies on the state and local levels are working hard to encourage FDI, and their efforts are continuing to pay off.

Mark Crawford (Location USA 2012)

Foreign companies that invest in the United States employ millions of Americans and have a big impact on the GDP, especially manufacturing. The United States continues to receive the most foreign direct investment (FDI) of any country in the world - mostly from Canada, Germany, France, Switzerland, the United Kingdom, and the Netherlands (Source: U.S. Bureau of Economic Analysis).

According to the Council of Economic Advisors' "U.S. Inbound Foreign Direct Investment Report," nearly half of all the goods and services provided by foreign-based companies came from the U.S. manufacturing sector. These companies employ about 5.7 million U.S. workers, including more than two million employees in manufacturing industries.

In 2010, U.S. inbound FDI rebounded sharply from 2009 levels. The U.S. Department of Commerce estimated FDI totaled about $194.5 billion in 2010. Bureau of Economic Analysis data indicated that 2010's total was 44 percent higher than the 2009 figure of $134.7 billion. The 2010 figure is the fourth highest recorded over the last 10 years - a strong indicator that the United States is recovering from the recession.

Attracting FDI Is Hard Work
Much of 2010's success resulted from hard-working teams of economic development professionals in every state who proactively seek leads through selected, industry-specific trade shows; targeted market seminars; and investment missions.

"Project managers work to build relationships with industry representatives and consultants," said Cheryl Hatfield, international specialist with the Alabama Development Office. "This is particularly important in the international arena and helped us recruit large projects such as Mercedes-Benz in the `90s and, more recently, Hyundai."

Foreign direct investment represents about 30 percent of new investment created in Kentucky in 2010 and nearly 43 percent for 2011 (as of this writing) - "a result of aggressive marketing by our international offices," said Mandy Lambert, spokesperson for the Kentucky Cabinet for Economic Development. "Our representatives on the ground in Japan, Mexico, China, and Europe directly communicate with and assist companies with existing investments that are considering expanding their North American presence."

States also welcome trade missions from other countries to tour facilities and visit with state economic development leaders. "We regularly host delegations in North Carolina," said Kim McCarl, spokesperson for the North Carolina Department of Commerce. "So far this year, we have had representatives from China, Ireland, Canada, and the UK, among others."

Incentive packages are part of the resources states rely on to attract FDI. Common incentives include funding or tax credits for jobs created, capital investments, land and infrastructure, R&D, and relocation assistance - at the local, county, and state levels.

For example, in 2010, German company Wilh. Schulz GMBH selected Tunica County, Mississippi, for its first facility in North America. The $300 million plant manufactures a special type of bonded pipe for use in deepwater oil and gas fields. About 300 U.S. counties competed for the project. "Nowhere else did we find what Mississippi and Tunica provided," said Rainer Floeth, managing director and chief financial officer for the company. "Very professional people, attentive, and very good to work with," he added.

That attentiveness included well-crafted incentives that met the firm's needs: a $15 million loan to Tunica County to construct the publicly owned building Schulz will occupy, a $20 million loan guarantee for the purchase of $60 million in equipment, and $5.6 million for site preparation and infrastructure work. After Schulz repays its share, Mississippi will have invested about $3.5 million in the project, creating a state-of-the-art facility and over 500 jobs within five years.

Nonetheless, although incentives may help in some situations, they aren't the deal-closers some people think. "It's a myth that you need killer incentives," said Hank Marshall, senior vice president of Business Development for the Arizona Commerce Authority. "At end of day you must have a site that is a perfect or near-perfect fit for a sound business plan; you can't simply add incentives and make it work if there are drawbacks to the location, or the plan."

Hot FDI Sectors
The strong rebound in FDI in 2010 indicates foreign companies still have confidence in the United States.

"At a time when job creation is paramount, it is outstanding news that global companies are pumping much needed capital into our economy," said Nancy McLernon, president and CEO of the Organization for International Investment (OFII). "The dramatic increase in such investment is a clear sign that these companies have a decidedly positive outlook for the American economy."

Of particular note, she indicated, are new statistics that show that the U.S. operations of global companies are reinvesting their profits back into their U.S. plants and factories. Reinvested earnings more than tripled from $28.5 billion in 2009 to $93.1 billion in 2010 - especially for the automotive, alternative energy, biomedical, and advanced manufacturing industries.

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About the Author

Mark Crawford
Mark Crawford is a full-time freelance writer in Madison, Wisconsin, who specializes in business writing. He is also the author of five books.

More articles by Mark Crawford

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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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