By Donna Clapp
From the May / June 2023 Issue
For over a decade, the U.S. has ranked as the top destination for international companies to set down roots and achieve their expansion goals,” stated U.S. Secretary of Commerce Gina Raimondo in Kearney’s Global Business Policy Council’s 2023 Foreign Direct Investment Confidence Index. “The United States’ diverse landscapes, vast resources, skilled workforce, and spirit of innovation and entrepreneurship are just a few of the reasons why investors choose to settle here.”
According to that Confidence Index from Kearney, the U.S. has been ranked as the top destination in the world for foreign direct investment (FDI) for 11 consecutive years, thanks to its large consumer base, a predictable and transparent justice system, a productive workforce, a highly developed infrastructure and a business environment that fosters innovation.
The U.S. International Trade Administration says that FDI accounts for nearly 16% of U.S. business research and development (R&D) and directly supports almost eight million jobs across the nation. The main investing countries in the U.S. are Japan, Germany, Canada, the United Kingdom, Ireland, and France. Most of these investments are in manufacturing, financial and insurance activities, and trade and maintenance.
“As site selection consultants who specialize in FDI, we pay attention to what the Organization for Economic Co-operation and Development (OECD) have reported as the deal values for the past two years,” says Mark Simmons, Senior Principal, Parker Poe Consulting.
“The OECD has reported a 76% increase in deal values since the end of 2020. And that’s been reflected in our experience as well,” continues Simmons. “We are seeing our FDI at 50% higher than pre-pandemic levels for a number of reasons. It’s the supply chain issues that affected the entire world during 2020 and 2021, it’s Brexit, and it’s Covid. The world economy has a lot of uncertainty right now, but the U.S. is looked at as a more stable market than many other locations. After so many issues with the supply chain, and getting goods where they need to be, many companies decided it would be better to have a physical presence, rather than just trying to export to the U.S.”
No wonder state and metro economic development organizations throughout the nation have made FDI a top priority. We’ve asked several leading locations for their FDI success stories.
Miami-Dade County, Florida: Multicultural Region Is Booming
Given that 50% of the population of Miami is foreign-born, it’s a natural choice for many foreign companies to consider locating there. Miami’s International Airport is America’s busiest airport for international passengers and international freight, and offers more flights to Latin America and the Caribbean than any other U.S. airport, boasting a lineup of over 90 air carriers. The region has been growing rapidly with both domestic, and foreign investment since the pandemic.
“Because Florida was more open than many other states during the pandemic, we have recently had a tremendous influx of businesses moving here from other states, and around the world,” says James Kohnstamm, Executive Vice President, Economic Development at Miami-Dade Beacon Council. “So last spring we started refocusing on international markets, and started doing some business recruitment missions to Spain, Israel, and the United Kingdom, and the floodgates just opened up. In return, we’ve had a massive influx of delegations visiting us from Tokyo, Berlin, Britain and more. In fact, we just had two dozen British health tech companies visit us in November. In the last year we’ve seen a resurgence of interest in Miami, and I believe it’s because we were one of the first out of the gate to recovery after 2020. Miami is on a growth trajectory.”
The Miami metropolitan area is home to 59 colleges, universities, and technical/vocational schools, churning out graduates with the kind of degrees that attract the innovative companies that are driving tech growth in the region. And a number of international companies have been taking advantage of the Miami tech talent in the past few years.
A great example is Chilean-based software developer and operator of virtual reality (VR) and free roaming gaming experiences, InBattle, who chose Miami for its state-of-the-art VR arena. In addition, the company also mentioned in a press release it will be moving headquarters to Miami.
“The decision to move our development offices to Miami in the coming months is to increase our community engagement through our collaboration with Miami Dade College and the mentorship program at MDC MAGIC; and through the development of institutional training programs with the City using immersive full body movement VR technology,” said Cristobal Baixas, InBattle Founder. “This will be our flagship location and will be the first of many arenas that we will roll out throughout the United States. We will create a network of arenas for teams to train and compete for local tournaments at the beginning and then national championships.”
Wabash County, IN: Certified As FDI Qualified Community
In 2020 and 2021, Grow Wabash County in Indiana worked with international consulting firm, Navigator Consulting and The Transatlantic Business and Investment Council (TBIC) to land the TBIC’s formal FDI Qualified Community designation, and there’s already been a $50 million project landed in doing that work.
In early 2022, Hello Nature, a global leader in organic fertilizers, biostimulants, and microbials, partnered with sixth-generation Indiana business MPS Egg Farms to form a joint venture, called Bionutrients, that will create a $50 million investment in Wabash, to construct and operate a specialty fertilizer manufacturing facility. Bionutrients, will employ 46 people and construct two facilities totaling nearly 300,000 square feet, to be fully operational this summer.
“We believe that this new production facility will be a turning point for the North American market,” said Luca Bonini, Hello Nature’s CEO. “Today the fertilizer industry undergoes multiple challenges such as rising prices, logistics issues and shortage of inputs, and there is a desperate need for innovative solutions to feed a growing population with less inputs and less land available. Our facility will ensure a regular production of sustainable fertilizers to help North American farmers achieve their yield goals. We are honored to partner with MPS and the Krouse family in this important project.”
There were a number of reasons Hello Nature chose to look at Wabash County.
Top 5 Industries For FDI
Based on the Bureau of Economic Analysis’ (BEA) 2022 data, the top 5 industries that received the highest amount of United States foreign direct investment are:
- Manufacturing: $239.7 billion
- Finance/insurance: $232.8 billion
- Wholesale trade: $163.1 billion
- Professional, scientific, and technical services: $152.9 billion
- Information: $135.2 billion
“The company was motivated to start this project and Wabash County was responsive,” said Keith A Gillenwater, President & CEO of Grow Wabash County. “We had recently brought a new business park online, and we had a site that could fit the 40 acres that they needed. We negotiated incentives that made sense for the community and company, worked with the company representatives through all of the necessary processes such as the sale of the land, incentive approvals and the like, and conducted due diligence on the project with local officials. In total, we were able to take this project from the initial contact with the site selector to a ground-breaking in less than six months!”
Michigan: A National Leader In FDI Investment
According to a recent report by the Global Business Alliance, an advocacy resource for international companies in the U.S., Michigan is a national leader in FDI. The report says that 317,000 workers in Michigan, including 202,300 manufacturing workers—ranking the state third among all U.S. states—are employed by more than 1,100 foreign-headquartered companies. Additionally, 8.2% of all private sector workers in Michigan are employed by global companies—the fourth-highest share out of all 50 states.
“Michigan’s status as a manufacturing powerhouse is hardly new,” says Nancy McLernon, CEO of the Global Business Alliance. “What’s changing, though, is the increasing role of global companies and global investment in fueling this manufacturing dominance. In 2019, for the first time ever, global automakers employed the majority of U.S. manufacturing workers in the automotive sector.”
Michigan was named one of three states that are poised to “dominate” electric vehicle battery manufacturing in the U.S. by 2030. Last year, the state attracted thousands of jobs and $14 billion in electric vehicle and battery investments while developing programs to train and employ the next generation of talent in the electric vehicle and mobility sector.
“Michigan is competing with other states and other nations to land game changing manufacturing projects and thousands of jobs,” Governor Gretchen Whitmer said. “Michiganders are tough, hard working people. We will work with anyone and compete with everyone to make sure that Michigan is home to the future of mobility and electrification and fight to bring supply chains home. We are in contention to be a top state for the electric vehicle industry in the next decade, and we will not stop until we win.”
Transformational electric vehicle and battery investments in Michigan in 2022 include:
- In March 2022, LG Energy Solution announced a $1.7 billion expansion creating 1,200 jobs in Holland manufacturing batteries.
- In June 2022, Canadian electric vehicle charging network operator FLO announced an investment of $3 million for the company’s first-ever U.S. manufacturing facility in Auburn Hills.
- In October 2022, Gotion announced a $2.36 billion investment for a new manufacturing facility in Big Rapids, creating up to 2,350 jobs.
Fairfax, VA: A Premium FDI Location
Located adjacent to Washington, DC, Fairfax County’s proximity to the U.S. Federal Government, considered one of the largest customers in the world for many companies, has made them a premium location for foreign direct investment.
“Fairfax County is an ideal setting for foreign direct investment. We are located at the heart of Northern Virginia, right outside of Washington, DC, and are the economic engine of our regional economy valued at $228 billion, making us the 46th largest economy in the world. Currently, more than 440 foreign-owned companies, representing 43 countries, have locations in Fairfax County,” says Victor Hoskins, President and CEO, Fairfax County Economic Development Authority. “Our close proximity to Washington, DC, provides access to the U.S. federal government, and international financial institutions, legal experts, and embassies. In addition, Fairfax County is conveniently located nearby to three major airports which provide direct links to global markets, and we have convenient access to Virginia Port Authority and to the Port of Baltimore.”
Fairfax is home to a highly skilled workforce, due to the more than 60 colleges and universities located in the area. In fact, this is a county that has 62% of residents holding a bachelor’s degree and nearly 27% hold PhDs. So it’s a great place for innovation and research and development, with more than 8,800 technology businesses making up this high tech hub. Fairfax’s high tech strength is one of the reasons the South Korean-based global golf simulator company, Golfzon, chose Fairfax for its North American headquarters.
“We came to Fairfax County for a number of reasons,” said John O’Malley, Chief Revenue Officer, Golfzon America. “Fairfax County has had a long history of supporting tech companies. It’s been a hub for tech companies for as long as I can remember, and rightfully so. There’s access to resources like the Fairfax County Economic Development Authority to help entrepreneurs and companies start and grow their businesses. There’s access to capital and to commercial real estate. There’s a rich talent pool to bring in employees and there’s a good demographic for the products we sell.”
Los Angeles, CA: Consular Corps Lends International Chops
Los Angeles, the second-largest city in the U.S., is also home to the third largest consular corps in the world, with 65 consulates located there. And the consul generals located there have been helping LA become a major force in foreign direct investment for decades by putting together their nation’s citizens with local investors and economic developers to expand into the U.S. market. It also means Los Angeles County is one of the most diverse locations in the U.S.
“We have 140 nationalities represented, speaking over 224 languages,” says Stephen Cheung, President and CEO of both the Los Angeles County Economic Development Corporation and the World Trade Center Los Angeles. “So, these international companies that are coming in can very easily go to one location, and be able to access this entire vast amount of workers that have different types of background and experience. One of the things that we keep on hearing from foreign companies looking to locate here is that they’re looking for folks that have multilingual language capacity, and we have all of that here.”
Beyond language capacity, Los Angeles has a highly skilled workforce with a variety of degrees earned from the 308 colleges located in Los Angeles County. This is a workforce ready to take on advanced technologies, positioning Los Angeles on the forefront of industries such as electric vehicles and EV battery manufacturing. In fact, that’s one of the reasons VinFast, an emerging global electric vehicle company from Vietnam has chosen Los Angeles for its U.S. headquarters in 2021.
“We are excited to make Los Angeles the permanent home of VinFast US,” said VinFast US CEO, Van Anh Nguyen. “California in general and Southern California in particular are rapidly becoming the epicenter of the advanced transportation world thanks to forward-thinking ideas, an abundance of talented workers, and the passion for making transportation electrification a reality. We are grateful to Governor Newsom and Mayor Garcetti for their continued support.”
VinFast intends to establish its management team and hire more than 400 employees at its headquarters and regional offices in Los Angeles in the next several years. VinFast joins more than 70 electric vehicle startup companies already in the city.
North Carolina: Innovation, Central Supply Chain Attract EV Investments
Home to the Kings Mountain lithium mine, North Carolina finds itself at the heart of one of the fastest growing industries in the world right now—electric vehicle manufacturing and lithium battery production. This has attracted both domestic and foreign direct investment into the region with both well-known corporations and up and coming ones as well. Although lithium mining has been going on at this location since the late 1930s, the newer application of electric vehicle batteries has brought new interest in the region.
“Although the electric vehicle lithium battery technology is newer, we have a large critical mass of technical knowledge that goes into both mining and refining of lithium in that region,” said Korey Howard, Director of Business Development for the Economic Development Partnership of North Carolina (EDPNC). “From a regional perspective, I think the supply chain for the automotive industry has changed quite a bit, because from a traditional perspective it centered around the I-75 corridor. We are now less dependent on the traditional supply chain because EV automobiles have far fewer parts than cars with gas-powered engines. That means the bulk of the investment in the automotive industry is no longer necessarily tied to I-75, and the map is now expanded easterly to include North Carolina.”
In 2021, Toyota chose to turn the Greensboro-Randolph Megasite into a new automotive battery plant with an initial investment of $1.29 billion for battery production and the creation of 1,750 new jobs, and before it has even started production, the company announced in 2022 that it is making an additional investment of $2.5 billion in its newest North American facility, Toyota Battery Manufacturing North Carolina (TBMNC). This investment adds capacity to support battery electric vehicle (BEV) battery production and adds 350 jobs, bringing the total employment to approximately 2,100. Scheduled to begin production in 2025, the facility will produce batteries for hybrid electric vehicles (HEV) and BEVs.
“This marks another significant milestone for our company,” said Norm Bafunno, Senior Vice President, Unit Manufacturing and Engineering at Toyota Motor North America. “This plant will serve a central role in Toyota’s leadership toward a fully electrified future and will help us meet our goal of carbon neutrality in our vehicles and global operations by 2035.”
As EDPNC’s Howard points out, the automotive supply chain has been shifting due to the preponderance of electric vehicle production. A significant example of this in practice is VinFast, a Vietnamese company that has been producing gas-powered and all-electric vehicles for its domestic market, announcing plans in 2022 to build North Carolina’s first OEM car manufacturing facility. The $4 billion investment will go toward building a factory to make electric buses, sport utility vehicles, and batteries for EVs. This was North Carolina’s largest economic development announcement in the state’s history, with the expected creation of 7,500 jobs the governor’s office said in a statement.
Greenville, NC Lands FDI Certification
Location factors that foreign companies weigh more heavily than domestic expansions include proximity to international air service, educational and workforce training customization, regulations, and speed to market. In an effort to address those factors, Greenville, NC recently worked with Navigator Consulting and the Transatlantic Business and Investment Council to become one of only 12 communities that now have FDI-Qualified Community certification.
“Data shows that foreign investment is a large driver of new capital investment and jobs in the U.S. economy,” said Josh Lewis, CEcD, President and CEO of the Greenville Eastern North Carolina (ENC) Alliance. “Our goal is to establish a recognizable brand and maintain contact with entities that have touch points with foreign business opportunities. Earning the FDI-Qualified Community certification is a step in that direction.”
“In the course of our visit to Greenville, my colleague and I came away impressed by the collaborative spirit of the local economic development team, the vibrancy of local industry, the professionalism of local officials, and the strength of local workforce development efforts,” explained Christopher Huppertz, Managing Director of TerraLogis Consulting in Berlin, Germany. “The Greenville ENC Alliance economic development team impressed us with the quality of the preparation of information and the smooth execution of our on-site visit. Community and utility stakeholders joined Mr. Lewis and Ms. Dunn in highlighting the community’s location assets. We recognized a mix of genuine enthusiasm for the community and ability to communicate a message that this region is striving for success.”