As follow up from my last column about the Aviation and aerospace industry, I received numerous thoughts and questions about our region as a destination for Foreign Direct Investment (FDI) and it's role in our economy.
To continue the conversation, here are some key points about what makes the US attractive for FDI from our partner, Organization for International Investment:
* Access to the premier global market
Competitive and dynamic, with 320 million consumers, the American market is one of the largest and perhaps the most attractive in the world. With an average household income of $51,017 in 2013, the demand is high for a variety of products and services. Leader in several industries, the country offers investment opportunities for any type of business (aerospace, food processing, pharmaceutical, energy industry...). A policy of "build where you sell" allows companies to get closer to their customers, to anticipate their changing demands, to score points relation to the competition and to reduce distribution costs.
* Low cost of production
The American workforce is among the most competent and productive in the world - over 30% more productive than Germany and almost twice as productive as South Korea. Without direct competition from low-cost labor, the United States offers a more secure and safe environment, conducive to international investment. (The workforce in the Greater Lafayette region demonstrates their productivity on a daily basis.)
In terms of energy, with a century worth of reserves within its borders, the cost of natural gas is a third of that of Asia. This reduced cost allows for savings of more than $130 billion per year for American industrials compared to those in Europe. The boom of the energy sector, not to mention the opportunities it generates for energy companies around the world, has reduced the price of natural gas by 60% between 2007 and 2012. (Especially in Japan that has shutdown 50 nuclear reactors since the 2011 Tsunami.)
* An environment that is business-friendly, stable and innovative
A cultural environment that encourages business development, the United States is constantly on the lookout for new proposals and business opportunities. Everything is done to maximize the chances of success thanks to a political, legal and economic framework that is good for business and respects the protection of intellectual property. With more than 15 of the 25 largest universities in the world, the high level of education is a strong source of innovation and development. The United States is the world leader in patents having initiated nearly 30% of all patents worldwide. Not surprisingly, the United States also provide over a third of total R&D in the world, more than any other country.
* Access to global markets
A presence in the United States provides unparalleled access not only to the largest consumer market in the world, but also quick access to global markets. The United States benefits from free trade agreements with 20 countries, including those in the colossal NAFTA. Local production within the dollar zone eliminates the risk of fluctuating currency exchange rates while generating opportunities for export development to other parts of the world (Latin America, Middle East, Asia).
Other data points on FDI:
* Japan continues to be in the top 5 for US FDI (since the late 80s), and European investment as a whole is the largest. Chinese investment continues to grow year upon year.
* Only a portion of FDI is greenfield development or expansions of facilities. Most FDI is business acquisition.
What do you think about these statements?
As you can imagine, Greater Lafayette enjoys many strategic advantages in that list. A critical aspect for our community, which helps us be successful as a destination for FDI, is the value we place on relationships. Not only supporting companies while in the process of locating in the community, but in their longterm partnership with the community.
One of the ways we demonstrate that is the through the Sister City relationship Greater Lafayette has with Ota City, Japan. On an annual basis, delegations from each community, travel to extend the intra-community relationship beyond just the relationships inside the Subaru family of companies. This year, we are hosting 12 Junior and Senior high students from Ota. The students arrived last week, toured many of our community gems, attend school for 3 days, and are departing tomorrow morning back to Japan. This wouldn't be possible without support from our Cities and County, the School Districts, SIA, Duke Energy and the volunteers who agree to host these students and share their homes and American culture with the students.
Next year, we will send a delegation, students and community leaders, to Ota, Japan, and other cities to meet with their community leaders and company executives as well. The delegation will thank those leaders for their continued investment in Greater Lafayette and further develop our relationships.
If you would like to learn more about our activities in the Sister City relationships (we are always looking for volunteers!) or our other economic development activities, let us know!