Two-thirds of Post-recession Manufacturing Jobs Were a Result of Foreign Investment, Says Study

Matt Posky
by Matt Posky

As the Trump administration applies pressure to encourage companies to manufacture goods within U.S. borders and bolster American employment (or potentially face towering tariffs), the president has more recently come out against foreign automakers directly. In late May, Trump responded to criticism from German Chancellor Angela Merkel by accusing her country of having a trade surplus with the United States — claiming its automakers send vehicles to North America while providing little else. Trump has levelled similar criticism at China.

However, there’s a problem with his assertion. Foreign companies may not always contribute the majority of their wealth towards improving the U.S. economy, but they do invest heavily into the country. In fact, a recent analysis of federal jobs data shows two-thirds of the 656,000 manufacturing jobs created between 2010 and 2014 can be attributed directly to foreign investment.

Accurate employment figures for the following years aren’t yet available. But, with an additional $700 billion in capital coming in from non-domestic sources, total foreign investment reached $3.7 trillion by the end of 2016 — a new record.

According to an analysis published by Reuters, the United Kingdom, Japan, and Germany spent a combined total of more than $300 billion on U.S. investments over the last few years. China, which has only recently begun pouring money into North America, saw its investment grow by more than 300 percent between 2011 and 2015. It’s expected to pursue an expanding interest, along with Germany and Japan, in the years to come.

Much of this investment targets the South, where foreign companies have made a home for themselves over the last few years. Mercedes-Benz recently finished an assembly plant for its Sprinter van in Charleston, South Carolina, employing over 1,200 local workers, and Volvo Cars intends to complete its own factory there by 2020.

BMW has invested $8 billion in order to construct a colossal assembly plant in Spartanburg, South Carolina. The site has become the single largest exporter of vehicles by value for the entire country and BMW’s largest factory throughout the world. Earlier this week the automaker announced it would invest an additional $600 million into the plant, creating 1,000 extra jobs.

“The presence of this company changed everything in the trajectory of our state,” said Governor Henry McMaster during Monday’s unveiling of BMW’s updated X3.

Before you break out into humming The Stars and Stripes Forever while saluting the German flag, know that BMW is a global company. It has interests in many other nations and is wary of the current political climate within the United States.

“We have a big footprint here, and we are flexible enough,” Oliver Zipse, BMW’s board member responsible for manufacturing, explained. “We will build the X3 not only in Spartanburg, we will split it into South Africa and then to China, so we will have some flexibility to produce cars somewhere else,” he said. “If something happens at the political level — which we don’t know yet — we are able to have a flexible response.”

Officially, the Trump administration has stated it welcomes outside investment — even if the president himself has proven himself less than cordial on occasion. However, with the renegotiation of NAFTA underway, some within his own party have accused him of being inflexible — and potentially bad for the economy.

Senator Lindsey Graham recently suggested the current administration’s tactics could severely harm an American workforce dependent on foreign companies. “Negotiate a trade agreement with Europe, modernize NAFTA, don’t tear it up,” Graham told Reuters at the BMW factory. “We’re going in the wrong direction. We need more trade agreements, not less.”

[Images: BMW]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Akear Akear on Jul 01, 2017

    "Two-thirds of Post-Recession Manufacturing Jobs Were a Result of Foreign Investment, Says Study" If that is true then we are a glorified third world manufacturing nation. When a nation can no longer make things, its economy will go downhill. Still, the nation has a proud history and it is worth fighting for. A trade war may restore some pride in the country. I don't like America being relegated to second tier status.

    • See 5 previous
    • Inside Looking Out Inside Looking Out on Jul 03, 2017

      @Big Al from Oz "how capitalism functions when factories are automated" It functions perfectly well. The goal of capitalism is the rapid progress. If losers cannot follow progress - it is their fault and they will die out in few decades anyway. Same question might be asked by Romans - how society can function without slaves, or how agriculture can function with only 1% population still farming. I guess would be transhumans are the future.

  • Inside Looking Out Inside Looking Out on Jul 01, 2017

    Great news! Now America finally competes with Mexico for the honor to become industrial colony of manufacturing superpowers of Japan and Germany. Now we have to beg Chinese companies to bring jobs back to US. Because there are no American companies left, all either bankrupt or owned by one these three superpowers.

    • See 5 previous
    • Onyxtape Onyxtape on Jul 06, 2017

      @threeer 2016 debt-to-GDP ratio: US: 105% Japan: 243% China: 22% India: 66% Keep in mind this is public debt. Consumer debt ratio is still relatively (actually very) low in Asian countries - the Chinese nominally save 30% of their income and have a home ownership rate of 90+% with only 18% of those on a mortgage.

  • Wolfwagen Is it me or have auto shows just turned to meh? To me, there isn't much excitement anymore. it's like we have hit a second malaise era. Every new vehicle is some cookie-cutter CUV. No cutting-edge designs. No talk of any great powertrains, or technological achievements. It's sort of expected with the push to EVs but there is no news on that front either. No new battery tech, no new charging tech. Nothing.
  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
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