By on June 30, 2017

BMW Spartanburg Assembly Plant Factory

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.

BMW Spartanburg Assembly Plant Factory

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]

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33 Comments on “Two-thirds of Post-recession Manufacturing Jobs Were a Result of Foreign Investment, Says Study...”


  • avatar
    28-Cars-Later

    “post-recession”.

    • 0 avatar
      FreedMike

      Technically, we’re out. Doesn’t feel that way.

      • 0 avatar
        28-Cars-Later

        Funny that.

        • 0 avatar
          FreedMike

          These jobs are goin’, boys, and they ain’t coming back…to your hometown…

          If a foreign company wants to set up shop here and employ Americans, we should roll out the red carpet. Protectionism is a guaranteed loser of a policy. Globalism is the deal. We better figure out how to get Americans working with it.

          • 0 avatar
            28-Cars-Later

            Nah.

          • 0 avatar
            tresmonos

            I don’t think so. I helped quote out a product in 2013 for the new Focus platform. Ironically, there was the Chinese plant, Aguascalientes (they didn’t disclose the plant location) and MAP. The burden in the SC plant where the product was made still had the worst burden at $10/hr, but it was interesting to see the gap closing compared to 2007 when I last did something for a Tier 1.

            Sure, there will be a drain, but products are increasingly becoming complex. Plus there are niche consumers that prefer a domestic value stream: See Tesla. Weiss Watch Co. Any White Oak Cone denim product. Small textile producers like Hudson Textiles in CA. American Giant. The list is growing.

    • 0 avatar
      Big Al from Oz

      28 Cars,
      The sooner the Luddites realise ALL the economies of the world are shifting the better we will be.

      Just crying about lost jobs takes away from creating new ones.

      The problem confronting the US is not a US problem, it’s global. If Trump tries to deal with this as a US only problem the US will have a lower standard of living.

      Trump, as Trump does, like any sociopath is playing on peoples emotions. That’s the only way he knows how to operate, hence a bully.

      What I find disturbing is I believe he will introduce a 20% tax on imports. If he does this the US will still be uncompetitive, because all who deal with the US will impose a 20% tax on US goods and services. This will lead nowhere, because the other nations will continue on with their global trade.

      Other nations put together can and do produce what the US produces, plus some. I only see the US losing out with Trump.

      Trump is a fool who will accelerate the decline of the US’es global position. It’s a pity to see such a great nation with such a fool at the helm.

      • 0 avatar
        stuki

        “Trump is a fool who ….”

        He wouldn’t be The President if he wasn’t.

        And he won’t impose a 20% tariff on imports. An upside of a political “system” purpose built to put fools in the drivers’ seat, is that once they realize the real world is more complex than a campaign speech (or TV show), they lack any and all ability to devise a mapping from the latter to the former, in the timeframe they have available, before they are right back at campaign speeches again.

      • 0 avatar
        28-Cars-Later

        Goldsmith had a great idea in 1994, countries should only be trading who are regionally homogeneous or other words, first world economy to first world economy. Anything else gets a steep tariff. Never tried, but quite simple.

        What none of you seem to get is global “free” trade is the first step to global government. This is exactly how the EEC, an economic trade union, became EC and then EU. The people of Europe did not and do not desire to become a federal state, they just liked the tariff free trade and later the passport free travel. This was the free hit from the globalists, then as time went on they consolidated their power and using the boiling frog approach, conquered Europe without firing a shot.

        The Lisbon Treaty was *rejected* in June 2009 by the Irish Republic, and then in October 2009 a *second referendum* was forced on the Irish people. I was in Dublin in the second week of October 2009, everywhere graffiti was written: “No means no”, “we love our constitution” etc. The people I spoke with were against the treaty because after their ancestors were under the boot of English rule for 700 years they did not want to be stomped on by another. But oops. Brussels: All your sovereignty are belong to us. To quote a great murdering psychopath who was never prosecuted: F*ck the EU.

  • avatar

    The U.S. allows 100% direct foreign investment, one of the strengths of our economy. China requires you to have a Chinese partner. If foreign companies want to invest here and employ Americans, I say welcome them with both arms. M-14 between Detroit and Ann Arbor is lined with facilities from foreign owned automotive suppliers like Brembo.

    • 0 avatar
      Big Al from Oz

      Ronnie,
      How many Chinese manufacturers are set up in the US? The Chinese have invested money into the US, which is slightly different.

      The US has a greater amount of money invested in Chinese manufacturing than the Chinese have in US manufacturing. Obviously whatever is going on the US manufacturers are finding it profitable to invest in China.

      This sort of negates your comment as inaccurate. It’s just irrational fear.

      • 0 avatar
        joeaverage

        And that is starting to change. My state recently announced 500 jobs from Chinese companies. I hear that Foxconn is setting up a display factory in the USA too.

  • avatar
    jalop1991

    The headline should read, Study Shows America Gained Status As Mexico Of The World Years Ago

  • avatar
    Lou_BC

    All of that foreign investment offsets trade deficits.

    Anyone point that out to #meincovfefepotus?

    • 0 avatar
      Garrett

      You mean CREATES trade deficits.

      If there is zero cross border investments/debt purchases, then you cannot have a trade deficit.

      Trade deficits are created through having a budget deficit that is financed through foreign debt purchases, combined with foreign purchases of domestic assets.

      Put another way, all the dollars that are used to buy imported goods need to either be pumped back into the USA by buying assets, or converted to a foreign currency, and the supply of foreign currency that needs to be converted to dollars is based on our own international investment and exports.

      • 0 avatar
        Big Al from Oz

        Garrett,
        Um ……. most foreign investment does create wealth in the country it is set up in.

        Look at the foreign manufacturers in the US. Most of the money they earn is kept in the US.

        If you import you will naturally move money off shore to pay for the imports. But, if the foreign money invested produces exports then money does flow back to the place export.

        The US has by far the largest network of off shore based operations globally. This is where Trump might find out the hard way about screwing around with the current status quo, the US has the most to lose, just as BMW stated.

        We bought Sth African made BMWs into Australia. We are now importing US made BMWs. The same can be stated for any product that is produced by a foreign manufacturer in the US.

        Trump needs to be very careful and not sh!t in his own nest, or more correctly your nest.

        • 0 avatar
          Garrett

          You missed what I was saying.

          It is a mathematical impossibility to have a trade deficit without having a net positive amount of foreign investment (foreign investment minus domestic investment overseas).

          If you had no cross boarder investment, and we bought 1,000,000 imported UK widgets for $1 each, and they bought a single Dodge Avenger, that Avenger would effectively sell for $1,000,000, assuming that each side repatriates their revenues (remember, no cross border investments).

          Foreign investment has the impact of causing the dollar to strengthen against other currencies. This makes imports cheaper for us, and our exports more expensive abroad.

          Germany’s exports are subsidized by the fact that other Eurozone members actually make the Euro weaker than the DM would be if it still existed.

  • avatar

    “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.

    • 0 avatar
      Big Al from Oz

      akear,
      This is where some of you guys have it all wrong.

      THE US IS PRODUCING MORE THAN EVER!

      I don’t know where you people get your alternative facts from.

      Most jobs are lost not to China, but robotics and AI.

      If you want to continue using people to manufacture your nation will go backwards.

      The world owes you nothing, not even a job. You must compete. If you don’t compete fairly, as in all aspects of life no one will deal with you.

      This is what many must realise the direction the US is currently heading in. Trump is tarnishing the good name of the US. It will take much longer to mend the ills created by Trump than it will take for him to destroy.

      Most of Trumps rhetoric pulls at peoples emotions, but, his rhetoric will not work. You can’t go around and bully other nations. The US is travelling okay in comparison to most other nations.

      This is as good as it gets, the only other way is down, like the direction the UK is heading in.

      • 0 avatar

        Unfortunately, most of those industrial robots and machine tools used in US factory floor are either from China or Germany. I think the US machine tool and robotics industry is in crisis with about 5% of the world market. For this reason the US is in danger of missing out in the next industrial revolution. The lack or US robotics and machine tools are a big part of the US trade deficit.

        Below is an article posted in the NYTs earlier this year illustrating the robotics crisis America is facing.

        https://www.nytimes.com/2017/01/25/technology/personaltech/how-to-make-americas-robots-great-again.html

        • 0 avatar
          Big Al from Oz

          akear,
          The US was in a similar position in the late 19th Century, when the last major changes occurred in manufacturing ……….. mass production.

          The US used many European ideas and technologies, then profited on them.

          The Europeans back in the 19th Century had more technology at their fingertips than the US did back then, no different than the position China was in 30 years ago or so.

          If the US manages itself like the Europeans did in the 19th and 20th Century the US will head down the track of the Europeans.

          The US people need to compete fairly and not blame the world for it’s woes.

          The US will rachet down gradually as time passes. Just look at what is occurring outside of the US, or the US can just stick it’s head in the sand, leaving most of itself exposed.

          Many in the US might feel uncomfortable regarding where the US is currently. But the US will find it hard to become what it was, unless there is a major war and the US comes out on top as what occurred in WWII, which left the US with over 50% of the global economy.

          Look to the future at what the US can become, not dwell on the past at what had been, but learn from the past.

          No matter what happens globally the US is up against several large economic competitors, China, EU, soon to be India, etc.

          All in the OECD must make a place for these economies. Fighting them will only retard our expansion, when we should be facilitating them.

        • 0 avatar
          joeaverage

          Just tell me how capitalism functions when factories are automated, doctors replaced by IBM’s Watson, and fastfood joints are the modern equivalent of an Automat with one employee (maybe).

          I’m not a Luddite nor the modern equivalent of a Buggywhip maker. Just would like to get a preview from someone’s crystal ball.

          • 0 avatar
            Big Al from Oz

            joeaverage,
            The candlestick makers, cobblers, tinkers and tailors made the same comments as you.

            Did they even consider working for NASA as an astronaut, software programmer or a neurosurgeon?

            I think you are scared and fear the future. This is not good if you want to advance.

            There will be jobs we can’t even think of.

          • 0 avatar

            “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.

  • avatar

    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.

    • 0 avatar

      The real crisis is the US can’t make robots and machine tools. Look at the NYTs article I posted above your message.

      • 0 avatar

        Americans lack one thing that made Germany, Japan and China superpowers – patience and workmanship (which also requires patiently and methodically doing things). In America everything is about stock price and getting rich very fast and ignoring long term goals. And note that all three super powers were or are enemies of US. US beat Germany and Japan into submission because US was world’s manufacturing superpower with unlimited resources in 40s. But not anymore. And hot war with China can happen pretty fast any time now. Of course Chinese might be smarter that Germany and Japan were and turn US into their colony by economical means, what both Germans and Japanese did eventually after war. But actually things are more complicated and may be Americans do the right thing – they consume and have nice life NOW by spending borrowed money now and do not care what happens in the future. Because there might be no future after all.

        • 0 avatar
          threeer

          Germany and Japan were also “gifted” billions and billions of American capital after the war when we worked diligently to rebuild their countries. China, however, is quietly (well, mostly quietly) working to overpower America simply by selling stuff to us cheaply and transferring an ape-ton of wealth their way. And we’re more than happy to allow this to happen. I’m not sure I buy that the foreign investment in American manufacturing offsets the deficits. Imagine what we could do if the $300 billion plus that goes to China ever. single. year….actually stayed at home. I’m not a fan of our country eventually succumbing to Chinese influence (much less dominance), but I’d not be surprised if, much like the frog in the boiling pot, it slowly happened anyway. I’d much rather see us as a country not beholden to others, as a country that cannot provide for itself soon becomes slave to those that can.

          As such, I’m torn when I see the factory opening in Charleston, for example. That’s where I consider “home.” While I’m happy that more folks will have jobs, not sure I’m thrilled with the ownership and eventual profit going back to a country that is neither friend nor ally. But that’s just me…

          • 0 avatar

            You can also consider it as savers vs spenders symbiosis. We (US) are spenders and Germany/Japan and now Korea/China too are savers. Americans do not want to do manufacturing jobs (and may be for a good reason). But what they do they print $$, then pay with these $$ for goods made by beforementioned manufacturing superpowers.These superpowers do not spend these $$, they save it. And what they can do with $$? Only option they have to give it back to Americans as loans (which will never be paid back) so Americans can buy their products. Yes in some sense Americans are parasites but them provide protection (like mafia does). They give us goods for free in exchange for protection.

          • 0 avatar
            Big Al from Oz

            Inside Looking Out,
            Japan has the world’s highest debt to GDP ratio.

            Savers you call them?

            China has a high debt to GDP ratio.

            Again, savers you call them?

            Korea has a high debt to GDP ration.

            ??????????????????

            Come on mate. You need to do better than that.

            A good idea when formulating an opinion is to use actual data and information. Don’t become creative like the POTUS to make an argument fit your paradigms.

            That is what is wrong with many people, not only in the US but many countries. You are scared, fear and you are blaming all instead of yourselves.

          • 0 avatar
            onyxtape

            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.

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