In Focus: The U.S. is Green with Insourcing Innovation

Some of the longest strides in green innovation in the United States are being made by insourcing firms. Fuel-efficient cars, energy-generating wind farms, sun-absorbing solar panels, and community-connecting commuter rails are all at work in the American market because of investment from foreign firms.

Insourcing is when companies based abroad invest in the United States and create jobs for Americans. Why the United States? Why now? Driving the influx of innovation is the rising cost of crude oil along with demand for less carbon and more environmental responsibility from corporations. Insourcing firms are finding the United States is ready to transform to a green economy; in response, firms are generating green options for the American consumer.

In Greensburg, Indiana, Honda is producing "America's Greenest Car," the Civic GX natural gas vehicle; EPA rated it 90% cleaner than the average gasoline-powered car. The American Council for an Energy-Efficient Economy agrees, awarding accolades to Honda for five consecutive years.

Honda, a Japanese-based company with over 50 years in the United States, has long been an environmental leader: first mass-produced hybrid, the Honda Insight; first vehicle to meet California's low emission vehicle standards; and first government-certified fuel-cell electric vehicle.

Insourcing companies’ contributions to better environmental stewardship are not limited to the auto industry. Top energy leaders in the United States, operating manufacturing and R&D facilities here, are foreign companies.

SCHOTT Solar, part of the German specialty glass manufacturer, dedicated its $100 million solar equipment manufacturing facility in Albuquerque, New Mexico, in May of this year. When fully operational, the facility will provide 1,500 new jobs and serve as the hub of SCHOTT’s U.S. operations.

In 2008, Vestas, a wind-power company based in Denmark, opened its first U.S. manufacturing facility in Windsor, Colorado. This initial facility was followed quickly by two more investments, demonstrating Vestas’ confidence in U.S. wind energy potential. Vestas is helping to establish the state as a hub of the “New Energy Economy.” Combining Vestas’ facilities in Windsor, Pueblo, and its soon-to-be-built Brighton plant, the company will be employing over 2,500 Coloradans, resulting in a $700 million capital investment in the state. Colorado Governor Bill Ritter said the investment was an “important economic reinforcement to Colorado.”

Whether it is Indiana, New Mexico, or where you are living, foreign direct investment will continue to be a driver of the American economy. FDI into the United States set a record in 2008 at $325 billion, which continued to rise in the first quarter of 2009, but at a slower rate. Overall, Insourcing companies make up a large slice of U.S. business activity. According to the latest government data, insourcing companies wrote $364 billion in U.S. paychecks, manufacture almost 19 percent of U.S. exports, spend 14 percent of total American-based

R&D, and pay 14 percent of total corporate taxes.

The United States continues to be a prime location for worldwide investment and the American economy is starving for new capital. Green investment is an opportunity for insourcers to expand their economic footprint. New capital and investment leads to new facilities, equipment purchases, new product developments, and most important, jobs. That is an economic combination that makes any community green with envy. 

Nancy McLernon is the president & CEO of OFII, an association representing the unique interests of insourcing companies. Find more information at www.ofii.org.