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The Impact on the U.S. Economy of Greenfield Projects by U.S. Subsidiaries of Foreign Companies

Organization for International Investment (Jul 08)
Insourcing by foreign companies, i.e., supporting American jobs, represents an integral part of the U.S. economy. Every year, foreign companies and their U.S. subsidiaries announce plans for hundreds of new projects in the United States, known as greenfield projects. The announcement or the opening of greenfield projects — along with expansions in existing U.S. subsidiaries’ operations by foreign-based companies — generates enormous economic benefits for the American economy. These new ventures bring billions of investment dollars into the United States, create thousands of insourced American jobs, and highlight the importance of the U.S. market for foreign companies as a location for their business operations.

The Economic Impact of Greenfield Investment on the U.S. Economy (2003–2007)
Nearly 760 greenfield insourced projects or expansions were announced or opened in 2007. This is the greatest number of planned greenfield projects by foreign companies or their U.S. subsidiaries in any single year during the last five years, and represents a 42 percent increase over the 536 greenfield projects recorded in 2003. Moreover, investments related to the greenfield projects declared in 2007 totaled $35.5 billion, a threefold increase over the $11.6 billion investment total in 2003 for greenfield insourced projects.

Cumulatively, over 3,000 greenfield projects or expansions were announced or opened by U.S. subsidiaries of foreign companies over the last five years. The $109.5 billion in investments tied to these greenfield projects are expected to generate almost 175,000 American jobs. This report provides an overview of the most recent statistics on announced or opened greenfield projects by foreign companies or their U.S. subsidiaries. The statistics presented here are generated from fDi Markets, a database that tracks foreign direct investment projects globally.1

Greenfield Insourcing Projects
Greenfield projects by U.S. subsidiaries of companies headquartered abroad refer to investments in brand new projects. This can mean a major capital investment by a foreign firm that entails the establishment of new production facilities, such as a manufacturing plant, office, or other physical company-related structure or group of structures in an area where no previous facilities exist. The name comes from the idea of building a facility literally on a "green" field, such as farmland or a forest that had not been developed. Greenfield investing is usually an alternative to other forms of investment by foreign companies, such as mergers and acquisitions, joint ventures, or licensing agreements.2

Toyota Motor, the Hanjin Group, Adidas, the Tata Group, and Vodafone are among the foreign firms that have most recently announced their intention to establish new ventures in the American market.

Greenfield Project: MMK
Location: Portsmouth, Ohio
In September 2007, Magnitogorsk, or MMK, Russia’s largest ferrous industry company, announced plans to invest more than $1 billion to build a new cold-rolled steel mill for automotive applications with annual capacity of 1.5 million metric tons. This greenfield insourcing project is expected to bring more than 1,000 jobs to southern Ohio, once the project is complete.3 The site selected by MMK is close to auto manufacturing plants in Kentucky, Ohio, and Indiana. Economic development officials in Ohio view the MMK mill as a major shot in the arm for the region’s economy, providing good paying manufacturing jobs.

According to Business Week, Russia’s big steel producers have invested more than $3 billion in U.S. operations in the last three years. This includes the 2006 acquisition of the U.S. rail and plate producer Oregon Steel by Evraz Holding, Russia’s largest steel maker, and the 2004 purchase by Severstal, Russia’s second-largest steel producer, of Rouge Industries in Michigan.4

…the MMK investment would be a huge economic development win for Ohio. — Ohio Governor Ted Strickland

Greenfield Project: Toyota Motor
Location: Tupelo, Mississippi
Toyota Motor announced plans to build a $1.3 billion assembly manufacturing plant near Tupelo, Mississippi, that will produce 150,000 of its next-generation Highlander crossover utility vehicles per year when it opens in 2010. Operations at the plant will include stamping, body weld, plastics, paint, and assembly. This is Toyota’s eighth North American vehicle assembly plant since it established operations in North America in 1957. In 2009, Toyota will have the annual capacity to build approximately 2.16 million cars and trucks, 1.45 million engines, and 600,000 automatic transmissions in 15 plants across North America. According to company information, Toyota directly employs more than 41,000 people in North America.5

When the plant is up and running in 2009, it will employ 2,000 factory workers at a forecast $20 an hour after three years on the job, plus health and retirement benefits.6 The company is expected to add a second vehicle plant after the current plant begins production in 2010. Toyota officials have hinted that it has plans to employ 4,000 employees, which implies a doubling of the plant.7

Today, Toyota is the second-largest car producer in the United States, overtaking Ford in 2008.8 Industry observers note that the decision by Toyota to open its auto manufacturing plant in Mississippi is part of a trend by Asian automakers to move production to the southern United States. The Tupelo investment is the second major auto assembly plant to locate in the state in the last decade. Senator Trent Lott (R-Mississippi) noted that the partnership between Toyota and Mississippi is taking place in a state that has already proven itself capable of attracting the world’s top defense, automotive, and aerospace jobs.

On my visits to Northern Mississippi, I have talked with area companies and observed their work force. What I observed were people who are educated, ethical, and friendly with a strong work ethic — a perfect match for the Toyota way. — Ray Tanguay, Toyota Manufacturing Vice President

Greenfield Project: National Industries Inc.
Location: Shoals, Alabama
The National Alabama Corporation, a newly formed subsidiary of the Canadian railcar manufacturer National Industries, will locate in Shoals, Alabama, bringing in at least 1,800 new jobs to manufacture railcars, at a pay scale of $15 to $18 an hour. The company is a subsidiary of National Industries Inc. and the parent company is the Canadian firm National Steel Car Limited. The railcar manufacturing plant is expected to begin operations in early 2009. It will produce 8,000 to 10,000 railcars per year once the manufacturing facility is fully operational.9

National Steel looked at about 150 sites before opting to locate in Shoals. Local economic development officials expect the annual economic impact of the investment to be at least $200 million in the area, including construction jobs as well as jobs associated with the retail, food, and service industries.

This is the type of transformational economic development project that northwest Alabama has needed for some time. It means new jobs, more opportunities, and a better quality of life for our citizens. We welcome National Alabama Corporation and will do everything we can to make sure the company succeeds, grows, and provides good jobs for the people of this area. — Alabama Governor Bob R. Riley

Greenfield Project: Hanjin Group
Location: Jacksonville, Florida
The Korean company Hanjin Shipping, Korea’s largest and one of the world’s biggest container carriers moving more than 100 million tons of cargo annually while operating in more than 50 countries, has signed an agreement with the Jacksonville Port Authority to build a new 170-acre container terminal in Jacksonville, Florida. The terminal is scheduled to open in 2011 with the capacity to handle one million twenty-foot-equivalent units (TEUs) annually. This measurement equates to more than seven and a half million tons of cargo.

The Hanjin Shipping Container Terminal in Jacksonville is expected to generate at least $1 billion in economic activity in Northeast Florida and create thousands of new direct and indirect jobs in the region.

Today’s agreement with Hanjin underscores Jacksonville’s new role in global trade. — Rick Ferrin, Executive Director of the Jacksonville Port Authority (JAXPORT)

Greenfield Project: Hon Hai Precision Industry
Location: Indianapolis, Indiana
Indiana is on a substantial roll for foreign direct investment. Foxconn Technology Group, part of Hon Hai Precision Industry Company, a Taiwanese powerhouse in high-tech contract manufacturing, will bring 1,400 new jobs into the Indianapolis metropolitan area over the next two years. Foxconn is the world’s number-one player in electronics manufacturing services. The company will make a multimillion-dollar investment to expand its Plainfield, Indiana, computer assembly facility.

Greenfield Project: Adidas
Location: Spartanburg, South Carolina
The German footwear manufacturer Adidas, one of the global leaders within the sporting goods industry, announced that it would build state-of-the-art distribution facilities in Spartanburg, South Carolina. The consolidation is designed to streamline the far-flung distribution operations of Adidas. The new facilities are expected to open by fall 2009. The footwear facility will be approximately 1.9 million square feet, and an apparel facility will measure approximately 800,000 square feet. At full capacity, the $150 million project is expected to create 1,200 jobs, in Spartanburg County.10

Today’s announcement is further evidence that our efforts to improve the economic conditions for business growth are producing real results. As we work to diversify our economy, our state’s ability to attract and grow world-class companies like Adidas is increasingly important. Given the size of this investment and the number of jobs that come along with it, this is a real win for Spartanburg County. — South Carolina Governor Mark Sanford

Greenfield Project: DaimlerChrysler
Location: Kokomo, Indiana
A new joint venture between DaimlerChrysler and Getrag Corporate Group, the largest independent transmission maker in the world, was announced in June 2007 to build a $560 million transmission plant in Kokomo, Indiana. The joint venture is expected to produce up to 500,000 transmissions annually, beginning as early as February 2009. This new plant will create nearly 1,200 jobs producing energy-efficient dual clutch transmissions.

This new investment will represent Indiana’s biggest economic development deal since Honda announced plans to build a new manufacturing plant in Greensburg. The jobs at Honda Motor Company and Getrag represent the kinds of advanced manufacturing jobs Indiana and other states are trying to attract, in part because they pay above average wages.11

Insourcing — Top 20 States 2007
The top five states in jobs generated by greenfield insourcing in 2007 were Indiana, Georgia, Ohio, Alabama, and Mississippi. Last year’s statistics reveal that Indiana was the top state with over 4,500 jobs expected to result from 33 insourced greenfield project announcements, followed closely by second-ranked Georgia with almost 4,400 new jobs tied to 34 insourced greenfield projects.

Both Indiana and Georgia pulled in investment from around the world last year. For instance, Indiana attracted greenfield projects from such source countries as Japan, Canada, Germany, the Netherlands, the United Kingdom, France, Switzerland, and Taiwan. Similarly, Georgia was a magnet for investors from diverse source nations including Germany, South Korea, Japan, and Belgium.

Even investors from small nations are drawn to the U.S. market. One example includes the investment in Georgia by the world’s largest independent gaming developer, the Iceland-based company CCP Games. In October 2007, CCP Games celebrated the opening of its North American headquarters outside of Atlanta, Georgia, allowing it to locate closer to Georgia’s growing gaming industry. CCP Games announced that it would hire more than 100 new employees.

Other leading states attracting significant insourced greenfield projects in 2007 were South Carolina, California, Michigan, Pennsylvania, Florida, and Arkansas. Planned insourced greenfield projects announced in 2007 are expected to generate more than 2,000 jobs in each of these states. An additional six states will have at least 1,000 new jobs on the payroll due to insourced greenfield investments: Tennessee, North Carolina, Texas, Massachusetts, New York, and Kentucky.

1 fDi Markets, formerly OCO Monitor, is an online database that has been tracking foreign direct investment projects worldwide since 2003. More information about fDi Markets can be found at
The data presented in this report were collected on May 1, 2008.
2 United Nations Conference on Trade and Development, World Investment Report, 2006.
3 ASM International, “Russian Steelmaker Pondering $1 Billion Mill in Ohio,” September 10, 2007.
4 Business Week, “Russia’s Steel Wheels Roll Into America,” October 1, 2007.
5 Mississippi Economic Council, “Toyota to Build Highlanders in Mississippi,” 2008.
6 USA Today, “Toyota to Build Mississippi Plant,” March 5, 2007.
7 The Car Connection, “Toyota Picks Tupelo, Miss., for Plant,” February 27, 2007.
8 U.S. News and World Report, “How Toyota Could Become the U.S. Sales Champ,” June 9, 2008.
9 Expansion Management, “National Steel Car to Build $350 Million Freight Rail Car Facility in Northwestern Alabama,” August 2, 2007.
10 Expansion Management, “Adidas to Build 1.1 Million Square Foot Distribution Facility in Spartanburg, South Carolina,” April 24, 2007.
11 Inside Indiana Business, “Chrysler Confirms Big Plant Announcement,” June 18, 2007.
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