Houston Chronicle - Texas' economy stands taller thanks to global investment

News Article

By Nancy McLernon

You could fill Reliant Stadium nearly two and a half times over with the number of Texans who work for an insourcing manufacturer. Texas' economy stands taller than most thanks to foreign companies like Air Liquide USA, AMEC, BASF, Bayer, Flextronics and Novartis Alcon investing in the Lone Star State. Texans know the positive impact these insourcing companies have on local communities. They also know what is at stake if America continues to lose its global market share of foreign direct investment.

Last year, half of all global investment in the U.S. flowed into the manufacturing sector, showing the strong connection between foreign investment and U.S. manufacturing. Texas ranks second in the nation in the number of manufacturing jobs supported by insourcing companies. It has proven it is wide open for business, welcoming more than 500 projects with foreign companies since 2008.

Over the past decade, however, the U.S. has watched its share of global investment shrink by more than half - from 37 percent in 2000 to 17 percent last year. In 2012, global investment in the U.S. fell by 28 percent, compared with 2011 levels.

This week, Houston is hosting the Reinvesting in American Manufacturing Conference to encourage more global manufacturers to make their products in the U.S. Houston, which has become a hub for high-tech manufacturing, was a natural choice for showcasing the advantages of investing in the U.S. to prospective insourcing companies.

Regardless of where you work, insourcing companies affect you. Beyond providing high-quality jobs, insourcing companies invest in their communities, and the investments spur economic development and support job growth.

A recent report from the Organization for International Investment found that insourcing manufacturers are increasing their purchases of locally-produced materials by 48 percent, compared to just 13 percent for U.S. manufacturers overall.

The study also found that insourcing manufacturers, on average, offer more in compensation and benefits to hardworking Americans and pay a disproportionate amount of U.S. taxes. In short, insourcing companies play an outsized role in local communities.

For example, Toyota has invested nearly $3 billion in Texas, supporting approximately 18,000 hardworking Americans in the state alone. In addition, Toyota's presence has benefited nearly 40 parts and materials suppliers throughout the state. They have also donated more than $13.4 million to local community organizations, including the Greater Houston Area Chapter of the American Red Cross, YMCA of Greater Houston, and Big Brothers Big Sisters of South Texas.

Nationally, global companies have insourced 2 million manufacturing jobs in the United States, and last year alone, they invested $83.4 billion in new facilities across the country. Insourcing manufacturers produce 18 percent of all U.S. exports, and invest more than $30 billion annually in U.S.-based research and development activities.

The benefits of globalization to U.S. workers and the economy are clear. Unless our elected officials advance key pro-growth policies quickly, however, we risk losing our competitive advantage.

First, policymakers must avoid placing U.S. subsidiaries at a disadvantage. Government-contracting policies that favor certain companies and discriminate against subsidiaries of foreign companies hurt American workers by limiting competition and discouraging job growth.

Second, they should actively support trade agreements like the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership. These agreements will harmonize regulations and encourage more global investment in Texas and across the country.

Third, policymakers need to simplify and modernize our tax system to attract more employers. Right now, America's corporate tax rate is the highest in the world and has not been updated since people listened to music on cassettes. The U.S. is the only G-8 country that has not modernized its tax code.

Texas continues to reap the benefits of insourcing companies investing in American workers. U.S. Rep. Kevin Brady, R-The Woodlands, recently launched the Congressional Foreign Direct Investment Caucus to support greater global investment in the United States. With help from other policymakers, manufacturing can continue to flourish throughout the Lone Star State and across the nation.

Nancy McLernon is the president and CEO of the Organization for International Investment, which represents the U.S. operations of many of the world's leading global companies that insource millions of American jobs.

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