Last December I wrote an article on U.S. companies with high exposure to emerging markets. Now let's take a look at foreign firms that have high exposure to the U.S. market.
Despite sluggish economic growth, the U.S. remains the world’s largest consumer market and is the world’s top destination for foreign direct investment (FDI). Hence hundreds of foreign firms have operations in the U.S. to take advantage of this huge market. This process of foreign companies investing in the U.S. and creating jobs is called “Insourcing."
During the last decade, FDI in the United States jumped by 82% from $179 billion to over $325 billion, resulting in the insourcing of 5.3 million American jobs, or 4.6% of the U.S. workforce. While most U.S. companies' offshore work consists of chasing the cheapest labor available on the planet (even if the quality is poor), it is commendable that some foreign firms actually have confidence in the ability of the high-quality U.S. workforce. The U.S unemployment rate will also be higher if these overseas firms do not invest and create high-paying jobs in the country.
Some interesting facts about what insourcing companies contribute to the U.S. economy:
- Write $364.2 billion in paychecks. The average compensation per American worker at Insourcing companies is $68,317, which is 32% higher than compensation at all U.S. companies.
- Re-invest profits earned in the U.S. back into American operations. Insourcing companies reinvested $68.5 billion of their U.S. profits back into their American operations.
- Purchase from local suppliers and small businesses. Insourcing companies bought $1.5 trillion in intermediate inputs from U.S. suppliers, amounting to 76.8 cents for every dollar spent of their total input purchases of $1.96 trillion.
- Conduct American-based research and development. Insourcing companies spent $34.3 billion in the United States on R&D – over 13.8% of all private-sector R&D.
- Manufacture in America to export to the world. Thirty percent of American jobs at Insourcing companies are in manufacturing, and products made by U.S. workers at these companies account for nearly 19%, or $195.3 billion, of all U.S. exports.
- Make long-term and strategic investments in the U.S. Many insourcing companies have been in the United States for decades; some have been here for almost a century, demonstrating their commitment to and confidence in the American workforce.
- Pay U.S. taxes. Insourcing companies paid a record $50 billion in U.S. corporate taxes, over 14% of U.S. corporate taxes.
The following is a brief overview of the insourcing firms:
1. Alstom (OTCPK:AOMFF): France-based global transportation infrastructure and energy leader has operations in nearly all 50 states and employs about 6,000 American workers. Alstom trades as an unsponsored ADR.
2. EADS North America (OTCPK:EADSF): The U.S. operations of Netherlands-based global aerospace and defense giant EADS supports more than 200,000 high-paying American jobs coast to coast. As the largest international customer or U.S. aerospace exports, the company is committed to making America stronger and safer.
3. Areva (OTCPK:ARVCF): France-based nuclear power company Areva employs over 6,000 Americans.
4. BAE Systems (OTCPK:BAESY): The U.S. headquarters of this British defense and aerospace leader is based in Rockville, Maryland. The company employs over 45,000 workers across the country.
5. Nestle USA (OTCPK:NSRGY): Switzerland-based Nestlé has been in America for over a century. Nestle USA operates 82 U.S. factories and employs over 42,000 American workers. In March 2009, Nestlé opened a new state-of-the-art factory in Anderson, Indiana, an area deeply impacted by the economic downturn. This factory created over 500 high-paying jobs in this poverty-stricken mid-western city where even minimum-wage service-sector jobs are hard to come by.
Other foreign firms with large U.S. operations are listed below, along with the number workers employed:
- Dassault Falcon Jet (OTCPK:DASTY) - 3,000
- T-Mobile USA (OTCQX:DTEGY) - Over 41,000
- Volvo Group North America (OTCPK:VOLVY) - Over 10,000
- Evonik Industries - Over 3,000
- Finmeccanica North America (OTCPK:FINMF)
- Novo Nordisk, Inc. (NVO) - 4,400
- Sanofi Pasteur (SNY) - 2,300
- BASF Corporation (OTCQX:BASFY) - 15,000
- SAP America (SAP) - Over 8,000
- SCHOTT Solar, Inc. - 2,500
- Sony Corporation of America (SNE) - 15,000
- Vestas American Wind Technologies (OTCPK:VWDRY) - 2,500
- Air Liquide USA (OTCPK:AIQUY) - 4,500
- Nokia, Inc. (NOK) - 6,000
- Solvay North America (OTC:SVYSF) - 3,400
- Sodexo, Inc. (SDX) - 110,000
- Thomson Reuters (TRI) - 26,000
Source: The Organization for International Investment
Disclosure: No Positions