Forget the “summer slump” – the summer of 2017 has been one for the books when it comes to foreign investment in the Carolinas. At the end of June, South Korean conglomerate Samsung made a monumental decision to locate an appliance manufacturing facility in Newberry, S.C., promising 954 jobs and an investment of over $380 million. German powerhouse BMW also announced a 1,000 job expansion at their manufacturing facility in Greer, S.C. Then, in North Carolina, India’s Infosys announced their intent to create 2,000 new jobs in Wake County, followed closely by an announcement from Austrian particleboard manufacturer, Egger, of their intent to create 770 jobs and invest $700 million. Combine these successes with other project announcements like Sumter Easy Home from China (creating 88 new jobs in Sumter County, S.C.) and HPFABRICS from Turkey (creating 260 jobs in Forsyth County, N.C.), and it becomes evident that foreign direct investment has been on a roll in our region. As the momentum continues to build in the Carolinas after a strong first half of 2017, it leads those interested in economic development to wonder what’s next.
In June, I had the opportunity to attend the US Department of Commerce’s Fourth Annual SelectUSA Summit. Over 3,000 foreign companies, service providers, trade groups and economic development professionals converged on the Gaylord National Convention Center in Washington D.C. for three days to talk about investing in the US. This was my fourth time attending the event but the first time under the Trump administration. This year, of the 3,000 attendees, more than one-third were international companies. These potential investors were at varying stages in the decision process, but many were simply gathering information to begin their evaluations.
Typically, beyond the beneficial meetings and networking opportunities, this conference delivers a good cross-section of prospective companies and provides suggestions of opportunities the world has identified in the US. This year, there were some definite changes stemming from the new administration; perhaps the most obvious being that President Trump did not speak at the event as President Obama has at each previous Summit. Despite proposed federal trade and commerce related budget cuts, many discussed their hopefulness that the SelectUSA program would not just continue, but continue to grow and thrive. However, federal politics aside, the Summit was indicative of many things to come.
One positive trend was that roughly 15% of the attending companies at the Summit identified as operating in the automotive industry. This is not surprising, given major announcements in recent years to boost US production by companies like Daimler, Volvo, BMW, Honda, Ford, and most recently Toyota, among others. In speaking with automotive suppliers at the event, the increases in vehicle production have tipped the scale and now demand a physical presence closer to these facilities. Aerospace and automotive manufacturing combined to make “transportation equipment” the second largest sector for foreign direct investment in the United States in 2016, according to a report by the Organization for International Investment. Given the robust automotive footprint in the region, these projects should continue to fare well for the Southeast, particularly the Carolinas.
Roughly the same amount of companies identifying as automotive, 15%, identified with the consumer goods sector. Examining some of the major international investments from this year, it is clear the Carolinas remain very strong in this segment. Large distribution centers from retailers like Target, Dollar Tree, Amazon, and Walmart continue to pop up and expand in the Carolinas, which can make it even faster and easier for companies making consumer products to get those goods to market. And, as we all know, time is money. Population access, low-cost labor and logistics (including the Port of Charleston and Charlotte-Douglas Airport) make North and South Carolina smart targets for these types of projects.
From a geographical standpoint, Asia seemed to be the dominant continent in attendance. The largest Asian contingents hailed from China and Japan, followed by Taiwan, South Korea and India. China boasted more than 150 company representatives and Japan over 100. To put this in perspective, Germany brought just over 40. Many countries that you would expect, like Canada, Italy, Brazil and Switzerland brought sizeable contingents. However, a few surprises - Romania, Jordan and Vietnam - each had larger delegations than countries typically targeted for foreign investment, such as the United Kingdom, France and Sweden. While it’s doubtful that these will become investment powerhouses in coming years, it may signal diversification in the portfolios of companies heading to the US. For example, companies from countries like Ireland (James Hardie Building Products in South Carolina), South Africa (Stormberg Foods in North Carolina) and Spain (Gestamp in South Carolina) have each made investments in the region this year. While it is hard to tell what’s to come, other countries such as Italy, the United Kingdom and China are already giving traditional investment origin countries that favor the Carolinas, like Japan, a run for their money.
Business is good right now and companies attending the Summit took notice. Both North Carolina and South Carolina had large groups of economic developers in attendance to meet with potential investors. South Carolina Governor Henry McMaster and North Carolina Economic Development Partnership President Chris Chung were each featured speakers. Executives from many companies at home in the Carolinas were presenters, including Michelin, Samsung and ABB. The presence did not go unnoticed, as many companies commented on these presentations and the evident pro-business climate of the Carolinas.
If this year’s Summit and recent economic development successes are any indication of foreign investment trends in the Southeastern US, the outlook is extremely positive. As the investment and job announcements continue to roll in from around the world, the Carolinas have strong potential in the months and years to come.