Foreign Direct Investment O NEAL // FOREIGN DIRECT INVESTMENT // 1
O NEAL KEEPS A PULSE ON MANUFACTURING TRENDS IN THE UNITED STATES PARTICULARLY THE MANUFACTURING BOOM THAT IS OCCURRING IN THE SOUTHEAST. FOREIGN DIRECT INVESTMENT (FDI) IN THE UNITED STATES HAS BEEN A KEY DRIVER IN THE RECENT MANUFACTURING ECONOMIC RECOVERY. CAPITAL INVESTMENT IN MANUFACTURING AND PRODUCTION FACILITIES BY FOREIGN- OWNED COMPANIES HAS BEEN ON A STEADY INCREASE IN THE SOUTHEAST UNITED STATES. Companies began shifting operations to the U.S. from overseas locations, and experts predicted a massive movement in the form of physical relocation back to the U.S. As this trend continues, questions have arisen as to how fast and even whether reshoring is actually occurring. Recently, an analysis by A.T. Kearney suggested that offshoring still has a greater economic impact than reshoring, when reshoring is strictly defined as physically returning production to the U.S. But this view of merely shifting products and processes from one location to another ignores the complexity of where money is being spent and investments are being made. According to the Organization for International Investment (OFII), it is insourcing, or foreign direct investment (FDI) in the United States, that truly bolsters U.S. manufacturing. The OFII s Foreign Direct Investment in the United States 2014 Report showed that in 2013, manufacturing accounted for one-third of cumulative FDI, in an amount exceeding $900 billion. There has been a solid upward trend in manufacturing growth that is expected to continue into the future. A forecast released by the Institute for Supply Management noted that manufacturing experienced 18 consecutive months of growth from June 2013 through November 2014...and our forecast calls for a continuation of growth in 2015. Similarly, in a survey completed in February 2015 by Avalanche Consulting, in 2014, more respondents from communities saw an increase in all types of economic development activity. A majority of respondents cited higher increases in leads, prospects, visits, expansions, and corporate announcements over the previous year. Positive momentum is expected to continue during the next 12 months. O NEAL // FOREIGN DIRECT INVESTMENT // 2
Some economists have suggested terms such as onshoring and reshoring are not an accurate portrayal of what is happening in manufacturing. They describe this as a regionalization of manufacturing as the importance of speed to market is increasingly playing a larger role in the strategic location of key components of the manufacturing process. A recent study by the Global Supply Chain Institute at the University of Tennessee on outsourcing and global supply chains reported that companies are adopting regional supply chain models. Our research suggests that global supply chains across the world will eventually break into a series of supply pods where regional procurement and manufacturing operations will supply the major demand centers of the area, at least for a significant percentage of production requirements. These trends bode well for the U.S. According to Bureau of Economic Analysis data from 2012, U.S. affiliates of multinational corporations were responsible for 15% of all U.S. private capital investment and 15% of research and development. Together, these companies employed 5.8 million people and compensation averaged $78,926. Companies are increasingly making their products in multiple stages from supply networks in many countries that are linked together by trade and investment. Factors Driving Foreign Direct Investment What are the factors that are driving FDI and how can a region make itself attractive? Area Development magazine article stated, State-level economic development agencies pursue a variety of strategies to attract FDI, including targeted marketing and business development campaigns, generous business incentives, and old-fashioned relationship-building through trade missions, operation of permanent offices abroad, and intense networking through their existing international business communities. O NEAL // FOREIGN DIRECT INVESTMENT // 3
States can also strive to maintain the key advantages that have been found to spur FDI: Proximity to markets Dependable infrastructure Training and education Business-friendly regulatory environments A January 2015 quarterly report from PricewaterhouseCoopers, LLCsurveyed U.S.based executives in large, multinational industrial manufacturing businesses. The report found that although companies anticipate continued growth of their workforce this year, the manufacturing skills gap was an area of concern among survey respondents. Thirtythree percent stated that a lack of qualified workers was a barrier to growth, compared to twenty percent of respondents a year ago. Area Development magazine s 29th Annual Survey of Corporate Executives also found that manufacturers are increasingly looking at the skill level of local workforces. This indicates that a significant area of focus should continue to be on the creation of college and secondary programs to train workers in skilled, engineering related fields. Southern states have a strong lead in building their manufacturing base. A 2011 Southern Business Development article stated of total investments made in this country by foreign-owned companies since 2001, the South s take has averaged 43 percent of the U.S. annual total. The growing roster of facilities that have already been built increases the likelihood that new manufacturers will be close to their customers if they build facilities in the south. A 2014 USA Today article credited the south with a trifecta of incentives: lower costs, generous state incentive packages and right-towork laws. Investing in Manufacturing Facilities With continued growth on the horizon and a suite of advantages working in America s favor, manufacturers will continue to look at capital investments in the United States. O NEAL // FOREIGN DIRECT INVESTMENT // 4
O Neal Delivers. FULL PROJECT DELIVERY O Neal focuses on the Business of Project Deliveryintegrating overall project planning, design and construction to create cost-effective capital solutions. With all of our design and construction professionals in-house, our clients benefit from a true collaboration of disciplines. PRECONSTRUCTION O Neal leverages design and construction expertise to develop project definition, scope and cost at the earliest phase of a project. Our proven process can identify and quantify clients project needs quickly and accurately. This allows clients to develop or confirm funding and schedule duration for their project prior to full capital commitment guaranteed. EXPERIENCE Since 1975, O Neal has been successfully delivering capital projects in diverse industries worldwide. Our professionals average over 21 years of experience and specialize in complex design and construction. OUR PEOPLE, OUR VALUES, OUR CULTURE Our people are our biggest asset. As an employeeowned company, O Neal people have a long-term stake in client satisfaction. Although we are not a small company, working with O Neal gives you that small business feel. Clients experience a culture that is customer-oriented, accountable and professional. GUARANTEED COST AND SCHEDULE Unlike most in our industry, O Neal can guarantee a cost and schedule for project delivery. Our expertise and due diligence in the Preconstruction phase allows us to be confident in our cost for total project delivery. ATLANTA 3715 Northside Parkway NW Northcreek 400, Suite 500 Atlanta, GA 30327 404.230.9901 GREENVILLE 10 Falcon Crest Drive Greenville, SC 29607 864.298.2000 onealinc.com O NEAL // FOREIGN DIRECT INVESTMENT // 5