Foreign Direct Investment Remains High For U.S. Manufacturers Despite Economic Slowdown

FDI Increase in 2000 Tops 1999



Developed Countries Dominate Top Investment Rankings,

With Record Growth in U.K.



Apr 18, 2001, 01:00 ET from Deloitte Consulting

    NEW YORK, April 18 /PRNewswire/ -- Despite the economic slowdown that
 began affecting investment in the third-quarter of 2000, U.S. manufacturers
 increased foreign direct investment (FDI) an additional $6 billion over the
 1999 increase, according to Deloitte Research's new Global Investment Trends
 of U.S. Manufacturers: Building the Global Network study.  By the beginning of
 2001, the estimated cumulative stock of FDI by U.S. manufacturers around the
 world stood at more than $358 billion conservatively estimated after
 increasing $42 billion in 2000, up from 1999's $36 billion.
     "This continuing upward trend in FDI underscores that U.S. firms have
 learned the lesson that globalization is no longer an option for a few select
 industries, but is instead imperative to remaining competitive," said Dick
 Gabrys, Deloitte & Touche global manufacturing practice director. "A short
 global slowdown is unlikely to seriously affect FDI flows due to their
 long-term nature and because the benefits of globalization -- increased
 economies of scale, access to top-notch manufacturing and technological
 resources, and presence in growing markets -- cannot be safely ignored by any
 firm."
     Major opportunities for U.S. manufacturers exist for investments around
 the globe, according to the study, and will continue to draw U.S. capital,
 technology, and managerial know-how, even in a slight downturn.  The Deloitte
 Research study of investment trends is based on a comprehensive analysis of
 available U.S., international, and industry-specific data and selected company
 information in electronics, industrial machinery, chemicals, food, metals and
 transportation equipment.
     "Based on our research, we believe developed nations will continue to
 receive a majority of U.S. manufacturing FDI for the foreseeable future,"
 added John Southcott, Deloitte Consulting Manufacturing Americas Practice
 Director. "In 1999, the latest year with complete, detailed data, high-wage
 countries captured an astounding 87 percent of U.S. FDI, compared to
 80 percent in 1998, reflecting the greater importance of non-wage factors in
 overseas investment decisions and the continued paradox of expensive versus
 cheap labor.  In fact, low-wage countries attracted less U.S. investment,
 13 percent in 1999, compared to 25 percent in 1998 and 31 percent in 1997."
 Country- and industry-specific findings from the latest Deloitte Research
 report include:
 
     Specific Findings Around the World:
     * U.S. manufacturing FDI into Europe increased 58 percent in 1999, with
       transportation equipment and electronics accounting for most of the
       growth.  Receiving $22.8 billion, Europe was by far the largest
       destination.
     * Europe also dominated the country rankings, where the greatest
       beneficiaries of the change in investment trends can be found.  Three of
       the top four 1999 recipients are European, compared to only one in the
       top four in 1997.
     * The United Kingdom remained number one for the past three years, but saw
       a record increase from $6.2 billion in 1998 to $10.1 billion in 1999
       despite the country's decision not to join the euro zone.  Germany rose
       from ninth in 1997 to second in 1999; with a dramatic 453 percent
       increase from $733 million in 1998 to $4.1 billion in 1999.  The
       Netherlands ranked number four, sliding one spot from 1998.
       Switzerland, which entered the top 10 in 1998, rose to ninth, and Italy
       joined the top 10 at seventh.  France fell from the top-10 list after
       being eighth and fourth in 1997 and 1998, respectively.
     * The most dramatic change was the disappearance of Mexico from the
       top-five list in 1999 after being the third and second largest recipient
       in 1997 and 1998, respectively.
     * Due to the crisis in emerging markets, Brazil dropped off the top-10
       list in 1999 after having been the fifth largest recipient in 1997.  The
       outlook for future FDI flows into Brazil looks promising as the nation
       returns to strong economic growth and successfully adjusts to its new
       currency regime.
     * 1999 also saw a rebound in FDI flows to Asia, particularly Singapore.
       Nearly half of total U.S. manufacturing FDI in Asia was funneled into
       Singapore's electronics and industrial machinery sectors.  Australia,
       Hong Kong, Japan, Korea, Taiwan and Thailand also experienced increases.
     * Eastern Europe saw an 81 percent fall in U.S. manufacturing FDI because
       of the aftermath of the Russian financial crisis in 1998 and the
       conflict in the former Yugoslavia.
 
     Industry-Specific Findings
     * Total U.S. manufacturing FDI into the electronics sector in 1999 totaled
       $6.2 billion, an increase of 234 percent from $1.9 billion in 1998.
       U.S. electronics manufacturers have seen globalization as a way both to
       improve responsiveness to changes in local markets and to access the
       increasingly sophisticated production capabilities in Europe and Asia.
       The Netherlands received $1.9 billion, Germany $1.2 billion, and
       Singapore $1.24 billion.
     * The industrial machinery sector also saw significant investment,
       $6.7 billion, due in large part to investments in the U.K.,
       $2.2 billion, and Singapore, $1.9 billion.
     * FDI flows into the chemicals and pharmaceuticals sector rose from
       $5.2 billion in 1998 to $7.1 billion in 1999.  In chemicals, the
       $1.6 billion to Germany and $1.2 billion to the Netherlands demonstrated
       the overall shift toward global consolidation of leading chemical
       manufacturers in the U.S. and Europe.
     * Expansion into Western Europe and Japan remains a key goal for U.S.
       pharmaceutical manufacturers due to the large markets and potential
       access to cutting-edge R&D and production technologies.  The most
       globalized pharmaceutical companies have seen their stock prices
       increase 400 percent from 1991 to 1998 while those of the least global
       firms only increased 75 percent.
     * In the transportation equipment sector, FDI flows rose from a 1998
       divestment of $1.2 billion to a positive flow of $4.9 billion in 1999.
       While developed markets will remain key to automotive companies in the
       future, the focus for growth will likely lie in emerging markets where
       joint ventures and strategic alliances will be the main mode of entry.
     * Although U.S. FDI increased in most industries during 1999, food and
       metals were weaker performers.  The 1999 metals sector ran slightly
       above that of 1997, while the food sector has fallen from $4.1 billion
       in 1997 to $1.4 billion in 1999.
 
     The annual Global Investment Trends of U.S. Manufacturers: Building the
 Global Networks study offers a complete analysis of U.S. FDI growth in leading
 and emerging markets, including Europe, Latin America, Asia-Pacific,
 Africa/Middle East and Canada.  It also identifies investment trends among
 U.S. manufacturers in six industries: electronics, industrial machinery,
 chemicals, food, metals and transportation equipment.
     For a complimentary copy of Global Investment Trends of U.S.
 Manufacturers: Building the Global Networks go to http://www.dc.com.
 
     Deloitte Consulting is one of the world's leading consulting firms,
 providing services in all aspects of enterprise transformation, from strategy
 and process to information technology and human resources.  The firm's
 professionals help clients, from new economy start-ups to Fortune 1000 global
 organizations, to create, reinvent and defend their business models by guiding
 them through the complexities of the evolving digital economy.  For more
 information about Deloitte Consulting, visit http://www.dc.com.
     Deloitte & Touche, one of the nation's leading professional services
 firms, provides assurance and advisory, tax, and management consulting
 services through 30,000 people in more than 100 U.S. cities.  The firm is
 dedicated to helping our clients and our people excel.  Known as an employer
 of choice for innovative human resources programs, Deloitte & Touche has been
 recognized as one of the "100 Best Companies to Work For in America" by
 Fortune magazine for four consecutive years.
     Deloitte & Touche and Deloitte Consulting are parts of Deloitte Touche
 Tohmatsu, one of the world's leading professional services firms, providing
 world-class consulting, assurance and advisory, and tax services through
 nearly 90,000 people in over 130 countries to nearly one-fifth of the world's
 largest companies, public institutions and successful fast-growing companies.
 
     Contact:  Jenna Focarino
               Citigate
               212-419-4252
               Jenna.Focarino@citigatedr-ny.com
 
               Jennifer Grimes
               Deloitte Consulting, Deloitte & Touche
               404-631-2134
               jegrimes@dc.com
 
 

SOURCE Deloitte Consulting
    NEW YORK, April 18 /PRNewswire/ -- Despite the economic slowdown that
 began affecting investment in the third-quarter of 2000, U.S. manufacturers
 increased foreign direct investment (FDI) an additional $6 billion over the
 1999 increase, according to Deloitte Research's new Global Investment Trends
 of U.S. Manufacturers: Building the Global Network study.  By the beginning of
 2001, the estimated cumulative stock of FDI by U.S. manufacturers around the
 world stood at more than $358 billion conservatively estimated after
 increasing $42 billion in 2000, up from 1999's $36 billion.
     "This continuing upward trend in FDI underscores that U.S. firms have
 learned the lesson that globalization is no longer an option for a few select
 industries, but is instead imperative to remaining competitive," said Dick
 Gabrys, Deloitte & Touche global manufacturing practice director. "A short
 global slowdown is unlikely to seriously affect FDI flows due to their
 long-term nature and because the benefits of globalization -- increased
 economies of scale, access to top-notch manufacturing and technological
 resources, and presence in growing markets -- cannot be safely ignored by any
 firm."
     Major opportunities for U.S. manufacturers exist for investments around
 the globe, according to the study, and will continue to draw U.S. capital,
 technology, and managerial know-how, even in a slight downturn.  The Deloitte
 Research study of investment trends is based on a comprehensive analysis of
 available U.S., international, and industry-specific data and selected company
 information in electronics, industrial machinery, chemicals, food, metals and
 transportation equipment.
     "Based on our research, we believe developed nations will continue to
 receive a majority of U.S. manufacturing FDI for the foreseeable future,"
 added John Southcott, Deloitte Consulting Manufacturing Americas Practice
 Director. "In 1999, the latest year with complete, detailed data, high-wage
 countries captured an astounding 87 percent of U.S. FDI, compared to
 80 percent in 1998, reflecting the greater importance of non-wage factors in
 overseas investment decisions and the continued paradox of expensive versus
 cheap labor.  In fact, low-wage countries attracted less U.S. investment,
 13 percent in 1999, compared to 25 percent in 1998 and 31 percent in 1997."
 Country- and industry-specific findings from the latest Deloitte Research
 report include:
 
     Specific Findings Around the World:
     * U.S. manufacturing FDI into Europe increased 58 percent in 1999, with
       transportation equipment and electronics accounting for most of the
       growth.  Receiving $22.8 billion, Europe was by far the largest
       destination.
     * Europe also dominated the country rankings, where the greatest
       beneficiaries of the change in investment trends can be found.  Three of
       the top four 1999 recipients are European, compared to only one in the
       top four in 1997.
     * The United Kingdom remained number one for the past three years, but saw
       a record increase from $6.2 billion in 1998 to $10.1 billion in 1999
       despite the country's decision not to join the euro zone.  Germany rose
       from ninth in 1997 to second in 1999; with a dramatic 453 percent
       increase from $733 million in 1998 to $4.1 billion in 1999.  The
       Netherlands ranked number four, sliding one spot from 1998.
       Switzerland, which entered the top 10 in 1998, rose to ninth, and Italy
       joined the top 10 at seventh.  France fell from the top-10 list after
       being eighth and fourth in 1997 and 1998, respectively.
     * The most dramatic change was the disappearance of Mexico from the
       top-five list in 1999 after being the third and second largest recipient
       in 1997 and 1998, respectively.
     * Due to the crisis in emerging markets, Brazil dropped off the top-10
       list in 1999 after having been the fifth largest recipient in 1997.  The
       outlook for future FDI flows into Brazil looks promising as the nation
       returns to strong economic growth and successfully adjusts to its new
       currency regime.
     * 1999 also saw a rebound in FDI flows to Asia, particularly Singapore.
       Nearly half of total U.S. manufacturing FDI in Asia was funneled into
       Singapore's electronics and industrial machinery sectors.  Australia,
       Hong Kong, Japan, Korea, Taiwan and Thailand also experienced increases.
     * Eastern Europe saw an 81 percent fall in U.S. manufacturing FDI because
       of the aftermath of the Russian financial crisis in 1998 and the
       conflict in the former Yugoslavia.
 
     Industry-Specific Findings
     * Total U.S. manufacturing FDI into the electronics sector in 1999 totaled
       $6.2 billion, an increase of 234 percent from $1.9 billion in 1998.
       U.S. electronics manufacturers have seen globalization as a way both to
       improve responsiveness to changes in local markets and to access the
       increasingly sophisticated production capabilities in Europe and Asia.
       The Netherlands received $1.9 billion, Germany $1.2 billion, and
       Singapore $1.24 billion.
     * The industrial machinery sector also saw significant investment,
       $6.7 billion, due in large part to investments in the U.K.,
       $2.2 billion, and Singapore, $1.9 billion.
     * FDI flows into the chemicals and pharmaceuticals sector rose from
       $5.2 billion in 1998 to $7.1 billion in 1999.  In chemicals, the
       $1.6 billion to Germany and $1.2 billion to the Netherlands demonstrated
       the overall shift toward global consolidation of leading chemical
       manufacturers in the U.S. and Europe.
     * Expansion into Western Europe and Japan remains a key goal for U.S.
       pharmaceutical manufacturers due to the large markets and potential
       access to cutting-edge R&D and production technologies.  The most
       globalized pharmaceutical companies have seen their stock prices
       increase 400 percent from 1991 to 1998 while those of the least global
       firms only increased 75 percent.
     * In the transportation equipment sector, FDI flows rose from a 1998
       divestment of $1.2 billion to a positive flow of $4.9 billion in 1999.
       While developed markets will remain key to automotive companies in the
       future, the focus for growth will likely lie in emerging markets where
       joint ventures and strategic alliances will be the main mode of entry.
     * Although U.S. FDI increased in most industries during 1999, food and
       metals were weaker performers.  The 1999 metals sector ran slightly
       above that of 1997, while the food sector has fallen from $4.1 billion
       in 1997 to $1.4 billion in 1999.
 
     The annual Global Investment Trends of U.S. Manufacturers: Building the
 Global Networks study offers a complete analysis of U.S. FDI growth in leading
 and emerging markets, including Europe, Latin America, Asia-Pacific,
 Africa/Middle East and Canada.  It also identifies investment trends among
 U.S. manufacturers in six industries: electronics, industrial machinery,
 chemicals, food, metals and transportation equipment.
     For a complimentary copy of Global Investment Trends of U.S.
 Manufacturers: Building the Global Networks go to http://www.dc.com.
 
     Deloitte Consulting is one of the world's leading consulting firms,
 providing services in all aspects of enterprise transformation, from strategy
 and process to information technology and human resources.  The firm's
 professionals help clients, from new economy start-ups to Fortune 1000 global
 organizations, to create, reinvent and defend their business models by guiding
 them through the complexities of the evolving digital economy.  For more
 information about Deloitte Consulting, visit http://www.dc.com.
     Deloitte & Touche, one of the nation's leading professional services
 firms, provides assurance and advisory, tax, and management consulting
 services through 30,000 people in more than 100 U.S. cities.  The firm is
 dedicated to helping our clients and our people excel.  Known as an employer
 of choice for innovative human resources programs, Deloitte & Touche has been
 recognized as one of the "100 Best Companies to Work For in America" by
 Fortune magazine for four consecutive years.
     Deloitte & Touche and Deloitte Consulting are parts of Deloitte Touche
 Tohmatsu, one of the world's leading professional services firms, providing
 world-class consulting, assurance and advisory, and tax services through
 nearly 90,000 people in over 130 countries to nearly one-fifth of the world's
 largest companies, public institutions and successful fast-growing companies.
 
     Contact:  Jenna Focarino
               Citigate
               212-419-4252
               Jenna.Focarino@citigatedr-ny.com
 
               Jennifer Grimes
               Deloitte Consulting, Deloitte & Touche
               404-631-2134
               jegrimes@dc.com
 
 SOURCE  Deloitte Consulting