ORGANIZATION FOR INTERNATIONAL INVESTMENT
CHAIN REACTION Global Investment Works For America
MAY 2012
The Direct Impact of U.S. Subsidiaries of Global Companies in the United States
> JOBS: U.S. subsidiaries of global companies directly employ 5.3 million Americans.
> R&D: U.S. subsidiaries spend an annual $43.4 billion on U.S. research and development activities.
> PAYROLL: U.S. subsidiaries support an annual payroll of > REINVESTMENT: U.S. subsidiaries reinvest an annual $409.7 billion-with average compensation per worker of
$93.6 billion in their U.S. operations.
$77,597, about one-third higher than compensation at all U.S. companies.
> TAXES: Although U.S. subsidiaries account for less than 1% of all U.S. business, these companies pay $38 billion in
> MANUFACTURING: Roughly 2 million jobs at U.S. subsidiaries are in the American manufacturing sector,
annual U.S. corporate taxes, nearly 17 percent of total U.S. corporate tax payments.
accounting for about 17 percent of total American manufacturing jobs.
> BRICKS & MORTAR: : U.S. subsidiaries spend an annual $154.2 billion on property, plant construction and new
> EXPORTS: U.S. subsidiaries manufacture in America to
equipment.
export goods around the world—accounting for more than 21 percent of all U.S. exports, or $219.7 billion.
> PRIVATE SECTOR: Nearly 98 percent of U.S. FDI is from private sector firms - only about two percent of all
> PURCHASE LOCALLY: U.S. subsidiaries buy $1.8 trillion
subsidiary activity (in terms of value added) is from
in intermediate inputs from local suppliers and small
companies that are controlled by foreign governments
businesses, almost 80 cents for every dollar spent of
or government-related entities.
their total input purchases.
> UNIONS: Jobs at U.S. subsidiaries are more highly unionized than the overall business community with 12.4 percent of employees covered, compared to 8.2 percent at all U.S. businesses. *All statistics are from the most recent government data from the U.S. Department of Commerce and the U.S. Department of Treasury.
Organization for International Investment (OFII) Created over two decades ago, the Organization for
American jobs. OFII advocates for fair, non-discrimina-
International Investment (OFII) is a non-profit 501
tory treatment of foreign-based companies and works to
(c)(6) business association in Washington, D.C.
promote policies that will encourage them to establish
representing the U.S. operations of many of the world's
U.S. operations, increase American employment, and
leading global companies, which insource millions of
boost U.S. economic growth.
C H ABACK I N RIntroduction ETO A CBASICS TION
CHAIN REACTION
Global companies from around the world have made the choice to invest in America’s economy—directly driving growth and insourcing jobs for Americans. However, their decision to locate businesses in the United States creates a chain reaction well beyond the direct impact, with positive effects throughout the local communities in which these firms invest. U.S. subsidiaries of global companies directly employ over 5 million workers in America. These jobs are the result of a variety of activities including building new factories, re-opening once shuttered facilities or acquiring struggling companies in this country. But the direct jobs are only the beginning of the story. Consider when a Switzerland-based cement company builds a plant in Colorado, or a Sweden-based trucking company sets up a state-of-the-art manufacturing site in Maryland to build engines. These companies, and companies like them, then purchase parts from the family-owned small businesses, partner with the area community colleges to train the next generation of American engineers and fund the local career fair to recruit the next generation of America’s workforce. Attracting and retaining foreign-headquartered companies like these to the U.S. should be a national priority for policy makers focused on creating jobs and ensuring economic growth. With other countries working over-time to do the same, America needs to step-up our efforts to create the most competitive location in the world for global companies to succeed. For the first-time ever, the Organization for International Investment’s Jobs Report “Chain Reaction: Global Investment Works For America” provides the facts and statistics on how U.S. subsidiaries of global companies— both directly and indirectly—are already playing a vital role in American towns, cities and states around the country.
U.S. SUBSIDIARIES OF GLOBAL COMPANIES: Companies headquartered abroad investing in the United States and creating jobs for Americans.
03
04
CHAIN REACTION
CHAIN REACTION: GLOBAL INVESTMENT WORKS FOR AMERICA > IMPACT ON AMERICAN JOBS: U.S. subsidiaries directly > IMPACT ON U.S. GDP: U.S. subsidiaries, their suppliers, and indirectly account for 21 million jobs, representing
and the associated paycheck impacts contribute
12.2 percent of total U.S. employment.
$2 trillion to the U.S. economy, representing 14.2 percent of U.S. GDP.
• Of the total jobs, 5.3 million are direct employees
of U.S. subsidiaries and the additional 15.8 million are in the supply chain or associated with the
• Each dollar of value added by U.S. subsidiaries
supports an additional $2.40 of U.S. GDP.
spending of employee paychecks. • For every direct U.S. subsidiary job, an additional
three jobs are supported in the U.S. economy.
> IMPACT ON AMERICAN MANUFACTURING SECTOR: U.S. subsidiaries employ workers in all industries across the country, with particularly strong representation in the
> IMPACT ON U.S. COMPENSATION:
These 21 million
American manufacturing sector.
U.S. subsidiary-related jobs account for $1.2 trillion in • The roughly 2 million direct manufacturing jobs at
compensation, representing 14 percent of total U.S. U.S. subsidiaries of global companies support an compensation. additional 10.2 million jobs. • Each dollar in direct compensation paid by U.S.
• The supply chain and paycheck impact in the
subsidiaries supports an additional two dollars in
manufacturing sector is five jobs for every U.S.
total U.S. compensation.
subsidiary employee, materially higher than the
• Average compensation per job across all U.S.
overall 3-to-1 jobs impact for all U.S. subsidiaries.
subsidiary-related jobs (including direct, supply chain, and paycheck spending related jobs) is $58,500—approximately 17 percent higher than
> IMPACT STATE-BY-STATE: U.S. subsidiaries have a material impact on employment in all states across the country.
the U.S. average for all types of employment ($50,100). Average compensation per direct U.S. subsidiary job is even higher, at $77,590.
• U.S. subsidiaries' employment (including supply chain
and paycheck employment) represents more than 10 percent of the total employment in 34 states.
SOURCE: “The Economic Impact of U.S. Subsidiaries,” PwC, May, 2012. (Based on most recently available government data, 2009.)
CHAIN REACTION
CHAIN REACTION
GLOBAL INVESTMENT WORKS FOR AMERICA
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CHAIN REACTION
CHAIN REACTION: GLOBAL INVESTMENT WORKS FOR AMERICA Total Impact on the American Economy Across the United States TOTAL JOBS BY STATE
TOTAL
289,600 52,700 290,400 150,000 2,474,900 313,200 308,000 105,300 57,200 967,200 626,800 76,000 68,800 1,014,300 522,800 204,000 213,300 304,800 292,200 91,100 339,500 581,100 594,500 382,700 127,100 373,000 43,200 110,100 137,500 117,000 813,700 79,100 1,340,900 691,000 49,800 832,500 195,700 204,600 1,001,100 67,700 337,000 38,200 432,900 2,209,800 150,800 36,200 476,300 374,600 98,700 343,500 43,200 39,300
21,084,900
PERCENT OF STATE WORKFORCE 11.7% 11.7% 9.1% 9.8% 12.5% 10.0% 14.3% 20.1% 6.9% 9.9% 12.0% 9.0% 7.8% 14.0% 15.0% 10.5% 11.9% 13.1% 11.7% 11.3% 10.1% 14.3% 11.9% 11.3% 8.6% 10.6% 6.9% 9.1% 9.2% 14.3% 16.5% 7.4% 12.3% 13.3% 10.1% 13.0% 9.2% 9.4% 14.1% 11.6% 13.9% 6.9% 12.3% 15.9% 9.4% 8.7% 10.1% 9.8% 11.0% 10.1% 11.2% NA
j ob s
ALABAMA ALASKA ARIZONA ARKANSAS CALIFORNIA COLORADO CONNECTICUT DELAWARE DISTRICT OF COLUMBIA FLORIDA GEORGIA HAWAII IDAHO ILLINOIS INDIANA IOWA KANSAS KENTUCKY LOUISIANA MAINE MARYLAND MASSACHUSETTS MICHIGAN MINNESOTA MISSISSIPPI MISSOURI MONTANA NEBRASKA NEVADA NEW HAMPSHIRE NEW JERSEY NEW MEXICO NEW YORK NORTH CAROLINA NORTH DAKOTA OHIO OKLAHOMA OREGON PENNSYLVANIA RHODE ISLAND SOUTH CAROLINA SOUTH DAKOTA TENNESSEE TEXAS UTAH VERMONT VIRGINIA WASHINGTON WEST VIRGINIA WISCONSIN WYOMING U.S. TERRITORIES AND OTHER
investment
STATE
S tat e s
06
12.2%
SOURCE: “The Economic Impact of U.S. Subsidiaries,” PwC, May, 2012. (Based on most recently available government data, 2009.)
GLOSSARY OF TERMS
> DIRECT EFFECTS: : Economic activities directly attributable to U.S. subsidiaries.
> COMPENSATION: For employees, this includes wages, salaries and benefits; for the self-employed, it reflects proprietors’ income.
>
SUPPLY CHAIN: Activities of upstream suppliers to U.S. subsidiaries, also known as “indirect” effects.
> VALUE ADDED, OR CONTRIBUTION TO GDP: The total output of each sector less the associated value of
> PAYCHECK SPENDING: Spending of paychecks by employees
intermediate inputs. The sum of the value added across
of U.S. subsidiaries and their suppliers, also known as
all sectors in the economy is GDP. For a business, it
“induced” effects.
approximates the sum of labor costs, profits, and taxes.
> EMPLOYMENT: The number of payroll and self-employed jobs (including part-time jobs), averaged over the year.
> FOREIGN DIRECT INVESTMENT (FDI): An investment made by a company or entity based in one country, into a company or entity based in another country.
OFII Member Companies ABB Inc. ACE INA Holdings, Inc. AEGON USA Ahold USA, Inc. Airbus North America Holdings Akzo Nobel Inc. Alcatel-Lucent Alfa Laval Inc. Allianz of North America ALSTOM AMEC American Air Liquide Holdings Inc Anheuser-Busch APG APL Limited AREVA, Inc. Arup Astellas Pharma US, Inc. AstraZeneca Pharmaceuticals BAE Systems Balfour Beatty Barclays Capital Barrick Gold Corp. of North America BASF Corporation Bayer Corp. BHP Billiton BIC Corp. Bimbo Foods, Inc. bioMérieux, Inc. BMW of North America BNP Paribas Boehringer Ingelheim Corp. Bombardier Inc. BOSCH BP Bridgestone Americas Holding Brother International Corp. BT Bunge Ltd. Case New Holland Cobham Covidien Credit Suisse Securities (USA) Daiichi Sankyo, Inc. Daimler Dassault Falcon Jet Corp. Deutsche Post World Net USA Deutsche Telekom Diageo, Inc. EADS, Inc. Electrolux North America EMD Serono Inc. Ericsson
Evonik Degussa Corporation Experian Finmeccanica North America Flextronics International Food Lion, LLC France Telecom North America FUJIFILM Holdings America Garmin International, Inc. GDF SUEZ Energy North America, Inc. Generali USA GKN America Corp. GlaxoSmithKline Hanson North America Heineken USA Holcim (US) Inc. Honda North America HSBC North America Holdings Huhtamaki Hyundai Motor America Iberdrola Renewables ING America Insurance Holdings InterContinental Hotels Group JBS USA John Hancock Life Insurance Co. Kia Motor Corporation Lafarge North America Logitech Inc. L'Oréal USA, Inc. Louisiana Energy Service (LES) Louisville Corporate Services, Inc. LVMH Moet Hennessy Louis Vuitton Macquarie Aircraft Leasing Services Maersk Inc Magna International Marvell Semiconductor McCain Foods USA Michelin North America, Inc. Miller Brewing Company National Grid Nestlé USA, Inc. Nissan Nokia, Inc. Nomura Holding America, Inc. Novartis Corporation Novo Nordisk Pharmaceuticals Oldcastle, Inc. Panasonic Corp. of North America Pearson Inc. Pernod Ricard USA Philips Electronics North America QBE the Americas Randstad North America
ORGANIZATION for INTERNATIONAL INVESTMENT 1225 Nineteenth Street, NW, Suite 501, Washington, DC 20036 TEL (202) 659-1903 FAX (202) 659-2293 VISIT OUR WEBSITE: WWW.OFII.ORG
Reed Elsevier Inc. Research in Motion Rexam Inc Rio Tinto America Roche Financial USA, Inc. Rolls-Royce North America Inc. Royal Bank of Canada SABIC Innovative Plastics Sanofi US SAP America Schneider Electric USA Schott North America Shell Oil Company Siemens Corporation Smith & Nephew, Inc. Societe Generale Sodexo, Inc. Solvay America Sony Corporation of America Sumitomo Corp. of America Swiss Re America Holding Corp. Syngenta Corporation Takeda North America Tate & Lyle North America, Inc. Teva Pharmaceuticals USA Thales USA, Inc. The Tata Group Thomson Reuters ThyssenKrupp USA, Inc. Tim Hortons Toa Reinsurance Company of America Tomkins Industries, Inc. TOTAL Holdings USA, Inc. Toyota Motor North America Tyco International (US), Inc. TE Connectivity UBS Umicore USA Unilever Vivendi Vodafone Voith Holding Inc Volkswagen of America, Inc. Volvo Cars North America Volvo Group North America, Inc. Westfield LLC White Mountains, Inc. Wipro Technologies Wolters Kluwer U.S. Corporation WPP Group USA, Inc. XL Global Services Zurich Insurance Group