The latest survey released by the Organization for International Investment reveals a surprising trend. While most people fear American jobs are going overseas or being taken over by robots, it turns out that foreign companies are initiating an “insourcing” boom as confidence in the U.S. economy grows. The survey asked 101 CFOs of insourcing companies—firms that operate in the US but are headquartered overseas—about prospects for their involvement in American labor markets.
Among the CFOs surveyed, 51% expect to add jobs in the next 12 months. Low energy costs, access to skilled labor, proximity to customers, corporate tax rates and quality of infrastructure were cited as the top factors driving global investment decisions. While the United States was the first choice for new foreign investment among advanced economies, only 13% of CFOs identified it as the top choice overall, compared to 49% naming China as the country to watch over the next five years.
If the United States wants to continue attracting foreign investment, and the jobs it brings, corporate tax policies need to ensure non-discriminatory treatment of foreign companies. Michigan’s Governor Rick Snyder (R-MI) and Washington Governor Jay Inslee have led the charge in welcoming overseas businesses through favorable tax structures and other unique programs, even co-authoring an op-ed in USA Today following the survey results.
Tom Walsh at the Detroit Free Press highlights a beneficiary of Gov. Snyder’s efforts: Sakthi Automotive, a parts manufacturer headquartered in India, has brought over 140 jobs to the area with even more positions available. The company is the recipient of a Grow Michigan loan, one of Michigan’s public programs trying to attract new jobs to the area and change the state’s image as a place to invest. So far the program appears to have traction:
“No one had ever attempted this kind of collaboration among senior lenders, who are usually all competitors,” said Russ Youngdahl, CEO of Grow Michigan. During its first seven months, Grow Michigan lent $20 million to Michigan firms, resulting in the creation of 274 jobs and retention of 1,030. The pipeline for this year currently has six more deals in the works for $17 million in loans,” he said.
From a jobs standpoint, the Governor’s efforts have paid off. Since 2011, Michigan added 32,000 “insourcing jobs,” which is more than double the number in any other state. According to the OFII, the jobs aren’t underpaid either. When compared to national averages for manufacturing jobs, foreign companies operating in Michigan pay an average salary of $84,300 versus the nationwide average of $75,787.
If you don’t have time to read the full report, here are the key takeaways from the survey:
- Insourcing CFOs Have Growing Confidence in the U.S. Economy
- Increased Confidence Means More Investment and Employment
- U.S. Manufacturing and Exports on the rise
- Emerging Markets Viewed as Top Location for New Investment
- Among Advanced Economies, America Offers a Better Business Environment
- Corporate Tax Rate Is the Top Tax Policy Impacting CFO Investment Decisions
- Ensuring Fair Treatment of Insourcing Companies Is Critical
For more information, read the full report or additional highlights of the 2014 Organization for International Investment Insourcing Survey, or check out the Organization for International Investment homepage.