Last year, Swiss pharmaceutical giant Novartis did something the media doesn't spend very much time talking about. The company moved its worldwide research headquarters from Europe to Cambridge, Mass. Similar phenomenon took place with global corporations including Nokia, Shell Oil, and Porsche. Could it be? Foreign companies relocating or expanding headquarters in the U.S.? Creating jobs for Americans and stimulating significant indirect growth in related support industries?
It's the less publicized silver lining to global business operations: insourcing. Contrary to popular opinion, the American job market is very much a two-way street. The issue at hand is known as foreign direct investment, or FDI.
FDI in the U.S. currently supports 6.4 million Americans with a $350 billion payroll. Generally, these jobs pay nearly 20 percent higher wages than those of many U.S. companies. These higher wages are attributed to the quality of the jobs-value-added jobs of a high-skill nature. And, according to some recent studies, insourced cumulative annual job growth in the U.S. from 1986 through 2001 outpaced total U.S. private sector job growth during that same time period.
A number of forces play a role in this trend, including the value of the U.S. dollar, America's involvement in a variety of different free-trade agreements, and the number of industry hubs in the U.S. offering economies of scale for various industries.
Don't underestimate the power of the people, either. Workforce quality has been identified as a key deciding factor in FDI decisions. However, the strongest driver of FDI in the U.S. is proximity to lucrative markets. U.S. operations often provide immediacy and a physical presence for marketing and public relations purposes to a highly coveted American marketplace.
Does FDI play in Peoria? We're placing our bets on the affirmative. The Illinois Foreign Trade Office has identified nearly 300 current examples of FDI in the North Central Region. While these investments vary greatly in industry and magnitude, they demonstrate the vitality of FDI in the greater Peoria region.
International interests have a role in the EDC's strategic marketing initiatives. The three key industries outlined as targets in the EDC's regional marketing strategy-technology commercialization, renewable energy initiatives, and intermodal logistics-are nothing if not global industries. As such, our initiatives in these arenas must be global as well.
The EDC, along with the Peoria Area Chamber of Commerce and Bradley University's NAFTA Opportunity Center, teams up this month with DCEO's International Trade Office to host the Chicago International Trade Commissioner Association (CITCA) on a trip to Peoria highlighting the assets and opportunities for global investment in the greater Peoria region.
CITCA's ranks include commissioners from 26 countries including China, India, France, Germany, Hong Kong, Great Britain, France, Mexico, and many others. "Global Business Plays in the Greater Peoria Region" has been designed to highlight the magnitude of activity underway in the region, from tech commercialization to brownfield redevelopment.
One of the key components of the October 7 daylong trip will be a luncheon taking place at the beautiful Gateway Building in downtown Peoria. This is Peoria's chance to show the involvement and support our business community has in the form of its number one asset-our people. Not only will the luncheon provide valuable networking opportunities for business leaders engaged in international business operations, but it'll provide us the opportunity to demonstrate the scope and dynamic nature of our business leadership. For more information, call 495-5955 or e-mail [email protected].
The October 7 trip likely will be followed by other customized engagements with CITCA members and ongoing relationship maintenance by the EDC team with key global contacts and consultants. If you or your company has an interest in being a part of this process, please let us know.
Global business does play in Peoria; our companies are global, and our environment offers global-scale benefits and opportunities. Our entire region benefits from FDI, and EDC looks forward to the involvement and engagement of our business community as we promote the greater Peoria region on the international stage. IBI