U.S. Industry Expands Foreign Base : Investments: New projects rose 25% in 1990, the Conference Board says. Europe and the Asia-Pacific region were top choices.
U.S. firms boosted their manufacturing investments abroad in 1990, as a slowing domestic economy sent them scrambling for fresh opportunities in the faster-growing and liberalizing markets of Asia and Eastern Europe, new data to be released today shows.
New U.S. projects abroad totaled 271 last year, a 25% increase over 1989, according to data compiled by the Conference Board, a nonprofit international business research organization. The European Community dwarfed the rest of the world in drawing 146 of the projects compared to 116 in 1989. Americans also made their first manufacturing investments in Poland and Bulgaria, as Eastern Europe gained 20 new projects in 1990, compared to nine in 1989, the organization said.
But Conference Board analyst James Greene said the most significant growth occurred in the Asia-Pacific region, which attracted 53 new projects, a 66% increase over 1989. Although that rate of growth was smaller than Eastern Europe, it increased from a much larger base, he said.
The big surprise was Australia, which led all Pacific Rim nations with 15 new investments ranging from Coca-Cola Co. and Du Pont Co. to McGraw-Hill Inc. and H. J. Heinz Co. Typically, Japan has drawn the greatest number of new investments in Asia.
“The jump in Asia is really quite remarkable,” Greene said. “A slowdown here makes a lot of foreign economies look more attractive” because of faster growth and cheaper costs.
Among the 2,000 U.S. firms with manufacturing investments abroad, two-thirds have sites in Europe. But only one-third have investments in Asia, leaving plenty of room for expansion, he said.
Du Pont, for instance, led all U.S. firms with 12 new overseas manufacturing investments--six in the Asia-Pacific region. The investments are part of a $3-billion, five-year expansion program in the Pacific Rim by the Delaware-based maker of chemical, textile and plastics products.
The firm’s new projects include a $1-billion nylon material complex in Singapore, a $100-million textile fiber plant in Australia and an electronics plant in South Korea. Du Pont is also expanding existing facilities in Japan, said Edgardo Lertora, the firm’s director of communications for the Asia-Pacific and Latin America regions.
“We have a good position in the United States, a pretty good position in Europe, and we need to have the same position in Asia for us to be a good global competitor,” Lertora said.
“The Asian companies are basically growing very fast as competitors. They are very tough. They are very smart and aggressive. We think this is the only way to compete there,” he said.
Greene said U.S. pressure on Japan and other Asian nations to open their markets has begun to bear fruit, encouraging more Americans to invest there. The growth in regional trade has also persuaded firms that one or two well-placed manufacturing sites can serve several Asian markets, he said.
Australia appeared to be the hot new spot for U.S. investments, which tripled in 1990 from the average number begun there in the previous three years. McGraw-Hill, for instance, acquired a ratings agency as part of an international expansion. It chose Australia as its second Pacific Rim venture because the nation’s capital markets were the most highly developed outside Tokyo, where the firm has already invested, said Roger Taillon, managing director of international ratings at Standard & Poor’s, which is owned by McGraw-Hill.
In addition, the Australian government has embarked on a program to attract more foreign investment in recent years.
“There has been deregulation and privatization,” said Connolly Cole, an official with the Australian Trade Commission in New York. “The Australian government has an attitude of openness.”
Growth in Projects New U.S. manufacturing investments abroad. 1990: 271 projects Source: Conference Board BIGGEST INVESTORS Biggest U.S. investors in foreign manufacturing sites in 1990. Company Du Pont Co. Number of projects 12 Countries Australia, Brazil, France, Germany, Japan, Netherlands, Singapore, South Korea, Spain, Turkey Company General Motors Corp. Number of projects 8Countries Czechoslovakia, France, Germany, Hungary, Italy, Spain, Venezuela, France Company CPC International Inc. Number of projects 6Countries Brazil, Denmark, France, Germany, Netherlands, United Kingdom Company Chrysler Corp. Number of projects 5Countries Austria, Canada, Germany, Spain Company General Electric Co. Number of projects 4Countries Germany, Mexico, Singapore, United Kingdom Source: Conference Board
