Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, September 30, 1993 TAG: 9309300072
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
While scores of U.S. corporations are cutting their work forces, companies such as Mercedes, BMW and Toshiba are creating thousands of jobs in this country by opening or expanding factories. Foreign investment in the United States has surged this year, reversing a three-year decline.
The trend, some economists say, could give a small but timely boost to the fragile U.S. recovery, which has been undermined by widespread layoffs as companies struggle to cut costs.
It also suggests a brighter side to the rapid globalization of U.S. business, a trend that has been decried in the past for shipping jobs overseas in American industries ranging from textiles to electronics.
"However you cut this, this is good for the United States," said Paul Boltz, chief economist at T. Rowe Price Associates Inc., a Baltimore investment management firm.
American businesses also are hiring workers, but large-scale layoffs have overshadowed any gains. Even healthy companies such as Procter & Gamble Co. and Anheuser-Busch Cos. are shedding jobs.
By contrast, Mercedes-Benz will employ 1,500 workers at its first U.S. factory in Vance, Ala.
Last year, South Carolina won the competition for a BMW plant. The German luxury-car company expects to begin production in Spartanburg, S.C., in 1995.
Any stigma Americans once attached to working for a foreign employer has been largely forgotten in today's hard-knock economy.
"If you ask most workers . . . a lot of that concern has dissipated," said Lynn Reaser, chief economist at First Interstate Bancorp in Los Angeles.
The story of foreign interest in the United States is told in the numbers. Direct foreign investment rose to $17 billion in the first half of 1993, up sharply from $2.4 billion for all of last year, the Commerce Department says.
A surge in foreign investment in the 1980s mostly went toward buying American companies, not creating new jobs, said Robert Z. Aliber, professor of international economics and finance at the University of Chicago.
But the latest influx of foreign money "will lead to a very modest increase in the demand for U.S. labor. We're talking tens of thousands, not hundreds of thousands, on a year-to-year basis," he said.
U.S. companies plan to increase spending 7.1 percent on new plants and equipment this year, Commerce says. But economists say it's mostly for computers and other machines to improve productivity, reduce labor costs and help them compete with foreign rivals.
For overseas companies, however, the cost of U.S. labor has become attractive. Consider Germany, where workers get an average of six weeks' vacation a year - more paid time off than anyone else in Western Europe.
Foreign firms are responding to the recent sharp fall in the dollar's value, led by a 15 percent plunge against the Japanese yen. That means their goods cost more in the United States.
Battered by the high yen, Honda Motor Co. said this summer it would cut costs by producing in the United States all the Accords and Civics it sells in North America. But the move is not certain to add jobs.
Other Japanese car makers also are considering stepped-up U.S. production.
Toshiba Corp. is shifting production of computers using advanced color monitor screens from Japan to its Irvine, Calif., plant, a move that will add 100 workers.
NEC Corp. will shift production of laptop computers to its Seattle factory in early October. But no new U.S. jobs are planned.
by CNB