My friend the late Richard E. Dauch was the youngest plant manager in the history of Chevrolet. In 1976, he was hired away to help build Volkswagen's first manufacturing plant in the U.S. near New Stanton, Pennsylvania. He had been assured VW would build other plants, and he would have a big future with the company, but the German labor union representing VW workers intervened. They disapproved of VW creating jobs for Americans.
VW's failure to build more plants in the U.S. was a colossal mistake that greatly diminished the company's footprint in the U.S. for many years. Dauch went on to build the first minivans for Chrysler, a product line still going strong more than 30 years later, and in 1994 he founded American Axle & Manufacturing, also going strong. He was a dynamic corporate leader whose untimely death two years ago was a tragic loss to our country.
When VW showed it was possible to build a production plant in the U.S., other foreign auto companies followed -- Toyota, Nissan, Honda, Mercedes, etc. -- they are all here adding to our GDP and creating jobs for Americans.
The numbers of all foreign investments are staggering. As of 2012, the net U.S. assets of foreign affiliates totaled $3.9 trillion. They've added $1.5 trillion since 2006 and $166 billion in 2012 alone. Most of this investment - some 80 percent -- comes from other industrial countries: Japan, Canada, Australia, Korea and seven EU nations. These companies employ 5.6 million people, one-third of them in manufacturing. They account for 9.6 percent of all private investment in the U.S., and 15.9 percent of all private sector research and development - the bulk of it in manufacturing.
There are many obvious reasons why foreign companies overcome domestic opposition to build productive facilities in the U.S. This is the world's largest consumer market - an average household income over $50,000 -- and we welcome foreign investment. We have a predictable regulatory environment that provides for protection of intellectual property. We have the world's top research universities. We lament our skills gap, especially in manufacturing, but our community colleges are working with industry to provide people with the skills they need. We also lament the sorry state of our infrastructure, but by world standards it is first class. And we have abundant energy resources at competitive prices - especially natural gas.
Perhaps the most ironic aspect of this foreign "invasion" is that these foreign-owned U.S. companies export more than $300 billion in goods every year accounting for more than 20 percent of all U.S. exports.
On March 24, President Obama joined Commerce Secretary Penny Pritzker at a conference in Washington celebrating the importance of foreign investment in the U.S. and inviting more of it. We need to keep in mind that Commerce is a two-way street that works greatly to our benefit. Congress should put aside partisan differences to provide President Obama -- and future Presidents -- with Trade Promotion Authority (fast track) to facilitate free trade agreements, especially the big ones pending with Europe and Asia.
Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. You may quote from this with attribution. Let me know if you wish to talk to Jerry. March 2015