Foreign firms export thousands of jobs to state

Carolyn Norris assembles parts for automotive fuel tanks at Alfmeier Corp. (George Gardner/Staff) e-mail this story to a friend

Bell, a production section leader at BMW Manufacturing Co., said the German-based company created not only his job and the other 4,700 at the plant but jobs at auto suppliers throughout the state.

"It's a major employer in our state. And these are technology jobs that people didn't have a chance to get before," he said, citing the 17,000 jobs created through both direct and indirect channels in the state.

Gail Trimier, a team leader at Alfmeier Corp., another German company, said her employer is good for South Carolina's economy, providing jobs for residents and challenges for its workers.

"It's a good place to work. It's busy, challenging," she said.

On the other hand, South Carolina residents have lost jobs when companies moved production abroad. For example, Kemet Corp., based in Simpsonville, has cut thousands of jobs in the Upstate while adding thousands of jobs in China. Kemet is a global player in the manufacture of capacitors, tiny components used in a variety of electronics, such as computers and cell phones.

The number of jobs lost to outsourcing is difficult to peg. Some economists estimate that about 100,000 white-collar jobs are outsourced annually. Many also expect that outsourcing will pick up in future years.

Still, South Carolina has been among the nation's leaders in creating jobs through foreign investment. According to a new study by Dartmouth College, the state ranks No. 2 in the nation in the percentage of its work force employed by foreign-based multinational companies, No. 16 in the number of actual workers 123,400 employed by foreign-based companies. The number of jobs created by U.S. subsidiaries of foreign firms in the state grew by 12,000 over five years, an increase of about 10.8 percent.

Matthew Slaughter, a professor at Tuck School of Business at Dartmouth, conducted the study sponsored by the Organization for International Investment. The group is an association of the U.S. subsidiaries of foreign-owned companies.

"It's like yin and yang," said Dean Jones, Greenville County's work force development administrator. "Both insourcing and outsourcing happen. It's really about the balance."

Government leaders and the public have to learn to deal with outsourcing, he said, because "we cannot back out of the global economy."

Bunny Richardson, spokeswoman for BMW, said it's important to remember that outsourcing cuts both ways.

When the company decided in the early 1990s to build a U.S. plant, "people saw those 2,000 jobs that could have been kept in Germany," she said. "There was great concern. But jobs are not necessarily moved from one place to another."

In fact, nearly 5,000 jobs engineers and R&D positions have been created in Germany because of the U.S. plant, she said.

Slaughter's report, based on Bureau of Economic Analysis data for 2002, concludes that insourcing companies paid American workers more than $307 billion in compensation, an average of $56,667 each 31 percent more than U.S. based companies paid. The companies also bought $1.26 trillion of intermediate resources from domestic suppliers and were responsible for the employment of more than 5.4 million U.S. workers, nearly 5 percent of the total private sector workforce in 2002.

They spent about $27.5 billion in research and development in 2002, about 14 percent of the total spent by private companies in the United States. The companies' capital investment in 2002 was $111.9 billion, more than 10 percent of the total private-sector capital investment in the country.

One case study in the report is Michelin North America's research and development operation near Donaldson Center. The facility has spent more than $2 billion in R&D over the past 20 years. Results of that research include the X-One single truck tire that replaces two tires on an 18-wheeler.

"For many years, the United States has been successful in attracting foreign direct investment, which has helped contribute to U.S. economic growth and rising U.S. living standards," said Michael Fanning, Michelin North America's vice president for corporate affairs. "Right here in South Carolina, for example, our state has the highest percentage of any state from foreign direct investment as a percentage of the private-sector work force."

Randy Clark, vice president of Michelin's global strategies, industry standards and government regulations, said that foreign-based companies "provide a really vital presence in South Carolina."

For example, Michelin has brought a variety of jobs to the state, said the 26-year veteran of the company. They include manufacturing, research and development, marketing, sales and human resources. Many of its employees would not be in South Carolina if it were not for the company.

"Obviously, this is one of those fronts where we're very competitive as a state," said Gov. Mark Sanford. "The more investment we can bring into South Carolina and stimulate from within South Carolina, the more jobs we're going to create, period."

South Carolina is an attractive location, Clark said. Besides the relative proximity to Europe, the state offers "a good, friendly work force and a good climate."