Pharos-Tribune

November 3, 2013

Foreign investment key to local expansion

Foreign investment key to local expansion

By Sarah Einselen
Pharos-Tribune

---- — On Logansport Mayor Ted Franklin's desk last week, he placed a memento given to him during a trip to Asia this summer. A photograph of an Asian business owner sits behind, on the large hutch lining the back wall of his office in the Logansport City Building.

Thousands of miles away, a Chinese businessman in upper-level management drinks coffee from a mug Franklin gave him during a visit to Logansport. Franklin hoped to return the gesture Friday.

Pursuing investors for Logansport's economy can seem like a dance — local officials take a step, interested businesses take another — and according to two local representatives involved in efforts to expand local business, it's one that involves give-and-take with foreign, as well as domestic, investors.

Recent research conducted by the Indiana Business Research Center, part of Indiana University's Kelley School of Business, indicates foreign funds — more specifically, foreign direct investment, which usually means part or whole ownership of a U.S. business by foreign citizens — play an integral role in expanding Indiana's economy, especially its manufacturing base.

U.S. businesses with majority foreign ownership employ about 133,600 people in Indiana, according to the IBRC, putting Indiana 14th in the nation as of 2010. Japan, the United Kingdom and Germany are the largest sources of such employment.

Two of those three countries have welcomed Logansport representatives in the last few months.

Franklin said he doesn't want to overlook domestic investment, but "I try to go where the opportunity is at," he added.

That included a trip with other Indiana mayors and Gov. Mike Pence to visit Japan in early September, followed by an independent trip to China where he met up with state Sen. Randy Head (R-Logansport) to visit with a variety of Chinese business representatives.

Franklin said he funded his trip to China himself; the funds for Head's travels came from funds earmarked by the Cass-Logansport Economic Development Organization for an Asia initiative.

This year, CLEDO set aside $20,000 of its marketing funds to pursue leads with foreign investors. Since it's now seeking a permanent director for the organization, the CLEDO board decided to send Head as a representative of Cass County instead.

"Part of the reason for the Japan-China trips," explained CLEDO interim director John Hipskind, is that "the Chinese have a lot of money right now." Chinese businesses could be interested in funding a U.S. venture, for one thing — and Japanese businesses are trying to orient production with where the market is. "And that's here," he said.

Many U.S. companies are owned by foreign entities, Hipskind went on. "To get them to invest here, you've got to deal with the owners, not just the local companies."

Cass County has a few businesses already owned in part or wholly by foreign establishments — Essroc is an Italian company; Hartz Mountain is Japanese — and expanding Japanese auto production could mean more in the long run, if Cass County dances the right steps.

Expanding auto production means more demand for supplies — so suppliers are also expanding their operations, Hipskind explained. "Instead of doing it [expanding production] where their original plants are located, they'd keep those ... but build new, smaller-midsize plants closer to their customers," the automakers.

From 2010 to 2012, Indiana companies announced 143 investments by foreign companies, totaling a value of $4.7 billion, according to the IBRC. They were projected to create about 4,100 new jobs a year, almost half of them in manufacturing.

"We're still looked at as a manufacturing-friendly state," said Hipskind, "and we're interested in manufacturing rather than service jobs simply because of the higher pay and benefits."

"We'll stay afloat with what we've got," Hipskind said of Cass County. But to grow, county officials have to seek investments from both domestic and foreign sources.

He expects the recent opening of the Hoosier Heartland highway to present a more attractive transportation route for prospective companies.

"There are a lot of options for people to invest their money," Hipskind said. "So we have to offer something that somebody wants."

Sarah Einselen is news editor at the Pharos-Tribune. She can be reached at sarah.einselen@pharostribune.com or 574-732-5151. Twitter: @PharosSME