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1 © Copyright 2006, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN
September 12, 2006
7/30/2015 1 1 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Direct Foreign Investment: A Wisconsin Perspective
Wausau, WI September 27, 2011 Dr. David J. Ward CEO and Founder NorthStar Economics, Inc.
7/30/2015 2 2 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
I. Global Economic Overview II. Background on DFI US/WI III. The UW Task Force on International Economic
Development IV. The DFI Opportunity Curve V. Questions & Discussions
Presentation Outline
7/30/2015 3 3 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
The Global Economy
World Population 2011 7.0 B U.S. Population 2011 308 M World Economy (GDP) 2010 $65.0T U.S. GDP 2010 $14.5T EU GDP 2010 $16.2T China GDP 2010 $ 6.0T
7/30/2015 4 4 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
U.S. Share of Global GDP
1950 35% 1970 27% 2010 22%
US GDP has steadily risen from 1950-2010.
Higher growth rates in emerging countries have grown the global GDP pie and marketplace.
7/30/2015 5 5 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
The Global Middle Class: Where the Markets Are Source: Brookings “Size of the Global Middle Class” 2011
2009 2020 2030
North America 338 18% 333 10% 322 7%
Europe 664 36% 703 22% 680 14%
Central & South America 181 10% 251 8% 313 6%
Asia Pacific 525 28% 1,740 54% 3,228 66%
Sub-Saharan Africa 32 2% 57 2% 107 2%
Middle East & North Africa
105 6% 165 5% 234 5%
World 1,845 100% 3,249 100% 4,884 100%
Table 1: Size of the Middle Class, Regions (millions of people and global share)
7/30/2015 6 6 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Key Markets for World Middle Class
Food – protein – meat, fish, dairy Feed – China now has 700M pigs and has
become a major buyer of US corn Fiber – clothing, packaging, personal care
products Fuel – oil, gas, alternative fuels
7/30/2015 7 7 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
US Economic Opportunity in The Global Economy
Exports – Another slide show in itself Direct Foreign Investment – what we are
talking about tonight
7/30/2015 8 8 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
The US Economy is Global
US Exports in 2010 $1.28 T US Imports in 2010 $1.91 T DFI in the US in 2008 $ 325 B DFI stock in the US in 2008 $ 2.1 T
7/30/2015 9 9 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
The Wisconsin Economy is Global
Exports in 2010 $19.8 B Foreign Firm Operations 2009 470+ Major Foreign Investments by WI Firms Schneider Transport - China Manitowoc Corp. - China
7/30/2015 10 10 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
US Direct Foreign Investment
Time Period DFI Inflow DFI Outflow Net Inflow
1960-1969 $42.2B $5.1 B +$37.1B
1980-1989 $206.3B $329.2B -$122.9
2000-2007 $2,950B $2,704B +$246B
7/30/2015 11 11 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
US DFI Statistics
Stock of DFI in US $2.1Trillion 2008 DFI in US $325Billion
7/30/2015 12 12 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Types of DFI in US
Reinvestment of earnings of foreign owned business
Acquisition of US assets – land, buildings Invest and Build US Subsidiary Acquire US company or division
7/30/2015 13 13 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Fears and Concerns about DFI in the US Economy
Foreign countries will steal our technology Foreign countries will influence our
government and politics Foreign firms will control the economy Fears are highlighted by the Japanese real
estate investment in US assets in the 1990s and current Chinese ownership of US debt
Foreign-Owned Operations Source: Wisconsin Department of Commerce
Economic Assets
7/30/2015 15 15 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
470 statewide
27 countries represented
Operations are located
in 51 of 72 (71%)
Wisconsin counties
Total employment is
60,000+ Source: Wisconsin Department of Commerce
Economic Assets
Foreign-Owned Operations
7/30/2015 16 16 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
0 5000 10000 15000 20000 25000 30000 35000 40000Manufacturing
Finance, Insuran
ce, & Real E
state
Services
Other Manufact
uringWholesale
Trade
Transportat
ion, Communicat
ions, Electri
c, Gas,
& Sanitar
y Serv
icesWholesale
TradeReta
il Trad
e
SIC Codes
Source: Wisconsin Department of Commerce, SIC Codes
Economic Assets Employment in Foreign-Owned
Operations by Industry
Origin of Foreign-Owned Operations in Wisconsin Source: Wisconsin Department of Commerce
Economic Relationships
7/30/2015 18 18 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Examples of DFI in Wisconsin
Alliance Laundry Systems – 2004-05 $375M IPO turns into $450M DFI as Ontario Teachers Retirement buys the company
Fincantieri acquires marine assets of Manitowoc Corp – 2009 for $120M
Seda International Packaging locates factory and North American HQ in Kenosha – 2011 for $76M
7/30/2015 19 19 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Examples of DFI in Wisconsin
Simonswerk Group sets up office and distribution center in Whitewater - 2011
Decision Insight Information group selects New Berlin as its new HQ site - 2011
Thomas Magnete GmbH to open manufacturing plant in Brookfield – 2011 $3 M investment
Statewide ◦ Economic assets ◦ Human capital & culture ◦ Economic relationships ◦ University of Wisconsin
System assets and relationships ◦ Growth opportunities
International Assets & Opportunities Scan
7/30/2015 22 22 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Approach ◦ Initial high-level statewide scan and communication
UW System assets and relationships Economic assets
Internationally significant assets and economies statewide Human capital and culture
Economic relationships
◦ Utilize New North as a Pilot Project ◦ Prepare compelling documentation of resources
International Assets & Opportunities Scan
7/30/2015 23 23 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
International Assets & Opportunities Scan
Purpose ◦ Take initial inventory of the UW System and State
international expertise and assets
Key questions ◦ What international relationships exist and where? ◦ What is the international expertise of the UW System
and State? ◦ What are our globally significant assets? ◦ How do our assets and relationships align with
emerging opportunities and growth regions?
Human Capital & Culture
Ethnic Heritage Source: The Atlas of Ethnic Diversity in Wisconsin, 1998
Statewide ◦ Economic assets ◦ Human capital & culture ◦ Economic relationships ◦ University of Wisconsin
System assets and relationships ◦ Growth opportunities
International Assets & Opportunities Scan
Wisconsin’s Sister Cities/States & Trade Focus Economic Relationships
Source: Wisconsin Department of Commerce
Statewide ◦ Economic assets ◦ Human capital & culture ◦ Economic relationships ◦ University of Wisconsin
System assets and relationships ◦ Growth opportunities
International Assets & Opportunities Scan
UW System International
Assets UW System Alumni Living Abroad Sources: UW Eau Claire, Green Bay, Madison, Milwaukee, Oshkosh, Platteville, and Stout
UW System International Students Sources: UW Madison, Milwaukee, Stevens Point; 2004-2010
UW System International
Assets
UW System International
Assets UW System Students’ Study Abroad Destinations Sources: UW Madison, Milwaukee, La Crosse, Platteville, Whitewater; 2006-2008
7/30/2015 32 32 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Relationship Countries
Cultural Canada, Germany, Norway, France, United Kingdom
Economic Canada, China, Germany, Japan, Mexico
Education University of Wisconsin System Students & Alumni
Canada, China & Hong Kong, India, and Taiwan
Education University of Wisconsin System Faculty
To be analyzed
Initial Synthesis Where We Have the Greatest
Existing Relationships & Focus
7/30/2015 33 33 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Initial Synthesis Key International Assets
Statewide ◦ Economic assets ◦ Human capital & culture ◦ Economic relationships ◦ University of Wisconsin
System assets and relationships ◦ Growth opportunities
International Assets & Opportunities Scan
Growth Opportunities Worldwide Top 30 GDP
Source: World Bank, 2010
Growth Opportunities Worldwide Top 30 GDP & Growth Rates (2000-2008)
Source: World Bank 2009 and 2010
7/30/2015 37 37 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
UW-Madison • China Initiative • Babcock Institute / World Dairy Expo • Chinese Champions Program
UW-Eau Claire • 1+2+1 China Program
UW-Platteville • Confucius Institute
UW System-wide • Alumni branches
• Beijing, Hong Kong, Singapore, Taiwan • Mandarin language instruction • Study abroad / student exchange • WARF (Wisconsin Alumni Research Foundation) • WiSys Technology Foundation
UW System Private Sector
Agriculture • World Dairy Expo • Ginseng Board of Wisconsin
Environmental Research & Technology • Aquarius Systems • Badger Meter
Medical & Health Services • TomoTherapy • GE Medical
Industry, Infrastructure, & Transportation • Harley Davidson • Oshkosh Trucks • Johnson Controls
Business Associations • Metro Milwaukee Association of Commerce – China Council • Madison International Trade Association • New North (Green Bay / NE Wisconsin)
Growth Opportunities China – UW & State Connections
7/30/2015 38 38 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Some Key Issues and Questions
Can Wisconsin globally compete and win more DFI?
If so where is WI competitive advantage? What about arguments related to foreign
control of our (US & WI) economy? Could the UW System play a role in
building global contacts and attracting DFI?
7/30/2015 39 39 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Remember the Global Demands of the Global Middle Class Food Feed Fiber Fuel
Will anyone be interested in the WI investment opportunity curve?
Will we develop the global case for investing in Wisconsin?
7/30/2015 40 40 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Why a DFI Strategy for Wisconsin
DFI investment creates jobs – Fincantieri WI has a base of DFI to expand and grow –
470+ firms and more choosing the state DFI often leads to exports Wisconsin is positioned to meet global middle
class demand WI is often overlooked (fly over?) in VC and
other domestic investment Much of the DFI creates jobs that match the
skills of the unemployed in Wisconsin
7/30/2015 41 41 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE
Questions and Discussion
7/30/2015 42 42 © Copyright 2011, NorthStar Economics, Inc. All rights reserved.
DIRECT FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 42
David J. Ward, Ph.D., President
Phone: (608) 279-3393
Email: [email protected]
Fax: (608) 441-8064
www.northstareconomics.com