Editor’s Note: I have had many conversations lately about what it means to “buy American” in a global economy. It is popular sentiment (and I believe rightly so) to boost our nation’s economy and help support our neighbors by purchasing the goods we need from companies located in the USA. It’s just common sense.
But, I have learned over the years that, if it sounds simple, there’s probably a lot more questions to be asked! Companies that we “know” to be owned by US citizens and/or corporations, may very well build their products entirely in Mexico - or China, or Korea. And foreign owned companies may source and build entirely in the United States. And products labeled “Made in America” are often assembled here from parts made in other countries.
Pleading the case, Nancy McLernon cites the stats on American jobs generated by foreign companies. It’s food for thought, as we head into the New Year.
Alongside traffic and coffee, news radio is a staple of my morning commute. As I flip through the stations, I’ll sometimes hear a pundit lament that “Nothing is made in America anymore.”
In reality, there are nearly 13 million manufacturing workers in the United States, including thousands in Arizona. Some of these folks are employed by U.S.-based firms. Many others work for companies headquartered abroad.
These international companies employ more than 108,000 Arizonans. That includes 24,300 employees in manufacturing jobs – or nearly 22 percent of all Arizona jobs created by international companies.
According to the latest government data, the number of Arizona jobs created by international companies jumped by 35 percent over the past five years. For comparison, the number of private-sector jobs overall in Arizona increased by 15 percent.
Arizona isn’t an anomaly. International companies created 62 percent of new manufacturing jobs in the United States over the past five years, according to the latest available government data. More than 770 different international companies employ Arizona workers. Many of them are household names, including Anheuser-Busch, BP, and DHL.
International firms pay better. Americans who work for global companies earn 26 percent more compensation than the average worker in the same geographic area, according to a new analysis from the National Bureau of Economic Research.
International companies benefit all workers, not just the ones they employ directly. When an international firm sets up a manufacturing plant and creates 1,000 new jobs in America, workers in that geographic area at domestic firms experience a collective $16 million boost in wages. So for every local job that an international firm creates, the wage pool for employees in the area increases to the tune of $16,000 annually.
International companies also benefit U.S. small businesses. Over the past decade and a half, international companies increased the amount of business they do with U.S. suppliers by nearly 30 percent – jumping from $1.5 trillion to $2.4 trillion, after adjusting for inflation.
In the manufacturing sector, business between international companies and domestic suppliers rose by nearly 70 percent during that same period. That is more than 14 times greater than the overall growth rate achieved by all U.S. businesses.
The economic well-being of local communities depends on international companies and their relationships with suppliers in the United States. For example, Honda operates manufacturing facilities across Ohio that directly employ more than 13,000 Ohioans. It also relies on a network of more than 600 suppliers across the Midwest, almost a third of which are based in the Buckeye State. In fact, Honda spends $10 billion in Ohio annually to obtain intermediary goods from regional suppliers.
Sourcing locally is important for reasons beyond just economics – it allows U.S. small businesses to demonstrate a commitment to social equity and environmental sustainability.
For instance, French food company Danone’s American division, Dannon, is the leading U.S. yogurt producer. Seeking to establish a more sustainably-sourced array of products, Dannon formed partnerships directly with seven family dairy farms and two dairy co-ops across the United States, which now supply all of the milk Dannon uses in its products. In doing so, Danone set high standards for animal welfare and sustainable agricultural practices that must be upheld by their suppliers.
As we celebrate local manufacturers statewide, let’s recognize how international companies catalyze local economic growth – giving a whole new meaning to “made in Arizona.”
Nancy McLernon is the president and CEO of the Organization for International Investment, an association representing U.S. subsidiaries of global companies. Her advocacy efforts focus on educating legislators on the important role U.S. subsidiaries play in the American economy.