Direct Foreign Investment: A Wisconsin Perspective Wausau, WI September 27, 2011 Dr. David J. Ward CEO and Founder NorthStar Economics, Inc. September 12, 2006 DIRECT FOREIGN DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 1 1 Copyright 2011, 2006, NorthStar Economics, Inc. All rights reserved. 1
Presentation Outline 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 DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 2 2
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 DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 3 3
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. DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 4 4
The Global Middle Class: Where the Markets Are Source: Brookings Size of the Global Middle Class 2011 Table 1: Size of the Middle Class, Regions (millions of people and global share) 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% DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 5 5
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 DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 6 6
US Economic Opportunity in The Global Economy Exports Another slide show in itself Direct Foreign Investment what we are talking about tonight DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 7 7
The US Economy is Global US Exports in 2010 US Imports in 2010 DFI in the US in 2008 DFI stock in the US in 2008 $1.28 T $1.91 T $ 325 B $ 2.1 T DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 8 8
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 DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 9 9
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 DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 10 10
US DFI Statistics Stock of DFI in US 2008 DFI in US $2.1Trillion $325Billion DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 111
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 DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 12 12
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 DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 13 13
Foreign-Owned Operations Source: Wisconsin Department of Commerce Economic Assets
Foreign-Owned Operations Economic Assets 470 statewide 27 countries represented Operations are located in 51 of 72 (71%) Wisconsin counties Total employment is Source: Wisconsin Department of Commerce 60,000+ DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 15 15
Employment in Foreign-Owned Operations by Industry Economic Assets Retail Trade Wholesale Trade Other Manufacturing Services Transportation, Communications, Electric, Gas, & Sanitary Services Wholesale Trade Finance, Insurance, & Real Estate Manufacturing 0 5000 10000 15000 20000 25000 30000 35000 40000 SIC Codes Source: Wisconsin Department of Commerce, SIC Codes DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 16 16
Origin of Foreign-Owned Operations in Wisconsin Source: Wisconsin Department of Commerce Economic Relationships
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 DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 18 18
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 DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 19 19
International Assets & Opportunities Scan Statewide Economic assets Human capital & culture Economic relationships University of Wisconsin System assets and relationships Growth opportunities
International Assets & Opportunities Scan 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 DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 222
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? DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 23 23
Ethnic Heritage Source: The Atlas of Ethnic Diversity in Wisconsin, 1998 Human Capital & Culture
International Assets & Opportunities Scan Statewide Economic assets Human capital & culture Economic relationships University of Wisconsin System assets and relationships Growth opportunities
Wisconsin s Sister Cities/States & Trade Focus Source: Wisconsin Department of Commerce Economic Relationships
International Assets & Opportunities Scan Statewide Economic assets Human capital & culture Economic relationships University of Wisconsin System assets and relationships Growth opportunities
UW System Alumni Living Abroad Sources: UW Eau Claire, Green Bay, Madison, Milwaukee, Oshkosh, Platteville, and Stout UW System International Assets
UW System International Students Sources: UW Madison, Milwaukee, Stevens Point; 2004-2010 UW System International Assets
UW System Students Study Abroad Destinations Sources: UW Madison, Milwaukee, La Crosse, Platteville, Whitewater; 2006-2008 UW System International Assets
Where We Have the Greatest Existing Relationships & Focus Initial Synthesis Relationship Cultural Economic Countries Canada, Germany, Norway, France, United Kingdom Canada, China, Germany, Japan, Mexico Education University of Wisconsin System Students & Alumni Education University of Wisconsin System Faculty Canada, China & Hong Kong, India, and Taiwan To be analyzed DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 32 32
Key International Assets Initial Synthesis DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 333
International Assets & Opportunities Scan Statewide Economic assets Human capital & culture Economic relationships University of Wisconsin System assets and relationships 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 Growth Opportunities
China UW & State Connections UW System 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 Private Sector Growth Opportunities Environmental Research & Technology Aquarius Systems Badger Meter Industry, Infrastructure, & Transportation Harley Davidson Oshkosh Trucks Johnson Controls Medical & Health Services TomoTherapy GE Medical Agriculture World Dairy Expo Ginseng Board of Wisconsin Business Associations Metro Milwaukee Association of Commerce China Council Madison International Trade Association New North (Green Bay / NE Wisconsin) DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 37 37
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? DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 38 38
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? DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 39 39
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 DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 40 40
Questions and Discussion DIRECT 7/30/2015 FOREIGN INVESTMENT: A WISCONSIN PERSPECTIVE 41 41
David J. Ward, Ph.D., President Phone: (608) 279-3393 Email: dward@northstareconomics.com Fax: (608) 441-8064 www.northstareconomics.com DIRECT 7/30/2015 FOREIGN 42 INVESTMENT: A WISCONSIN PERSPECTIVE 42 42