In-Sourcing Impacts

Few would deny that international companies contribute a great deal to the American economy. Those who defend "Out-Sourcing," have coined the term "In-Sourcing," to account for the economic impact of foreign direct investment (FDI) in the U.S.

Frankly, those of us who have been around for a while, don't need to be convinced of the benefits of FDI. It's great! But it's hardly an offset for offshoring work.

Cross-investment by companies on all continents is a feature of globalization. That is a reality for everyone to live with. U.S. companies build facilities abroad and foreign companies build them in the U.S. The truth is that most FDI in the U.S. takes the form of acquisitions of U.S. companies by foreign companies. These acquistions account for nearly 85% of all FDI by foreign companies in the U.S.

In any case, here are the numbers on "insourcing":

-U.S. subsidiaries employ a record high 6.4 million Americans.

-U.S. subsidiaries support an annual payroll of $350 billion and pay, on average, 19.1% more than all U.S. companies.

-U.S. subsidiaries heavily invest in the American manufacturing sector. Thirty-four percent of the jobs at U.S. subsidiaries are in manufacturing -- more than double the proportion of manufacturing at all U.S. companies.

-Annual federal taxes paid by U.S. subsidiaries are at a record high of $28 billion.

-U.S. subsidiaries manufacture in America to export goods around the world -- accounting for over 22.4 percent of all U.S. exports.

-Over the last 15 years, manufacturing "insourced" jobs grew by 82% - at an annual rate of 5.5%; and manufacturing "outsourced" jobs grew by 23% - at an annual rate of 1.5%.

-Over the same period, total "insourced" jobs grew by 117% - at an annual rate of 7.8%; and total "outsourced" jobs grew by 56% - at an annual rate of 3.8%.

-New foreign direct investment (FDI) in the U.S. totaled $82 billion in 2003, over twice the amount from the previous year.

-In 2003, U.S. subsidiaries reinvested $38.6 billion in their U.S. operations.

-U.S. Subsidiaries have spent $29.6 billion on U.S. research and development activities.

More here.