After Dubai Ports, U.S. courts foreign investment

On Wednesday, the Bush administration is set to announce a campaign to woo foreign companies, and the U.S. jobs they'll create.

Nina Easton, Fortune Washington bureau chief

WASHINGTON (Fortune) -- Hoping to demonstrate that US workers aren't globalization's great losers, the Bush administration is set to announce an "invest in America" campaign to attract more foreign companies.

While state governors routinely court foreign investors, this is the first time since the early 1980s that Washington will actively market America to overseas investors as a friendly place to do business. It comes a year after the politically-charged collapse of Dubai Ports World's bid to manage U.S. ports, an episode that contributed to an investment climate that foreign investors continue to describe as hostile.

Frank L. Lavin, Under Secretary of Commerce for International Trade, told Fortune that on Wednesday he will announce the launch of a campaign to encourage more investments by companies like Toyota (Charts), which last week announced plans to build a $1.3 billion SUV plant near Tupelo, Mississippi.

"If you take a more pro-active view, you can ask: Who's the next Toyota, who are the top 20 car manufacturers around the world who might be thinking of US facilities, and how do we make that happen? How do we get those jobs?" he says.

While wages in the U.S. are higher than many other countries vying for the attention of investors, Bush administration officials plan to highlight America's flush capital markets, high education levels, and culture of innovation.

Direct foreign investment in the US plummeted after 9/11 - from a high of $321.3 billion in 2000 to a low of $67.1 billion in 2003, according to the Commerce Department. Since then the number has steadily risen and is expected to top $180 billion when the 2006 figures are finalized later this month.

The Commerce initiative is relatively small, involving the creation of a new office and the retraining of 1,000 commercial officers stationed at embassies around the world, who will now promote the U.S. as an investment destination as well as push American exports.

But Todd M. Malan, president of the Organization for International Investment, praised the Commerce plan as a first step in combating what he calls "Davos-water cooler effect," where CEOs swap stories about negative experiences trying to invest in the U.S.

"There are 19 federal agencies that promote U.S. exports but zero assigned to make the case for why the US is a good place to invest," Malan said. "We're leaving good jobs on the table."

Despite steady increases in foreign investment, Malan, whose group represents US subsidiaries of foreign firms, said the Dubai Ports incident continues to scare off investors. Indeed, government figures show that national security reviews of proposed deals have increased.

Under the new Commerce initiative, officials will keep detailed accounts of efforts to attract foreign investment, said Lavin."You'll know the failure rates once you're engaged," he said. "Now we'll be tracking runs, hits and errors."

Meanwhile, in the Senate, Democrat Jeff Bingaman of New Mexico and Republican Richard Lugar of Indiana, on Friday introduced "Invest USA" legislation to create an under secretary position to promote investment in the US, and to require the Commerce Department to track its success in recruiting foreign investors.

"People understand that a significant portion of jobs are going to come from foreign investments," Bingaman told Fortune in an interview Monday.

Proponents of more foreign investment say they want to combat a growing popular sentiment - fueled by some political leaders and media commentators such as Lou Dobbs - that globalization is leading to the loss of American jobs.

Malan argues that the US remains a good investment for overseas manufacturers - 31 % of all American jobs at U.S.-based subsidiaries are in manufacturing - as well as high-tech companies. He notes that the Swiss pharmaceutical company Novartis (Charts) outsourced its core research to Massachusetts, with a $2 billion investment.

Still, while data compiled by the Organization for International Investment and provided to Fortune shows the potential of foreign investments to create jobs, they also reveal that the numbers remain small, at least so far.

In recent months, Germany's Siemens (Charts) announced an auto components plant in Michigan that will create 2,851 jobs; an expansion by UK's BP (Charts) in Houston will create 2,000 jobs; and NuComm International of Canada plans a new facility in Louisiana with 1,000 jobs. By contrast, an estimated 86,000 blue- and white-collar jobs are expected to disappear as Detroit's three major automakers undergo restructuring.

Overall, the Organization for International Investment says, subsidiaries of foreign firms employ 5.1 million Americans. Top of page