Ireland ranked fourth for US investment

IRELAND is now one of the top five most important destinations in the world for the United State’s $29 billion manufacturing investment annually.

Ireland has climbed from eight to become the fourth most important destination for US manufacturers investing overseas, according to a study by Deloitte.

The study, Globalisation Divided? Global Investment Trends of US Manufacturers, found that US FDI to Ireland jumped from $1.26bn in 2001 to $2.25bn in 2003 and the upward trend continues into 2003.

Deloitte head of consulting David Hearn said the findings were consistent with what they had seen over the past year, with further inward investment by groups such as Intel.

“This is very encouraging for Ireland given recent concerns about our competitiveness and is a clear indication that IDA Ireland continues to be a world leader in attracting quality foreign direct investment.” The study found that while US FDI globally dropped by 1% in 2003 to an estimated $29bn, investment in Ireland jumped by 78%.

“Internationally, we are seeing a dramatic slowdown in US direct manufacturing investment into low-wage locations because more firms appear to be outsourcing work to local vendors rather than establishing or acquiring their own operations,” said Mr Hearn.

The survey found that Ireland was the ninth most important destination in 1999 but by 2002, Ireland had become the 4th most important destination behind Canada $8.95bn, Britain $6.81bn and the Netherlands $3.79bn. The study indicates the emergence of a “Global Investment Divide” with US manufacturers’ foreign direct investment concentrating in higher-wage countries, such as Ireland, Canada and Britain and outsourcing and partnering being the strategy of choice to source and market in lower-wage, fast-growing economies, such as Brazil, China, India, Korea and Mexico. The authors found that one reason for the dramatic slowdown in manufacturing FDI into low-wage locations may be that companies increasingly are using arm’s length, contractual means to source in those locations, rather than, through green-field investments or acquiring their own facilities, including plants, equipment, distribution facilities, and office buildings.

“The long-term implications for US manufacturing multinationals and their competitiveness in global markets, however, are worth considering. As the hub of global manufacturing is moving towards low-wage nations in general and the Asia-Pacific region, including China in particular, innovation in product and process capabilities and technology is likely to move along as well.