‘Made in America’ relies on our global connections

BMW is the quintessential German carmaker. But the company’s largest factory isn’t in Berlin or Munich — it’s in Spartanburg, S.C.

Likewise, L’Oréal dominates the global cosmetics market. But the French brand’s most productive plant isn’t located anywhere near Paris — it’s in Florence, Ky.

For decades, the world’s biggest companies have flocked to the United States, attracted by our skilled workforce, expansive consumer base and entrepreneurial business climate. They’ve created millions of good American jobs and revitalized many communities.

But over the last four years, the nation’s chaotic and protectionist trade policy scared away many would-be investors and employers. As a result, annual foreign direct investment has plummeted 63 percent since 2016.

Fortunately, change could be afoot. President Biden pledged to restore America as a manufacturing powerhouse. He can do so by rolling out the welcome mat for international job creators.

Global firms are some of the most dynamic and innovative manufacturers in the United States. According to the most recent government data, international companies created 80 percent of all new U.S. manufacturing jobs from 2013 to 2018. Across the country, international companies directly employ 7.8 million workers, a figure that has increased 26 percent over the past five years, compared to a 10 percent increase in hiring for the U.S. private sector as a whole.

These companies pay exceptionally well. On average, they offer U.S. workers $82,600 in annual compensation — 20 percent more than the private-sector average.

That’s why the Trump administration’s multi-front assault on our longtime economic allies made so little sense. It was targeting the very companies helping to revive American manufacturing.

Consider how the previous administration invoked national security concerns as a pretext to impose tariffs on cars, SUVs, and auto parts — even though international automakers are some of America’s biggest job creators. Of the 516,600 new U.S. manufacturing jobs created between 2013 and 2018 at international companies, the largest gains came from the “Motor Vehicles & Parts” sector. International automakers created 128,700 new U.S. jobs, more than 70 percent of the total added in this sector. Japanese-headquartered companies added 36,900 new U.S. jobs; German-owned manufacturers added 21,600; British firms, 5,800.

International firms got the message. For the first time in more than a decade, last year China replaced the United States as the No 1 location for cross-border investment.

As part of its plan to bounce back from the pandemic-induced economic downturn, the Biden administration will need to reverse that trend.

There have been some promising early signs. The administration has pledged to reestablish good relationships with our allies. It has already suspended some tariffs, such as the levies on European wines. And the new U.S. Trade Representative, Katherine Tai, recently stressed the importance of pursuing “trade policies that advance the interests of all Americans — policies that recognize that people are workers and wage earners, not just consumers.” Such a recognition is tailor-made to encouraging more job-creating foreign direct investment.

Yet, the administration’s first months haven’t been uniformly positive. In fact, officials have effectively endorsed many of Trump’s ideas, including measures to promote “supply chain self-sufficiency.” Such language is Beltway-speak for favoring domestic firms at the expense of international ones.

Trade and foreign direct investment make America’s economy — and its manufacturing sector —stronger, not weaker. President Biden pledged to “Build Back Better.” To do so, he’ll need to strengthen these economic global connections and welcome back international companies with open arms.

Nancy McLernon is president and CEO of the Global Business Alliance, formerly known as the Organization for International Investment (OFII), a business association whose mission is to actively promote and defend an open economy that welcomes international companies to invest in America.