European investment in Indiana's automotive sector.

• Author: Krause, Ryan

Indiana, as well as the rest of the Midwest, boasts a proud tradition of automotive manufacturing. Historically, transportation equipment has been Indiana's biggest export, although that distinction has become tenuous in recent years. The percentage of Indiana's employment devoted to transportation equipment manufacturing is more than three times the corresponding percentage for the nation as a whole. That figure, however, has decreased considerably over time. In 2001, transportation equipment manufacturing accounted for 5.6 percent of Indiana's employment. In 2009, that figure dropped to 3.8 percent. For the United States as a whole, the decrease was less dramatic, from 1.8 percent to 1.3 percent.

As Figure 1 shows, the most recent recession has proved particularly devastating to Indiana's transportation equipment manufacturing employment, although the drop in employment in this sector began as early as 2004. But transportation equipment remains a major player in the Indiana economy.

[FIGURE 1 OMITTED]

A Snapshot of Europe's Investment

Foreign investment in Indiana's motor vehicle manufacturing activity has ballooned over the last half-decade, particularly from the European Union (EU). EU firms' estimated investment in Indiana in transportation equipment has totaled close to $1.5 billion since 2003. This investment has resulted in the creation of more than 5,300 jobs in the state, or roughly 6 percent of the total 2009 transportation equipment manufacturing employment in Indiana. Relatively speaking, Europe is a prominent player in the transportation equipment manufacturing industry in Indiana.

Figure 2 shows the estimated dollar value of EU investments in Indiana's transportation equipment industries in each year since 2003.

These investments came from 21 separate European firms. The top five EU investors are shown in Table 1. The lion's share of investment was derived from DaimlerChrysler, the German-owned firm created when Daimler merged with U.S. car company Chrysler in 1998. Daimler divested its interest in Chrysler in 2007, and so 2007 is the last year in which the combined firm is recorded as investing in Indiana. After a couple of years as a privately owned firm, Chrysler was sold to Italian auto firm Fiat in 2009. A review of the specific investments DaimlerChrysler made in Indiana reveals two investments, both of substantial value, and both directed at Chrysler's Kokomo manufacturing facility. So, while the German firm is no longer supplying the funds, Chrysler remains financially tied to the EU through its corporate parent, Fiat.

Table 1: Top Five European Investors in Transportation Equipment Manufacturing, 2003 to 2011 Investor Source Country Total Estimated Investment DaimlerChrysler Germany $938,000,000 Rolls-Royce Group United Kingdom $254,100,000 ThyssenKrupp Germany $53,750,000 Michelin France $50,000,000 BAE Systems United Kingdom $31,900,000 Source: IBRC, using FDI Markets data Rolls-Royce Group, a U.K. firm, has invested over a quarter of a billion...