A stimulative influence.

• Position: Views of Michel Bally, President of Sulzer Brothers Inc. - Special Section: Being a Global Leader

A Stimulative Influence

Foreign direct investment in the United States has increased practically fivefold since 1980, from $500 billion to almost $2 trillion today. A decade ago U.S. companies decided not to automate to cut production costs but opted to utilize low-wage, offshore locations. This reduction of demand in the labor-intensive sector of the U.S. set the stage for the beginning of severe unemployment and the erosion of skills in the work force, leaving the U.S. vulnerable and needy.

As West Germany, Japan, Britain, and France began to mature economically and become competitive (with each other and the U.S.), these countries saw the potential of an eager, educated, and underutilized work force in the U.S. They began to take advantage of the vast marketplace, the relatively few barriers to investment, and the comparatively high standard of living. As a result of this competitive environment, the U.S. no longer holds the monopoly on superior technology and management.

Foreign direct investment is a logical extension of free trade, and free trade is a two-way street. Consistently, for over 40 years, U.S. companies have been establishing overseas operations in order to utilize the unique capabilities and areas of expertise that they couldn't otherwise take advantage of in their home market alone.

Today, the U.S. is in a period of duress. It is suffering from a recession, an out-of-control budget, and a trade deficit. The benefits from foreign direct investment can only be a positive influence. Confidence in the U.S. by foreign companies is strong and the jobs that are created by foreign companies should be welcomed, as should their revitalizing foreign dollars.

Many European companies have stepped up their direct investment activities in the U.S. in the past five years. They maintain that there is great promise in the U.S. - if a long-term approach is taken. The interest that foreign companies have in the U.S. in these turbulent times should be seen as a supportive and stabilizing force. As Harvard Professor Robert Reich has noted, "American competitiveness is much more a matter of what we do than what we own. The critical question is how much value Americans add to the global economy. And if Americans can learn to be more productive under the auspices of foreign managers...then we come out ahead."

Sulzer Bros. Inc. currently employs over 4,000 Americans and has generated several hundred of those jobs since 1985. By licensing European...