Foreign Investors Bank Big on U.S. Industry.
American industry is in a new phase of prosperity. New home-grown operations are on the rise, but in place of steel mills and coalfields, tech-driven segments like solar module manufacturing and battery production lead the resurgence. As foreign direct investment (FDI) pours in, design and engineering, procurement, and construction (EPC) firms that can deliver quality projects on time and under budget are in position to develop valuable long-term partnerships.?
The State of FDI?
Current figures for FDI in the U.S. paint a rich picture. Last year, the U.S. brought in more than $5.25 trillion in cumulative investment, leading the world by a wide margin. But let’s contextualize this figure.?
At the onset of the COVID-19 pandemic, China took the mantle as the world’s premier FDI destination. Before that, the country garnering the biggest slice was obviously *checks notes* the Netherlands. As much of the world emerged from the throes of the pandemic two years ago, the U.S. reclaimed the top spot as the world leader in FDI inflows, according to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report.?
UNCTAD’s July 2023 report showed the U.S. in the lead for the second consecutive year, while Kearney had the U.S. in the top spot for the 12th straight year in its FDI Confidence Index. Despite a worldwide dip in FDI, the U.S. is garnering impressive stats by any measure, leading the world in announced greenfield projects in 2022 with 3,829 (the U.K. was second with 1,967) and posting a fifth consecutive top three finish in the World Intellectual Property Organization’s (WIPO) Global Innovation Index, which measures 80 indicators to assess an economy’s overall innovation, including policy actions, venture capital trends, R&D spending, and patents issued.??
Of the top 20 countries in FDI position in the U.S., Japan ranked highest with $712 billion, followed by the U.K. with $663 billion, and the Netherlands in third with $617 billion. Canada was fourth, followed by a nearly complete list of Western European countries. Mexico appeared in the final slot of the top 20 with $33.79 billion.?
It’s no secret why foreign investors look to the U.S. for business opportunities. In addition to housing the world’s largest consumer market, the U.S. boasts a robust finance sector with a variety of sources for capital, solid infrastructure that allows fast access to outlying regions, and quality vocational programs and higher education institutions.?
Moreover, the U.S. has passed major legislation in the CHIPS & Science Act and Inflation Reduction Act that paved the road to FDI with tax breaks, grants, grid incentives, and fast-track permitting for funded projects. The result has been an influx in advanced tech projects over the last 22 months—a big step forward in moving the entire supply chain for manufacturing semiconductors, solar modules, batteries, and wireless technologies stateside.?
Imagine where we’ll be another two years from now when projects breaking ground today begin to come online.?
Learn more about what’s driving inbound FDI in our recent article on gray.com.?
Design-Build Delivers Results for Solar Industry?
The rapid development of the domestic solar industry continues to make front-page news. This top trend in FDI has garnered attention not only for its promises of a cleaner environment and more affordable energy, but also for the scale and speed of its rollout. This electrifying development has been driven overwhelmingly by one project-level trend: design-build delivery.?
As solar companies rush to stake a claim in a fertile new market, they are faced with a critical question: what’s the fastest way to turn investor confidence and ample resources into a tangible, finished project and functional asset? The choice goes beyond simply selecting a capable contractor. The project’s delivery method must provide the speed, flexibility, and capacity for innovation to build a facility that will serve the company’s immediate needs and accommodate its growth for decades to come.?
Design-build offers a significant advantage right from the jump, placing architect/engineer and general contractor under a single contract with the owner. This eliminates the lengthy tender process of separately bidding work to designers and general contractors. Moreover, design-build’s contract structure creates team unity and fosters a more relational mentality between stakeholders.?
Benefits of design-build include shorter project timelines, streamlined communications, and lower cost escalation over the project lifecycle. Solar investors that contract early with a design-build expert greatly improve their chances of meeting critical deadlines and going to market ahead of competitors.
What makes design-build especially relevant to the emerging U.S. solar industry? Adaptability. Unlike many industries, solar hasn’t had a century to evolve and refine its products and processes and must advance technology on a condensed timeline. Manufacturers working to achieve economies of scale must develop materials and processes that can increase cell efficiency and lifespan while reducing the time and cost of unit production. Design-build can help solar providers claim these advantages. By shortening a project’s timeline, the design-builder ensures a quicker production start. Continued interplay between architects, engineers, and construction teams allows owners to make late-stage design changes to incorporate fresh technological advances into production processes. The flexibility to innovate even as the project is underway guarantees that the facility will maintain its relevancy and commercial viability for much longer.?
Ultimately, it’s not just solar manufacturers that can benefit from design-build delivery’s advantages. Any business that prioritizes a faster start, lower overall costs, and the ability to quickly adjust project details to shifting market conditions and technology is a great candidate to be a design-build partner—and a market leader.?
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Byte: With faster schedules, lower costs, and a more collaborative team structure, design-build delivery offers foreign investors a proven method for turning a new project into a market share advantage.??
Click here to learn more about Gray’s role as a leading design-builder for the emerging U.S. solar industry.?
The Local Face of Global Business
Much of this month’s issue has focused on how foreign corporations stand to gain from entering the U.S. market. The move can introduce products and services to a wider base of paying customers, shorten supply chains, and elicit unique financial incentives in a hospitable business climate. These benefits energize corporate decision-makers, but they also invigorate communities.?
At a local level, FDI projects provide direct and indirect opportunities for employment. Foreign corporations need a local labor force to power their U.S. operation, engage customers within the cultural context, and establish ties to the community. New operations require additional infrastructure, material suppliers, distribution partners, equipment vendors, technical training programs, and more, all of which stimulate economic growth and more hires for adjacent industries.?
A large share of new FDI projects involves the manufacture of advanced technology—industrial operations heretofore absent in most communities—which ushers in a new class of jobs and a reason to develop valuable tech skills. The more technologically advanced, the greater the need for worker education and training programs.?
BlueOval SK Battery Park—a joint venture between Ford and South Korea’s SK On in Glendale, KY—is home to the new 42,000 s.f. Elizabethtown Community & Technical College (ECTC) BlueOval SK Training Center. Starting this month, the center will provide hands-on training for thousands of new workers learning to safely execute sensitive processes critical to the production of lithium-ion batteries. Such a resource benefits corporations as well as municipalities seeking to attract further investment and individuals looking to become more competitive in the job market.?
Communities that are welcoming to new businesses may also see progress on social and public projects. For example, BlueOval SK has leveraged Gray and Barton Malow’s community ties and construction expertise to allocate money and manpower to several projects throughout Glendale:?
Community building on FDI projects isn’t limited to foreign corporations. At industrial sites across the U.S., Gray and its subcontractor partners have raised funds for flood and tornado victims; organized food, toy, and clothing drives; donated to child and victim advocacy groups, led beautification projects, and more. Other leaders throughout the construction industry are doing the same, demonstrating that with new business comes a renewed focus on elevating the community.?
Byte: With FDI booming and thousands of announced projects on the horizon, foreign investors and U.S. communities are poised to reap the benefits of mutual attraction, providing a major opportunity for designers, engineers, and contractors to shape the future of American industry.?
Superior technology and resources. A highly skilled labor force. A welcoming environment ripe for innovation. Many of the reasons that foreign businesses choose to invest in the U.S. compare directly to the advantages of partnering with a design-build expert. Businesses interested in tapping U.S. markets for growth opportunities should be careful to include an expedient project delivery method in their calculations. With design-build, they all add up to sustained success.?