RURAL AMERICA A GOOD PLACE FOR GERMAN FDI
Adam Prager from Site Selection magazine reports on FDI trends
Long touted for its strong agrarian work ethic and cheaper operating costs, non-urban America is better connected and better equipped than ever before. That connectivity comes not just via roadways, but through high-speed communications, industry supplier-consumer collaboratives, and a web of business support services as well.
Yes, by sheer numbers, the magnitude of available workers in many of these locales is paltry compared to their urban counterparts. And even with enhanced transportation, business travel can be troublesome. But concentrations of cutting-edge industry expertise can be found well beyond America’s major metro areas — so much so that some companies are coming to these locations because of and not in spite of their labor profile. It’s become evident that rural and remote are not synonymous.
Enhanced connections and industry workforce clusters in more rural locations can pique the interest of companies headquartered outside the US. This is evidenced by new foreign direct investment, acquisition of US operations, and cross-continent partnerships leading to shared expertise, joint production and international distribution. The path for foreign investors into the US can be a challenging one, especially in less traveled rural areas. But many foreign-owned firms making their first foray into this country choose smaller communities. For some companies, this is a natural decision because a rural operating environment is the norm for them, not the exception.
As with domestic business investment into these areas, decisions among foreign-affiliated businesses are often tied to regional workforce competency, a pre-existing company relationship, access to raw materials and key inputs, an available building, and industry-targeted government assistance. But these decisions are emboldened when the location they examine has an industry mindset and work ethic similar to their own. This trend is especially popular with German companies
Geringhoff (St. Cloud, Minnesota)
Geringhoff is a German-owned manufacturer of harvesting equipment, specifically corn heads used for corn harvesting and other farm machinery. Geringhoff is a fifth-generation, family-owned business — typical of the class of German companies known as the mittelstand — that started to sell into the US in 2005 strictly from its dealer network. Seeking to better penetrate the booming US agricultural market, Geringhoff decided to set up production operations in the States, and undertook a location search centered on the country’s corn-growing states. The company received a variety of state incentives, including training assistance and tax benefits from Minnesota’s JOBZ program.
Siemens (Fort Madison, Iowa)
Iowa is a leading state in wind power generation; about 25 percent of its electricity comes from wind turbines. Wind power development in Iowa got a boost in the 1980s when a state law required investor-owned utilities to purchase power from wind generation. In 2007, Germany’s Siemens Energy opened a wind turbine blade manufacturing facility in Fort Madison (pop. 11,000) on the Iowa banks of the Mississippi River.
Schnitzler Inc is German owned as well as is uniquely positioned to be the first point of contact for Foreign companies looking to locate in the USA.