#203 – Inside Our Industry – FDI into the United States in 2022 – Part 2

Posted on | Inside Our Industry

This week we are sharing more information from last week’s post on FDI in the U.S. The same article from AreaDevelopment.com delved into some challenges for FDI projects.

Current Site Selection Challenges for FDI Projects

Finding a site which meets the requirements for any kind of manufacturing is a real challenge at the moment. Some states have limited or no inventory for smaller or midsize projects (100 acres and larger). As lead times for the start of production (SOP) continue to shrink, available utilities are an ever more critical topic. Water scarcity in the United States is an increasing problem. It is estimated that more than 50% of the Continental U.S. has experienced drought conditions since 2000.

The lead time to obtain transformers is now up to 18-24 months. Fast track permitting is also now on top of the list for many clients. Renewable energy usage has become a mandatory topic for many clients, and therefore, countries such as Morocco and Egypt, with abundant natural resources, are becoming very popular for new plants. These countries are very innovative in their ability to offer plenty of renewable energy sources.

The growing tension between the U.S and China already mentioned has also led to challenges for Chinese companies seeking U.S. locations for a new plant. Although the relationship has been contentious for some time, more recent political and economic disputes have resulted in the U.S.’s imposition of substantial tariffs on Chinese imports and on-going spats over China’s failure to protect intellectual property, technology misappropriation, industrial espionage and unfair governmental subsidies for Chinese industry. Chinese investment projects looking at U.S sites now face increased scrutiny. In many recent instances cases, state and local governments have pushed back against these projects, even when billions of dollars and thousands of potential jobs are at stake.

Numerous American states have completely rejected all Chinese investment projects. Some have passed legislation prohibiting the sale of land to Chinese nationals or Chinese-owned companies. Moreover, several states have declined to offer any incentives for even large Chinese-owned investment projects, which would have been unthinkable in the recent past. Additionally, these well publicized anti-Chinese investment policies have resulted in making Chinese companies feel uncomfortable and uncertain whether their new manufacturing facilities will be welcome.