Thomko Petro Chemical Blog

On the global world market, the United States is for sale - and at discount prices.

A Saudi conglomerate buys a Massachusetts plastics maker last year. A French company starts a new factory in Michigan at the end of last year, and a British company buys up a New Jersey cough syrup maker.

A German company broke ground in last November in Alabama on a $3.7 billion stainless steel plant  - all the while touting about the low cost of production in the United States and the chance to reach many millions of customers - in particular because NAFTA allows goods to flow into Mexico and Canada free of duty.

The weakened American dollar has made our companies and properties cheaper on the global market - especially for European and Canadians.

And while our economic growth is weak, other countries like Russia, Saudi Arabia, China and Germany have strong growth and one key economic factor the U.S. does not have - strong exports.  

According to research firm Thomson Financial, foreign investors poured $414 billion last year into securing stakes in American companies, factories - and other properties through private deals, and purchases of public traded stocks. 

That staggering amount accounts to more than one-fourth of all deals announced for the entire year. And during the first two weeks of 2008, foreign businesses have invested $22.6 billion in American companies.

Canada is the leading country buying stakes in American companies spending more than $65 billion in 2007, but other countries' purchases are growing rapidly. South Korea's investments were totaled to more than $10.4 billion last year; Russia invested $572 million; and India $3.3 billion.

If the dollar continues to drop, look for more foreign companies buying up U.S. assets at even more bargain prices.

While State officials and government officials in Washington are courting more and more foreign money in an effort to convence Americans that the economy is indeed growing, there are also concerns about foreign countries gaining an influence over U.S. financial systems and military related technology. But even with these concerns, vast pools of money are still being courted from China to the Middle East. It's a Catch 22 situation because all this foreign investment may be preventing the U.S. from sinking deeper into financial crisis.

Wall Street is benefiting because banks like Merrill Lynch, Citigroup and Morgan Stanley have sold stakes to government controlled funds in Asia and the Middle East to compensate for huge losses on subprime mortgages.

Some American workers are also benefiting. Five million Americans now work for foreign companies set up in the United States, and those jobs pay 30% more than similar work at domestic companies. Almost a third of these jobs are in manufacturing, which explains why many States are looking for more foreign investment.

Bottom line - The U.S. has lost more than three million manufacturing jobs since 2001, with foreign trade often taking the blame. Foreign-made goods now account for roughly one-third of all wares consumed in the United States, and now our economy is vulnerable to decisions made very far from our shores.

Source: New York Times - by Peter S. Goodman and Louise Story