TRAVERSE CITY, Mich. An organization representing the eight states and two Canadian provinces that surround the Great Lakes announced a partnership Friday with former U.S. Treasury Secretary Henry Paulson to recruit foreign manufacturing investment to the region.
The Council of Great Lakes Governors and The Paulson Institute, based at the University of Chicago, will try to capitalize on the growing interest of China and other emerging economies in making direct investments in advanced nations. Such investments which often involve buying or expanding plants and other assets have greater potential to create jobs than bond holdings bought or sold through paper transactions, Paulson said.
The U.S. overall is not getting its fair share of those kinds of Chinese investments, he said in a phone interview from Chicago, where the governors organization was meeting. A lot is going to other developing nations, or Europe, or Canada. And the Midwest is not getting a fair share of what is coming to the U.S. compared with states such as Texas and California, he added.
Governments ability to attract investors is limited by the need to avoid favoring one company over another, he said. Still, they can play a significant role especially in helping mid-tier companies with limited experience in dealing with overseas investors and partners.
Theres room for a sophisticated clearinghouse, one that is really quite strategic about some specific capabilities a state has and matching those with the right people in a foreign country, Paulson said.
Less than $2 billion of Chinas foreign direct investment was in U.S. companies in 2005, but that total had grown nearly eight times by 2013. So this is a good time for a stepped-up campaign to lure investments that would boost Great Lakes manufacturing and employment, said Michigan Gov. Rick Snyder, co-chairman of the council.
We have an outstanding manufacturing base led by automobiles but including a wide variety of other products, Snyder said. Theres a good opportunity for more of this kind of direct investment in the Midwest.
Chinas notoriously polluted environment offers especially promising prospects, Paulson said. The Michigan-based auto industry is a leader in developing systems that reduce emissions, and the Great Lakes region is becoming a hub for research and production of clean-water technology.
Another possibility: with its aging population, Chinese investors might be interested in Ohios medical device sector.
Snyder and Paulson will host a competitiveness forum this summer in Detroit to discuss the pitfalls and opportunities presented by foreign investment in regional manufacturing. Later, the partnership will look for ways to link foreign investors with opportunities in the Great Lakes. Another goal: finding good fits overseas for research, development and innovation hatched in the region.
The council includes the governors of Minnesota, Wisconsin, Ohio, Pennsylvania, Indiana and New York and the premiers of Ontario and Quebec.
Paulson said the best type of foreign direct investment would be in greenfield projects building new factories or stores that provide steady employment. Another target will be investors who could become complete or partial owners of troubled companies and pump in capital enabling the businesses to grow.