The Two-Way Street

Fretting about U.S. industry's "export of jobs" to lower-wage foreign lands, leaders of two major U.S. unions--the Machinists and the Steelworkers--last week urged Congress to restrict corporate expansion abroad. Next day, at his press conference. President Kennedy used their plea to press his own drive for powers to negotiate sweepingly lower reciprocal tariffs. His argument: if tariff walls stay high, U.S. companies will continue to elude them by setting up branches abroad. "This," said the President, "is a matter of importance to United States workers."

Behind the rising clamor against overseas business ventures lay the fact that U.S. direct long-term investment abroad, which now stands at $34 billion, is increasing at an ever-mounting rate. Last week the management consultant firm of Booz. Allen & Hamilton reported that between mid-1960 and mid-1961, U.S. companies started 653 new businesses overseas, mostly in chemicals, machinery, food, and transportation equipment. Western Europe attracted more than half the new businesses, followed by Latin America and Asia. This year, the Commerce Department estimates, U.S. companies will spend $4.5 billion on overseas plant and equipment--but up to two-thirds of that sum will probably be generated by profits earned abroad or by foreign borrowing.

Short Sights. U.S. seed money abroad bears fruit in the form of repatriated profits, dividends and taxes. Not counting Ford's special purchase of its British subsidiary, U.S. manufacturers last year invested $237 million in Europe, pulled back to the U.S. $241 million in earnings. Moreover, critics innate the danger of "job exports." Many of the investments are aimed at cracking markets that simply cannot be satisfied from the U.S.; if Coca-Cola had no plants overseas, few foreigners would go to the trouble of importing Cokes. And the existence of U.S. foreign plants makes jobs for those U.S. workers who supply machinery and spare parts.

Also creating jobs for U.S. workers are the steadily mounting investments of foreign companies in the U.S. Long-term foreign investments in U.S. plants and real estate have doubled since 1950, now total $6.9 billion. The Italian balm supplied by Olivetti has eased the pains of the U.S.'s typewriter-making Underwood Corp., and other European giants such as France's glassmaking Saint-Gobain and Germany's chemical-making Bayer have opened U.S. branches with U.S. partners. One British real estate syndicate--Boston British Properties, Inc.--even intends to rejuvenate downtown Boston, has bought a tract near the scene of the Boston Tea Party to put up the city's tallest building -- a 30-story. $20-million affair.

Long Gains. Foreign investment is a two-way street, and the U.S. is by no means getting the worst of the bargain. Booz, Allen figures that U.S. income from private investments abroad has topped outflow by $7.8 billion over the past decade. Says Booz, Allen Partner C. Wilson Randle: "Income on foreign investments is--next to exports--the largest single source of income in the U.S. balance of payments.''

This file is automatically generated by a robot program, so reader's discretion is required.