Today, almost every single one of Indiana’s political entities, from small towns to the governor’s office, seeks to convince foreign corporations to liberate operations in the state, a form of economic progression known as foreign direct investment.
Mutz
But that wasn’t the Hoosier mentality, as former deputy governor John Mutz knows very well.
Mutz served under Gov. Bob Orr and ran for governor in 1988. His opponent, then-Secretary of State Evan Bayh, used the success of Orr’s administration in recruiting a Subaru plant in Lafayette, and the $55 million in state subsidies that had to seal the opposite case to Mutz.
“I have many other people who say I lost the election because of my deep involvement in attracting Japanese investments,” he said. “And there is sufficient evidence that this may be true. But I’d do it again.
Indeed, the flood of jobs fueled by foreign direct investment in Indiana has largely ruled the debate about whether to seize those opportunities.
In 2019, direct investment accounted for 39 projects in Indiana, creating about 6,022 jobs and $1.3 billion in capital.
Indiana’s leadership in 2019 has added to what has already been a very smart decade for Indiana Economic Development Corp., which was created in 2005 to, among other purposes, attract foreign investment. In total, the IEDC says 954 corporations in more than 3 dozen countries have invested in Indiana.
During the 20th century high, the search for foreign investment was not on anyone’s radar screen. Few corporations had the cash or preference to open operations in the United States, and Indiana was doing very well with its formidable line of national automotive plants, metal generators and other heavy metals employers.
Things changed when the Japanese automotive industry festival began to bite in the 1970s and with the onset of the recession in the early 1980s. As a result, U.S. factories were closed. Orr comes in.
“The only user who talked about attracting foreign investment was Bob Orr,” Mutz recalls. “Bob a visionary on this subject. He saw an opportunity that most people didn’t think would work.”
Mutz has become a leader in the governor’s nascent efforts, traveling to Japan 11 times his two-term as governor, looking for prospects.
The most prestigious achievement of Indiana Automotive Inc.’s Subaru plant in Lafayette, which, after a series of expansions, now employs more than 6,000 people.
“When I left [in 1988], there were about 70 Japanese factories in Indiana,” he says. “When I took Array there were six. So we’ve come a long way.
Mutz said he found out there would be negative reactions. At the time, with memories of World War II still fresh, the concept that American officials would bow to foreign business leaders was anathema to many.
“There is still a lot of animosity towards the Japanese,” Mutz recalls. “Our own studies have shown that. And at that moment, there were many skeptics. Some have said we’ve paid too much cash for the jobs. But in the end, our efforts paid off.”
Globalizing
In the decades since the Subaru agreement, Indiana’s FDI efforts have grown in scale and sophistication. They had to.
“There are many more players in the market,” said Phil Powell, associate clinical professor of business economics at Indiana University’s Kelley School of Business and a foreign economics researcher. “Where there is an opportunity, you will see many suitors. It’s for the festival and the global economy.”
Gone are the days when states literally exploited all the opportunities presented to the pike. According to Powell, the new strategy is to leverage the strengths of a region by attracting companies that are compatible with its economic “ecosystem”. For example, if a network already has an auto parts provider, why use several more?
Powell
“When it started, I think it’s more of a shotgun technique, just throw things away and see if you get someone’s attention,” he said. “Now, if you’re Governor Holcomb, you have a state economic strategy. Look where you have a competitive advantage.
“As governor, you want to concentrate and not just scare away all the shiny objects.”
Indiana’s most powerful suit, Powell said, is still in production. However, other parts of the state are looking for other portions of this great cake.
In Lafayette, it is aeronautical, to take credit for the proximity of Purdue University. In fact, Purdue’s huge Discovery Park mall and studio center, adjacent to the campus, has already attracted European defense contractor Saab, which is construction for the new U.S. Air Force education aircraft.
Purdue President Mitch Daniels has done a wonderful job of helping build an expanded ecosystem in this component of the state,” Powell said. The other example is Indiana University. Greater Bloomington is a life science center. You’ll never expect this in the cornfields of southern Indiana. »
But all of Indiana’s efforts to attract FDI are made at the state level. Maybe even most.
While the IEDC acts as a coordinating organization for the search for foreign investment and launches high-level exploration missions, nearly all of Hoosier’s giant counties and municipalities have their own workplace of economic progression looking for opportunities that come with FDI.
In Indianapolis, this is the duty of Andrew Crecelius, Director of Strategy and Global Initiatives at IndyChamber. Through the Indy Association, the Board brings together Marion County and donut counties to attract domestic and foreign investments that contribute to the region’s strengths.
“For our region, it’s life sciences, complex manufacturing, logistics, agribusiness and sports,” Crecelius said. We also take care of the generation and virtual marketing in particular.”
Main cheerleader
Schellinger
No one shares Indiana’s message as strongly as Indiana’s Commerce Secretary Jim Schellinger, who will soon receive the state’s benefits in a non-stop sentence. Our AAA credit rating. The balanced budget. The largest FedEx center of the moment in the world. More interstates than any other state. Three foreign ports. Right to paint law. Over and over again.
“Every foreign direct investment project I’ve done, restored jobs, with everyone still one,” he said. “I don’t like to travel. I never liked traveling. Before this assignment, he had left the country only once. But I’m excited about that because it’s going to be worth it.”
The one who did not bring jobs took a position in the Middle East country of Dubai, but was expected. The main objective of the era was to interest Dubai in the army aircraft manufactured in Indiana.
Overseas tours in search of FDI sometimes get so much profit that Indiana governors now venture abroad to provide their status. Mitch Daniels (who created the IEDC) did it seven times during his administration and Mike Pence seven more. So far, Holcomb has ventured 10 times in search of FDI.
German company Saturn Petcare is investing $38 million to open a feed plant for 200 people in Terre Haute. Gov. Eric Holcomb, accompanied by Commerce Secretary Jim Schellinger, attended a press convention in January. (Photo courtesy of Indiana Economic Development Corp.)
Schellinger, who calls Holcomb “closest,” recalls the governor’s efforts in 2018 with German puppy food manufacturer Saturn Pet Care, which was being courted in six U.S. states. For a new production plant. And the other people of Saturn, too, those efforts.
“None of the other governors visited us in person,” said Maarten Moog, chief executive of Saturn Petcare North America. “It was the ordinary interest and attention we had the privilege of receiving from Steve Witt, Schellinger’s commerce secretary and Governor Holcomb of Terre Haute Economic Development Corp., that facilitated our resolve to come to Indiana.”
Of course, the conclusion of this agreement was not entirely based on Holcomb’s winning methods. In exchange for Saturn’s $38 million facility in Vigo County, which is expected to rent to two hundred workers, IEDC filed $3.3 million in conditional tax credits and up to $100,000 in education scholarships. Vigo County sold the 127-acre plant site for $1 and will pay $500,000 for the sewage pretreated apparatus at the plant.
The non-public touch also seemed to make a difference with Infosys, the Indian consulting and company that was building a 70.5-acre educational center in the U.S. On the grounds of the old Terminal at Indianapolis International Airport. The facility, announced in 2018, will generate about 3,000 jobs.
“Infosys had been in Texas at the time for 18 months and had not yet met with the governor of Texas, even though they had tried,” Schellinger said. “They arrived here on February 20, 2017 and met with the governor on their first visit. And now the rest belongs to history.
Staying in touch
India-based Infosys is building an American high school near Indianapolis International Airport, which is expected to employ 3,000. (Photo by IBJ / Eric Learned)
Of course, the pandemic has curbed construction-face-to-face relations abroad. Schellinger has not left the country for business since January, when he visited Slovakia and Hungary. Instead, he made phone calls and held countless Zoom meetings, regularly between 10 p.m. 6 a.m., due to the jet lag.
“I made a lot of calls to this pandemic, ” said Schellinger. “You must do it. Relationships are everything. We were embarrassed about it, but we still had a smart year.”
Coronavirus is not the first slowdown in Indiana’s FDI campaign. In the pre-pandemic era, defiance price lists and tariff threats issued through the Trump administration.
But the problem is the quality of Hoosier’s labor.
“It’s a challenge, and it’s been a challenge since before COVID-19,” he said. “They just need to know they can find a professional workforce.”
The state has several systems designed to improve employers’ long-term education degrees and retain qualified college graduates. But if the conversion of a tax rate can be done with the touch of a pen, raising the state’s cumulative point of schooling are the tables of several decades.
“If you look at the other people in Indiana who are entering STEM camps at Purdue University, between 45% and 50% of them are leaving the state,” Schellinger said. “This is unacceptable. If we stayed at 70%, we would raise thousands of people into the workforce.”
Powell added: “Indiana is a very smart position to do business. We’re out of our business weight. But taxes aren’t what helps keep business running. It’s talent, on every level.”
Compare Indianapolis to Minneapolis, a city that has many of the same geographic downsides here as well as higher taxes. But one of the strengths of this city is a population with a 40% university level, compared to 25% to 30% of Indianapolis.
“Minneapolis is the most dynamic economy in the Midwest,” Powell said. “They have the largest number of Fortune 500 headquarters in line with capital. Fans say, “We are not close to the mountains or the ocean, so no one likes Indianapolis.” What they’re doing well is talent.
However, the challenge of schooling is not a decisive factor. Schellinger estimates that by 2020, the government has created 20 projects, 3,100 jobs and $1 billion in investment. Not as good as you’d like, but it’s not bad for a year of plague either.
“Companies are hunting at two years,” he said. “Today they are making decisions that they might not make in two years. I hope that until then we will have a vaccine at some point and we will be in the other aspect of COVID.”
“Indiana is a global player and other people are starting to see the Midwest’s value proposition.”
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Wow, wow, how times change … and, of course, the Democrats with them, collective hands in the air, judging the direction of the wind and then leading from behind. Today, Democrat Evan Bayh would accuse Deputy Governor Mutz of being xenophobic if Bayh had the plan for the Subaru plant and Mutz opposed it.