European foreign direct investment (FDI) in the U.S. increased by over 40% between 2014 and 2020, rising to $3.19 trillion in 2021. According to the German American Chambers of Commerce (GANO), 93% of German companies plan to grow their U.S. investments over the next three years, with construction, infrastructure and industrial manufacturing accounting for the highest investments.
What’s driving European manufacturers to relocate production in the United States?
Sebastian Meis, a cross-border transactional corporate attorney for Baker Donelson, attributes it to record high energy costs in the European Union exacerbated by the removal of Russian natural gas supplies following the invasion of Ukraine, coupled with general economic insecurities and increasing bureaucratic regulations. U.S. government incentives for European manufacturers to relocate here further help the trend.
He cautions, however, that there are challenges for European manufacturers to relocate. In this week’s Industry Today feature, he notes that, “The availability of a qualified workforce is critical…substantial governmental incentives become insignificant when a qualified workforce is unavailable and companies have to dedicate resources for more intensive recruiting. According to the German American Chambers of Commerce, building a sustainable workforce pipeline remains the No. 1 challenge for German companies in the U.S. for the second year in a row, with 78% reporting they’ve experienced difficulties attracting skilled workers in the U.S.”
To help address this issue and make the U.S. as attractive as possible for European companies, state and local governments should launch apprenticeship and community college programs that target the jobs and skill sets in demand. Meis also recommends reducing certain regulatory requirements to aid training development. “The legal framework must also provide conditions to nourish the expansion of educational programs among students and workers at all stages of their careers. Regulations hindering recruitment and restricting workers from entering certain occupations, such as age requirements for apprenticeships, need to be reviewed and reformed.”
Read the complete article, High Energy Costs Drive European Manufacturers to the U.S.
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