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Foreign firms fuel region’s job growth

Foreign-owned businesses are a “significant force” for employment in the Dayton region, representing more than 20,000 area jobs, according to a U.S. economy report released today.

The Dayton-Springfield metropolitan area ranks 53rd out of the top 100 largest in the U.S. for the total number of jobs in foreign-owned companies. However, the region has the nation’s 17th highest share of workers employed by foreign-owned companies at 6.4 percent, relative to the size of the local economy.

Foreign-direct investment into the U.S. is heavily directed toward manufacturing, which benefits the Dayton region, said Kenan Fikri, a Brookings Institution research analyst who co-authored the report on foreign investment.

Nationally, foreign-direct investment supports 2.2 million manufacturing workers, or nearly one-fifth of all manufacturing jobs in the country, the report said.

“You see Dayton emerging from the pack because of its orientation on manufacturing,” Fikri said.

The number of jobs at foreign-owned businesses in the Dayton region increased from 10,500 in 1991 to 20,070 in 2011. The region’s employment share increased over that period from 3.2 percent to 6.4 percent, which is ahead of the national average of 5 percent.

“In two decades of rapid globalization, Dayton was essentially on the map and it doubled its share, and it did that better than the national economy,” Fikri said.

Foreign-direct investment occurs when a foreign company invests in a U.S. business either by opening a new operation, or through a merger or acquisition. That investment plugs metros into the global economy and provides an infusion of capital that was outside the region or U.S., Fikri said.

The U.S. operations of foreign firms account for only 5 percent of total private sector employment, but represent 12 percent of the nation’s productivity growth, 15.2 percent of capital investment, 18.9 percent of corporate research and development, and 20.3 percent of goods exports, the report said.

Dayton Development Coalition officials are “encouraged” by the report, said Dave Burrows, vice president of development.

Burrows noted the report’s data only extends to 2011 and doesn’t include more recent examples of foreign-direct investment into the region, such as Chinese automotive glass manufacturer Fuyao’s $15 million purchase last month of a portion of the former General Motors Assembly plant in Moraine. Fuyao expects to employ about 800 people at the plant.

“We feel that in the next reporting cycle it will be even more positive,” Burrows said.

Auto parts production is the region’s leading jobs sector for foreign-owned companies, employing 4,000 area workers, or 19.8 percent of total foreign-owned business employment, in 2011, the report said.

German-owned MAHLE Behr Dayton, which makes heating ventilation and air-conditioning products and parts for automotive customers, employs 1,100 local workers and does about $650 million in annual business, said Rob Baker, manager of the plant at 1600 Webster Street.

Behr, a German company that purchased the facility in 2002 from Chrysler Corp., invests an average of $10 million annually into the plant, Baker said. Last year, German firm MAHLE GmbH took a majority ownership stake in Behr and has an option to purchase the Dayton facility, he said.

Mergers and acquisitions is the primary factor behind U.S. job growth in foreign-owned companies since 1991, the Brookings report said. However, 36 percent of 2011 jobs in foreign-owned businesses in the Dayton region came from new operations, compared to the national average of 26 percent.

“Dayton has actually seen more and larger openings than many other metropolitan areas,” Fikri said.

The Brookings report said England — home to defense and aerospace company BAE Systems, and LexisNexis parent company Reed Elsevier — is the top source country for foreign-owned business employment in the region, followed by Japan, Germany, France and the Netherlands.

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