News Release

EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, TUESDAY JUNE 1, 2005
BEA 05-23

Foreign Investors' Spending to Acquire or Establish U.S. Businesses, 2004



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Thomas Anderson:	(202) 606-9879					BEA 05-23


			Foreign Direct Investors' Outlays to Acquire or 
			Establish U.S. Businesses Rose in 2004


In 2004, outlays by foreign direct investors to acquire or establish U.S. businesses rose 
significantly. Outlays were $79.8 billion, up 26 percent from 2003, when outlays were $63.6 
billion. Outlays remained below those in 1998-2001, when new investment outlays were
 
Outlays for New Investment in the United    
States by Foreign Direct Investors, 1980-2004            
Billion $
p Preliminary __________________________ This news release is available on BEA's website at: www.bea.gov/newsreleases/rels.htm historically high, ranging from $147.1 billion to $335.6 billion. Transactions of more than $5 billion continued to account for a sizable share of total outlays. In 2004, outlays in depository institutions (banking) increased sharply and outlays in other financial services industries continued to be large, as overseas banks and finance and insurance companies continued to seek access to the profitable and open U.S. financial market. Outlays in manufacturing rose substantially. Outlays in information declined for the fifth consecutive year. Outlays by Canadian investors increased substantially and accounted for more than 40 percent of total outlays. Outlays from European investors were up slightly, as increases in outlays from the United Kingdom, Switzerland, and France were offset by decreases in outlays from Germany and other European countries. Outlays from Australia decreased. Outlays from Japan declined for the fourth consecutive year. Outlays in 2004 In 2004, as in previous years, outlays by foreign direct investors to acquire existing U.S. businesses (at $72.5 billion) were far larger than outlays to establish new U.S. businesses (at $7.3 billion). By industry, outlays in finance (except depository institutions) and insurance ($24.9 billion) were largest for the second consecutive year. Outlays in depository institutions, at $14.1 billion, were also large, up sharply from outlays of $4.9 billion in 2003. Outlays in manufacturing rebounded to $17.2 billion in 2004 from $10.8 billion in 2003. Within manufacturing, the largest increases were in chemicals, beverages and tobacco products, and computers and electronic products. Outlays in real estate rose to $4.8 billion in 2004, up from $2.8 billion in 2003. Outlays in information continued to decline, from $9.2 billion in 2003 to $3.1 billion in 2004. By country of ultimate beneficial owner, outlays from Canada were largest, increasing from $9.2 billion in 2003 to $32.4 billion in 2004. Outlays from the United Kingdom increased from $20.4 billion to $24.2 billion. Outlays from French and Swiss investors increased, while those from German investors decreased. Outlays from Japanese investors continued to decline from an already low level to $1.0 billion in 2004, down from a peak of $26.0 billion in 2000. Outlays from Australia decreased from $9.0 billion to $2.9 billion. The ultimate beneficial owner is that person, proceeding up a U.S. affiliate's ownership chain, beginning with and including the foreign parent, that is not owned more than 50 percent by another person. The estimates of outlays for 2004 are preliminary. The estimate of outlays for 2003 has been revised up 5 percent from the preliminary estimate published last year. Employment and assets of newly acquired or established businesses Newly acquired or established businesses employed 193,000 people in 2004, up from 166,100 in 2003. Manufacturing, with 48,300 employees, accounted for the largest share of employment in 2004. The total assets of newly established or acquired businesses were $313.0 billion in 2004, up from $219.1 billion in 2003. * * * Estimates in this report are based upon a Bureau of Economic Analysis survey that covers (1) existing U.S. business enterprises in which foreign investors acquired, either directly or through their U.S. affiliates, at least a 10 percent ownership interest and (2) new U.S. business enterprises established by foreign investors or their U.S. affiliates, also using the 10 percent ownership interest threshold. Additional details on the new investments by foreign investors in 2004 will appear in the June issue of the Survey of Current Business, the monthly journal of the Bureau of Economic Analysis. * * * BEA's national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements. Summary BEA estimates are available on recorded messages at the time of public release at the following telephone numbers: (202) 606-5306 Gross domestic product 606-5303 Personal income and outlays 606-5362 U.S. international transaction
Table 1. Investment Outlays by Type of Investment and Investor, 1992-2004
[Millions of dollars]
  1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 r 2004 p
Total outlays 15,333 26,229 45,626 57,195 79,929 69,708 215,256 274,956 335,629 147,109 54,519 63,591 79,820
                           
By type of investment:                          
  U.S. businesses acquired 10,616 21,761 38,753 47,179 68,733 60,733 182,357 265,127 322,703 138,091 43,442 50,212 72,546
  U.S. businesses established 4,718 4,468 6,873 10,016 11,196 8,974 32,899 9,829 12,926 9,017 11,077 13,379 7,274
                           
By type of investor:                          
  Foreign direct investors 4,058 6,720 13,628 11,927 32,230 13,899 120,828 120,878 105,151 23,134 13,650 27,866 33,529
  U.S. affiliates 11,275 19,509 31,999 45,268 47,699 55,809 94,428 154,078 230,478 123,975 40,869 35,725 46,291
                           
  p   Preliminary.                          
  r   Revised.                          
Source: U.S. Bureau of Economic Analysis                        
                           
                           
Table 2. Distribution of Investment Outlays by Size, 1992-2004
[Percent]
  1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 r 2004 p
Total outlays 100 100 100 100 100 100 100 100 100 100 100 100 100
  $5 billion or more 0 0 0 (D) 0 0 55 55 48 30 (D) (D) (D)
  $2 billion - $4.999 billion 0 (D) 27 18 29 12 11 16 20 22 18 (D) 17
  $100 million - $1.999 billion 42 51 51 48 55 67 27 24 27 40 45 43 40
  Less than $100 million 58 (D) 22 (D) 16 21 7 5 5 9 (D) 12 (D)
                           
  p  Preliminary.                          
  r  Revised.                          
  D  Suppressed to avoid disclosure of data of individual companies.                      
Source: U.S. Bureau of Economic Analysis                        

 
Table 3. Investment Outlays by Industry of U.S. Business Enterprise, 2003-2004                      
[Millions of dollars]                      
  2003 r 2004 p                      
All industries 63,591 79,820                      
                           
Manufacturing 10,750 17,178                      
Food 2,516 2,383                      
Beverages and tobacco products (D) 3,777                      
Petroleum and coal products (D) 0                      
Chemicals 1,164 5,140                      
Plastics and rubber products 498 (D)                      
Nonmetallic mineral products (D) 127                      
Primary metals 91 (D)                      
Fabricated metal products 123 (D)                      
Machinery 122 580                      
Computers and electronic products 2,125 2,818                      
Electrical equipment, appliances, and components 139 306                      
Transportation equipment 225 425                      
Other 462 539                      
Wholesale trade 1,086 951                      
Retail trade 941 3,055                      
Information 9,236 3,102                      
Publishing industries 1,431 (D)                      
Motion pictures and sound recording industries 278 0                      
Telecommunications (D) (D)                      
Other (D) 2,857                      
Depository institutions 4,864 14,095                      
Finance (except depository institutions) and insurance 23,511 24,904                      
Real estate and rental and leasing 2,817 4,823                      
Professional, scientific, and technical services 1,955 4,048                      
Other industries 8,429 7,664                      
                           
  p Preliminary.                          
  r Revised.                          
  D  Suppressed to avoid disclosure of data of individual companies.                          
Source: U.S. Bureau of Economic Analysis                          

 

Table 4. Investment Outlays by Country of Ultimate Beneficial Owner, 2003-2004                    
[Millions of dollars]                    
  2003 r 2004 p                    
All countries 63,591 79,820                    
                         
Canada 9,157 32,378                    
Europe 39,024 39,424                    
France 2,955 4,661                    
Germany 8,830 5,020                    
Netherlands 1,077 253                    
Switzerland 649 3,523                    
United Kingdom 20,373 24,166                    
Other Europe 5,140 1,801                    
Latin America and Other Western Hemisphere 1,607 1,418                    
South and Central America 182 (D)                    
Other Western Hemisphere 1,425 (D)                    
Africa (D) (D)                    
Middle East 1,738 (D)                    
Asia and Pacific 11,469 4,800                    
Australia 9,032 2,885                    
Japan 1,544 986                    
Other Asia and Pacific 893 929                    
United States 1 (D) (D)                    
                         
   p Preliminary.                        
   r Revised.                        
  D Suppressed to avoid disclosure of data of individual companies.                      
   1. The United States is the country of ultimate beneficial owner for businesses newly acquired or                    
established by foreign investors that are ultimately owned by persons located in the United States.                    
   Note. For investments in which more than one investor participated, each investor and each investor's                    
outlays are classified by the country of each individual ultimate beneficial owner.                      
Source: U.S. Bureau of Economic Analysis                        

 

Table 5. Selected Operating Data of U.S. Business Enterprises Acquired or Established, by Industry of U.S. Business Enterprise, 2003-2004        
                               
  2003 r 2004 p          
Millions of dollars Thousands of employees Hectares of land 1 Millions of dollars Thousands of employees Hectares of land 1          
Total assets Sales Net income Total assets Sales Net income          
All industries 219,072 54,549 2,037 166.1 47,711 313,042 64,077 3,560 193.0 227,323          
                               
Manufacturing 12,105 9,530 76 34.9 1,456 29,191 20,695 899 48.3 4,568          
Wholesale trade 1,388 3,478 2 4.2 166 (D) 1,904 24 I 23          
Retail trade 1,551 6,399 (D) 30.0 (D) (D) (D) (D) K (D)          
Information 20,813 11,387 -767 14.0 (D) 3,058 (D) -67 1.7 0          
Depository institutions 42,541 2,933 602 11.8 (D) 60,886 3,960 (D) 13.6 71          
Finance (except depository institutions) and insurance 115,576 11,201 2,043 31.6 79 193,612 20,461 1,505 23.4 139          
Real estate and rental and leasing 3,829 539 79 1.1 4,344 6,766 791 62 H 3,659          
Professional, scientific, and technical services 2,130 1,709 (D) 8.0 164 4,208 2,387 (D) 14.2 (D)          
Other industries 19,138 7,372 229 30.4 40,404 9,713 4,252 275 38.5 218,816          
                               
   p Preliminary.                              
   r Revised.                              
   D Suppressed to avoid disclosure of data of individual companies.                            
  1.  One hectare equals 2.471 acres.  Thus, for all industries, acres of land owned in 2003 were 117,894, and in 2004 were 561,715.                    
   Note. For newly acquired businesses, the data cover the most recent financial reporting year preceding acquisition.  For newly established businesses, the data are projections for the first full year of operations.          
  Size ranges are given in employment cells that are suppressed.  The size ranges are: A--1 to 499; F--500 to 999; G--1,000 to 2,499; H--2,500 to 4,999; I--5,000 to 9,999; J--10,000 to 24,999; K--25,000          
 to 49,999; L--50,000 to 99,999; M--100,000 or more.                              
Source: U.S. Bureau of Economic Analysis