FOR WIRE TRANSMISSION: 10:00 A.M. EDT, MONDAY, JUNE 9, 1997 Mahnaz Fahim-Nader: (202) 606-9828 BEA 97-16 William Zeile: (202) 606-9893 Foreign Investors' Spending to Acquire or Establish U.S. Businesses Surged in 1996 Foreign investors' spending to acquire or establish U.S. businesses surged to a record $80.5 billion in 1996 from $57.2 billion in 1995, according to preliminary estimates by the Commerce Department's Bureau of Economic Analysis. These investment outlays, which include both those made directly by foreign investors and those made through their existing U.S. affiliates, increased 41 percent (or $23.3 billion) in 1996, following increases of 25 percent in 1995 and 74 percent in 1994. Outlays by Foreign Direct Investors to Acquire or Establish U.S. Businesses, 1980-96 Highlights of the 1996 outlays were:  Sources of funding: The portion of outlays financed with funds supplied by foreign parents increased $27.6 billion, to $58.4 billion. The increase contributed to the overall increase in net capital inflows for foreign direct investment in the United States (FDIUS) recorded in the U.S. balance of payments accounts for 1996. Outlays financed with funds from other sources -- whether U.S. or foreign -- decreased $4.3 billion, to $22.1 billion.  Channels of investment: Outlays made directly by foreign investors were 44 percent, and outlays made through their existing U.S. affiliates were 56 percent of total outlays. The 44-percent share accounted for by outlays made directly by foreign investors was substantially larger than in any year since this series began in 1980. To some extent, this development may reflect the larger-than-usual impact of foreign investors making their first direct investments in the United States; these investors lack U.S. affiliates through which new investments could be channeled.  Industry composition: The industry composition of outlays in 1996 tended to be more heavily weighted with services-type industries -- including finance, insurance, communication, and a number of business services -- than in past years, and the outlays in manufacturing tended to be more concentrated in industries that are information related or that use advanced technologies.  Size of investments: The substantially higher level of outlays in 1996 partly reflects an increase in the number of very large investments. The number of investments of over $1 billion more than doubled, to 19 in 1996 from 9 in 1995, and the investments of over $2 billion increased to 8 in 1996 from 5 in 1995. Investments of $1 billion or more accounted for almost one-half of total outlays in 1996. As in past years, outlays to acquire existing U.S. companies rather than to establish new U.S. companies accounted for most of the outlays in 1996 -- 90 percent. Investment outlays by industry and by country By industry of the U.S. businesses acquired or established, outlays were mainly in manufacturing and services. Manufacturing accounted for 36 percent (or $29.0 billion) of total outlays and services for 19 percent (or $15.3 billion). Outlays increased in most major industries in 1996. Increases were particularly large in services and insurance. Within services, increases in outlays were largest in business services, particularly computer and data processing services, and in health services. Within manufacturing, the largest increases were in "other manufacturing" and in primary and fabricated metals. The increase in "other manufacturing" was mainly accounted for by large increases in printing and publishing and in transportation equipment. Outlays decreased in depository institutions, "finance, except depository institutions," and real estate. By country of ultimate beneficial owner (UBO), the largest investor countries were the United Kingdom, Germany, and Canada. Outlays by British UBO's were $15.5 billion, by German UBO's $13.0 billion, and by Canadian UBO's $10.2 billion. The four countries whose investors had the largest increase in outlays in 1996 -- the United Kingdom ($6.4 billion), Japan ($5.7 billion), the Netherlands ($5.6 billion), and France ($5.1 billion) -- accounted for almost all of the increase in total outlays. Outlays by Japanese UBO's increased for the third consecutive year. However, at $9.3 billion, Japanese outlays were only about one-half of their 1990 peak of $19.9 billion. Outlays by Swiss UBO's declined $2.7 billion. Selected operating data The total assets of U.S. businesses newly acquired or established were $239.2 billion in 1996, up from $97.1 billion in 1995. U.S. businesses that were newly acquired in 1996 had assets of $227.0 billion, employed 434,000 workers, and owned 314,000 hectares of U.S. land. U.S. businesses that were newly established in 1996 had assets of $12.2 billion, employed 9,000 workers, and owned 38,000 hectares of land. * * * Estimates for 1996 are preliminary. Revised estimates for 1996 and preliminary estimates for 1997 will be released in the spring of next year. * * * Data in this report are from 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. The data are limited to newly acquired or established U.S. business enterprises with total assets of over $1 million or ownership of at least 200 acres of U.S. land. * * * Additional details on the new investment by foreign direct investors in 1996, together with an analysis of the overall operations of U.S. affiliates of foreign companies in 1995, will appear in the June issue of the Survey of Current Business, the monthly journal of the Bureau of Economic Analysis. * * * BEA estimates are available in several forms in addition to the printed news releases. News releases are available at the time of public release through three subscription services offered by the Commerce Department's STAT-USA. Information on how to receive releases by FAX may be obtained by calling (202) 482-1986 (voice). Information about the Economic Bulletin Board (EBB) and about Internet services may be obtained at the same voice number and on-line, as follows: EBB (202) 482-3870 Internet http://www.stat-usa.gov In addition, BEA's most frequently requested statistical series are available on the Internet, as follows:  The Federal Statistics Briefing Room (FSBR) on the White House Web site provides summary statistics for GDP and other major aggregates on its output, income, and international statistics pages. http://www.whitehouse.gov/fsbr  The FSBR provides links to BEA's Web site, which provides summary tables and charts on BEA's national, international, and regional data. http://www.bea.gov  BEA's Web site provides links to detailed BEA databases on STAT-USA's Internet subscription service. http://www.stat-usa.gov Summary estimates are available on recorded messages at the time of public release at the following telephone numbers: (202) 606-5306 Gross domestic product 5303 Personal income and outlays 5362 Summary of international transactions. Most of BEA's estimates and analyses appear in the Survey of Current Business, BEA's monthly journal. The Survey is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402. First class mail: Annual subscription $69.00 domestic. Second class mail: Annual subscription $35.00 domestic, $43.75 foreign; single issue $11.00 domestic, $13.75 foreign. In addition, the Survey is now available on the Internet in a searchable, retrievable electronic format at least a week before the printed version. To subscribe to STAT-USA's World Wide Web system, go to http://www.stat-usa.gov. Subscriptions for single-user unlimited access to STAT-USA's Internet information are $50.00 for 3 months or $150.00 for 1 year. For further information, call (202) 482-1986. Table 1.--Investment Outlays, Investments, and Investors, 1990-96 ________________________________________________________________________________________________________________________________________________ | | | Outlays (millions of dollars) | Number |______________________________________________________________|_______________________________________________________ | | | | | | | | | | | | | | | 1990 | 1991 | 1992 | 1993 | 1994 | 1995/r/| 1996/p/| 1990 | 1991 | 1992 | 1993 | 1994 | 1995/r/| 1996/p/ _________________________|________|________|________|________|________|________|________|______|______|______|______|______|________|___________ Investments, total....... 65,932 25,538 15,333 26,229 45626 57,195 80,537 1,617 1,091 941 980 1,036 1,124 1,158 U.S. businesses acquired............. 55,315 17,806 10,616 21,761 38,753 47,179 72,253 839 561 463 554 605 644 707 U.S. businesses established.......... 10,617 7,732 4,718 4,468 6,873 10,016 8,284 778 530 478 426 431 480 451 Investors, total......... 65,932 25,538 15,333 26,229 45,626 57,195 80,537 1,768 1,220 1,019 1,094 1,144 1,213 1,304 Foreign direct investors............ 14,026 8,885 4,058 6,720 13,628 11,927 35,234 670 438 350 368 345 345 351 U.S. affiliates........ 51,906 16,653 11,275 19,509 31,999 45,268 45,303 1,098 782 669 726 799 868 953 ________________________________________________________________________________________________________________________________________________ p Preliminary. r Revised. Source: U.S. Department of Commerce, Bureau of Economic Analysis Table 2.--Number of Investments by Size of Outlays, 1990-96 ____________________________________________________________________________________________________ | | | | | | | | 1990 | 1991 | 1992 | 1993 | 1994 | 1995/r/| 1996/p/ _____________________________________|________|________|________|________|_______|________|_________ Total.......................... 1,617 1,091 941 980 1,036 1,124 1,158 $2 billion or more................... 5 1 0 1 4 5 8 $1 billion - $1.9 billion............ 6 1 0 1 4 4 11 $100 million - $999 million.......... 74 45 28 47 71 79 103 $10 million - $99 million............ 499 273 252 252 273 329 360 Less than $10 million................ 1,033 771 661 679 684 707 676 Addenda: Percent of total outlays accounted for by: Investments of $1 billion or more.................. 40 12 0 19 39 41 49 Investments of $100 million or more.................. 73 59 42 64 78 78 84 ____________________________________________________________________________________________________ p Preliminary. r Revised. Source: U.S. Department of Commerce, Bureau of Economic Analysis Table 3.--Source of Funding of Investment Outlays, 1995-96 (Millions of dollars) _________________________________________________________________ | | | 1995/r/ | 1996/p/ _____________________________________|_____________|_____________ Total outlays ...................... 57,195 80,537 Funds from foreign parent groups.. 30,847 58,439 Other............................. 26,348 22,098 Addendum--Funds from foreign parent groups as a percent of total ..... 54 73 _________________________________________________________________ p Preliminary. r Revised. Source: U.S. Department of Commerce, Bureau of Economic Analysis Table 4.--Investment Outlays by Industry of U.S. Business Enterprise and by Country of Ultimate Beneficial Owner, 1990-96 [Millions of dollars] _____________________________________________________________________________________________________________ | | | | | | | | 1990 | 1991 | 1992 | 1993 | 1994 | 1995/r/| 1996/p/ ______________________________________________|________|________|________|________|________|________|_________ Total................................... 65,932 25,538 15,333 26,229 45,626 57,195 80,537 By industry: Petroleum................................... 1,141 702 463 882 469 1,520 (D) Manufacturing............................... 23,898 11,461 6,014 11,090 21,218 26,643 28,976 Food and kindred products................. 997 1,247 404 1,294 4,567 3,802 1,239 Chemicals and allied products............. 7,518 2,897 1,644 5,035 6,905 12,511 4,038 Primary and fabricated metals............. 2,447 797 1,187 1,297 1,485 547 3,193 Machinery................................. 3,795 4,929 1,002 1,778 1,867 4,489 4,673 Other manufacturing....................... 9,141 1,591 1,778 1,686 6,393 5,293 15,834 Wholesale trade............................. 1,676 623 698 837 2,156 1,168 5,092 Retail trade................................ 1,250 1,605 256 1,495 1,542 2,838 3,216 Depository institutions/1/.................. 897 482 529 958 2,026 2,301 2,154 Finance, except depository institutions/1/.. 2,121 2,199 797 1,599 2,195 7,837 7,709 Insurance................................... 2,093 2,102 291 1,105 450 654 (D) Real estate................................. 7,771 3,823 2,161 1,883 2,647 2,996 2,955 Services.................................... 19,369 2,256 2,023 4,162 7,163 5,881 15,306 Other industries............................ 5,716 284 2,101 2,218 5,760 5,359 8,942 By country /2/: Canada...................................... 3,430 3,454 1,351 3,797 4,128 8,029 10,240 Europe...................................... 36,011 13,994 8,344 16,845 31,920 38,195 50,402 France.................................... 10,217 4,976 406 1,249 1,404 1,129 6,196 Germany .................................. 2,363 1,922 1,964 2,841 3,328 13,117 13,041 Netherlands............................... 2,247 1,661 1,331 2,074 1,537 1,061 6,633 Switzerland............................... 3,905 1,327 1,259 804 5,044 7,533 4,789 United Kingdom............................ 13,096 2,169 2,255 8,238 17,261 9,094 15,473 Other Europe.............................. 4,183 1,939 1,129 1,639 3,346 6,261 4,270 Latin America and Other Western Hemisphere.. 796 375 1,438 874 1,352 1,550 771 South and Central America................. 399 108 1,152 527 (D) 1,283 396 Other Western Hemisphere.................. 397 267 286 347 (D) 267 376 Africa...................................... (D) (D) (D) (D) (D) (D) (D) Middle East................................. 472 1,006 238 1,308 (D) 447 (D) Asia and Pacific............................ 23,170 6,560 3,716 3,004 5,263 8,688 12,677 Australia................................. 1,412 251 164 129 1,522 2,270 2,425 Japan..................................... 19,933 5,357 2,921 2,065 2,715 3,602 9,311 Other Asia and Pacific.................... 1,825 952 631 810 1,026 2,816 941 United States /3/........................... (D) (D) (D) (D) 201 (D) (D) Addenda: European Union (12) /4/ .................... 30,741 12,007 6,862 15,747 25,027 ...... ...... European Union (15) /4/ .................... ...... ...... ..... ...... ...... 27,302 44,246 OPEC /5/.................................... 387 1,119 458 600 305 451 537 ______________________________________________________________________________________________________________ D Suppressed to avoid disclosure of data of individual companies. p Preliminary. r Revised. 1. Prior to 1992, "depository institutions" excludes, and "finance, except depository institutions" includes, savings institutions and credit unions. Beginning with 1992, savings institutions and credit unions have been reclassified from "finance, except depository institutions" to "depository institutions." 2. For investments in which more than one investor participated, each investor and each investor's outlays are classified by country of each ultimate beneficial owner (UBO). 3. The UBO is the first person in the ownership chain of the acquired or established U.S. business, beginning with the foreign parent, that is not owned more than 50 percent by another person. The foreign parent is the first foreign person in the ownership chain. The country of UBO is often the same as that of the foreign parent, but it may be a different foreign country or the United States. 4. Prior to 1993, the European Union was known as European Communities (12). Through 1994, it consisted of Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and the United Kingdom. At the beginning of 1995, the Union was enlarged to include Austria, Finland, and Sweden. 5. OPEC, the Organization of Petroleum Exporting Countries, comprises Algeria, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. Before January 1, 1993, Ecuador was also a member of OPEC; its data are included in this line through 1992. Source: U.S. Department of Commerce, Bureau of Economic Analysis Table 5.--Total Assets, Sales, Net Income, Employment, and Acres of Land Owned by U.S. Business Enterprises Acquired or Established, by Industry of U.S. Business Enterprise, 1996 (Millions of dollars unless otherwise indicated) ____________________________________________________________________________________________________________________________________________________ |Total as-| U.S. business enterprises acquired | U.S. business enterprises established |sets of |_____________________________________________|______________________________________________ |all U.S. | | | | | | | | | | |business | Total |Sales/1/| Net | Number | Number | Total |Sales/1/| Net | Number | Number |enter- | assets| | income | of | of | assets| | income | of | of |prises | | | | employ-| hectares| | | | employ-| hectares |acquired | | | | ees | of land | | | | ees | of land |or estab-| | | | | owned/2/| | | | | owned/2/ |lished | | | | | | | | | | _____________________________________________|_________|_______|________|_________|________|_________|_______|________|_________|________|_________ All industries ........................ 239,217 226,968 82,743 2,592 434,333 313,781 12,249 2,458 -57 9,052 37,551 Petroleum ................................... 2,346 (D) (D) 25 2,519 (D) (D) 2 (*) (D) 0 Manufacturing ............................... 35,095 31,916 24,525 127 131,015 (D) 3,179 1,103 -104 4,879 671 Food and kindred products ................. 1,533 (D) 1,286 65 4,718 319 (D) (D) (D) (D) (D) Chemicals and allied products ............. 4,361 (D) 2,952 142 10,457 467 (D) 94 (D) (D) 2 Primary and fabricated metals ............. 7,217 (D) 6,065 35 28,145 985 (D) (D) -2 159 (D) Machinery ................................. 3,836 1,883 3,198 62 13,378 306 1,953 (D) (D) 1,527 386 Other manufacturing ....................... 18,148 17,865 11,024 -177 74,317 (D) 283 61 (*) 689 214 Wholesale trade ............................. 4,757 4,501 3,483 80 11,015 200 257 363 (*) 548 0 Retail trade ................................ 4,658 (D) 7,072 89 77,844 623 (D) (D) -2 (D) 0 Depository institutions/3/................... (D) (D) (D) (D) (D) (D) 0 0 0 0 0 Finance, except depository institutions/3/... 20,768 16,563 2,917 (D) 7,151 (D) 4,206 170 30 (D) (D) Insurance ................................... (D) (D) 3,458 -37 (D) (D) 0 0 0 0 0 Real estate ................................. 3,124 223 22 4 (D) 125 2,901 462 76 322 11,890 Services .................................... 16,853 15,322 9,268 402 92,376 2,416 1,531 229 -67 2,188 (D) Other industries ............................ 26,283 26,151 18,843 590 75,057 39,786 132 (D) 9 (D) 24,901 ____________________________________________________________________________________________________________________________________________________ * Less than $500,000 (+/-). D Suppressed to avoid disclosure of data of individual companies. 1. Sales, or gross operating revenue, excluding sales taxes. 2. One hectare equals 2.471 acres. Thus, in terms of acres, the businesses that were acquired owned 775,352 acres of land, and those that were established owned 92,789 acres. 3. See footnote 1, table 4. NOTE.--Data for 1996 are preliminary. For acquired businesses, data are for, or as of the end of, the fiscal year preceding the year of acquisition; for newly established businesses, data are projections for, or as of the end of, the first full year of operation. Source: U.S. Department of Commerce, Bureau of Economic Analysis