THE $10 BILLION SWEEPSTAKES: HOW STATES WOO FOREIGN INVESTMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000504840002-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: January 12, 2012
• Sequence Number: 2
• Publication Date: May 20, 1985
• Content Type: OPEN SOURCE

ST
Declassified in Part - Sanitized Copy Approved for Release 2012/01/12 : CIA-RDP90-00965R000504840002-2
, ICLE A P AREED ~.
UK PAGE _ Asa
I 0111:~ -111 -1-11
T'HE $TO BILLION SWEEPSTAKES:
HOW STATES WOO FOREIGN INVESTMENT
BUSINESS WEEK
20 May 1985
THE SEARCH FOR CAPITAL HAS TURNED GOVERNORS AND MAYORS INTO GLOBETROTTERS
I n 1982. Minnesota elected Rudy Per-
pich governor on a platform promis-
ing to improve the state's economy
by attracting foreign investment. So far,
he's made good on his word: Fifteen for-
eign companies are in the process of set-
ting up sales offices or manufacturing
plants in the state. More this 16b others
have made serious inquiries.
Perpich has drummed up offshore in-
terest by establishing a Minnesota Trade
Office that now has a 30-member staff.
He is also building a World Trade Cen-
ter in St. Paul, scheduled for completion
in 1987. But the most successful lures
have been the half-dozen seminars that
Perpich has hosted in foreign, mainly
Northern European, countries.
PERSONAL TOUCH. When pressing the
flesh overseas, Perpich is almost as like-
ly to bump into other U.S. governors
and mayors promoting their locales as
he is to meet foreign business execu-
tives. Politicians are competing fiercely
for the 300.000 new jobs and $10 billion
in capital that overseas business pump
into the U. S. economy even year. "The
help ensure
ones who get big pieces can
their local economies star healthy for
years," says Daniel Malachuk Jr., a part-
ner at Arthur Young & Co.
That explains why Ohio Governor
Richard F. Celeste spends so much time
on the road. Were it not for a savings
and loan association crisis in his state,
Celeste would now be on a scheduled
tour of Asia, proclaiming the virtues of
Ohio to would-be investors. In Decem-
ber, Celeste led a trade mission to South
Korea. A year ago he attended an inter-
national trade conference in West Ger-
many and returned with two German
investments for his state: a Kosmos
brewery for Youngstown and a Roxane
Laboratories Inc. complex for Columbus.
When the complex opens next year, it
will bring the pharmaceutical company's
U. S. headquarters, manufacturing,
warehousing, and distribution facilities
together under one roof.
Important as the personal touch is, it
mac mean little unless more fundamen-
tal concerns such as financing, a skilled
work force, wage rates, location, and
quality of life have already been ad-
dressed. Take New Orleans: Its mayor,
MAYOR 61ESON: PROXIMITY TO MANHATTAN
HELP= WEE POREIfJ1 CAPETALTO NSWAft
Ernest "Dutch" Morial, has been a rov-
ing ambassador for the city since win-
ning office in 1978. He has traveled with
local business executives to Europe, Af-
rica, Central America, and Asia. Yet not
one foreign company has set up shop in
New Orleans as a direct result of Mor-
ial's efforts. He has no plans to go back
on the road anytime soon. Attracting
foreign investment, he sighs, "is not an
easy task."
The task is getting tougher all the
time. More than 40 states are now will-
ing to issue industrial revenue bonds at
attractively low rates. And foreign com-
panies are seeking and receiving tax
breaks and government-financed job
training as a matter of course. For ex-
ample, before Britain's BoC Group PLC
opened a plant outside Charleston, S. C.
in 1983, prospective employees were giv-
en six-week training courses at the
state's expense in the Boc facility.
And last fall. Michigan won a battle to
land a $700 million Mazda Motor Corp.
assembly plant that will employ 3.500
people. Michigan prevailed over several
other states in part by offering a pack-
age that includes sending some future
employees to Japan at state expense to
learn about Mazda's production system.
THE HARD WAY. In addition, state offi=
dials have been instructed to help for-
eign workers secure employment visas,
or "green cards," open bank accounts,
obtain driver's licenses, and enroll chil-
dren in schools. Such practices are cer-
tain to become more routine. "If your
opponents do something, you almost
have to [do it] or default," says Gary
Miller, head of Connecticut's Interna-
tional Div.
California learned that lesson the hard
way last September, when Fujitsu Ltd.
announced plans to shift two factories
located there to Oregon. "Our major rea-
son for selecting the Oregon location is
its abolition of the unitary tax in July."
says Yoshinao Hirose, general manager
of Fujitsu's information administration
group. Many states with unitary taxes
assess levies on the basis of a company's
worldwide profit, not Just its earnings
within their borders. Strong opposition
from foreign" Companies is putting pres-
sure on California and other states with
such taxes to eliminate them.
Because so many municipalities are of-
fering them, financial incentives are rap-
idly losing their importance in relation to
other lures. Says Richard A. C. Kidney,
properties director for Canada's North-
ern Telecom Inc.: "I've been approached
[with attractive financing] by every
state except Alaska."
Consequently, companies such as
Northern, which has invested $l.7 billion
.in the U. S.. tend to be swayed more by
an area's quality of life and the profes-
sionalism of its representatives. "The
people who used to be sent out were
i.ard-drinking. backslapping guys who
didn't know anything," Kidney says.
"Now they are very intelligent and will
bring whatever data is necessary, public
or private."
Quality of life even played a role in
,~ntuwrl~
Declassified in Part - Sanitized Copy Approved for Release 2012/01/12 : CIA-RDP90-00965R000504840002-2