By Jim Edmonson
Good news for U.S. communities looking for new targets and skilled workers looking for work. After the dust clears and the non-competitive companies disappear, a host of emerging multinational companies will have their sights set on America . New York Times writer William J. Holstein recently addressed the importance of these new global players. On one hand these companies will place more pressure on non-competitive U.S. companies but Holstein says the emerging multinationals will also build new plants in the United States and offer service and products that are in great demand. That’s good news for local economic development programs and those looking for skilled work and wages. Manufacturing remains the leader in economic multipliers and in wages paid.
So who are these emerging multinationals? Some we all recognize like China ‘s Lenovo who bought I.B.M.’s personal computer division or Brazil ‘s Embraer, a big supplier of jets to the U.S. airline industry as their regional link jets. Other Brazilian companies include Brasle, and Matira. Russian companies Gazprom, Lukoil and Rusal. And like India ‘s Wipro, Infosys Technologies and Tata Consultancy Services. Other Chinese companies include Haier, emerging in appliances and Huawei Technologies competing against Cisco Systems.
You may be thinking all their work will stay offshore, but Wall Street Journal’s Mark Whitehouse agrees with Holstein in this way. Whitehouse believes that what ever work is going abroad has left. And what will remain are high end goods, home building, medical testing, electronic components, chemicals, metal fabrication and heavy or time sensitive materials and parts. These industry sectors fit many of the companies listed by Holstein .
Holstein quotes Antoine van Agtmael’s work in his new book, “The Emerging Markets Century: How a New Breed of World-Class Companies Is Overtaking the World.” In Agtmael’s book he states the emergence of these new multinationals is part of “the biggest shift in the global economy since the Industrial Revolution of the 18 th century.” This has become possible in large part because of the new ease of global communications and air travel. Another is that the necessary expertise is available for sale. “These companies are hiring people from anywhere in the world”, according to Peter J. Williamson, a professor at Insead, the business school, and co-author of “Dragons at Your Door: How Chinese Cost Innovation Is Disrupting Global Competition.”
How many new multinationals are there? Agtmael’s book identifies 25 but a study from the Boston Consulting Group last year named 100. Accenture, the consulting firm, says that there were 62 emerging market multinationals in the Fortune Global 500 in 2005.
Holstein accurately predicts that “not all the would-be competitors will be successful, but clearly enough of these will succeed that Americans will feel it, with both positive and negative results.” On the positive side consumers will find lower prices. But there will be some pain too as some people will be faced with layoffs because their companies can not compete. I contend that many displaced workers will find their new job at one of the emerging multinational’s U.S. facility. U.S. companies can and will compete but must do so with new business models.
It’s time to broaden our horizons and add a new category to our industrial prospects attraction list, the emerging multinationals. At Whittaker Associates we will be watching the progress of these emerging companies as they mobilize toward a U.S. footprint. You should be watching too.
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