This report analyzes the recent trends and seeks to advance understanding of foreign direct investment (FDI)—i.e., operations in the United States by foreign companies—in the city of Detroit. Presenting new data on jobs in foreign-owned establishments (FOEs) between 1991 and 2011, the analysis compares Detroit city to its metro area and its peer cities. It concludes with a discussion of what metro-area policymakers can do to maximize FDI’s contribution to economic development goals for the city and the region.
The key findings are:
- FDI supports a relatively small and declining jobs base in Detroit city. Foreign-owned U.S. affiliates employed only 15,102 workers in 2011, accounting for 5.4 percent of private-sector employment. Between 1991 and 2011, the total number of jobs in FOEs declined by nearly 50 percent.
- FDI in Detroit city and the metro area concentrates heavily in the auto industry. In 2011, the auto industry alone accounted for 70.5 percent of all jobs in FOEs in Detroit city, with Chrysler-Fiat being the largest employer. Regionwide, 41.8 percent of all jobs in FOEs are in the auto industry. Although FDI in both the city and the metro remains heavily manufacturing focused, services account for a growing share of jobs in FOEs.
- A majority of FDI-supported jobs in Detroit city originated from mergers and acquisitions (M&As), and come from a small group of investor countries and global city-regions. Compared to its peer cities, Detroit has seen more of its jobs in FOEs originate through M&As (52.2 percent) and fewer created through “greenfield” investments (12.6 percent). Compared to many of its peer cities, FDI in Detroit city is less diversified, with the top two investor countries (Italy and Germany) accounting for 82.3% of the city’s jobs in FOEs.