McLernon: Foreign? Not so Much …

Posted February 4, 2010 at 11:28am

Regardless of how you feel about the Supreme Court’s decision in the Citizens United campaign finance case, we can all agree on one thing, right? Foreigners should not be able to influence our political system. Right. Here’s the problem. What truly defines a company as foreign in today’s global economy?

[IMGCAP(1)]First, let’s get the facts straight about what the Supreme Court’s decision permits. Simply put, the court’s ruling does not touch existing restrictions that prohibit foreign nationals, governments and corporations from spending monies on U.S. elections. All U.S. corporations, including U.S. subsidiaries of companies headquartered abroad, must certify under threat of prosecution that all monies used for political purposes are from U.S. sources and that only U.S. citizens are involved in the decision-making.

Nonetheless, some lawmakers are trying to broaden the definition of “foreign” companies to include the U.S. operations of companies headquartered abroad. These companies are incorporated in the United States and in all aspects of law have all the same obligations and rights as any other U.S. firm. So, do they truly deserve to be painted with the scarlet letter F?

Let’s do some quick checks.

U.S. employees? Check. U.S. subsidiaries of companies based abroad directly employ 5.5 million Americans. Manufacturing employment? Check. Twenty-nine percent of total jobs at these companies are manufacturing jobs compared with just more than 16 percent of jobs at all U.S. businesses. High-skill, high-wages jobs? Check. U.S. subsidiaries write more than $403 billion in paychecks to their American workers — with compensation 35 percent higher than those working at U.S.-headquartered companies. Union jobs? Check. More than 12 percent of the American employees at U.S. subsidiaries are covered by a union collective bargaining agreement compared with just more than 8 percent of employees at all U.S. businesses.

Let’s check out some examples.

There is a story in every state of good American jobs at U.S. subsidiaries of companies headquartered abroad. With almost 1,000 workers at its two Tennessee facilities in Knoxville and Chattanooga, the U.S. operations of French-headquartered ALSTOM are manufacturing the world’s largest turbines. Nestlé, whose parent company is based in Switzerland, recently opened a new state-of-the-art manufacturing center for Nesquik Ready-to-Drink and Nestlé Coffee-mate Liquid in Anderson, Ind. — now providing more than 500 high-paying jobs to the city. And last year in Albuquerque, N.M., the U.S. operations of German-based Schott Solar inaugurated a high-tech manufacturing facility to produce solar-power products, creating up to 350 new jobs initially — with long-term plans to result in an 800,000-square-foot facility and 1,500 new jobs.

Final checks.

Do U.S.-headquartered multinational companies have “foreign” interests? Of course they do. Do the U.S. operations of foreign companies have “American” interests? Of course they do. Are U.S. workers at U.S.-headquartered companies more patriotic than the U.S. workers at U.S. operations of foreign companies? Of course they aren’t.

Have we uncovered anything? Only this. It is more difficult than ever to put a flag on a company. And consequently, it is more irrelevant than ever to do so.

After doing all the checks, we can now all agree on one more thing, right? The U.S. operations of globally based companies are really not so foreign after all. Right.

Nancy McLernon is the president and CEO of the Organization for International Investment, a Washington, D.C.-based business association representing U.S. subsidiaries of international companies.