Wed, Nov 25 2009
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Exchange-rate shift makes us attractive to Canadian investors By CARL E. FEATHER - Lifestyle Editor - cfeather@starbeacon.comStar Beacon “That means U.S. companies are on sale and Canadian companies clearly think that even those U.S. companies that have gone broke now look so cheap that they are a good bet,” he says of the RTS situation.
From banks and record companies to plastics manufacturers and wineries and distilleries, much of America’s industries are being offered at a tag sale in an effort to attract outside investment. According to the research firm Thomson Financial, foreign investors spent a record $414 billion acquiring American companies, factories and other properties in 2007. Tonelson says that while these sales look good for the short term because they save jobs, they point out that a fundamental flaw in American trade policy is going uncorrected. “The U.S. dollar is so weak because the U.S. has mismanaged its trade policies in recent years and foreign creditors are losing faith in our national currency,” he says. These investors are choosing to make direct investments in hard assets rather than buy stocks and cash. While economic development directors welcome these purchases because they save jobs, Tonelson says it does not bode well for the long-term security of the nation. He compares it to a family that is heavily in debt choosing to sell off their assets rather than tighten their belt and work harder. “To maintain our living standard, our jobs, we are selling off assets,” Tonelson says of the nation. Thomas Heffner, a Dublin, Ohio, entrepreneur who runs the Web site economyincrisis.org, describes these deals in a word: “stupid.” “We’re heading full speed and head first into becoming a colonial state, owned, managed and controlled by foreigners,” he said in a telephone interview. Tonelson points out that the statistics show 90 percent of the foreign direct investment made in this country has not produced real growth. “The overwhelming share of foreign direct investment is in existing companies, existing workforces and not in setting up new companies and hiring new employees.” Foran, however, sees this investment as a good thing for northeast Ohio. He says it not only retains jobs but also offers opportunity for expanding employment. Foran says he has no insight on how the Canadian acquisitions could affect salaries here, but said those are factors the investors take into consideration when deciding on the feasibility of conducting a profitable business in the U.S. Tonelson says foreign buyers often re-negotiate wages when they move into a distressed market, especially in Ohio and the Midwest, where jobs are scarce. “The new owners are always looking for new opportunities for new efficiencies,” Tonelson says. “If there are not a lot of attractive job opportunities, the new owners will realize they are in a seller’s market for labor.” Even if the tables are turned and the U.S. dollar becomes stronger and the local labor market tighter, Foran does not see that as boding poorly for foreign-owned interests in the U.S. “Many international types are learning to hedge their businesses by having operations in both countries,” he says. “It’s sort of like building a portfolio.” A stronger U.S. economy would also benefit the Canadian owners by placing their product closer to the consumer, he says. 
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