In 2003, 903 Japanese facilities were located in Illinois, Indiana, Minnesota, and Wisconsin, which represents a nearly 4% decline from the previous year. The vast majority of the closed facilities were small firms with 100 or fewer employees. By sector, the broad-based decrease was most notable in metal and steel. Moreover, the 261 actual manufacturers, which account for nearly 30% of the total facilities, declined by 3%.
Employment, while remaining at a high level, also weakened. In 2003, Japanese facilities provided 80,770 jobs, for a 4% decline over the previous year. Employment in the motor vehicles and parts sector and the pharmaceutical sector increased, while it decreased in metal and steel. The decline resulted mainly from a large metal and steel joint venture, which became U.S.-owned. If that sector's employment had not declined, total employment at the Japanese facilities in the 4-state area would have increased.
The number of local employees totaled 78,540 individuals, representing a 4% decline over the previous year. They comprise 97% of the total employment at the Japanese facilities. Although comparatively small in number, Japanese employment declined by 8%.
Actual manufacturing facilities provided 43,290 jobs, representing an 8% decrease.
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By sector, the 571 overall manufacturers continue to play the central role in Japanese direct investment in the Midwest with 63% of the total facilities. The two principal manufacturing sectors are motor vehicles and parts (140 facilities) and electronics (118 facilities), which together account for nearly 40% of the overall manufacturers. Commercial trade, and transportation and warehouse, represent 15% and 8% of the total facilities, respectively.
Manufacturing also leads the employment picture with 73,130 positions, or more than 90% of the total employment. One-half of the total positions are provided by the motor vehicles and parts sector, followed by electronics (8%), and pharmaceutical (7%).
As previously noted, the 261 actual manufacturers account for nearly 30% of the total facilities and 54% of the total employment. They constitute a key center of Japanese manufacturing in the United States.
As illustrated by the maps, the facilities are located both in major metropolitan areas and in rural areas. In Illinois and Indiana, they are distributed throughout the state. In Minnesota and Wisconsin, they are centered in the metropolitan areas of Minneapolis and St. Paul as well as Milwaukee and Madison.
The largest facilities, with more than 1,000 employees, are located near medium-size and small-size communities in the rural areas. In Indiana and in part of Illinois, the facilities are located along the interstate highway system, which reflects the importance of the transportation network in investment decisions.
Illinois continues to be the largest direct investment recipient with 618 facilities, or 68% of the total facilities. In 2003, the state's facility number decreased by 5% and employment declined by 7%.
Indiana is home to 208 Japanese companies, or 23% of the total facilities. It is the number one recipient of production facilities with large employment, particularly in the motor vehicles and parts sector. In 2003, the state's facility number increased by 1% and employment declined by 1%. Unlike in other states, actual manufacturing employment in Indiana increased by 10% in the last five years.
Minnesota has 39 facilities, or 4% of the total facilities, and leads the four-state region in its share of electronics companies. The state's facility number and employment declined by 9% and 18%, respectively.
Wisconsin's 38 facilities represent 4% of the total facilities. The state's facility number increased by 6% and overall employment rose by 7%.
From 1998 to 2003, the number of Japanese facilities in the four-state region declined by 16%. By sector, the facility number for motor vehicles and parts as well as chemicals remained steady, while a decrease occurred in commercial trade; finance, insurance and real estate; services; and metal and steel. Although total employment declined by 15%, the results differed by sector. Pharmaceutical employment doubled, motor vehicles and parts employment increased by 16%, and food employment rose by 15%. Declines were experienced in finance, insurance and real estate; commercial trade; metal and steel; and tire and rubber. The 5-year trend reflects the shift in investment toward motor vehicles and parts and pharmaceuticals.
Significantly, actual manufacturers remain the key component of Japanese direct investment in the four states. The high paying, high skill positions at the manufacturing facilities are particularly important since employment opportunities are more limited outside the major metropolitan areas.
Both the Midwest and Japan benefit from this close relationship. The four-state area is particularly attractive to Japanese companies due to its large consumer market and its centrally located transportation network, which facilitates the shipment of finished products and parts across America. In addition, with the region's heavy industrial base mirroring that of Japan, it offers key resources including a highly skilled labor force, available parts, and raw materials. In return, Japanese facilities provide jobs in both urban and rural areas, source components from U.S. companies, facilitate technology transfer, and furnish new revenue sources to help boost both state and local economies. |
Following is a summary analysis of the results of the 2003 survey of Japanese direct investment in four Midwest states, conducted by the Consulate General of Japan at Chicago. Click here to view the data in PDF format.