Md. pursues foreign investment

Maryland wants to capitalize on the ever-shrinking nature of the world by revamping its international business strategy this year in the hopes it will draw more foreign investment, create higher-paying jobs and boost the state's place in the global economy.

Advances in technology have made communication and travel among countries exponentially easier, further converging cultures, politics and economics. And that means there's more money to be made from abroad, officials said, but only if Maryland does a better job of making its name - and assets - known.


"As a state we're competing with Philadelphia as well as Paris, France. People can do their jobs anywhere," said Robert McGlotten Jr., the assistant secretary within the state's Department of Business and Economic Development who is spearheading the effort. "One of the challenges we're going to have is getting Maryland on the radar screen - the world radar screen."

The region's fresh foreign focus piggybacks on an "Invest in America" program launched in March at the national level and comes as part of a directive by Gov. Martin O'Malley to boost Maryland's economic place on the planet.


The move also could boost residents' paychecks: U.S. subsidiaries of foreign-owned companies pay 36 percent more in average salaries than domestic businesses, according to the Commerce Department.

Dozens of foreign firms - such as Germany's Siemens AG and Royal Ahold's Giant Food, the area's largest grocery chain - have operations in Maryland. They employ roughly 104,000 people, which is about 5 percent of the state's private-sector work force.

McGlotten wants a new overseas strategy in place early this year that includes plans to double those figures and put the state among the top three in terms of international name recognition.

It's part of a shift in international emphasis, which typically skewed toward exporting homegrown products, to include importing foreign employers.

It's unclear how the state will accomplish the goals. The international division is nearing the end of an "evaluation" phase McGlotten said, and the details have yet to be worked out. Many of them will fall on the shoulders of whoever replaces Nancy Wallace as director of international trade and investment. Wallace left the post in late October, and McGlotten expects to replace her as early as next week.

Some have characterized the goals as lofty - particularly when there are no plans to significantly boost the international division's $2 million budget.

Getting to No. 3 behind New York and California is "going to be difficult, we're such a small state," said W. Alan Randolph, director of the Center for Global Business Studies at the University of Baltimore's Merrick School of Business. "On the other hand, if you don't set a high goal, you don't get very far at all."

The number of Marylanders working for foreign-owned businesses has been rising; it's up 30 percent from the 79,000 people employed in 1997. But the increase is due less to state efforts, which already include international marketing missions and liaison offices in seven foreign locations, than economic evolution and convenience.


Maryland is next door to Washington and all of the foreign embassies. The state has three international schools (French, Japanese and British). And Maryland's East Coast location means executives can fly to much of Europe in about the same time it takes to get to Los Angeles.

Dutch companies in particular are drawn here because of a relationship between the Netherlands' Rotterdam port and the port of Baltimore, said Rene van Hell, head of the economic department of the Royal Netherlands Embassy in Washington.

Dutch-owned companies employ about 28,000 Marylanders, according to the Bureau of Economic Analysis, by far the largest foreign employer in the state. Besides buying the Giant grocery stores in 1998, Dutch companies own insurer Aegon NV and - as of last year - medical test maker Digene Corp. Soon Baltimore's Visicu Inc., which Royal Philips Electronics last month said it plans to buy for $430 million, will join the list.

Such acquisitions have traditionally made economic development types uneasy because the state may lose a corporate headquarters and local control. But that's changing. Instead of lamenting the sale of Maryland's biggest biotech - MedImmune Inc. - to Britain's AstraZeneca PLC last year, the state should celebrate it, said DBED Secretary David W. Edgerley.

"It's a validation of Maryland's businesses and what they have done," Edgerley said.

Van Hell, however, acknowledged that concerns still exist when foreign ownership takes over a local brand. But, he added, it's a two-way street.


"Quite a lot of American companies have bought Dutch companies," he said, pointing to Sara Lee Corp. in particular, which purchased the Netherlands' top coffee brand, Douwe Egberts, in 1978 and still markets it today.

Though Americans are big spenders, offer an educated work force, and more recently, a weak dollar, foreign direct investment in the United States - or FDI as it's known - slipped sharply after peaking at $336 billion in 2000. The decline followed the dot-com bust and later the Sept. 11 attacks.

And controversy raised last year by Congress over the Bush administration's plan to sell port operations - including those in Baltimore - to the United Arab Emirates' Dubai Ports World scrapped that deal. That and other issues have raised concerns about whether the U.S. would recover, said Nancy McLernon, a senior vice president with the Organization for International Investors, a Washington group representing foreign companies.

Preliminary numbers from the Bureau of Economic Analysis, however, show the country's FDI creeping forward for the past few years. The $162 billion in foreign direct investment from 2006 increased 77 percent from the year before, with Germany leading the way. (Germany tripled its 2005 funding to overtake the United Kingdom as the top investor in the United States).

Still, increased interest in emerging markets such as China and India indicate the U.S. faces renewed pressure to remain a strong player. That has helped spur the Invest in America initiative, which Maryland officials hope to use to bring in more business from abroad.

"Our job in terms of FDI is to help [other countries] understand that it's a little better down here in Maryland," McGlotten said. "This is the land of pleasant living."