PARIS — Last summer, as the mounting European debt crisis was forcing many businesses in the region to scale back, the multinational Dow Chemical made a seemingly contrarian move: rather than hunker down, it doubled down.
Dow expanded its presence in the region by allocating 10 million euros, or about $13.2 million, for a new water-desalination research center on Spain’s eastern seaboard, about 50 miles southwest Barcelona. There a staff of engineers hopes to develop new ways to produce cheap, clean water.
While not as big an investment as some of Dow’s others in Europe, it showed that even in a troubled economy like Spain’s, big foreign multinational companies still see opportunities.
“We invested because there’s good technology, educated workers and an increasingly competitive cost structure,” said Geoffery E. Merszei, the president of Dow’s European operations. “Europe is not growing as fast as Asia Pacific countries, but it’s certainly not doomsday here.”
The evidence so far may be more anecdotal than statistical. But despite the lingering debt crisis and an incubating recession in many nations of the European monetary union, many global companies say they are maintaining or even increasing their investments in the euro zone and elsewhere on the Continent.
They are peering past the region’s current woes and betting on eventual payoffs, as European officials and politicians shift their rhetoric toward reviving growth and luring private investment, after two years of grinding austerity.
The rising confidence of multinational corporations follows several years in which foreign direct investment in Europe slumped, hampered by lackluster economic activity, weakness in the region’s banking system, worries about a Greek default and fears that all these troubles could ignite a second Lehman-like liquidity crisis in global markets.
Now, though, as the fever of the euro crisis cools, headlines regularly herald fresh investments in Europe by big foreign firms.
In Ireland, for example, multinationals are increasing spending as that country’s economic doldrums make it more cost-competitive than ever.
Microsoft, for one, recently invested $130 million to expand a data center outside Dublin. Eli Lilly, the drug giant, plans to spend 330 million euros on a new biopharmaceutical plant near Cork, creating hundreds of jobs.
General Electric, meantime, is forging ahead with a 30 million euro investment to expand research and development in energy, aviation and medical technology in Germany — a nation G.E. considers a haven from the euro storm — and an additional 56 million euros to broaden its commercial presence.
Infosys, the big Indian technology consulting and outsourcing company, plans millions in additional investments in its core northern European markets, and is girding to hire hundreds more people in Europe this year.
The trend appears to counter the big reversal in 2010, the latest year for which figures are available, when foreign direct investment in Europe fell by 19 percent from the previous year.
By contrast, in North America, where the economy had already begun showing signs of an upturn, foreign direct investment jumped 44 percent that year, according to the United Nations Conference on Trade and Development.
Lately, according to analysts, economists and executives, companies and cash-flush investment funds from China, India, Brazil and the United Arab Emirates are adding to their baskets of European assets and are on the prowl for fresh investments in infrastructure, technology and manufacturing across the European Union.
In 2011 Europe for the first time edged out the United States as China’s biggest region for overseas investment.
So far this year, China’s European deals have included the Shandong Heavy Industry Group’s purchase of a 75 percent stake in the Italian yacht maker Ferretti, and the State Grid Corporation of China’s buying 25 percent of Portugal’s electric utility.
“There is more optimism that the euro crisis will be solved soon — or at that least people will see that we can live with it,” said Marc Henry, the financial director at Michelin, the French company that is one of the world’s largest tire makers.
He said Michelin intended to invest more in plants, equipment, research and development on the Continent this year and beyond.
The company plans to spend £50 million (more than $79 million) to update machinery at its factories in Britain over the next five years, for instance, and is also looking at possible expansions in Eastern Europe.
The hard times are hardly over, of course. For every cash-rich conglomerate betting on a European turnaround, thousands of small and medium-size firms have been sapped by three years of financial and economic volatility spawned by weaker countries along the euro zone’s southern tier.
nytimes.com
Dow expanded its presence in the region by allocating 10 million euros, or about $13.2 million, for a new water-desalination research center on Spain’s eastern seaboard, about 50 miles southwest Barcelona. There a staff of engineers hopes to develop new ways to produce cheap, clean water.
While not as big an investment as some of Dow’s others in Europe, it showed that even in a troubled economy like Spain’s, big foreign multinational companies still see opportunities.
“We invested because there’s good technology, educated workers and an increasingly competitive cost structure,” said Geoffery E. Merszei, the president of Dow’s European operations. “Europe is not growing as fast as Asia Pacific countries, but it’s certainly not doomsday here.”
The evidence so far may be more anecdotal than statistical. But despite the lingering debt crisis and an incubating recession in many nations of the European monetary union, many global companies say they are maintaining or even increasing their investments in the euro zone and elsewhere on the Continent.
They are peering past the region’s current woes and betting on eventual payoffs, as European officials and politicians shift their rhetoric toward reviving growth and luring private investment, after two years of grinding austerity.
The rising confidence of multinational corporations follows several years in which foreign direct investment in Europe slumped, hampered by lackluster economic activity, weakness in the region’s banking system, worries about a Greek default and fears that all these troubles could ignite a second Lehman-like liquidity crisis in global markets.
Now, though, as the fever of the euro crisis cools, headlines regularly herald fresh investments in Europe by big foreign firms.
In Ireland, for example, multinationals are increasing spending as that country’s economic doldrums make it more cost-competitive than ever.
Microsoft, for one, recently invested $130 million to expand a data center outside Dublin. Eli Lilly, the drug giant, plans to spend 330 million euros on a new biopharmaceutical plant near Cork, creating hundreds of jobs.
General Electric, meantime, is forging ahead with a 30 million euro investment to expand research and development in energy, aviation and medical technology in Germany — a nation G.E. considers a haven from the euro storm — and an additional 56 million euros to broaden its commercial presence.
Infosys, the big Indian technology consulting and outsourcing company, plans millions in additional investments in its core northern European markets, and is girding to hire hundreds more people in Europe this year.
The trend appears to counter the big reversal in 2010, the latest year for which figures are available, when foreign direct investment in Europe fell by 19 percent from the previous year.
By contrast, in North America, where the economy had already begun showing signs of an upturn, foreign direct investment jumped 44 percent that year, according to the United Nations Conference on Trade and Development.
Lately, according to analysts, economists and executives, companies and cash-flush investment funds from China, India, Brazil and the United Arab Emirates are adding to their baskets of European assets and are on the prowl for fresh investments in infrastructure, technology and manufacturing across the European Union.
In 2011 Europe for the first time edged out the United States as China’s biggest region for overseas investment.
So far this year, China’s European deals have included the Shandong Heavy Industry Group’s purchase of a 75 percent stake in the Italian yacht maker Ferretti, and the State Grid Corporation of China’s buying 25 percent of Portugal’s electric utility.
“There is more optimism that the euro crisis will be solved soon — or at that least people will see that we can live with it,” said Marc Henry, the financial director at Michelin, the French company that is one of the world’s largest tire makers.
He said Michelin intended to invest more in plants, equipment, research and development on the Continent this year and beyond.
The company plans to spend £50 million (more than $79 million) to update machinery at its factories in Britain over the next five years, for instance, and is also looking at possible expansions in Eastern Europe.
The hard times are hardly over, of course. For every cash-rich conglomerate betting on a European turnaround, thousands of small and medium-size firms have been sapped by three years of financial and economic volatility spawned by weaker countries along the euro zone’s southern tier.
nytimes.com
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