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The Pluses and Minuses of Foreign Investment in the United States
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12514 |
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Section : |
CURRENT ISSUES
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| Issue
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7 / 1987 |
3,565 Words |
| Author
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Wiliam C. Freund
William C. Freund, chief economist emeritus of the New York
Stock Exchange, occupies the New York Stock Exchange Chair in
Economics and International Business at the Graduate School of
Business of Pace University in New York City. |
When the giant Japanese semiconductor firm Fujitsu announced plans to pay $220 million to acquire 80 percent of Fairchild Semiconductor, Commerce Secretary Malcolm Baldrige and Defense Secretary Caspar Weinberger appealed to the president to stop the deal. They argued that we should not allow the Japanese to take over an essential American defense facility and make ourselves dependent on the goodwill of a foreign nation. Lost in the rhetoric was the fact that Fairchild was already owned by Schlumberger Limited, a French company. Apparently, Americans are more sensitive to Japanese than European ownership. The Fairchild merger was called off.
The shoe was on the other foot when the U.S. oil giant Amoco recently bid for ownership of Dome Petroleum, a Canadian oil company. Canadians are no less emotional when it comes to foreigners buying their companies. There was much debate about whether Canadian oil companies as big as Dome should be allowed on the international auction block. The issue became highly political when the liberal party campaigned for a Canadian rather than foreign takeover of Dome. American capital was put on notice that it was not welcome.
International buyouts are becoming commonplace. In the decades from the 1950s through the 1970s, acquisitions were mostly by U.S. companies expanding abroad and becoming multinational. Again, the shoe is on the other foot, with foreigners keeping the investment pot boiling here.
Recent examples of foreign acquisitions in the United States include the $2.8 billion cash purchase of Celanese by the German chemical giant Hoechst, the $1.3 billion takeover of Big Three Industries by
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