Mayor Steve MacDougall of Lexington recognizes that foreign direct investment is a buzzword in economic development. The French company Michelin has operated a manufacturing facility in Lexington County for more than 40 years, producing millions of tires that have kept everything from passenger cars to earthmovers rolling.
When Steve MacDougall was a young man, he and his pals would engage in the small-town ritual of hanging out in the grocery store parking lot, sitting on their pickup truck tailgates and shooting the breeze. At times, the conversation would include news of which friend was the latest to land a good-paying job at the new factory. “I remember a lot of my friends applying and how excited they were,” Steve says. “At that point we were probably a population of about 800 in the town.”
That small town was Lexington. Steve is now mayor of a growing city of more than 24,000 in a booming county of more than 300,000. And that new factory? It’s still humming along, just outside the city limits. Over the past 40-plus years, the Michelin plant has produced millions of tires that have kept everything from passenger cars to earthmovers rolling.
Having been a South Carolina staple for so long, it’s easy to forget Michelin was somewhat of a novelty when it first came to the Palmetto State. As a French company establishing a manufacturing facility in the South, it was among the pioneers that began an economic development tradition that continues to this day, with German-backed Scout Motors recently announcing plans for a major facility in northern Richland County.
When it comes to international business, South Carolina punches above its weight, attracting companies from all around the world and exporting those companies’ wares just as vigorously. “Foreign firms wanting to establish a presence in the United States have found South Carolina to be a good strategic location,” says Doug Woodward, Ph.D., director of the Division of Research and a professor at the University of South Carolina’s Moore School of Business.
“It’s become an important part of the South Carolina economy. We’ve got investments in South Carolina from all corners of the globe. There have been milestones — BMW in 1993 was a big one — but it’s mostly been consistent.”
Foreign direct investment is a buzzword in economic development. FDI pertains to when a business based in one country seeks to establish a facility or take an ownership stake in a facility in another country. There are numerous related statistics in which South Carolina shines.
“We have, relative to our size, more foreign manufacturing presence than any other state,” Doug says. The U.S. Bureau of Economic Analysis tracks business activity from majority-owned U.S. affiliates of foreign multinational enterprises, essentially the end result of FDI. As of 2020, manufacturing-driven South Carolina and tourism-driven Hawaii led the nation, with foreign-owned companies employing 9.4 percent of workers in each of the two states.
FDI in South Carolina increased 371 percent in 2022 over 2021, according to the SC Department of Commerce. Rebounding from the pandemic, the state’s 2022 export sales totaled $31.5 billion, up 6 percent over 2021, according to data from the U.S. Department of Commerce. The state remains the nation’s top exporter of completed passenger motor vehicles nine years in a row and tires seven years in a row.
“South Carolina has built a successful track record of foreign-owned companies finding success within our state,” SC Department of Commerce spokeswoman Kelly Coakley says. “The roster of thriving international companies shows prospective investors that South Carolina has what foreign companies need to be successful.”
China and the United States are considered the top markets for FDI. In a recent survey of economic development consultants by Area Development magazine, 80 percent of respondents said they were working with international companies pursuing foreign direct investment in the United States.
The impetus for South Carolina’s recruitment of foreign companies goes back to a pair of Upstate construction executives. Charles E. Daniel and later Buck Mickel would travel to New York and to Europe, trying to convince manufacturers to establish facilities in the post-World War II South. It led to jobs for South Carolinians and projects for Daniel International Corp., which through merger is now known as Fluor Corp.
Early success came with European manufacturers of textile machinery. Then, in 1975, Michelin began producing tires in Greenville. It established its North American headquarters there and expanded to several facilities around the state, including the Lexington plant.
“Bosch was also a major investor in the 1970s,” Doug says. The Robert Bosch facility in Charleston is its largest in the United States. Doug says both Bosch and Michelin help attract additional FDI to the state. BMW has also recruited its suppliers to establish facilities nearby.
“When a company comes in, if they’re doing their homework, they’ll talk to their peers,” says Jeff Ruble, Richland County’s economic development director. “They can share the experience of what it’s like starting up here. That’s a huge comfort.”
Scout Motors, which is owned by Volkswagen, takes great pains to emphasize it’s an American-headquartered startup reviving an American vehicle brand name. Officials also say that as they come out of the ground in Blythewood, they’ll be taking lessons from two existing facilities: the VW assembly plant in Chattanooga, Tennessee, which opened in 2011, and BMW’s Plant Spartanburg. Scott Keogh, Scout Motors’ president and chief executive, calls the BMW facility “one of the most successful factories in America.”
With BMW in the Upstate and Mercedes-Benz and Volvo in the Lowcountry, it was perhaps time for the Midlands to land an automaker of its own. Officially announced in March, Scout Motors plans to hire 4,000 workers to produce 200,000 electric vehicles per year at a facility on 1,100 acres along Interstate 77. Production is slated to begin in 2026.
Scout Motors joins a diverse list of Midlands FDI. For example, it will join military and police weapons supplier FN America, which is Belgian-owned, and China Jushi, a fiberglass maker, in Richland County. South Korea’s Samsung has manufactured appliances in Newberry County since 2017. Orangeburg County has Sweden’s Husqvarna Outdoor Products.
And then there’s Michelin, whose Midlands operation has expanded multiple times over the years. Steve says when Lexington was small, it was tough trying to get a second-tier supplier or even a major restaurant chain to look at his community.
“Now the gates are open and people want to be here because of what they’re doing out there,” he says of Michelin. He’s especially proud of the small, local businesses, from HVAC to janitorial, that grew by providing services to the factory. “And of course, we have the out-of-town companies. They all wanted to be here because Michelin is here.”
The economic ripple effects of FDI are real, and it’s why such companies are coveted by economic developers. Doug says for every one job created inside an auto assembly plant, there can be more than three additional jobs created in the community. Steve says that when the housing stock became thin for Michelin managers, they built new homes that improved property values for entire neighborhoods.
Since the benefits of FDI are no secret, the state Department of Commerce aggressively courts international companies. In an email response to a series of questions, Commerce says FDI has been trending upward over the past few years. In 2022, the state set a record with more than $4 billion in foreign capital investment.
FDI helps diversify South Carolina’s economy, according to Commerce, and gives the state exposure to new markets. The department has representation in six foreign markets, where they meet with companies interested in establishing a U.S. presence and educate business leaders on the reasons South Carolina may be the right location. Commerce is also a regular attendee at some of the world’s largest industry trade shows.
But what’s in it for the companies? Why has the Palmetto State become a location of choice? Talking with experts reveals several key factors that help set South Carolina apart.
Scout Motors looked at 74 locations in at least a dozen states. Officials with the company say the people — the workforce— made Blythewood “the way to go,” as Scott puts it.
“When they make labor and talent a prime focus, it’s really gratifying,” Jeff says. He says most FDI decisions begin with workforce. “The quality of labor is going to drive these decisions. Cost of doing business is also a factor.”
Dovetailing with that are South Carolina’s workforce development resources, such as readySC, which is housed within the state’s technical college system. South Carolina is often willing to set up programs to teach skills needed by a major new employer. A readySC facility will be built at the Scout Motors site to do just that.
Commerce points out the state’s vast supplier network, which empowers new companies to get up and running as quickly as possible. Doug says suppliers tend to cluster around an auto assembly plant and will seek to do business with additional customers in the region. “Success breeds success,” as Jeff puts it.
The state is also well-positioned among East Coast population centers, with robust rail and highway infrastructure. The Port of Charleston is crucial to many foreign companies that need to source parts internationally or export finished goods. The port handled a record number of containers in 2022, and the S.C. Ports Authority says an improvement project will soon make it the deepest harbor on the East Coast.
South Carolina’s reputation as a business-friendly state is also not to be ignored. Collaboration among elected leaders, government officials, and the business community, from the local to the state level, creates a culture of responsiveness. Gov. Henry McMaster was able to marshal a team that worked out a complex deal with Scout Motors in 60 days’ time — projects of that size often take more than a year to percolate.
“Every governor has been committed to doing this,” Doug says. Ernest Hollings helped launch the technical college system, John West made the announcement that Michelin was coming to South Carolina, and it was Carroll Campbell who personally led negotiations that convinced BMW to reconsider the Palmetto State over Nebraska.
Other South Carolina plusses mentioned by experts are a low cost of living and a low rate of unionization. The time differences between the East Coast and European cities are more manageable than from a West Coast location. Doug mentions that the Charlotte airport’s direct flights to Germany make travel easier for German companies.
Scout Motors has begun laying the groundwork for hiring locally, for those interested in a job in the electric vehicle industry. Perhaps soon there will be some Midlands young people sitting on tailgates— or posting in a chatroom or sharing a group text — talking about who among their friends has landed a high-tech job with the latest new factory in town.
