USA: Investing in the World’s Largest ITC Market/Myths and Realities iTec10, Hanau, November 24, 2010 Edward Fantasia, Commercial AttachÊ US Consulate General, Munich
Population: 310 Mio. (3rd ) Size: 9.8 Mio. sq km (3rd)
GDP (PPP): 14.2 Trillion USD (1st) Per Capita: 46 USD (11th)
Time Zones: 4 Still daylight on West Coast Toronto
Seattle
Chicago
LA
Las Vegas
Atlanta
The biggest concentration of lights (from top to bottom) are the cities of Boston, New York, Philadelphia and Washington.
Dallas Puerto Rico Houston
Mexico City
Miami
US-IT Market Overview Æ US spending on IT products and services is forecast to reach almost US$531bn in 2010 and US$683bn by 2014. IT-Spending -2009e (US$bn)
Source: Business Monitor International
IT segments 2009e
The Changing Nature of US Production Capacity U.S. Industrial Production Capacity Change 2008-2009
Source: Business Monitor International
US IT Sector Overview 2007 IT market (US$mn) IT market, % GDP Hardw., computer mar. sales Services Software PC’s Servers
2008
2009e
2010
2011f
2012f
2013f
2014f
457,683 489,500 487,053 530,887 562,740 602,132 641,271 682,953 34.3%
31.1%
31.6%
28.1%
26.7%
25.9%
25.5%
24.9%
127,007 134,613 131,650 148,648 154,937 162,961 170,541 178,411
201,381 215,380 215,375 230,936 246,016 264,553 283,158 303,071 129,295 139,508 140,028 151,303 161,788 174,618 187,572 201,471 107,956 114,421
111,903
126,351 131,696 138,516 144,960 151,649
11,431
11,849
13,378
Source: Business Monitor International
12,115
13,944
14,666
15,349
16,057
Industry Developments US Federal Government Spending on IT The government has reported on its 2009 calendar year IT spending In 2009, total IT spending came to US$74.2bn. One expects an increase of US$78.4bn for 2010
Source: Business Monitor International
Competitive Landscape The US PC competitive landscape is dominated by two large domestic vendors, Dell and HP, which together account for at least 50% of the US market. Computer Sales: The US addressable market for PCs and accessories is estimated by BMI at US$126.4bn in 2010, with single-digit growth compared with 2009. Software: The US software market is estimated at US $151.3bn in 2010, with single-digit growth from 2009. IT Services: The US IT services market is forecast at US$ 230.9bn in 2010, with a sharp deceleration in spending expected compared with 2006-2008. Source: Business Monitor International
Market drivers/opportunities:
Growing fixed and mobile broadband penetration Product innovation Æ tablet notebooks, ereaders and feature-rich net books Technology innovation Æ GPS and services Business model innovations such as virtualization
Source: Business Monitor International
Market drivers/opportunities: Economic recovery Federal IT spending rise to US$78.4bn in 2010 (cf. 08: US$72.8 B; 09: US$ 74.2B) Stimulus Bill, which requires the use of electronic healthcare records by 2015 major driver of investment Drive to efficiencies from cloud computing (Saas/IaaS) from cloud computing such as SaaS and IaaS, to save on IT investments. National and local government expressed strong interest Source: Business Monitor International
Telecommunications USA Industry Trends – Mobile Sector (2007-2014) Mobile Phone Subscribers/100 Inhab (LHS)
Source: Business Monitor International
A Comparative Study Of Mobile Operator Market Shares (2008-2010) 35 AT&T Mobility 30 Sprint Nextel 25 Alltel
20
US Cellular
15
Verizon Wireless
T-Mobile
10
TracFone 5 Other 0 2008 Jun
2008 Sep
Source: Business Monitor International
2008 Dec
2009 Mar
2009 Jun
2009 Sep
2009 Dec
2010 Mar
2010 Jun
USA Industry Trends – Fixed-Line Sector (2007-2014)
Source: Business Monitor International/FCC
USA Industry Trends – Internet Sector (2007-2014)
f = forecast. Source: BMI, FCC
BTOP: Federal Gov.: Broadband Technoogy Opportunities Programme (BTOP) 7.2 Billion USD to bring broadband infrastructure to underserved areas under ARRA
Table: Timetable For Broadband Technology Opportunities Programm Phase Anticipated Milestones Dates Phase 1: Programme design: February-June, 2009 Phase 2: Programme implementation Initial grant awards Q409 Second and third notices of funds availability – general 2010 Completion of grant awards September 30 2010 Broadband map posted to website February 17 2011 Substantial completion of all grant projects September 30 2012 Phase 3: Final programme audits and shut down September 30 2014 Source: NTA
Myths About the US Market Myth: The New “BUY USA“ Laws + Regulations Discriminate Against Foreign ITC Suppliers
Fact: There is No Substantial Change To the US‘s Commitments to Free Market For Government Procurement, But .....
Source: Business Monitor International
Possible Treatment of Foreign Supplier under ARRA
U.S.States party to GPA
Party, no or few restrictions Party, some restrictions Non Party,
Source: Monitor International Source: Business Department of Commerce, Bureau of Economic Analysis
FDI in the U.S. Economy 5.5 million $40 billion $55 billion $404 billion Source: Department of Commerce, Bureau of Economic Analysis
U.S. Affiliates of Foreign Firms Generate 19% of U.S. Exports ($204 billion in 2007)
U.S. FDI Trends Foreign Direct Investment in the U.S. (Billions of dollars; Without current-cost adjustment) $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0
Source: U.S. Department of Commerce, Bureau of Economic Analysis *2009 preliminary
U.S. FDI Trends Top 10 FDI Positions in the United States, 2009 20%| $453.9b 9% | $218.1b 6% | $127.8b
10% | $225.8b 11% | $264.2b 10% | $238b 8% | $189.4b 8% | $189.3b 2% | $43.9b
2%|$45.7b
Note: Numbers denote percentage of the global investment position in the United States
European FDI in Perspective 2009 European Investment Positions in the United States
Source: BEA
Average Annual Growth Rate of European FDI Positions in the United States 2005 - 2009
FDI in the U.S. – Industry Perspective Industry Breakdown of FDI Position in the United States, 2009
Top 10 FDI Growth Sectors in the United States (CAGR in FDI position between 2005 and 2009)
1. Miscellaneous Store Retailers
94%
2. Educational Services
89% 73%
3. Copper, nickel, lead, and zinc ores
4. Computers and Peripheral Equipment 73% 5. Beverage and Tobacco Products 6. Petroleum refining
66%
7. Communications Equipment
56%
8. Steel products from purchased steel
52%
9. Oil and gas extraction
42%
10. Travel arrangement and reservations 39% services 37%
Source: BEA
Myths About the U.S. Market
Myth: Product liability cases create an unfriendly U.S. business environment Facts: • U.S. Supreme Court has limited punitive damage awards to nine times actual damages • Tort reform initiatives are proceeding in several U.S. states • 86% of U.S. companies rated their state court systems from fair to excellent
Myths About the U.S. Market Myth: Patent infractions in the U.S. make it difficult for firms to profit from their intellectual property Facts: • Protections for patents and trade secrets in the U.S. are among the strongest in the world • 40% of global R&D spending is done in the U.S. because of strong intellectual property rights protections • U.S. court system treats foreign and domestic firms that hold U.S. patents equally
Myths About the U.S. Market Myth: The Foreign Corrupt Practices Act (FCPA) is unfair to foreign firms
Facts: • FCPA applies equally to U.S. and foreign firms and individuals. • Companies that continue to act corruptly may sacrifice access to the world-leading U.S. economy • The FCPA legislation has furthered the goals of the OECD Anti-Bribery Convention
Myths About the U.S. Market Myth: U.S. laws and business culture make it difficult to do business Facts: • According to the World Bank’s “Ease of Doing Business Index,” the U.S. ranks as the world’s best large economy for doing business (#4 overall, behind Singapore, New Zealand, and Hong Kong) • The U.S. has clear rules governing business, which make for a predictable market • U.S. subsidiaries of foreign firms receive equal treatment under U.S. law
President Obama tours the Siemens Wind Turbine Blade Manufacturing Plant in Fort Madison, Iowa “. . [J]ust a few short years ago, this facility was dark, it was quiet, nothing was going on. And today, it’s alive and humming with more than 600 employees . . .So in the midst of the economic turmoil, the Recovery Act helped make it possible for America to install nearly 10 gigawatts of new wind-generating capacity last year alone -– and that's enough to power more than 2.4 million American homes. So when people ask you what was the Recovery Act about, what was the stimulus about, it was about this -- this plant.”
-President Barack Obama Fort Madison, Iowa., April 27, 2010
Source: Official White House Photo by Lawrence Jackson
Case Study: Siemens in the U.S. … reported U.S. sales of $21.3 billion in 2009 … employs more than 60,000 U.S. workers … has been listed on NYSE since March 2001 Source: www.usa.siemens.com Source: www.usa.siemens.com
Over the past 10 years, Siemens has invested more than $25 billion in all three of its business sectors in the U.S. (Energy, Healthcare, Industry & Infrastructure) Recent business developments: 2006:
2004: 1998:
Siemens purchases Diagnostics Products Corporation (DPC) and Bayer Diagnostics, making Siemens’ Medical Solutions U.S. unit the world’s first full service diagnostics firm Siemens buysUSFilter, the leader in water and wastewater systems Siemens takes over Westinghouse’s power plant business
Source: www.usa.siemens.com, PR Newswire
Ombudsman for Foreign Investors:
Maintaining Competitiveness
•
Created in 2007
•
Primary U.S. Government Mechanism to Manage Foreign Investment Promotion
•
Tools IIA provides: 1.
Facilitate Investment Inquiries
2.
Act as Ombudsman
3.
Connect Investors with U.S. States
4.
Provide Policy Guidance
5.
Educate Investors
Facilitating Business Inquiries Invest in America provides actionable information to foreign firms to help them: • Incorporate a business in the U.S. • Understand basic U.S. tax and legal concepts • Learn about incentives available to businesses in the U.S. • Connect with U.S. state, city, or regional economic development offices to learn about investment opportunities • Apply for a business-related visa Foreign investors can communicate with Invest in America staff by phone or email in Washington, DC, or meet with members of the U.S. Foreign Commercial Service in almost 80 countries around the world.
Single Point of Contact for Foreign Investors:
Federal
State and Local
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Contact Information Edward Fantasia U.S. Consulate Munich Commercial AttachĂŠ Coordinator, Invest in America Tel.: 089 2888 750 Email: Ed.Fantasia@trade.gov Web: www.buyusa.gov/germany Aaron Brickman Director, Invest in America Tel: 202-482-1889 Email: aaron.brickman@trade.gov Web: http://www.investamerica.gov