By Judi Currie
Business NH Magazine
Despite the lingering effects of a global pandemic and the Trump administration’s trade wars, foreign markets and investment by foreign companies remain a vital part of New Hampshire’s economy. In fact, the latest New Hampshire Globalization Report prepared by researchers at Plymouth State University (PSU) shows New Hampshire is primed to attract more foreign investment.
The pandemic exposed high risks to the global supply chain and as companies seek to minimize those risks, they are investing in areas where the supply chain is more regionalized. New Hampshire is well positioned to be the gateway to the East Coast for foreign-owned companies, according to the 2020 report released in January by PSU Business Professors Roxana Wright, DBA, and Chen Wu, Ph.D., building on 2018 and 2019 PSU studies.
The report found foreign direct investment (FDI) has been declining nationally since 2016 and was exacerbated in 2019 and 2020 when trade disputes and the pandemic caused U.S. exports and imports to decline and disrupted supply chains. As a result, Wright says, New Hampshire companies made supply chain resiliency a top priority.
“A quarter of activities were supply-chain focused. Clearly companies were trying to establish a stronger supply chain,” said Wright of the state’s corporate activity in 2020.
Brian Ward, vice president of sales and marketing at Jewell Instruments in Manchester, a manufacturer of sensors and controls, meters and avionics, and industrial test equipment, says the trade wars had a greater effect on his supply chain than COVID-19.
“We’ve actually had to work with our suppliers in pricing in the way we did our contracts, as tariffs became a reality,” he says. “We were able to work all those issues out, as well as COVID, and now have a really resilient supply chain.”
New Hampshire’s close proximity to Canada, as well as the presence of manufacturing, high-tech firms and foreign-owned firms in New Hampshire and neighboring New England states, should allow the Granite State to “benefit from regionalization, as more companies are aiming to increase the resilience of their supply chains and limit the high cost of disruptions,” the report states.
Foreign investment on the rise
While U.S. trade dropped in the first half of 2020, the good news is it “bounced up starting the third quarter due to the worldwide efforts to reopen economies.” And New Hampshire followed suit. The report states after a sharp contraction in the second quarter of 2020, the Granite State’s economy grew in the third quarter at a pace that ranked eighth nationally.
“We didn’t expect a lot of activity in 2020 with so many businesses closed. We were a little surprised, pleasantly, that foreign business activity was still strong,” Wright says.
New Hampshire entered the pandemic with a strong portfolio of investment and economic activity by foreign firms, with mergers and acquisitions, new establishments and business expansions increasing from 2016 to 2019, the report notes. In 2019, New Hampshire exported 9.8% more merchandise compared to 2018, reaching $5.8 billion in export value after four consecutive years of growth.
Wu says although New Hampshire exports declined 7%, the dollar value for 2020 was still higher than 2018 and close to the record amount in 2019.
Even with the decline in overall business activity in 2020, foreign firms continued to invest in New Hampshire, particularly in the electronics, information technology and financial services sectors as well as some activities in the energy and life sciences sectors. This included 25 “notable” investment and expansion projects initiated by or involving foreign firms, including five acquisitions valued at more than $100 million, according to the report. “[Most] foreign businesses in New Hampshire are in financial services, a sector that was less impacted by the pandemic than other traditional sectors,” Wu says.
Success stories
Among New Hampshire companies that actually grew during the pandemic due to foreign markets are Foxx Life Sciences and Jewell Instruments.
Foxx Life Sciences is a manufacturer of bioprocess pharmaceutical products and labware for research. Its headquartered in New Hampshire, with facilities in Salem and Londonderry, but sells to customers in 35 countries and has built partnerships in India and China, says Tom Taylor, president and CEO. “Recently we added a manufacturing distribution center in India to better supply all of our Asia customers,” he says.
Jewell Instruments does most of its manufacturing in New Hampshire but has a facility in Barbados, West Indies, for offshore manufacturing of its legacy products—analog and digital panel meters. In 2020, sales outside the U.S. surpassed domestic sales.
“It is interesting how COVID impacted our business. We went from 35% international to 55%. A lot more international business really helped us out in this COVID period,” says Ward. “One of our growth areas is in the sensors and controls division. That business actually went to 60% international. It’s been fantastic.”
These articles are being shared by partners in The Granite State News Collaborative. For more information visit collaborativenh.org.
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