The document discusses foreign companies establishing manufacturing operations in the United States. It notes that while some US jobs have moved overseas, many foreign companies are also creating new jobs in the US for reasons like proximity to consumers, business incentives from local communities, and generally better business conditions. The article provides examples of Mexican, Japanese, and European companies that have expanded manufacturing in the US and employed thousands of American workers.

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DATE -----------
THE
Source Articles from
WALL STREET JOURNAL.
CLASSROOM EDITION
Chapter 17 International Trade
This article from the April2004 Wall Street Journal Classroom
Edition offers a
broader view of a long-running trend in global trade: the
movement of manufacturing
jobs to other countries. In "Two-Way Street," Journal staff
reporters Joel Millman
and Norihiko Shirouzu explain that while many manufacturing
jobs are indeed
streaming out of the U.S., some foreign companies are eagerly
creating new manufac-
turing jobs in the U.S.
Before reading the article, you may want ro look up the
following terms: proxim-
ity, incentives, rhetoric, value chain.
uBut free trade works both
ways, and just as U.S.
companies look overseas

2. for workers, a lot of foreign
companies have been
expanding their operations
in the U.S. and creating new
jobs for Americans. The
attractions for them are better
business conditions, proxim-
ity to the ever-expanding U.S.
consumer market, and the
promise of incentives that
many U.S. communities offer
to attract new investment.''
Free trade has hammered a lot of U.S. towns, making it easier
for companies to send manu-facturing jobs south of
the border or overseas, and
idling hundreds of American
factories and tens of thousands
of workers.
But free trade works both
ways, and just as U.S. compa-
nies look overseas for workers,
a lot of foreign companies have
been expanding their opera-

3. tions in the U.S. and creating
new jobs for Americans. The
attractions for them are better
business conditions, proximity
to the ever-expanding U.S.
consumer market, and the
promise of incentives that
many U.S. communities offer
to attract new investment.
In 1999, for example,
Gruma, Mexico's largest pro-
ducer of corn flour and tor-
tillas, wanted to extend its
sa les territory in the eastern
U.S. The manufacturer found
that the quickest way was to
buy a rival, Barnes Foods, ven-
dor of the regional Pepito
brand in Goldsboro, N .C ..
After closing the $12 million
transaction, Gruma found something else: a com-
munity eager to offer incentives to persuade the
Mexican company to invest
millions more.
Within a year, Gruma
delighted Goldsboro by agree-
ing to buy an empty warehouse
the city owned outside rown.
The building had sat for four
years, after officials spent more
than $1 million trying to mar-
ket it as parr of an industrial

4. park. By promising to invest
$13 million locally, and add
100 jobs to Barnes's payroll,
Gruma got $200,000 chopped
off the building's sale price and
another $200,000 in grants to
defray infrastructure costs.
Gruma also received job-cre-
ation tax credits to offset
almost $200,000 annually
from its state corporate income
tax. Ultimately, the Mexican
company well exceeded the
n urn ber of new hires it
promised, tripling its Golds-
boro work force to nearly 200.
"T his is the second wave
of Nafta kicking in," says
Todd Malan, director of the
Organization for International
42 Chapter 17 Source Articles from The Wall Street Journal
Classroom Edition
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Source Articles from The Wall Street Journal Classroom Edition
Investment, which represents foreign companies
with U.S. subsidiaries . The North American Free
Trade Agreement "enabled Mexico to invest

5. abroad, and that investment is creating thousands of
jobs for U.S. workers."
Among some other recent deals: San
Luis/Rassini, a Mexican maker of automotive
springs, negotiated incentives
from Ohio officials ro open a
plant near Toledo, a city that
has been hit hard by cutbacks
in the U.S. auto industry. Mex-
ican brewer Grupo Modelo
received an incentive package
that brought an $84 million
barley-malting plant to Idaho
Falls, Idaho. Mexican steel-
maker Imsa parmered with the
city of Moscow, Tenn. (popula-
tion 422) ro purchase land in a
local industrial park. The move
brought 113 jobs and made
Imsa the biggest employer in
Moscow.
Eugenio Clariond, chair-
man of Imsa, says that aside
from community incentives,
Mexican businesses are
attracted to the U.S. because
business conditions are better
here-chiefly because of more
abundant energy and less
corruption.
Through 2001, the most

6. recent year for which figures
are available, Mexican compa-
nies created 145,000 jobs in
the U.S. While that doesn't
begin to offset the number of
jobs that have left the U.S., it is
a sma!J part of a bigger group: foreign businesses all
over the world creating jobs in America. According
to Mr. Malan's organization, U.S. subsidiaries of
foreign companies employed 6.4 million people in
2001, up from 5.1 million in 1996 and 4.9 million
in 1991.
The investments from Mexico are a fairly recent
outgrowth of Nafta, which took effect in the early
1990s. But other foreign companies have been mov-
ing jobs to the U.S. for more than two decades,
many into the nation's manufacturing heartland.
The most notable are Asian and European auto
makers and parts producers. Japan's Honda Motor
began producing motorcycles near Columbus, Ohio,
25 years ago, and then cars in 1982. Today, in Ohio
alone, Honda employs 13,000 factory workers and
another 1,000 people in higher-skill positions
devoted to developing vehicles like the Honda Pilot
sport-utility vehicle and the
Honda Element for the U.S.
marker. Nationwide, Honda's
U.S. work force, including
sales and marketing staff in
Torrance, Calif., and workers
at another car plant in
Alabama, has swelled to
24,000.

7. A number of other auto
companies, including Ger-
many's BMW and Mercedes-
Benz, soon foJiowed suit. Most
of them initially shifted pro-
duction to the U.S. to soothe
trade tensions with the U.S.
and the Detroit auto makers,
which had complained about
widening trade imbalances in
autos. But over time, those for-
eign auto makers realized it
also made good business sense
ro be closer to consumers in
the world's wealthiest nation
and biggest auto market. They
have since been beefing up
the ir marker-research and
product-development centers
in the U.S., creating hundreds
of thousands of white-collar
jobs in the process.
Hiroshi Okuda, chairman
of Toyota Motor, likes to say
that America, with the sophistication of irs con-
sumers and irs population expected to continue
expanding through 2030, is a much surer bet than
any market in the world, including China.
Indeed, Toyota has fast become one of the
biggest foreign employers in the U.S. auro sector. In
the beginning, it tiptoed into the U.S., setting up a
jointly operated assembly plant in Fremont, Calif.

8. with General Motors in 1984. But two decades later,
the No. 1 Japanese auto maker has two more plants,
in Kentucky and Indiana, which it operates on its
Through 2001, the most
recent year for which figures
are available, Mexican com-
panies created 145,000 jobs
in the U.S. While that doesn't
begin to offset the number of
jobs that have left the U.S., it
is a small part of a bigger
group: foreign businesses all
over the world creating jobs
in America. According to Mr.
Malan's organization, U.S.
subsidiaries of foreign com-
panies employed 6.4 million
people in 2001, up from
5.1 million in 1996 and 4.9
million in 1991.

9. Chapter 17 Source Articles from The Wall Street Journal
Classroom Edition 43
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Source Articles from The Wall Street Journal Classroom Edition
own, and is building a pickup-
truck plant in San Antonio,
Texas. Altogether it employs
31,000 U.S. workers, 8,700 of
whom work for the company's
sales and financial services
units in California . Mean-
while, the company's technical
center in Ann Arbor, Mich.,
which currently employs 500
to 600 engineers, is planning to
increase that number to as
many as 1,000 over the next
"Top manufacturers all over
the world are getting good at
slicing up the value chain~
placing each task where it
offers the greatest return.
And sometimes~ that~s right

10. here in the U.S.~~
few years to beef up its product
development-capabilities.
For companies moving tO
the U.S., election-year rhetoric
about jobs leaving ignores a
broader truth: Top manufac-
turers all over the world are
getting good at slicing up the
value chain, placing each task
where it offers the greatest
return. And sometimes, that's
right here in the U.S.
QUESTIONS FOR DISCUSSION
44
1. How has the North American Free Trade Agreement affected
the flow of manufacturing jobs in and
out of the U.S.?
2. What factors attract foreign businesses to the U.S.?
3. Drawing Conclusions How do the jobs that are flowing into
the U.S. compare with the ones that
are flowing out?
Chapter 17 Source Articles from The Wall Street Journal
Classroom Edition
NAME: CLASS: DATE: Question 1: Question 2: Question 3:

11. NAME ---------------------------------- CLASS ------------- DATE
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Economic Cartoons
Study this cartOon and review the section entitled "Levels of
Development" beginning on page
471 before answering the questions below.
IF W£ W£Rt IN BANGLADE:SH
YOV'I> ~E RIC.H! THIS TRASH
WOULD BE A TREASVR£ I
TJ.IIS I>IJMI>STE~ WOlJLD ~e:
A C.A r
Copyright© 1997 by Ted Rail. Reprinted with permission
of Universal Press Syndicate. All rights reserved.
1. (a) Why is one of the men lying in the dumpster?
(b) What is the man in the dumpster doing with his newspaper?
2. (a) Who is the man with the suspenders supposed to
represent?
(b) How do you know this? ------------------------------------------
---
3. Drawing Inferences Judging by this cartoon, which country
has a higher level of develop-
ment-the United States or Bangladesh? Explain your answer. ---
------------------
4. Drawing Conclusions Why do you think the cartoonist called
this cartoon "Fun with

12. Economic Relativity"? ------------------------------------------------
-
5. Recognizing Points of View What does the cartoonist imply
is the attitude of the rich toward
the problems of the poor? --------------------------------------------
--
Chapter 18 Economic Cartoons 25)
Name: Class: Date: Question 1a: Question 1b: Question 2a:
Question 2b: Question 3: Question 4: Question 5:
NAME -----------------------------------
c~ss ____________ _
DATE -:--------------
Economic Detective
South Gamara ••
Problem
South Gamara is a less developed country in the southern part
of Africa. It was under French
colonial rule from 1868 to 1927. The decades following
independence saw a civil war and a
series of ruthless military dictators. For the past five years
South Gamara has been ruled by
President Amoto, who has been trying to stabilize the country,
help it develop, and relieve his
people's poverty. Use what you have learned in this chapter to
answer the following questions.
n Investigation 1

13. / When President Amoto took office, his first
priority was to determine his country's level of
development compared to other countries of the
world.
1. What factors will President Amoto's economic
advisers use to measure South Gamara's level of
development?
2. How will President Amoto's economic advisors
determine South Gamara's per capita gross
domestic product? --------------------------
n Investigation 2
/ The World Health Organization has been
sending representatives to South Gamara since
President Amoto took office, bringing vaccines and
medicines to improve the health of the people.
Gradually life expectancy has increased. South
Gamarans have always had large families, and now
with improved health care, more and more of the
children survive.
1. What will result from an increased life expectancy
and improved health care? _______________ _
--------------------
2. What problems will this situation cause South
Gamara if the country does not increase its
GDP? __________________________ _
~ n Investigation 3
@ / The government of South Gamara owns the

14. few businesses and industries that exist in the
country. President Amoto wants to bring more
industry to his country, but South Gamara is very
poor and his people lack capital to build production
facilities and businesses.
1. What are some of President Amoto's options for
developing industry in South Gamara? _____ _
2. What are President Amoto's options for privatiz-
ing some of the government-owned businesses?
i
Chapter 18 Economic Detective 23)
NAME: CLASS: DATE: Investigation 1 Question 1:
Investigation 1 Question 2: Investigation 2 Question 1:
Investigation 2 Question 2: Investigation 3 Question 1:
Investigation 3 Question 2: