[Marxism] Are foreign buyouts good for the US working class?

[Greg McDonald]

This article discusses record foreign buyouts of US corporations by  
foreign investors, which the author argues is being encouraged by a  
weak dollar and the existence of a more globalized economy in  
general.  One of the companies affected is Sabic plastics, located  
near me in Pittsfield, MA. According to the president of the local  
labor council, organized labor is happy to have foreign investment as  
opposed to say a Dupont or Dow because the foreign companies will not  
only keep the local plant operating without relocating it to one of  
their other locations, they will also invest heavily, adding 75 to  
100 new jobs for Pittsfield, which has been economically crippled  
since GE pulled out years ago. General Dynamics still has a local  
plant nearby which assembles computer components for bombs, but it  
employs a fraction of the old GE plant  (thankfully).

Greg McDonald


International Herald Tribune
Weak dollar prompts record foreign buyouts of U.S. companies
By Robert Weisman
The Boston Globe
Tuesday, October 2, 2007

BOSTON: European, Asian and Canadian companies are taking advantage  
of the weaker dollar to buy their U.S. counterparts at a record pace,  
increasing investment in the United States but also raising fears  
about a potential loss of jobs and autonomy.

"We could be looking at the world's largest tag sale if we continue  
to see declines in the dollar," said Donald Klepper-Smith, chief  
economist at DataCore Partners.

In the latest large deal aided by a weak dollar, Commerce Bancorp,  
which is based in Cherry Hill, New Jersey, agreed Tuesday to be  
acquired by Toronto-Dominion Bank of Canada in a cash-and-shares deal  
valued at $8.5 billion.

Nationally, the value of purchases of companies by non-U.S. buyers so  
far this year totaled $257.4 billion - more than in any full year  
since 2000, the height of the technology boom, according to Thomson  
Financial, a research firm in New York.

The buyouts are sparking anxiety in the United States, though their  
impact is complex. Foreign owners typically use acquisitions as an  
entry into the U.S. market and thus may be more willing than American  
buyers to invest in their new holdings, some economists say. But the  
risk is that they might also be quicker to cut back or consolidate  
U.S. operations when times get tough.

"Quite naturally, foreign companies want to play in this market,"  
said Alan Tonelson, a research fellow at the U.S. Business and  
Industry Council, a trade group for small and midsize manufacturers.  
"They want leading-edge technology, and the United States is still  
the technology leader. But when they buy these companies, they're  
acquiring control over the most dynamic pieces of the American  
economy, and they're acquiring control over America's future."

Corporate deals are just one way the dollar's falling value is having  
an impact. The weaker dollar has also drawn European, Asian and  
Canadian tourists, made it more expensive for Americans to travel  
abroad, and bolstered the exports of U.S. companies that sell high- 
technology equipment or medical gear overseas. But foreign  
acquisitions could become the sagging dollar's most lasting legacy.

In New England, one of the regions heavily affected, 69 companies  
have been sold to foreign buyers in the first nine months of 2007 for  
a total of $30.8 billion - also a seven-year high.

In June, Philips Electronics of the Netherlands snapped up Color  
Kinetics, a maker of lighting systems, for $714 million. Last month,  
Analog Devices agreed to sell a pair of cellular product lines to  
MediaTek of Taiwan for $350 million. And last week, United Group of  
Australia completed a $411 million purchase of Unicco Service, which  
sells cleaning services for office buildings.

Some see the takeovers as inevitable in a global economy where  
geographic borders are no match for increasingly multinational  
companies.

"It's part of the overall global economic climate," said Brian  
Bethune, an economist for Global Insight, who said the acquisitions  
should be judged case by case. "Foreign companies are trying to get  
access to the U.S. market, and generally that's positive. European  
and Asian companies tend to take a longer view and could be more  
patient investors than U.S. hedge funds."

For now, many of the overseas buyers are promising to invest in their  
acquired properties. The new management team at Sabic Innovative  
Plastics, the former GE Plastics, plans to add 75 to 100 employees to  
its 425-person work force in New England.

"We're really lucky it wasn't bought by a Dow or a DuPont, because  
they might have moved the work from here to another one of their U.S.  
facilities," said Alfred Shogry, president of the Berkshire Central  
Labor Council in Pittsfield, Massachusetts.

A spokeswoman at Color Kinetics said, "Philips is looking at us to be  
their global research and development center for LED-based lighting  
fixtures," referring to the company's patented light-emitting diode  
technology. "We're absolutely hiring and growing right now."

But that is not always the case with foreign takeovers. The French  
telecommunications equipment maker Alcatel, which bought its U.S.  
rival, Lucent Technologies, last year, said last month that it would  
cut thousands of jobs. The outsourcing provider Caritor, which has  
corporate offices in California but almost all its employees and  
operations in India, recently said it planned to eliminate more than  
a quarter of the 350 jobs at the Boston headquarters of the  
technology services company Keane, which it purchased in June.

Klepper-Smith said he feared the effect of foreign deals on workers  
and communities if decisions on jobs and plant locations are made in  
Europe, Asia or the Middle East. "It raises some red flags and some  
real questions about our independence," he said.