Columbus’ economic development leader and mayor have altered their annual Asian economic investment trip in the fall, scheduling a week in India instead of China because of the impact of the United States’ new foreign trade policies, including tariffs.
Typically, Jason Hester, the Greater Columbus Economic Development Corp. president, and Mayor Jim Lienhoop spend a week in China and a week in Japan. Columbus businessman Ryan Hou, who was born in Taiwan, also has typically been part of the local delegation to China.
This year, however, Hester will spend a few days in Japan and a week in India, likely joined by the mayor, Hester said. Hou said he would not be part of the Columbus delegation this year.
The Columbus trade mission is being considered for October, Lienhoop said.
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A local delegation started making annual trade trips to Asia after three-term Mayor Robert N. Stewart took office in 1984. By the time Stewart left office in 1995, 28 international companies had established operations in the city.
Hester has traveled to China nine times in eight years with current and previous mayoral administrations to seek foreign direct investment in Columbus, and foster relations between the city and its friendship cities in China.
However, a trip to China would be less productive this year, Hester said.
“With the trade war in place and discussions about tariffs, it’s maybe made the environment over there a lot less certain,” Hester said.
Conversations with prospective companies are likely to steer to federal trade policies, over which Columbus’ leaders have no control, Hester said. Also, China’s foreign direct investment in the United States has slowed and instead increased in Africa and eastern Europe, he said.
Hou said he’s disappointed that a Columbus delegation will not be visiting China, and added that a trade war makes it more important for a local delegation to travel and maintain existing relations.
“In my opinion, they should go,” Hou said.
Three Chinese companies have investments in the city, and Columbus-based Cummins Inc.’s global power operations include manufacturing facilities in China.
Last year’s trip to China produced talks with 11 confidential prospects and an introductory meeting with e-commerce company Alibaba.
“Even though it’s a political situation, there’s more need to go there now to make friends,” Hou said.
New opportunity
Visiting India instead is a good opportunity, Hester said. Local economic investment leaders have considered such a trip for a few years, and it also capitalizes on recent investment by India-based companies in Indiana.
Bangalore-based AXICADES, a global product engineering and technology solutions company, chose Columbus for its North American headquarters in December, making it the second Indian company to set up shop in the city. The first was KPIT, an engineering services company, that started in 2002, according to Greater Columbus Economic Development Corp. records.
Also last year, information technology company Infosys, based in Bengaluru, announced it would build a technical center in Indianapolis.
“We’re starting to see the wind blow favorably. It works well for us,” Hester said of visiting India.
City leaders always try to align Columbus’ economic promotion activities with the opportunities presented, and — where it makes sense — to develop new ones, Lienhoop said.
“Given the tariff issues that have arisen between the U.S. and China, we had initially concluded to skip China this year and visit only Japan. But, the arrival of AXISCADES and the excellent relationships we have developed with their leadership team have led us to look more closely at what opportunities for Columbus may exist in India,” Lienhoop said.
“Plus, AXISCADES’ leadership team has invited us to visit. The EDC executive committee has discussed this invitation and views it as a logical next step to not only deepening our friendship with them but developing relationships with the companies they will introduce to us,” the mayor said.
Hester said he’s working with the state’s representatives in India to open opportunities, and the focus of the Columbus trade mission team will be meeting with companies in the engineering services and pharmaceutical fields — those that can help diversify the local economy.
Tariff concerns
A big part of Columbus’ economy depends on foreign companies that have established operations in the city. Currently, 41 foreign companies operate in Columbus, with Japan leading the way with 28, according to Greater Columbus Economic Development Corp. records.
The 41 foreign companies combined have 8,922 employees. Three top foreign-based have at least 1,000 employees in Columbus:
- Faurecia Mobility (1,635), based in France.
- NTN Driveshaft (1,599), based in Japan; and
- Toyota Industrial Equipment Manufacturing (1,120), also based in Japan.
The impact of tariffs has caused concern — but not panic — among Columbus manufacturers, Hester said.
Of the 47 manufacturers the Greater Columbus EDC has spoken with over the past two years, 33 of them (or 70 percent) earn at least a portion of their revenue from foreign exports, Hester said.
U.S. tariffs on foreign imports such as aluminum and steel are driving up input costs and disrupting global supply chains, and the finished products of local manufacturers are getting hit with retaliatory tariffs imposed by foreign countries on U.S. goods, Hester said.
A 25 percent tariff on steel and 10 percent tariff on aluminum from the European Union, Canada and Mexico went into effect June 1. Canada has imposed tariffs on $12.6 billion of U.S. goods, the European Union on more than $3 billion of U.S. goods and Mexico on about $3 billion worth.
The U.S. and China have each imposed $34 billion in tariffs on each other, and President Donald Trump is threatening tariffs on all $500 billion of Chinese goods shipped to the U.S.
Trump also is threatening tariffs as high as 25 percent on imported cars and auto parts.
Cummins representatives said previously that exports and trade are vital to its success, driving the company’s growth over the past decade. The global power company does business in more than 190 countries and employs 58,600 worldwide.
It has more than 8,000 workers in southern Indiana, making Cummins the region’s largest employer.
“I don’t mean to be overly dramatic, but we just wouldn’t be here if it weren’t for the fact that international trade got going in industrial goods in a big way,” Linebarger said in May.
Cummins worries about tariffs affecting the cost of material prices and affecting them and its 2,500 direct suppliers, not to mention jeopardizing foreign trade markets.
“Losing export lanes would be a disaster,” Linebarger said in May.
Hester said Cummins’ concerns are valid, but he’s hopeful the trade situation will improve.
“We share Cummins’ concerns and we share the concerns of our manufacturers whom we’ve spoken to,” Hester said. “All in all, I tend to be an optimistic individual and think things will work out.”
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“With the trade war in place and discussions about tariffs, it’s maybe made the environment over there a lot less certain.”
— Greater Columbus Economic Development Corp. President Jason Hester, on a city delegation not making an economic investment trip to China this year.
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