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^J N I T E D S T AT E S D E P AR T M E N T OF CO M M ERCE O F F ICE O F B U S I N E SS E C O N O M IC S W A SH IN G T O N , D. C. 20230 .i f FOR A.M. RELEASE TUESDAY, SEPTEMBER 3, 19 6 8 Ro David Belli: OBE 68-44 967-2287 PLANT AND EQUIPMENT EXPENDITURES BY FOREIGN AFFILIATES OF U.S. CORPORATIONS, 1967-69 Plant and equipment expenditures by foreign affiliates of U.S« corporations are expected to rise 5 percent in the current year and an additional 4 percent in 1969., the Department of Commerce announced today« These increases follow a 7 percent rise in 19 6 7 which brought total outlays in that year to $9,2 billion. The 1967 increase was slightly smaller than the rise projected last December and represents a significant slowdown from the 20 percent advance recorded in both 19 6 4 and 1965 and the 16 percent rise in 19 6 6 » These data are based on reports received in June and July of this year by the Department's Office of Business Economics from about 500 major U.S» corporations with foreign affiliates« The sample results are adjusted to reflect foreign plant and equipment expenditures by all U.S« corporations. Year-to-year changes are computed by comparing the estimate for a given year with that made in the corresponding period of the preceding year, on the assumption that the estimates are based on similar types of information available to corporate officials responding to the questionnaires« For example, the 4 percent rise for 19 6 9 is based on a comparison of column A, 19 6 9 , with column A, 19 6 8 « Industry patterns The slower growth is attributable primarily to the leveling off of expenditures in manufacturing. Spending by manufacturers had risen about 30 percent in both 19 6 4 and 19 6 5 , and 18 percent in 19 6 6 . However, no increase was recorded for 19 6 7 and none is now projected for either 19 6 8 or 19 6 9 . /More/ -2- Within manufacturing, two significant reversals of trend are suggested by the current data. The chemical industry is planning little increase in expenditures this year and a drop of almost 20 percent for 19 6 9 , after steady growth through 19 6 7 . In the transportation equipment industry, expenditures declined in 19 6 7 and are expected to decrease again this year. For 19 6 9 , however, first estimates indicate a new surge in investment, much of it concentrated in Canada. The petroleum industry, with a rise in expenditures of $0.5 billion or 19 percent in 19 6 7 , realized its largest gain on both a dollar and percentage basis since 1957 when the plant and equipment survey was initiated. With rising expen ditures concentrated primarily in Europe, Africa, and the Far East, petroleum affiliates accounted for better than four-fifths of the 19 6 7 spending increase for all areas and industries. For 1968, outlays are expected to increase 9 percent, while no further advance is presently planned for 19 6 9 . The mining industry shows a consistently high growth rate in capital invest ment over the 3-year period covered by the current survey. The 14 percent rise in 19 6 7 , however, was well below the 19 6 6 rate of advance and somewhat lower than previously projected. The larger increases scheduled for 19 6 8 and 19 6 9 suggest that some expenditures initially planned for 19 6 7 may have been deferred. In other industries, including public utilities and trade, expenditures are expected to rise 25 percent in 19 6 9 after steady but considerably smaller increases in 1967 and 19 6 8 . Geographic patterns Canada was the only major area of the world in which foreign affiliates re duced capital expenditures in 19 6 7 , following a large increase in 1966. The de cline, concentrated almost entirely in manufacturing industries, is expected to continue at the same rate this year, but increased spending in all major industries is projected for 19 6 9 . Canada's share of total plant and equipment expenditures was a steady 25 percent from I9 6 O-I9 6 5 and rose to 27 percent in 1966. For 19 6 7 , its share was reduced to 2J+ percent and, if current estimates materialize, it will reach a new low of 21-1/2 percent in 1968. In Europe, a significant expansion in the petroleum industry was the prime factor in the 12 percent rise in 19 6 7 ; however, this was a drop by nearly half from the rates of growth for this area recorded in 19 6 5 and 19 6 6 . This year, cut backs in expenditures by both petroleum and manufacturing affiliates are expected to reduce capital investments in Europe by 4 percent. In 19 6 9 , expenditures are projected to remain approximately at the 19 6 8 level. /More/ - 3 - Led by rising investments in the mining industry, expenditures in Latin America are expected to increase substantially in both 19 6 8 and I 9 6 9 , following the 15 percent rise in 19 6 7 . Although the 19 6 7 and 19 6 8 advances are below the estimates made last December, Latin Americans share of total plant and equipment expenditures is moving steadily upward, from 13 percent in 19 6 6 to a projected 18 percent for 19 6 9 » In all other areas, where a large share of U.S. investments is in the petroleum industry, outlays rose 11 percent in 19 6 7 . A further rise of 21 percent— well above previous estimates— is expected for the current year. Total expenditures will change little in 19 6 9 , with reductions in petroleum offsetting increases in all other industries. Expenditures by foreign affiliates are shown in the accompanying tables. Additional detail will be included in the September issue of the Survey of Current Business, the monthly publication of the Office of Business Economics. The Survey of Current Business is available from Field Offices of the Depart ment of Commerce, or from the Superintendent of Documents, U.S. Government Print ing Office, Washington, D.C. 20402, at an annual subscription price of $6.00, including weekly supplements; single copy 45 cents. T a b le 1 . - - P e r c e n t Ch a n ge 1n P l a n t an d Eq u ip m e n t Ex p e n d i t u r e s by F o r e i gn A f f i l i a t e s o f U . S. C o r p o r a t i o n s, 1 9 6 5 - 6 9 Act u al 1 9 6 5 -6 6 T otal . . . . . Pr oj e ct e d 1 9 6 6 -6 7 1 9 6 7 -6 8 1 9 6 8 -6 9 ..................... 16 7 5 M i n i n g an d sm e l t i n g . . . . . . . . . . . . 25 14 18 27 Pe t r ole u m . . 11 19 9 -1 . . . . . . . 18 -2 -2 1 14 10 10 25 . 28 -6 -5 7 . . . . . . . 2 15 19 12 23 12 -4 1 3 11 21 0 . . . M a n u f a c t u r i n g. . O t h e r i n d u st r i e s Ca n a d a . . . . . L a t i n Am e r ica. Eu r op e . . . . . . . ............ . . . . . . . O t h e r a r e a s. . . . . ............ . . . . . . 4 Table 2.— Plant and Equipment Expenditures by Foreign Affiliates of U.S. Companies, by Area and Industry - Summary of Surveysi/ (Mi.llions of dollars) - 1965 E A All areas, total Mining and-smelting Petroleum Manufacturing Other industries 7440 629 2277 3884 650 7305 ■8805 482 637 2330 2689 3832 4796 661 683 Canada, total Mining and smelting Petroleum Manufacturing Other industries 1847 212 503 944 188 Latin America, total Mining and smelting Petroleum Manufacturing Other industries 1966 C 1967 C 1968 B 1969 A D E A B 9039 764 2727 4793 756 8680 746 2629 4553 752 / 8640 789 2526 4583 741 9115 637 2937 4803 738 10069 839 3334 5098 798 10045 9466 931 903 3295 3099 5035 4709 783 755 9785 761 3018 3432 4513 4853 812 .739 1678 2076 173 244 358 426 963 1199 184 207 2175 278 552 1143 202 2263 266 609 1156 231 2357 297 649 1174 237 2081 188 570 1132 191 2273 274 600 1163 237 2360 2227 332 306 650 625 1122 1064 256 233 2208 2053 310 24 0 636 6 16 998 963 264 234 2229 375 670 933 251 2244 401 681 893 269 2206 286 668 991 261 1073 160 307 459 147 933 1140 110 176 334 378 346 452 144 134 1238 214 336 518 171 1105 211 282 462 150 1092 229 268 451 143 1250 193 391 516 1434 288 366 624 1715 1791 490 433 15 6 1258 292 301 484 181 19 2 3 15 0 1441 1339 298 287 380 368 591 526 17 2 159 Europe, total Mining and smelting Petroleum Manufacturing Other industries 2639 4 603 1860 172 2893 3545 8 6 776 972 1876 2341 233 227 3555 5 873 2424 252 3345 8 873 2220 244 3253 6 778 2243 226 3691 3 940 2485 263 4009 11 3970 3723 6 6 3637 3814 8 9 1049 1038 2344 2544 236 222 Other areas, total Mining and smelting Petroleum Manufacturing Other industries 1880 252 864 621 143 1802 2044 192 212 862 912 648 804 100 116 2072 267 966 708 131 1968 261 865 714 128 1938 257 832 714 135 2093 253 1036 669 135 2142 2317 293 177 IO3 2 13 0 3 687 704 130 134 Note. 1. A 3 J§> D E Source : B Detail may not add to totals because of rounding. Estimated in June of previous year Estimated in December of previous year Estimated in June of current year Estimated in December of current year Actual - Reported in June of following year U.S. Department of Commerce, Office office of Business Economics 12 0 6 114 0 2529 263 2582 242 2352 266 1161 782 142 2274 295 1125 741 114 D 10 7 0 2 4 10 237 2 17 7 30 5 10 3 6 7 10 12 7 E y A 9 24 5 902 16 0 1 335 475 642 15 0 C 10707 (10520) 10168 1067 líól 969 3641 3595 3385 5 2 OC 4963 4894 921 861 799 454 491 775 204 4 12 4 26 6 59 6 36 218 233 1066 2616 242 3803 10 IO5 2 2488 252 3858 7 1047 2528 275 2624 229 1414 877 10 4 . 2759 278 1435 924 122 2 3 13 3932 8 186 1237 738 152 Table 3 .— Estimates of Plant and Equipment Expenditures by Foreign Manufacturing Affiliates of U.S. Companies, by Area and Industry - Summary of Surveys(Millions of dollars) 19 6 5 E _________ 19 6 6 _____________ A B C D E 3832 4796 835 925 1067 1005 1092 1033 944 Canada, total 225 Chemicals II/4Machinery Transportation equipment 224 381 Other manufacturing 963 300 459 Latin America, total 15 1 Chemicals 66 Machinery 73 Transportation equipment 16 6 Other manufacturing 346 101 3884 All ar e a s , total 861 Chemicals 882 Machinery Transportation equipment 873 1267 Other manufacturing Europe, total Chemicals Machinery Transportation equipment Other manufacturing i8 6 0 14 2 238 283 51 69 125 1876 319 4553 4583 4803 5098 5035 4709 4513 4853 5200 4963 4894 1054 1044 1018 1436 1035 1044 966 1537 13 15 1381 1205 989 1523 1385 1198 949 1504 1269 1149 852 1439 1203 1083 797 1429 1360 1212 819 1466 1256 1103 1298 1018 IkSl 1572 14-20 1204 817 1523 1199 314 170 283 432 1143 260 148 1156 II 3 2 1122 239 194 275 460 271 494 255 513 1163 213 174 278 497 1064 194 192 247 432 998 168 189 236 404 963 254 153 176 380 933 205 164 223 341 893 180 161 1174 221 186 155 203 355 991 207 184 265 336 452 150 63 81 158 518 187 61 108 162 462 166 61 65 118 163 624 213 78 120 213 591 166 80 108 642 213 83 237 526 160 80 86 200 484 75 160 451 143 65 72 171 241 775 237 93 143 302 659 177 93 143 246 200 107 109 220 2424 521 712 2243 458 662 564 560 2485 648 793 495 551 2529 649 821 480 579 2582 685 801 476 619 2410 628 2344 640 545 2220 432 692 594 502 609 379 615 2544 576 847 448 674 2616 608 862 417 728 2488 615 838 348 687 2528 419 882 516 712 708 194 136 89 289 714 226 131 78 279 714 213 669 258 137 99 175 782 741 295 122 115 208 710 288 122 102 198 687 257 107 94 229 704 877 416 137 123 201 924 447 118 123 236 738 278 125 128 208 12 6 5 1406 582 458 499 333 621 Other areas, total Chemicals 164 120 Machinery Transportation equipment 118 Other manufacturing 219 648 114 127 142 264 804 191 137 126 350 Note. - Detail may 1. A - Estimated B - Estimated C - Estimated P - Estimated E - Actual — Source: U.S. 606 618 19 6 9 A 4793 1161 1057 1119 1456 2341 437 664 775 465 321 __________ 19 6 7 _________________ ________ I 9 6 0 _______ A B C D E A B C 646 230 13 2 75 294 1150 982 1356 24 0 155 270 468 516 17 0 not add to totals because of rounding. in June of previous year in December o f previous year in June of current year in December of current year Reported in June of following year Department of Commerce, Office of Business Economics 30 5 13 2 111 234 250 439 755 417 13 8 78 88 180 7 10 10 5 3 17 129 91 167 906 1475 6 36
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