County Analysis

Foreign Firms Add Opportunities for Development and Innovation across New Hampshire

Location is a key consideration for domestic and foreign companies and their growth. The present report investigates location choices of foreign firms in New Hampshire. A special feature of the analysis is the mapping of activities across counties. The study identifies where production takes place and where service providers and distributors are located. In addition, foreign firms’ representation across sectors[i] and industries in each county is also recognized.

The number of foreign firms across counties identifies clustering in Hillsborough and Rockingham. Merrimack has the third significant number, although the difference in the presence of foreign subsidiaries is notable. The fewest foreign firms are in Coos and Sullivan counties.

The top 5 sectors by presence of foreign firms in New Hampshire and the numbers of foreign firms in each county are showed below. Notably, none of these sectors have foreign subsidiaries presence in all counties.

Top 5 Sectors Distribution of Foreign-owned Subsidiaries across Counties

Foreign firms make a significant positive impact to the New Hampshire counties’ employment and economies through their noteworthy presence in banking and financial services. The New England Council 2017 study[ii] concluded that “the financial services sector is one of our region’s strongest job-generating, growth-producing industries [..]. In no state does financial services account for less than 5 percent of that state’s jobs [..]. Additionally, a hallmark of financial services jobs in New England is that they are high-wage jobs, featuring an impressive array of benefits for the hundreds of thousands of individuals who make up the region’s workforce.”

Foreign banks have significant presence across counties, with subsidiaries from parent companies such as The Royal Bank of Scotland Group, the Canadian TD Bank Financial Group and Banco Santander of the Spanish Santander Group. In a WMUR interview[iii] last year, New Hampshire Banking Commissioner Jerry Little noted that there are fewer banks in the state than there were a few decades ago. He stated that the driving trends in the sector are consolidation and financial technology as computer power is applied to the delivery of financial products and services. The Commissioner observed that there are a lot of services that are competitively priced and good for the economy and the consumers. Building on these aspects, it can be inferred that the presence of foreign banks and other financial organizations adds to the numbers in the sector and provides global interconnectivity and access to technology. Thus, the strong presence of foreign banks in our state brings meaningful contributions across most counties.

The second represented sector in terms of foreign firms’ presence is computer, electronic, electrical and communications equipment and instruments. Like in most sectors, foreign subsidiaries in this sector are concentrated in Hillsborough and Rockingham counties. The sector produces new innovations and developments in telecommunications, robotics, computing hardware, and power and electrical equipment. It also encourages education and training in a mix of science, information technology and mathematics disciplines. The sector entails and supports scientific research and advanced manufacturing. Thus, the positive impact of foreign firms’ presence in this sector is undeniable. Half of the New Hampshire counties benefit from foreign firms operating in the field of computer, electronic, electrical and communications equipment and instruments.

The mapping of foreign firms across counties and main value chain activities indicates opportunities for increasing presence in counties in central and northern New Hampshire.

Distribution of Foreign-owned Subsidiaries by County and Main Value Chain Activity

The analysis reported here shows the predominance of foreign service providers, followed by distributors and producers. Retail trade or wholesale trade are represented in the top 5 industries where foreign firms operate in each of the 10 New Hampshire counties. In half of the counties, the merchant wholesalers of durable goods rank high as relative number of foreign subsidiaries. Foreign distributors enhance market coverage and may inspire expansion of other foreign firms. Improving distribution from foreign subsidiaries may encourage other foreign companies to invest in our state.

As noted earlier, foreign firms presence in most counties is mainly in banking and financial services. Hillsborough and Rockingham counties have foreign subsidiaries in a variety of industries. In these counties, the computer, electronic, electrical and communications equipment and instruments follows the banking and financial services sector in foreign firms’ representation.  The same distribution can be seen in Merrimack, although the number of firms and the number of industries where they operate are lower.

Banking and financial services also have the highest representation of foreign subsidiaries in Belknap and Carroll counties, followed by textiles, clothing, footwear and accessories. The foreign firms’ representation is lower in these counties. The other sectors have only 1-2 foreign firms. The food and hospitality sectors are represented in both of these counties.

Grafton county foreign firms are again mostly in the banking and financial services sector, followed by equal representations in the second ranking sectors. Relative to total number of foreign firms in this county, machinery and construction are sectors that rank higher for subsidiaries representation, comparative to how they rank in other counties.

The distribution of foreign firms in the rest of New Hampshire counties is less rich and was hence not illustrated visually. A ranking by numbers of foreign firms in Strafford has the banking and financial services sector at the top, followed with equal low numbers each by hospitality; computer and electronic equipment sector; rubber, plastics and glass; and construction sectors. Only one firm operates in each of the third represented sectors of medical, parts, pharma, textiles, food and other retail. In Cheshire County, 11 sectors have only one foreign subsidiary operating in each, while the banking and financial services sector has eight foreign firms. The 11 sectors are: petroleum; pharma; rubber, plastics and glass; metal; machinery, equipment and tools; computer, electronic, electrical and communications equipment and instruments; medical; professional services; hospitality; other retail and other services.  In Coos County, only two foreign subsidiaries operate in each banking and financial services sector and the gas distribution sector. Only one foreign firm is present in each sector in construction, pharma and in other retail and other manufacturing. This is indicative of very weak representation of foreign firms in the northern New Hampshire. In Sullivan, the 6 foreign subsidiaries are distributed across professional services, parts, metal, construction and other manufacturing and other retail sectors.

From another perspective, foreign subsidiaries operate across many industries in New Hampshire. Hillsborough County has a relatively strong number of foreign manufacturers, almost the same as the number of foreign retailers and the number of foreign firms in finance and insurance. The more detailed industry representation[iv] identifies the variety of industries[v] in which foreign subsidiaries operate in this county. The Royal Bank of Scotland has a sizeable presence in Hillsborough County. BAE Systems PLC is a large employer in the county. Osram Licht AG, CRH PLC, Compagnie De Saint-Gobain SA and Velcro Industries NV also have a presence.

The variety of industries by foreign firms’ presence can be concluded for Rockingham County, although the industries are less varied than in Hillsborough County. Foreign firms have strong representation in retail trade. Firms like Ahold NV and Deutsche Telekom AG have relative good coverage in retail in Rockingham County. A number of stores from multinational retailers add to the presence of foreign firms in retail trade. Lonza Group LTD., Chocoladefabriken Lindt & Spruengli AG, Groupe Danone, High Liner Foods Inc., and Hutchinson SA are foreign manufacturers in this county.

Aside from firms in finance and insurance, Merrimack County benefits from the presence of foreign retailers, as well as, to a lesser extent, wholesalers and manufacturers. Most foreign subsidiaries in this county are in credit intermediation and securities (the large multinational banks are represented in this county). Firms in securities brokerage (UBS AG) and portfolio management – insurance / retirement (Great-West Lifeco Inc.) are also present. The retail is mainly represented by stores, including clothing and food stores, such as Ahold NV. The foreign manufacturers in this county have a somewhat diverse object of activity.  Freudenberg & Co. LLP has a presence in Merrimack County.

As in Merrimack, Grafton County has a somewhat similar distribution of foreign firms across the top represented industries. Professional, scientific and technical services are a relatively well represented industry. The types of stores are to some degree different from those in Merrimack. Foreign manufacturers operate in a variety of industry segments. Freudenberg & Co. LLP is an important manufacturer. Fujifilm and CRH PLC also have a presence in this county.

The presence of foreign subsidiaries in Belknap County follows a similar top 3 main industry ranking by numbers as in Grafton, Hillsborough and Carroll counties. At a more detailed industry level, a variety of service providers and retailers operate in Belknap and Carroll counties. Freudenberg & Co. LLP and Minebea Co. LTD. are significant manufacturers in Belknap County. NEFAB AB and CRH PLC are in Carroll County.

Foreign firms in Cheshire are mainly in finance, followed by manufacturing. Some foreign retailers operate in this county. Foreign firms are also present in services. HCP Packaging (Shanghai) Co. is present in this county.

Strafford County benefits from a relatively higher representation of foreign manufacturers, when industries are compiled at a more general level. Shanghai Electric Printing And Packaging Machinery Group has a presence in Strafford County, as well as Contitech AG, CRH PLC and Velcro Industries. When detail is added to the industry analysis, credit intermediation is the industry of preference for foreign firms, trailed by accommodation, durable good wholesalers and manufacturing of plastics and petroleum products.

Foreign firms in Sullivan County are mainly manufacturers. The sample shows one manufacturer in each of the industries of transportation equipment, fabricated metal, petroleum and wood manufacturing. GKN Aerospace is present in this county. Danzer AG has a subsidiary in Sullivan County.  Manufacturing is also the general industry of most foreign firms in Coos County, with companies in miscellaneous, chemical and petroleum manufacturing. Credit intermediation and utilities are also represented. Trividia Health, Godin Guitars and CRH PLC have presence in this county.

Endnotes

[i] Sectors were created by authors.

[ii] “The New England Financial Services Industry: Around the Corner and Around the World”, available at http://newenglandcouncil.com/assets/NEC-Financial-Services-Report-Jan-2….

[iii] Future of banking in New Hampshire, Aug 13, 2017, available at http://www.wmur.com/article/future-of-banking-in-new-hampshire/12004286.

[iv] For readability, actual number of foreign firms have not been included in the 3-digit NAICS code industry charts. These charts are only designed to illustrate variety and representation of industries.

[v] “Electrical equipment, appliance and component…” represents “Electrical equipment, appliance and component manufacturing”; “Securities, commodities contracts, and other financial…” represents “Securities, commodities contracts, and other financial investments and related activities”.