US continues strategic investments in Romania

US companies remained active investors in Romania last year, with players in the IT, automotive and oil & gas sectors making strides to strengthen their local operations, taking the country’s total foreign direct investments (FDI) to over USD 1 billion.

By Ovidiu Posirca

US-based Lufkin Industries, the oilfield equipment maker, is the latest in a series of companies that have decided to establish or develop their local operations. The equipment maker inaugurated a USD 140 million plant in the city of Ploiesti, which was the biggest investment in the company’s history. The government provided EUR 28 million in state aid in an effort to help the firm build a larger facility and create more jobs.

Transferring state-of-the-art technology to Romania

Romania’s relationship with the US has expanded from the military and security fields, into technology exchange, education and the environment, said President Traian Basescu during Lufkin’s inauguration event. He said the latest investments were made under the aegis of the Joint Declaration of Strategic Partnership for the 21st century between the US and Romania, which was sealed in the autumn of 2011.

“The Strategic Partnership with Romania is more extensive than we are used to understanding it to be and I consider it one of Romania’s political successes, first of all because many states would like to have partnerships with the US, but only a few have such partnerships, which also include the transfer of technology,” said President Basescu.

American carmaker Ford started to manufacture its B-max model in Craiova last year but production was severely impacted by weak European demand. The company made 30,217 vehicles last year, representing around 30 percent of the initial estimated output, according to media reports. The Craiova plant, which also hosts production lines for engines, became operational in June.

US software producer Oracle is set to invest another EUR 100 million in Romania, said Dan Sova, the delegate minister for large infrastructure projects and foreign investments, in May.

In the energy sector, oil and gas company ExxonMobil has continued exploration activities in the Black Sea along with Austria’s OMV Petrom. The companies spend around EUR 1 million per day in Romania’s offshore area, where they are searching for oil and gas deposits. Meanwhile, Chevron has been granted the right to start drilling for shale gas in the country.

In the military field, Romania will host elements of the US missile defense project in the Deveselu base, southern Romania. Building works started in spring and the first stage of the project is due to become operational in 2015. It should reach full capacity by 2018. In addition, the government has passed a draft bill for the acquisition of 12 old F-16 fighters from Portugal and the US. The fighters were made by Lockheed Martin, a US military and engineering company. Romania will operate the newly purchased fighters from 2017, when the current fleet of MIG 21 Lancers will be grounded.

Manuel Donescu, state secretary at the Ministry of Economy, last week met Eric Stewart, the president of the American-Romanian Business Council (AMRO), and L.F. Paine, president of McGuire Woods Consulting, in Washington. They were joined by companies and associations keen to increase their presence in Romania.

The food industry, automotive, IT&C, energy and environmental protection have been highly regarded sectors by US investors. The development of industrial clusters in IT and aeronautics was mentioned as an additional means to increase the local presence of American companies.

ovidiu.posirca@business-review.ro

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