Foreign Direct Investment and the Front Range

I read with great interest a Denver Business Journal article of April 4, 2019, entitled “The pitch heard ’round the world: Colorado and Denver have big plans to compete in the global marketplace.”

I lived for over 25-years in eight countries around the world, working for the world’s largest logistics company, airports, and for governments focusing on international trade and foreign direct investment.

Denver, the Front Range, and the entire state of Colorado are under study by foreign and domestic manufacturers, their 3rd party service providers, and real estate investors as companies adjust their investment portfolios to optimize performance and costs.

Real estate investment in the US has for years focused on gateway cities. Those cities today are becoming too expensive and are not generating the returns that investors require. As a result, cities like the Denver Metro area is attracting those investors and others that are cheaper than US gateway cities in terms of real estate and taxes. The Denver area also has the benefits cited in almost every economic development article written: the natural beauty, the outdoor activities, the highly educated workforce, the low unemployment rate (an indicator of robust economic activity), and the airport (DEN) and its connectivity to many cities in the US and growing list of international destinations.

The greatest contributor to the state’s economic activity is DEN. There is no doubt about it. The primary economic clusters in the Front Range benefit as their businesses are dependent upon fast, predictable multimodal connectivity.

The state of Colorado Office of Economic Development & International Trade (OEDIT) has a list of these clusters and declares that its role is to attract Foreign Direct Investment (FDI) from these clusters and to help expand their success and, thus, their presence in the state.

Harvard’s Michael Porter established the Institute for Strategy and Competitiveness (https://www.isc.hbs.edu/about-michael-porter/affiliated-organizations-institutions/Pages/us-cluster-mapping-project.aspx). The institute researches and publishes scholarly studies on why industries develop competitive advantages and how communities can use this information to differentiate themselves from others in attracting that FDI.

Many of the clusters that the institute tracks are here in Colorado and many of them are the priorities of OEDIT and the ones highlighted are also large users of air transportation for passengers and cargo:

Cluster Name 2016 Employment
Business Services 189500
Distribution and Electronic Commerce 85048
Hospitality and Tourism 77775
Financial Services 40930
Education and Knowledge Creation 35662
Transportation and Logistics 29170
Marketing, Design, and Publishing 22115
Insurance Services 21585
Information Technology and Analytical Instruments 19603
Food Processing and Manufacturing 17358
Oil and Gas Production and Transportation 16114
Construction Products and Services 15433
Production Technology and Heavy Machinery 8736
Aerospace Vehicles and Defense 8412
Performing Arts 7974
Livestock Processing 7639
Communications Equipment and Services 6746
Printing Services 5873
Downstream Metal Products 4998
Medical Devices 4604
Plastics 4546
Wood Products 3708
Automotive 3528
Biopharmaceuticals 3301
Total 640,358

Porter says that existing clusters should be the focus of economic development and not the attraction of new clusters (cybersecurity, fintech-as cited in the article). Their reasoning (simplified mightily) is that the community already has an established base that has attracted these industries and efforts to attract the emerging industries will be frustrated because other communities have a head start.

What do we have in the Front Range in terms of economic development activity? Take Denver, as an example:

  • Metro Denver Economic Development Corporation
  • Denver Office of Economic Development
  • Denver Metro Chamber of Commerce
  • Denver Regional Council of Governments) (DRCOG)
  • OEDIT
  • World Trade Center Denver

Then add in the same types of organizations for the communities of Aurora, Adams County, Longmont, Centennial, Boulder, Commerce City, Brighton, Louisville, and what do you have? Confusion in the minds of potential investors. All of these communities have similar organizations pursuing the same objective: attract investment, much of it FDI.

Is there a more efficient way to attract investment?

Instead of sending trade missions to the UK, the Netherlands, Belgium, Spain, German, Sweden, Mexico, and China, why not put all of these groups in a room for a week and develop a comprehensive plan for the entire Front Range to attract investment?

As part of that plan, the group should perform personal interviews with the top management teams of the companies in the Front Range’s existing clusters and ask them what they need from the community to invest more and to expand. Is it more engineers, or talented labor? Is it tax relief? Is it real estate sites developed for the expansion of their supply chains? Is it help in attracting their tier one or tier two suppliers to the Front Range?

Metro Denver, the Denver Chamber, OEDIT, DRGOC and DEN all claim to be the one who brought in the tech companies, the aerospace companies, or the bioscience companies. The reality is that the Front Range brought in those companies. Those companies were already looking at the Metro Area and many others as a possible investment site because of the cost pressures at existing locations before being contacted by these groups.

It is clear that the investment by foreign companies positively impacted our economy. So did the investment by new domestic companies that moved here. What is the total FDI investment?

From 2009 through 2018, 177 international companies from 34 countries invested in Colorado and completed 195 projects, created 7,215 jobs, and invested $2.1 billion in capital, according to information provided by OEDIT.[1]


With all of these organizations doing basically the same thing, is there money being wasted? Of course, there is. Some of these initiatives approach the absurd.

Denver’s City2City initiative (“Opening frontiers for Startups: Co-working spaces Accelerators, Key Partners, Soft landing”) looks like a copy of the American Chamber of Commerce’s initiatives in every country where I have lived and worked. Go to the websites of the American Chamber of Commerce in São Paulo, or London, or Shanghai, or Moscow and you will find the same services. In Denver, foreign companies with interest here find the same services offered by the World Trade Center, banks, and law firms.

The City2City agreement signed with Brest, France, a small, third tier port on the western edge of France is a mystery. What does it have in common with Denver? Certainly, it is a beautiful, scenic, even idyllic site, but its maritime economy is about as far away from Denver’s as possible.

At a recent Colorado Real Estate Journal-sponsored seminar on commercial real estate in the Front Range, Darryl Jones, Chief Real Estate Officer of DEN, when asked, said that the planning coordination function for the region is Denver Regional Council of Governments (DRCOG). J. J. Ament, CEO of Metro Denver Economic Development Corporation, said that function is with them.

In my experience in working to attract FDI to Dubai and Moscow, one of the primary decision factors is clarity. Clarity about who is in charge, what are the rules, how are infrastructure decisions made, etc.

The area around DEN has open, undeveloped land that is an ideal location for the expansion of bioscience, aerospace, high technology, electronics, and other clusters. Longmont’s Northern Colorado Regional Airport has land that could be developed in the same way. The Colorado Air and Space Port will, no doubt, attract FDI in the space launch business and perhaps in the more mundane sub-segments of aerospace.

When the Colorado Department of Transportation prepared the Colorado Aerotropolis Visioning Study, it included representatives from these communities in its planning efforts, participation in seminars, and review of the report. The report was a significant beginning. That product gave great hope to many in the community that the various organizations mentioned above could work together and benefit the Metro Area, the Front Range, and the entire state of Colorado in optimizing the aerotropolis development strategy. However, that hope was never realized as the implementation of the recommendations in that report were never finished.

I am realistic in my expectations. I understand the political difficulties of planning for a comprehensive approach to optimize the Denver Aerotropolis opportunity. Perhaps there will emerge dynamic leadership that drives a comprehensive aerotropolis planning strategy.

Let’s hope so.

[1] https://www.bizjournals.com/denver/news/2019/04/04/colorado-denver-global-marketplace.html?ana=e_den_bn_newsalert&mkt_tok=eyJpIjoiTWpaa05UQTJPVGN6T1RWaCIsInQiOiI0TlVMT3JoeUh3YlFlOEN4cnBnOTMzMnhKQ1BKVkNQK2NOXC9vNGliV2czMEhHTklTcjBBS3F5NGYrdjJsK2FGWlFZc2g3RXhHcmI4ZGZUVno5RGZlWmZiaGhad1FNanphSlpVaCtvM29LNmxuWldyaDRjYXRSTFZtQmhOV0FcLzdTIn0%3D

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