Business World

Thursday 27 October 2016

China's factories rising in the old industrial base of United States

Andrew Mayeda

Published 12/09/2016 | 02:30

Cho Takwong, chairman and chief executive of Fuyao Glass. Photo: Bloomberg
Cho Takwong, chairman and chief executive of Fuyao Glass. Photo: Bloomberg

For six years, the General Motors factory that used to make Chevy Trailblazers in Moraine, Ohio, sat abandoned, a rusting monument to the decline of the American car industry.

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These days, the plant is humming again, fuelled by a resurgent US consumer. But now it's under Chinese management. On the shop floor, Chinese supervisors in sky-blue uniforms that carry the logo of the new owners, Fuyao Glass, teach American employees how to assemble windshields.

Drive along Interstate 75, through America's industrial heartland, and you'll find no shortage of Chinese-owned firms like Fuyao.

They're setting up shop in states such as Ohio and Michigan, key voter battlegrounds in November, where traditional manufacturing has been hollowed out, in many cases, by trade. Trade with China.

It's those losses that shape election headlines. Republican candidate Donald Trump excoriates China as an unfair trading partner, and blames a whole class of American politicians - including his Democratic rival Hillary Clinton - for selling out US workers to Beijing. It's an aggressively America-first brand of capitalism. Clinton's whole career suggests she's more comfortable with globalisation, though lately she's been drawn into the China-bashing and trade-scepticism too.

But away from the sound and fury of the national campaign, state and municipal governments of both stripes have welcomed Chinese firms with open arms.

When it took over the GM plant, Fuyao got a $9.7m tax credit from the Republican-run state of Ohio, which also kicked in a $1m grant for road work.

"This is an example of international capital choosing to locate here in Dayton, Ohio," said Republican Congressman Michael Turner, who represents Moraine, about a 10-minute drive southwest of Dayton.

"And that international capital happens to be Chinese."


And there happens to be a lot of it about. This year has seen $75bn of Chinese acquisitions across the US, more than double the previous record - ranging from luxury hotels to aluminium-foil makers.

Since 2008, Chinese companies have invested $4.1bn in Ohio and Michigan alone.

Fuyao acquired roughly half the old GM plant in 2014, spending $450m to buy and remodel it. For a company that started out as a small producer of covers for water-meters and is now the world's second-biggest auto-glass supplier, the acquisition capped a decade-long push into US markets.

For the Dayton area, it meant employment: the city, hometown of the Wright brothers, was hit hard by the shutdown of the GM plant two days before Christmas in 2008. The following year another big local name, NCR Corp, announced it was moving to Atlanta after pioneering the cash-register during more than a century based in Dayton.

The company aims to be the world's biggest auto-glass plant, with capacity to equip four million cars a year, double the current level. That will require a workforce of 2,500 people, up from 1,700 now.

That current staff includes as many as 200 Chinese nationals sent over to train their US co-workers.

At lunch, a local restaurant delivers deep-fried prawns and chicken's feet for the Chinese employees.

Near the plant's entrance, construction is underway on a Chinese restaurant. It'll mostly cater to employees - but will also open its doors to the people of Moraine.

It's a cosmopolitan scene. Although some approve of the move as it secures jobs, not everyone in America's factory belt has come to terms with that kind of change.

Up Interstate 75 in Saginaw, Cheryl Badger is a 62-year-old nurse who used to work at GM.

"I take issue any time an American business is sold to foreigners," she said.

"It bugs me. But ain't nothing I can do about it." (Bloomberg)

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