日志
Ni hao, US hinterlands woo Chinese firms & A Clash of Cultures at Alabama Fa
|
Chinese Manufacturers Struggle with US Operations, as Culture Clashes often Ensue
PINE HILL, Ala. — Burdened with Alabama’s highest unemployment rate, long abandoned by textile mills and furniture plants, Wilcox County desperately needs jobs.
They’re coming, and from a most unlikely place: Henan Province, China, 7,600 miles away.
Henan’s Golden Dragon Precise Copper Tube Group opened a plant here last month. It will employ more than 300 in a county known less for job opportunities than for lakes filled with bass, pine forests rich with wild turkey and boar and muddy roads best negotiated in four-wheel-drive trucks.
“Jobs that pay $15 an hour are few and far between,” says Dottie Gaston, an official in nearby Thomasville.
What’s happening in Pine Hill is starting to happen across America.
After decades of siphoning jobs from the United States, China is creating some. Chinese companies invested a record $14 billion in the United States last year, according to the Rhodium Group research firm. Collectively, they employ more than 70,000 Americans, up from virtually none a decade ago.
Powerful forces — narrowing wage gaps, tumbling U.S. energy prices, the vagaries of currency markets — are pulling Chinese companies across the Pacific. Mayors and economic development officials have lined up to welcome Chinese investors. Southern states, touting low labor and land costs, have been especially aggressive.
In the case of the Pine Hill plant, tax breaks, some Southern hospitality and a tray of homemade banana pudding helped, too.
“Get off the plane and the mayor is waiting for you,” says Hong Kong billionaire Ronnie Chan.
In March, Dothan, Alabama, held a two-day U.S.-China manufacturing symposium, drawing dozens of potential Chinese investors. On sale were T-shirts reading: “Ni hao, y’all” — combining the Chinese version of “hello” with a colloquial Southernism.
Chinese executives wandered around during a street festival, experiencing Americana by snapping photos of vintage ’60s muscle cars. A Chinese company, in a deal negotiated before the symposium, announced it would bring a 3D printing operation to Dothan.
Among other Chinese projects in the United States that are creating jobs:
— In Moraine, Ohio, Chinese glassmaker Fuyao Glass Industry Group Co. is taking over a plant that General Motors abandoned in 2008 and creating at least 800 jobs. The site puts Fuyao within four hours’ drive of auto plants in Ohio, Kentucky and Indiana.
— In Lancaster County, South Carolina, Chinese textile manufacturer Keer Group is investing $218 million in a plant to make industrial yarn and will employ 500. South Carolina nudged the deal along with a $4 million grant.
— In Gregory, Texas, Tianjin Pipe is investing over $1 billion in a factory that makes pipes for oil and gas drillers. The company expects to begin production late this year or early in 2015. It will have 50 to 70 employees by the end of this year and 400 to 500 by the end of 2017.
The United States and China have long maintained a lop-sided relationship: China makes things. America buys them. The U.S. trade deficit in goods with China last year hit a record $318 billion. And for three decades, numerous U.S. manufacturers have moved operations to China.
The flow is at least starting to move the other way. One reason is that in the past decade, the cost of labor, adjusted for productivity gains, has surged 187 percent at Chinese factories, compared with just 27 percent in the United States, according to Boston Consulting Group.
In addition, Chinese electricity costs rose 66 percent, more than twice the United States’ increase. The start of large-scale U.S. shale gas production has helped contain U.S. electricity costs.
And the value of China’s currency has risen more than 30 percent against the U.S. dollar over the past decade. The higher yuan has raised the cost of Chinese goods sold abroad and, conversely, made U.S. goods more affordable in China.
Those rising costs have cut China’s competitive edge. In 2004, manufacturing cost 14 percent less in China than in the United States; that advantage has narrowed to 5 percent. If the trend toward higher wages, energy costs and a higher currency continues, Boston Consulting predicts, U.S. manufacturing will be less expensive than China’s by 2018.
Cost isn’t the only allure. As Chinese companies build more sophisticated products, they want to work more directly with U.S. customers.
“Being close to the marketplace is good for everybody,” says Loretta Lee, a Hong Kong entrepreneur who just opened a shoe factory in Tennessee.
Sometimes, political pressure nudges Chinese firms into investing in America. Tianjin Pipe, for instance, began building its Texas plant after the U.S. imposed sanctions against Chinese-made pipes in 2010, notes Thilo Hanemann, Rhodium’s research director.
Local officials here in southwestern Alabama went out of their way to lure Golden Dragon, which wanted to build a plant to make copper tubing for air conditioners.
At first, the company considered Thomasville, just across the border in Clarke County. But Thomasville didn’t have any suitable sites after Golden Dragon decided it needed three times as much space as originally sought.
“I was almost in a panic,” recalls Thomasville Mayor Sheldon Day.
But Day spotted an industrial park in Wilcox County with plenty of space. Day says he didn’t mind the project going to a neighboring county. The plant would employ Thomasville residents, too.
And there was another benefit: Wilcox County — stuck with 15.5 percent unemployment, Alabama’s highest — qualified for extra aid. It landed $8 million in state and federal grants to help build an annex road and sewage lines for the project.
Wilcox County also gave the company 100 acres of a 274-acre industrial park it bought for $1.2 million and a break on local property taxes. And Alabama offered to reimburse the company up to $20 million of its costs for building the $100 million factory. It will get the full amount if it ends up hiring 500 people, says George Alford of the Wilcox County Industrial Development Authority.
Local officials assembled all the public agencies and utilities Golden Dragon will have to deal with — from Alabama Power to the Port of Mobile — in one room on one day so company executives could have their questions answered at once.
The message, Day said, was: “If you come here, we’ll hold your hand.”
A banquet was organized with both traditional Southern fare, such as pinkeye purple hull peas, and Chinese dishes from Thomasville’s New China Buffet restaurant.
When the visiting Chinese were seen devouring homemade banana pudding, “we took them the whole tray,” Day says.
To prepare for future banquets, Thomasville is buying Chinese-style dining tables with built-in turntables.
Still, culture and language can remain a barrier. Local officials hastily replaced a black-and-white banner welcoming Golden Dragon after learning that the colors signified a funeral to the Chinese.
“Nobody wants a faux pas,” says John Clyde Riggs, executive director of a regional planning commission.
Golden Dragon and the future Dothan 3D join two other Chinese firms in Alabama: Continental Motors in Mobile makes piston engines for aircraft. And Shandong Swan USA in Montgomery makes saws for cotton gins.
Alabama and other Southern states have followed the example of South Carolina, which nabbed the first Chinese plant in America 14 years ago when appliance giant Haier built a refrigerator plant in Camden.
John Ling, who runs South Carolina’s Shanghai office, has an empty factory he’s pitching to Chinese firms. It’s been shuttered for four years — since the former owners closed it and moved the jobs to China.
“We will see more and more Chinese projects coming,” Ling says. “It’s at the very beginning.”
Supply Chain News: Chinese Manufacturers Struggle with US Operations, as Culture Clashes often Ensue
While Japanese Lean Translated Well, Top-Down, Low Cost Labor Mindset of Chinese Firms does Not, Well-Known Writer Says
SCDigest Editorial Staff http://www.scdigest.com/ontarget/16-01-26-1.php?cid=10190 It's still relatively small in absolute terms, but the level of investment by Chinese companies in new or existing US manufacturing operations continue to grow - but a new report says labor issues continue to plague many of these operations. The growing Chinese manufacturing presence in the US was highlighted two weeks ago, when it was announced that China's Haier would acquire the appliance business from GE - and thus its sprawling manufacturing operations centered around Louisville, KY - for about $5.4 billion.
Haier had previously opened its own factory in South Carolina, but has struggled to gain much traction in the US. There have been a few other recent noteworthy Chinese manufacturing investments in the country, such as in 2014, when Fuyao Glass Industry Group acquired part of the well-known GM assembly plant in Moraine, OH, shuttered in 2008 and made famous as the focus of the documentary film "The Last Truck: Closing of a GM Plant." The new Fuyao factory began producing car windshields in late 2015, and will employ nearly 1000 workers when it ramps up to full production later this year. Chinese direct foreign investment in the US is rising, though how much is specifically for manufacturing (greenfield or acquired sites) is hard to discern from the data. While overall Chinese DFI in the US rose from $11.9 billion in 2014 to $14.7 billion last year, that was spread across multiple areas, from banking and other service firms to commercial real estate, farming and other areas, in addition to manufacturing. That data is from the Rhodium Group, which tracks these investments. But manufacturing is a significant part of the total, appearing to involve about $3.5 billion in investment by Chinese firms in the US in 2015. Rhodium notes that "The deal pipeline is at an all-time high at the beginning of 2016. We count more than $22 billion worth of pending acquisitions, " which it says are focused on focused on communications and other tech manufacturers (e.g., Omnivision, Western Digital), and electronics (e.g., Philips' LED unit), in addition to the GE Appliances deal. Rhodium further reports that potential future capital expenditures related to announced greenfield projects add up to more than $10 billion, including a new Shandong Sun Paper pulp plant in Arkansas ($1.36 billion), Faraday Future's $1 billion investment in an electric vehicle plant in Nevada, and a dairy plant in California by Feihe Dairy. Can the Chinese Make US Plants Work? Unlike the wave of Japanese factories in the US that started showing up in the 1980s, and introduced Lean processes that led to success not only in their own plants but eventually in thousands of other US factories over time, the Chinese have largely struggled to get things right in their new US operations, according to a recent article by well-known business writer Jeffrey Rothfeder in the New Yorker magazine. "Today, no Western manufacturer can hope to compete on a global stage without adopting some version of Lean production - an undertaking that remains difficult for many firms, because it can require altering not just assembly processes but a company's culture, especially where worker roles, management, and methods of innovation are concerned," Rothfeder writes. But it is in these human resources areas that Chinese manufacturers are weakest, Rothfeder says. "The country's factory boom was made possible, instead, by low wages, subpar conditions, and few benefits," Rothfeder adds. "That strategy can succeed in emerging nations, especially ones with large labor pools, but it is not feasible in developed economies." | ||||||||
The problems of Chinese factories are most apparent in the relationship between managers and employees, Rothfeder notes. He says Chinese firms embrace a strict top-down view of a factory as a place where the authority of supervisors is paramount, and workers are expected to take directions, perform tasks, do their work, and go home without complaining. There have been many reports Chinese employers in the U.S complaining that American workers are too outspoken and independent and are unable to follow rules. But US workers are often pushing back. At Haier's factory in South Carolina, for example, Chinese managers had to be sent back to Asia because they were alienating workers and threatening productivity. At the Chinese-owned Golden Dragon copper-tube factory in Wilcox County, Alabama, workers last year voted to form a union - rare in this and other Southern right to work states - amidst complaints of low pay and poor working conditions at the plant. "The perception that employees are interchangeable and replaceable has led turnover at factories in China to average an astounding 35% a year among workers employed at least six months," Rothfeder quotes one Chinese consultant as telling him. But Chinese companies are seeing the same kind of turnover in their US plants - a death sentence in the here, where employee skills, loyalty, continuity, job satisfaction and creativityâ€â€in other words, Lean requirements - determine profitability." Rothfeder says another factor is that many of these Chinese companies are state-owned, and feel less pressure to be profitable then privately held Chinese firms, often under bidding US rivals to gain a foothold here. But will they be around for the long term? Rothfeder concludes with a warning to governments across the US to be circumspect about offering sweetheart deals to Chinese companies considering making investments in their regions. "If the manufacturers turn out to be nothing more than low-paying loss leaders, cities may find that they've given away more than they receive in return," he notes. Are you surprised with the struggles Chinese companies are having with US workers? Will they get it sorted out in the end? Let us know your thoughts at the Feedback section below. |
By
on June 03, 2012 at 7:15 PM, updated June 03, 2012 at 8:01 PM
http://blog.al.com/live/2012/06/thomasville_mayor_shows_off_go.html
THOMASVILLE, Alabama -- Mayor Sheldon Day exudes the same enthusiasm about economic development whether he’s talking to a recruitment target or, as was the case this afternoon, to a Japanese news crew.
Representatives from the Japan Broadcasting Corp. came to see the 274-acre property in neighboring Wilcox County that soon will become home to the giant Golden Dragon Precise Copper Tube Group plant. It is one of 7 projects that will bring some $300 million in investments to the greater Thomasville area over a 3-year period.
Yuichiro Hanazawa, chief correspondent in Japan Broadcasting Corp.’s Washington bureau, wanted to know how Thomasville landed the project and how it might change local perceptions to China, where the manufacturing company is based.
Day said state tax incentives, proximity to a rail line and access to the Port of Mobile each played a role in beating out 61 other communities that bid on the project.
But most importantly, he said, is improved cooperation among neighboring cities and counties that used to compete with one another, and a realization that rural Alabama could not beat out large metro areas on their terms. In so doing, he said, Thomasville and the surrounding areas have tried to turn a perceived weakness into a positive.
“We like to think there’s a new economic development theme that is starting to emerge,” he said. “Many, many companies would prefer to locate in a rural area because of the wholesomeness of a rural area. You don’t get the traffic jams....
“We thought for years, we had to keep up with the Mobiles and the Birminghams and the Huntsvilles,” he added. “We thought we had to do economic development their way.”
Secret weapon: banana pudding
View full sizeJapanese reporter Yuichiro Hanazawa asks Thomasville Mayor Sheldon Day on Sunday, June 3, 2012, about how the area landed a Chinese copper plant. Japanese cameraman Torao "Tiger" Kono films the interview for the Japan Broadcasting Corp. (Press Register/Brendan Kirby)Day talked about setting up a reception for the Golden Dragon announcement. He said officials contacted a local Chinese restaurant, which prepared traditional Chinese fare alongside Southern comfort food.
The Golden Dragon executives especially loved the banana pudding, Day said.
“We say banana pudding is our secret weapon,” he said. “Most big cities won’t serve banana pudding.”
Hanazawa asked the mayor about American attitudes toward China, saying he was particularly struck by the negative tone toward the country from the Republican presidential candidates.
“I feel more than ever that business partnerships can bridge the gap and bridge the differences of our governments,” Day responded.
Hanazawa said in an interview that he felt the energy and enthusiasm of the local officials he talked to.
“Now is a very good time for China to invest,” he said. “This is a good thing for China and the local area.... This is very similar to what Japan did (in America) 20 to 30 years ago.”
The area certainly could use the jobs. Unemployment in Wilcox County, 15.1 percent, is the state’s highest. Clarke County, where Thomasville is, also is above the state average.
Fighting Alabama’s highest unemployment rate
Tree-clearing work already has begun on the Wilcox County site. Golden Dragon will take ownership of about 140 acres within the next 30 days, and construction should take 18 months to 2 years. Day said he anticipates about 1,000 temporary construction jobs and 300 to 500 permanent jobs at the precision copper plant.
View full sizeGeorge Alford Jr., of the Wilcox County Industrial Development Authorities, talks on Sunday, June 3, 2012, at the site of a future Golden Dragon Copper plant about what the project means to his county, which has Alabama's highest unemployment rate. (Press Register/Brendan Kirby)George Alford Jr., of the Wilcox County Industrial Development Authority, said the rest of the property hopefully will become the home to future businesses in what will be known as the Thomasville-West Wilcox Industrial Park.
Alford and Day said their communities have worked hard to forge an alliance in economic development. Although Thomasville has only about 4,200 residents, it is a regional retail hub, and Day counts a population of some 80,000 people who shop and eat in his city.
As a result, a big industrial project benefits Thomasville whether it is in the city limits or not, he said.
Originally, in fact, Golden Dragon had settled on a Thomasville site but then concluded it was too small to meet future expansion needs. As it happened, Day was meeting in his office with Alford the day he learned about Golden Dragon’s concerns.
Day said he walked back into his office, where he and Alford were talking about the Wilcox site as the possible location for a different project, and went back to the Golden Dragon representative with a conceptual drawing.
“Sheldon pulled a plat out of his pocket that we were meeting about and said, ‘How about this one?’” Alford said.
More Chinese investment to come?
Economic development officials said they foresee a possible avalanche of investment from China, and they are doing everything they can to court it.
Gov. Robert Bentley and other officials will meet with Hong Kong’s top official, Donald Tong, at a reception in Montgomery on Tuesday. The following day, officials leave for a 10-day mission to China and Taiwan in an effort to teach companies how to do business in Alabama.
Day said the local high school has installed a college-level welding program to prepare gradates to work for steel and metals manufacturers. He said he is working on a number of high-profile prospects, some of them even larger than Golden Dragon.
Monroe County officials want a piece of that action, as well. Pete Black, president of the Southeast Regional Development Center, said a Chinese-language instructor this fall will teach Mandarin at Monroe County High School and Monroeville Elementary School.
Black said he will join the group headed to China next week and hopes to further efforts to attract Chinese investment to Monroe County.
“It’s a work in progress,” he said. “We don’t have anything imminent.”
A Clash of Cultures at Alabama China's Factory
China’s Golden Dragon struggles to find common ground with workers
A union, which workers narrowly approved in 2014, is pressing for an increase in wages that currently start at $11 an hour. Employees have alleged some unsafe work practices, such as operating hazardous machinery without adequate safeguards, leading to $38,700 in fines from the U.S. Occupational Safety and Health Administration.
GD Copper officials said they have improved safety practices.
In an attempt to bridge cultural chasms, the company in 2014 hired KC Pang to head human resources and public affairs. A 61-year-old Malaysia-born Chinese, he emigrated to the U.S. 35 years ago and has worked as a university professor and executive for FedEx Corp.
Some workers say that U.S. citizens don’t have much authority at the plant. Golden Dragon relies on about 70 workers from China, brought in on visas and described as advisers, to help run the plant. The company houses the Chinese workers in 10 prefab dormitories and employs a Chinese chef to feed them.
GD Copper says the Chinese workers are here in part for training and translating. “Our goal is to slowly train the American workers to take over the management of the company,” said Mr. Pang.
GD Copper’s president is a Chinese citizen, as are at least two department heads. Phillip Sherrill, a veteran manager of other factories who headed production and maintenance for GD Copper, left in November after about 19 months. A Chinese citizen is now handling that job. GD Copper and Mr. Sherrill declined to comment on his departure.
Some of the banners hung inside the factory have a hectoring tone. One reads: “One Quality escape erases All the good you have done in the past.”
In the 1980s, many U.S. companies stumbled as they raced into China. Some chose incompatible local partners; others tried to sell products ill-adapted for China. Now Chinese companies are working out how to operate in the U.S.
Chinese companies’ spending on acquisitions and new facilities in the U.S. last year totaled a record $15.7 billion, up 32% from 2014, according to Rhodium Group, a research firm. It is an echo of Japan’s move into the U.S., but with Chinese characteristics.
Patrick Van den Bossche, a partner at consultants A.T. Kearney, said Japanese companies arrived with well-established procedures and taught Americans to conform. By contrast, he said, Chinese companies work more by trial and error, and are more open to learning from Americans.
State and local governments gave GD Copper incentives including free land, money for worker training tax benefits and a grant of $20 million to defray capital spending.
The Chinese company was then taken aback when workers, unhappy with the pay and difficulties in communicating with Chinese bosses, began a unionization drive a few months after the plant opened. The South generally has low union-membership rates, but the United Steelworkers union represents workers at paper mills near GD Copper’s site, and its workers aligned with that union.
Alabama Gov. Robert Bentley sent letters to workers urging them to reject the union, warning that it might scare other companies away. But in November 2014, workers approved the union in a 75-74 vote. GD Copper appealed to the National Labor Relations Board to demand a new vote, arguing that the union organizers had used scare tactics.
You give them respect. They appreciate that better than money.
By mid-2015, Golden Dragon dropped its appeal and agreed to negotiate with the Steelworkers. Daniel Flippo, a United Steelworkers official involved in the union drive, said he expects an agreement soon.
Mr. Pang has established a rapport with Mr. Flippo. The union official, who initially had trouble remembering Mr. Pang’s name, jokingly calls him P.F. Chang, after the restaurant chain.
GD Copper initially didn’t give managers and workers enough training in such areas as safety and understanding foreign cultures, Mr. Pang said.
Some American workers thought the Chinese trainers didn’t trust them. “We are independent people here, and the Chinese are so hands-on,” said an American who worked at the plant until early 2015.
Mr. Pang said that the trainers were trying to show workers how to do tasks but that communication wasn’t adequate. One problem is that some of the Chinese brought in as interpreters have limited command of English.
Mr. Pang won’t say whether Golden Dragon will agree to higher wages. “We look at all kinds of options,” including how to improve quality and productivity, he said, adding: “You give them respect. They appreciate that better than money.”
I can’t say I see much change.
Not all workers are mollified. “I can’t say I see much change,” said Tanya Pickens, a worker on the negotiating committee. She said American workers are punished more harshly for safety lapses than are Chinese and get shorter lunch breaks.
Mr. Pang said all salaried workers, not just Chinese, get one-hour lunch breaks, while hourly workers get 30 minutes. “All employees are treated equally and fairly,” he said.
Write to James R. Hagerty at bob.hagerty@wsj.com
