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World watches as Fuyao pursues historic U.S. investment in Dayton area

At a time when political stances on international trade range from skepticism to outright hostility, the eyes of the world are on the Dayton area and its fastest growing manufacturer, a Chinese-owned company that can’t seem to hire American workers fast enough to fill a reclaimed General Motors plant.

Fuyao Glass America has launched the world’s biggest automobile glass production plant in Moraine and has garnered worldwide acclaim that was not seen when its workers were churning out SUVs for the largest American automaker.

The collapse of the auto industry in Dayton and elsewhere idled plants that stretched for blocks and carried enough rust to fit an outsider’s description for an entire region of America.

Just last week, the Washington Post described the area along the Interstate 75 corridor just south of Dayton as a “gritty patch of the American Rust Belt.”

But that gritty patch, at least the part that has risen from the long-idled auto parts plant in Moraine, is now an American — and Chinese — success story that is attracting attention throughout the world.

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Now, it is the “bright shining city on the hill” according to Stephen Orlins, president of the National Committee on U.S.-China Relations in New York City.

“What we’re seeing in Dayton, if it works, is the future,” Orlins said.

‘What they’re doing is special’

The plant is historic for at least two reasons, observers say.

First, the sheer size of the investment, the largest Chinese investment in Ohio history. Fuyao has invested about $600 million in a former General Motors plant about 10 minutes south of downtown Dayton. It has sunk some $1 billion total across the United States, in facilities in Illinois, Michigan and South Carolina.

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The move might be big enough to discourage similar moves by competitors, said James Browning, president of Auto Glass Digest and a former Fuyao technical consultant.

“Fuyao has come in at such a large scale, that it would certainly be tough for someone to come in and compete with that,” Browning said. “That doesn’t mean people won’t try. But what they’re doing is special.”

Second, the investment is in a wholly new company, not an existing business, which typically Chinese companies have sought when exploring American investments.

Chinese companies were expected to invest $20 billion to $30 billion in the U.S. in 2016, mainly through buying existing businesses, the Wall Street Journal reported this year. That compares to a record $15 billion in 2015 and nearly $12 billion in 2014, the year Fuyao started refurbishing the Moraine plant.

“The GM (General Motors) factory was closed,” Orlins said. “Effectively, they are building a new factory.”

Fuyao Global Chairman Cho Tak Wong said recently the plant is on its way to 2,500 workers and could employ as many as 3,000, though he gave no timeline for that.

As recently as Thursday, the company held a recruiting event in Moraine for 200 production openings.

The next big investments may be made by suppliers to Fuyao, said Jeff Hoagland, chief executive of the Dayton Development Coalition.

“It might be a company who says, ‘Hey, it worked there (in Moraine). Let’s do business,’” Hoagland said.

Stu Lichter, principal of Industrial Realty Group, from whom Fuyao bought the plant, said he’s impressed with how long the project has remained in the public eye.

“This deal is still getting a lot of of focus years after it happened,” Lichter said. “It’s kind of amazing to me to watch.”

‘Do you believe jobs will ever come back?’

Having a plant in Moraine at all wasn’t necessarily assured.

The vast complex — of which Cho initially bought 1.4 million square feet and 110 acres — got caught up in GM’s 2009’s bankruptcy process, subject to claims by those to whom GM owned money.

It was the largest industrial bankruptcy in history. An added wrinkle: The federal government, which had been helping GM, became a “super-claimant,” with claims considered legally superior to others.

Local officials insisted on keeping the building standing. U.S. Rep. Mike Turner, R-Dayton — the son of a former GM worker — worked with the Commerce and Treasury departments to require bidders on the property to demonstrate a clear benefit to Moraine.

“When I first met with Commerce (department officials), they challenged me and said, ‘Do you believe jobs will ever come back here?’” Turner said.

In June 2011, Lichter’s IRG bought the former GM plant and christened it with a new name: “Progress Park.”

Smaller companies slowly found homes in parts of the plant, but Moraine still waited for what City Manager Dave Hicks would later call its “home run.”

Project Southbound

Nearly two years later, the home run came. JobsOhio, the state’s private development corporation, sent dozens of Ohio cities an email.

An unnamed company was looking for a place to start a manufacturing operation. The project already had a code name: “Southbound.”

Mike Davis, Moraine economic development director, said such emails are common enough – so common that sometimes city staff don’t respond to them.

“We did (respond),” Davis said. “And thankfully, look where we are today.”

The first Fuyao representative to visit the former GM-Moraine plant was Chris Feng, former president of Fuyao Automotive North America in Michigan, said Fuyao Glass America Vice President Dave Burrows, who was a coalition executive at the time.

That initial visit was on the way to a lunch and wasn’t seen as a big deal, Burrows said. “We didn’t even tell anybody.”

Kristi Tanner, a JobsOhio managing director, said Fuyao was focused on buying land for a new building, not buying an empty factory.

But Feng agreed to look at the plant anyway.

“I don’t think we would go in that direction, but we’ll at least take a look at it,” Feng said, according to Tanner.

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A week later, Feng called Burrows. He wanted to see the Moraine plant again. And this time, he wanted to bring some colleagues.

‘This dark plant can be reused’

That summer, some eight to 10 Fuyao technical staff and engineers — and even a Fuyao board member — visited the plant, taking careful notes, Davis said.

Then: nothing. For much of July and August 2013, Moraine staff did not hear from Fuyao.

“Everything went silent,” Davis said.

Moraine officials said they learned that Fuyao leaders were still considering all their options.

In Ohio, Fuyao’s choice came down to Moraine and Wapakoneta, an Auglaize county town about 60 miles north of Dayton.

Both sites were in coalition territory, and state officials would have considered either choice a win.

Moraine officials had other ideas, though.

“It was either site,” Davis said. “And we had to separate ourselves out.”

Moraine had the plant. And Montgomery County had the available workforce. (In 2013, Auglaize County had a population of about 46,000, while Montgomery County’s population was closer to 536,000 that year.)

The question was, would Fuyao Chairman Cho Tak Wong – also known by his Mandarin name of Cao DeWang – like the Moraine plant? Would it meet his standards?

Cho (now 70) is a faithful Buddhist, someone who is said to take seriously the Chinese philosophical discipline of Feng Shui, the art of harmonizing one’s surroundings.

Moraine officials took Fuyao’s Chris Feng to DMAX, to show how well American and Japanese workers worked together in Moraine, building heavy-duty diesel truck engines.

Davis also took Cho through WCR Inc.’s section of the former GM plant, showing him how the plate and gasket manufacturer had remade its part of the property.

“Fortunately,” Davis said, “he loved it.”

Those who worked with Cho say the idea of using a former GM plant to serve GM and other North American automakers had some appeal to the chairman.

At one point when he visited the plant, Cho said, “Look, this dark plant can be reused.”

Challenges ahead

At the Moraine plant’s Oct. 7 grand opening, those seeking to unionize the plant got a powerful, public boost. In remarks before about 700 assembled guests, Sen. Sherrod Brown, Ohio’s senior senator, said he supported unionization efforts.

In May, the United Auto Workers (UAW) assisted 11 Fuyao workers who signed a letter sent to the Occupational Safety and Health Administration Cincinnati office, alleging unsafe work conditions at the plant, saying workers were not given safety gloves when working with glass, among other charges.

A UAW spokesman at the time said workers approached the union for help.

“What I hear is long hours and dangerous working conditions,” Ken Lortz, director of a UAW region that includes Ohio, said last week.

Lortz said Fuyao workers have shared with him what he called “major issues” at the plant. “That’s a major driver with the folks wanting to organize that plant.”

He said the UAW is “absolutely” interested in organizing the Moraine plant, and a campaign to set up a representation vote there is “very strong.” But Lortz declined to give specifics or to say how many worker signatures have been collected.

“We always want jobs,” he said. “But we want to make sure they are good jobs and safe jobs.”

The United Steelworkers represents a Fuyao glass supply plant in Mount Zion, Ill.

Asked about the possibility of a unionized workforce, Burrows said the company’s focus can’t waver from customers and workers.

“We have to do our job here, to take care of our people,” he said. “To give them the pay, give them benefits, give them opportunities. We feel that if we do that and do that right, we don’t need a third party to monitor that.”

He said the company is crafting a performance incentives package for workers on the floor, a package worth more than $10 million. He declined to give specifics last week, but he called the package “huge.”

While the auto industry appears strong today – more than 17 million cars sold in the U.S. so far in 2016 — company leaders watch for signs for cyclical weakness.

“That’s what worries me, that it’s sustainable,” Burrows said. “We (as a company) are sustainable. But is the auto industry in general? Can we keep these numbers up?”

Hicks, Moraine’s city manager, said it’s important to be aware that this is an international investment.

“It’s all good,” Hicks said. “But it is different. It isn’t as if we have a known company in the U.S. investing here.”

Culture and language have not yet been barriers, even when crafting complex property and incentive agreements, Hicks said.

“At the end of the day, it’s business,” he said. “They’re providing a product that needed. And it’s no different than (other) products manufactured in Moraine.”

TIMELINE

June 2008: General Motors announces it will close a number of U.S. plants, including its SUV assembly site in Moraine.

Dec. 23, 2008: The last SUV rolls off the assembly line at GM-Moraine. About 1,000 workers leave the plant for the last time.

June 2009: GM files a bankruptcy petition in New York City. It spends six weeks in Chapter 11 bankruptcy protection.

Late 2008-2011: Local officials work to make sure “scrappers” don’t demolish the Moraine plant.

Spring 2011: Industrial Realty Group (IRG) buys the former GM property from a trust, which controlled “old GM” properties.

April 2013: Fuyao representatives contact JobsOhio, looking for potential manufacturing sites in Ohio. An email from JobsOhio inquiring about possible sites is sent to “dozens” of Ohio cities along Interstate 75 and in the Cleveland area. Moraine city hall gets one of those emails.

June 2013: Chris Feng, former president of Fuyao Automotive North America, visits several sites, including the Moraine plant.

Summer of 2013: Fuyao leaders visit the Moraine facility again, weighing their options.

September 2013: Kristi Tanner, a JobsOhio managing director, visits the grand opening of a Fuyao plant in Russia. She has with her a letter from Ohio Gov. John Kasich congratulating Fuyao Global Chairman Cho Tak Wong.

Nov. 1, 2013: Montgomery County makes public the city of Moraine’s application for $700,000 to help attract a large employer to the plant, a manufacturer that would use 1.4 million square feet and employ up to 800 workers there. Fuyao is not named in that application.

January 2014: Cho appears with Kasich at the Ohio statehouse, announcing his intention to purchase the Moraine plant, if the right deal can be reached.

May 2014: At a Sinclair Community College conference room, Cho writes a $15 million check to Stu Lichter, principal of IRG, to buy 1.4 million square feet of the former GM plant.

Summer of 2014: Fuyao begins to hire managers and plant demolition and reconstruction work start.

January 2016: Fuyao Glass America, a company consisting of plants in Moraine and Mount Zion, Ill., has more than 1,000 employees in Moraine.

Oct. 7, 2016: Fuyao Glass America has a “grand opening” for its Moraine plant, and Cho says the plant will one day employ 3,000 employees.

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