Labor-management relationship is not a key consideration for Fuyao Investment.
For a documentary that is intended to set a target, if you are serious, you lose.
Yes, this documentary is known as the American Factory with Obama’s blessing. The topic is operated in much the same way as the former US Vice President Al Gore’s famous documentary, The Truth That Cannot Be Ignored: Establishing a Target with the Popular Topics of Society, and then firepower.
The popular topic is very easy to find. Fuyao Glass, the protagonist of “American Factory”, invested $1 billion in the Dayton factory. It has been repeatedly concerned by the society because of labor relations, and it has been a topic in the United States.
As for whether the target itself is valid, it depends on what the director wants to say.
For example, the “American Factory” said that workers can get $29/hour in 2008, but time to enter the beginning of 2018 at the Fuyao American Factory (FGA) The hourly wage is only $14, and the income is reduced by more than 50%. A “low salary” target is erected.
But what is not mentioned in the documentary is that the average hourly wage in the United States in 2017 was $14.63. In 2008 this figure was $12.23.
US average hourly wage in 2003-2017, in US dollars Source: Stastata
This means that in 2008, the auto industry practitioners took more than twice the national average salary and paid a high salary. Ten years later, the Americans in the Fuyao factory received a salary that was significantly lower than before, but not too bad, at least above average.
Like all popular documentaries, the narrative of the American Factory is to edit the information to show dramatic plots such as sharp conflicts in the narrative. The documentary mainly talks about labor relations and rises to the height of the collision between the two cultures. The specific reasons why the company itself came to invest and build a factory and the business considerations behind it are not what it wants to say.
There is no mention in another documentary. It is Fuyao’s own glass factory in Illinois and Michigan in the United States, which is slightly smaller than the Dayton factory. The Labor Factory dispute in the Dayton factory described in the “American Factory”It does not reflect the full situation of Fuyao in the United States.
Labor relations are not the key to investment
If you want to focus on labor relations every time you build a factory, Fuyao will not have to build a factory in the United States.
The company’s investment building is based on two other factors: close to the market, reducing costs.
The Dayton, Ohio facility is not the first factory established by Fuyao overseas. The company’s first overseas factory is located in Kaluga, Russia, near Moscow. In 2015, I visited this factory for an interview and asked the general manager of the Chinese factory why Fuyao chose to build a factory in Kaluga. He replied: Fuyao’s idea of building a factory is to build the production line at the gate of downstream customers.
In the country, it is also followed in foreign countries. Next door to the Fuyao Kaluga factory is Volkswagen’s complete vehicle assembly plant. After the final processing of the automotive glass finished product, it can be directly pulled to the public warehouse or production line.
The idea of site selection at the Fuyao factory in Dayton, USA is also strictly practiced. Within three hours of Dayton, there is a complete assembly plant for well-known automakers such as GM, Ford and Honda. As the world’s largest supplier of automotive monolithic glass, Fuyao seeks infinite proximity between the factory and downstream customers in terms of geographical distance, improving efficiency, reducing storage and logistics costs. In 2017, Fuyao set up a factory in Germany to provide its products for its long-term partner Audi, for similar reasons.
Cost is another important factor in Fuyao’s overseas construction. However, it should be emphasized here that it is not correct to link Chinese companies directly to production costs overseas. Fuyao has occupied more than 70% of the Chinese market. Its goal is to be a global supplier. Therefore, Fuyao does not transfer production capacity abroad, but expands overseas production capacity when the domestic market has become saturated. The cost factor at this time needs to be considered in combination with various productivity factors, and it depends to a large extent on the strength of local government investment.
The Fuyao Kaluga factory is a successful case of investment promotion: the local government has provided low-cost land use fees, reduced taxes, and guaranteed the “three links and one leveling” required for factory construction and construction. infrastructure. On the issue of wages, I learned from the exchange that the average monthly wage of Kalu processors is about 30,000 rubles (about 3,300 yuan at the time). However, according to the law, workers have 28 days of paid leave and 15 days of paid sick leave. This benefit has clearly raised the cost of labor.
Fuyao’s Dayton plant is basically similar to the Kaluga plant, and enjoys tax breaks, land supply (mainly using GM’s abandoned plants) and lower operating costs. Cao DewangPublicly stated that to 2017, the Fuyao Dayton plant received at least 40 million US dollars in subsidies from the local government, and the fuel (natural gas) and industrial electricity prices required to produce glass are equivalent to one-fifth of the Chinese price. And about half. Cao Dewang said that human expenditure is the biggest cost. But as mentioned above, Fu Yao’s salary is not low. According to local laws, each worker will have 10 days of paid leave after one year.
Fuyao clearly has a comprehensive balance between approaching the market and reducing costs.
On the US job search site “Indeed”, the salary income of the Fuyue Dayton factory was rated the highest among work and life balance, work safety and technology leadership, management, and culture. Source: ww.indeed.com
What other Chinese companies are setting up overseas?
Proximity to the market and cost reduction are also basic considerations for the rest of Chinese companies investing in the United States.
In addition to Fuyao, there are still a number of large factories invested by Chinese companies in the United States. China CRRC established an assembly plant in Springfield, Massachusetts, in 2016 to assemble subway cars. One of its users is the Boston Metro Company. The latter just got the first batch of cars provided by the CRRC plant in the summer. Earlier settled in the United States is the Jinlong Group in Henan. In 2014, its precision copper tube factory in Alabama provided parts for the surrounding US refrigeration companies. In addition, Alabama has the lowest average wage in the United States, and the local government provides various tax breaks and preferential policies without exception.
The most influential is the 2017 Foxconn display panel project in Wisconsin. Guo Taiming claims to invest more than $10 billion here and create tens of thousands of jobs. The Wisconsin government also did not hesitate to express its best efforts. The Verge reports that the preferential rate for up to $3 billion in 15 years, and later increased to $4 billion to $4.5 billion. The attention of American political circles reached its peak in June 2018: Trump personally participated in the groundbreaking ceremony. However, the establishment of this factory has been controversial in the political circles because of the high subsidies and the difficulty of the government.
In addition, the Foxconn Wisconsin factory is facing difficulties in land acquisition and environmental protection.