Trips to Russia and China Help Woo Chinese Glassmaker
Fuyao’s decision to come to Ohio and how it came together.
IN-DEPTH COVERAGE GM PLANT
Trips to Russia, China helped woo Chinese glassmaker
Over dinner, Ohio official made case for locating plant in Moraine.
COLUMBUS — A generous list of incentives along with a ready-made plant near a rail line and an interstate highway helped lure a Chinese auto glassmaker to Moraine.
But such deals aren’t done on incentives alone, and the tale of how Ohio wooed Fuyao Auto Glass Group includes a bag of pretzels, a congratulatory letter from Gov. John Kasich and a coffee table photo book about Ohio.
That and a willingness to travel the globe for a dinner invitation.
An examination of how the deal was put together shows one of the critical decisions — perhaps the critical decision — was sending JobsOhio managing director Kristi Tanner to Kaluga, Russia, last September to meet Fuyao leaders at their soon-to-be-christened auto glass manufacturing plant.
It was after 10 p.m. and the restaurants were shuttered for the night when Tanner dropped her bags at her hotel. She had just flown the first leg of a 20,000-mile journey that would take her through 14 time zones and three continents in a quest to convince Fuyao to open its next plant — a $200 million investment with 800 jobs — in Ohio.
After arriving, Tanner cracked open the bag of pretzels — her dinner — and prepped for her two-day stay. She didn’t know it at the time, but she wouldn’t be alone in pitching to Fuyao leaders in Kaluga. Tucked into the same hotel in an industrial area of the city 90 miles southwest of Moscow were emissaries from other states: Tanner’s competitors.
The gifts Tanner brought with her were heartfelt but modest: a letter from Gov. John Kasich congratulating Fuyao on the new plant, a coffee table photo book about Ohio, and a pencil holder with the state seal on it that she had purchased at the Ohio Statehouse gift shop.
Four months later, Fuyao Chairman Cao Dewang would be in the Statehouse signing a deal to buy 1.5 million square feet of the Moraine assembly plant. It was a big win for Ohio and a huge win for the Dayton region, which is more accustomed to seeing plants close than having new ones come in. So how did it come about?
“There is not just one thing,” Kasich told the Dayton Daily News. “First of all, Kristi, she’s very good and she showed them a lot of special attention. And I think we were able to turn lemons into lemonade with the old facility in Moraine. ... It’s not just one thing that delivers. It’s a team effort.”
The size of the incentives — yet to be revealed — no doubt played a big role. But inside the glass plant in Kaluga where competitors were offering their own incentives, Tanner scored a major coup: an invitation to Cao’s family home in Fuqing city in China’s Fujian Province. Dinner with Cao in the city where the world’s second-largest auto glassmaker is based would mean unfettered access to the man who would make the decision about where to locate Fuyao’s U.S. manufacturing facility. And Ohio would be the only state at the dinner table that evening.
Tanner added a China leg onto her ambitious Asian itinerary, gave a 30-minute pitch to Cao on why Ohio would be the right place for his U.S. investment, and spent hours dining with Cao’s family members and executives in the chairman’s sumptuous home in Fuqing City approximately a nine- hour drive from Shanghai.
“It was a great opportunity for me to talk personally with the chairman about the benefits of doing business in Ohio and why Ohio would be the best state for them,” Tanner said. “That was my pitch to the chairman. And I had brought some things with me for the chairman that had all been translated into Mandarin so that he’d be able to look at it and flip through it with me.”
After the pitch, Cao showed Tanner his home, discussed artwork with her and hosted the meal. “We were probably there for four or five hours. Anytime you can spend four or five hours with the decision maker of a company, that’s a good thing,” Tanner said. “That definitely was a pivotal moment.”
In Kasich’s office four months later, Cao through an interpreter credited Tanner for bringing him to Ohio.
“Because of her visits,” he said, “I’m here today.”
The Moraine plant was late entry in the Fuyao sweepstakes.
Fuyao contacted JobsOhio in April 2013, asking for help in selecting undeveloped land or “greenfield” sites for an auto glass manufacturing plant to supply Fuyao’s customers in North America. Right away, Tanner knew the request had blockbuster potential.
JobsOhio provided a list of possible sites across the state and Tanner decided to toss in the former General Motors assembly plant in Moraine, even though it didn’t meet Fuyao’s criteria. Tanner, who had been in the Moraine plant in the past, said she felt it would be a good fit, particularly if Fuyao wanted to get to market more quickly by sidestepping the cost and time it takes to build a new plant.
Tanner and JobsOhio took Fuyao (pronounced Fwee-ow) officials on tours of the sites and the Moraine plant, a 4.1-million- square-foot complex shuttered by GM in 2008. Fuyao officials narrowed the list and then visited four greenfield sites plus Moraine. Again, they winnowed the list, this time to Ohio finalists: a single greenfield site and Moraine. Other states were still in the hunt as well.
Adrian, a small town in southern Michigan, offered Fuyao an undeveloped site and a comprehensive incentives package, according to Jim Van Doren, executive director of Lenawee Now, the economic development agency for Michigan’s Lenawee County. “It was a pretty attractive package,” Van Doren said. “Otherwise, I don’t think we would have been in the final mix.”
Adrian did not send emissaries to Russia and China, though Michigan Gov. Rick Snyder may have visited with Fuyao while in China, Van Doren said.
A representative of the Michigan Economic Development Corporation — the state’s development arm — declined to comment on how it courted Fuyao, saying such information is confidential.
The Kasich administration and JobsOhio have not disclosed the scope of incentives— grants, loans or tax credits — that were promised to Fuyao once the deal closes. JobsOhio spokesman Matt Englehart will only say that the package is expected to be finalized in two to three months.
Observers, however, expect the deal to be substantial. Companies like Diebold and American Greetings received tens of millions of dollars in subsidies to keep or expand jobs in Ohio.
JobsOhio has access to approximately $200 million a year streaming from a $1.5 billion bond issue backed by future state liquor sale profits.
In return for the subsidies, Fuyao — assuming it’s due diligence process produces no hitches — will give southwest Ohio a shot in the arm. Moraine officials are hopeful the Fuyao jobs could lead to others and serve as a catalyst for future development.
Rags to riches
Cao Dewang operates the Fuyao business out of Fuqing City, where he grew up with little formal education. Born in 1946, he started his own business as a teenager, peddling tobacco, farming and selling fruit. In 1976, he started work at a specialty glass factory and in 1983 he was asked to take it over and turn it around. Within a year, Cao had made the company profitable, according to a biography published by Columbia University.
Cao founded Fuyao Group in 1987 with a focus on auto safety glass and industrial technological glass. In 1993, it became listed on the Shanghai Stock Exchange.
Fuyao now has more than 10,000 employees worldwide at locations in China, Germany, Russia, Japan, South Korea, Australia, Brazil and the U.S. It controls 18 percent of the global auto glass supply market and in 2012 it had $16 billion in sales.
In 2009, Ernst & Young named Cao the global entrepreneur of the year, calling him a pioneer in corporate governance.
Cao — who has a net worth of about $1.2 billion, according to Forbes — is known internationally for his philanthropy as well as his business acumen.
In 2012 alone, he donated more than a half-billion dollars to charity, according to Business Insider magazine, far outpacing the $372 million donation made by Microsoft co-founder Paul Allen.
He was among the first Chinese philanthropists to insist on audits to ensure that his charitable donations were being properly distributed and spent as intended. In 2010, he donated company stock to fund the Heren Charity Foundation, the largest such foundation in China.
“This is exactly the kind of company you want to bring into the state,” Tanner said. ‘A lot of momentum’
Bringing Fuyao to the Miami Valley may have unexpected spinoff benefits and draw more interest in the Dayton area for businesses looking to build and grow, Tanner said.
“It gives Moraine a lot of momentum to build from,” she said. “There is a lot of opportunity there — a lot of great companies that are out there. Again, the location where you are, the workforce that you have, being right off of I-75 — it’s a great location. You’re positioned such that you can reach the Midwest and Canada and all the southern areas when you’re thinking automotive in particular. It’s just a fantastic location.”
Dino Lanno, a senior vice president at Safelite Auto, which is based in Columbus, said it is encouraging to see Ohio emerge as a leader in vehicle glass. “The leadership teams of Safelite and Fuyao are actively engaged in strategic discussions to enhance their business together,” he said in a statement.
Although Fuyao agreed to buy a sizable chunk of the Moraine plant, the deal has yet to close. The company is in its “due diligence” phase, which could take several months.
Fuyao has told Montgomery County officials that the jobs here would yield a $25 million annual payroll at an average annual salary of $32,000 to $35,000. The company will begin interviewing managers in May, hiring manufacturing workers at the end of 2014 and starting production in mid- 2015.
Perrysburg-based GlassTech will be building the manufacturing equipment that will outfit the Fuyao plant in Moraine. Tanner said she ran into a GlassTech engineer from Toledo in Fuyao’s plant in Kaluga, Russia.
“He said, ‘Yup, I’m here. My job is to make sure that this piece of equipment runs exactly like it’s supposed to run for this company. And I’m here until I’m confident that it’s going to happen.’ ”
“It was an interesting experience to be so far away from home and then meet with a company employee from Ohio,” Tanner said. “There is always an Ohio connection.”