China Daily Global Edition (USA)
Pennsylvania push
The Keystone State attracts more investment from China
TWe felt it was a good choice to invest in America. We may save the transportation cost to pay more wages to our American workers.” Hu Xinfu CEO of Fuling Plastic USA
housands of colored and transparent straws whirled through machinery, each getting individually wrapped in paper sleeves to keep them sanitary. The individual straws then moved on a conveyer belt and were bundled together by the hundreds. Sealed in clear plastic pouches, they were boxed and shipped across the US to fastfood chains like Subway, Taco Bell and Wendy’s.
This is the inside of the twoyear-old Allentown, Pennsylvania, factory of Fuling Plastic USA, a unit of the Zhejiangbased Chinese plastics company. The plant with 37 employees makes only straws — approximately five to six tons every day — but it may produce plastic food containers by 2018 or 2019, according to the company.
Fuling’s four factories in China produce disposable forks, knives and containers.
Hu Xinfu, CEO of Fuling Plastic, said that 90 percent of Fuling’s products are exported to the US, but the cost of doing that is very high.
“We felt it was a good choice to invest in America. We may save the transportation cost to pay more wages to our American workers,” he said.
The 88,000-square-foot plant is part of the company’s $21 million investment in the US, and may already be paying off. Firstquarter earnings for this year were $1.4 million, compared to $700,000 for the same period last year. Sales rose 28 percent to $26.3 million. Hu said in a statement that he was “pleased” with the year-on-year growth and was optimistic that results will continue to improve.
Gilbert Lee, CFO, said the main goal of the Allentown unit is to increase sales in the US, the biggest market for Fuling’s products. Because it manufactures in China and the US, Fuling can decide where to make its products based on labor and production costs.
“Even though the labor costs in the US are much higher than in China, if we can utilize automation and higher volume, then we can save on costs from having to ship from China,” he said.
“That will create a much more cost-competitive advantage for us to compete in the US, and allow us to bid on higher volume contracts with the larger QSR [quick service restaurant] chains.”
‘Better image’
Lee noted another advantage. By bringing production to the states, it creates a “much better image that [the products are] made in the USA, and a lot of the customers such as Wal-Mart and [other companies] will find it very favorable to buy our products here,” he said.
The company’s listing on the NASDAQ also adds credibility to its operations, Lee said, and “doing business with us is just like doing business with a US company’’.
Fuling’s economic impact on Lehigh County, where Allentown is located, has been minimal because of the few number of employees at the plant, but Lee said Fuling will help the area’s economy grow as it expands.
Fuling’s entry-level wages are about $11 to $13 an hour; technicians can earn up to the mid-$20s per hour, depending on experience.
Ed Stagemyer, who oversees employees and production on the plant floor, said that the company has had a positive impact on Allentown.
“We sometimes hire temps from this area if we get into a busier season and it’s been good. It’s brought more jobs,” he said.“The plant is small right now, but it’s growing, so it’s going to have even more of an impact on the area.” Gary Borochaner, a logistics manager who has been with the company for about two years, shared similar sentiments.
“I have had the opportunity to see [growth] because we’ve had to add people as we’ve grown. I’m one of the longesttenured people here now,” he said.
Many of the company’s employees commented on the fast-pace of production, due in part to the high level of automation.
“I’ve only been here for about two months, but we’ve had some good training,” said Dylan Frey, a lead technician. “There’s a lot more automation and it’s been fast-paced, but it’s a good job.”
Manufacturing in Lehigh Valley — the name given to the metropolitan area of Lehigh, Carbon, and Northampton counties — makes up the largest part of the region’s economic output.
“For America today, to find a region [where] its biggest output is manufacturing is unusual because of the transition away from manufacturing in the United States,” said Don Cunningham, president and CEO of the Lehigh Valley Economic Development Corporation (LVEDC), which worked to bring Fuling to Allentown.
A selling point for Fuling to put its plant in Lehigh Valley was the region’s proximity to the rest of the Eastern seaboard and the Port of Newark, providing easy access to about 30 to 40 percent of the company’s US customers, said Cunningham.
Fuling had scouted six or seven states before choosing Lehigh Valley, where the development agency worked with the state to develop an incentive package for Fuling.
Cunningham said that it was “somewhat of a groundbreaking approach” by Fuling to open up a manufacturing operation in the United States, and “to crawl before they walk or run, starting with [manufacturing] straws and trying to grow that into a profitable plant for Fuling globally.”
Seeking investors
In China, Fuling’s leaders have been “vocal advocates” for Lehigh Valley, which Cunningham said is “on the radar” enough with Asia-based manufacturers that it plans to send representatives to China to meet with potential investors. There are two companies in China that are looking to invest in the region, he said, but declined to name them.
It will be difficult for the manufacturing sector in the US to produce as much as it used to or for job numbers to be as high as they had been historically, Cunningham said, but Lehigh Valley has a skilled workforce that could be useful for Chinese companies looking to locate in Pennsylvania.
“In China there is movement for the smaller, non-stateowned companies to get plants closer to customer bases overseas because of the demand for labor in China. I think there is converging opportunity, both in manufacturing policy in China and what we have available here,” he said.