Chinese Consul General in Chicago Hong Lei speaks at the opening ceremony of the manufacturing facility of Chinese ball bearing supplier CW Bearing in Northville Township to the west of Detroit, the United States, on Aug. 25, 2017. After more than 20 years of sales and research and development in south California, CW Bearing moved to suburban Detroit, the historic heart of the U.S. automotive industry, to build its U.S. headquarters and manufacturing facility. (Xinhua/Gao Pan)
DETROIT, Aug. 28 — After more than 20 years of sales operation and research and development in Southern California, Chinese ball bearing supplier CW Bearing moved to suburban Detroit, the historic heart of the American automotive industry, to build its U.S. headquarters and manufacturing facility.
It’s the latest example of Chinese companies increasing investment in the U.S. Midwest to upgrade their manufacturing capabilities to better serve American customers, create new jobs and help revive the rust-belt region.
With initial investment of around 20 million U.S. dollars, the CW Bearing manufacturing facility, opened Friday in Northville Township, west of Detroit, will supply ball bearings for the electronic power steering (EPS) system of a wide range of vehicles, including the most popular SUVs and pickup trucks such as the Ford F-150 pickups.
The company plans to further expand the manufacturing facility with the second-phase investment of 20 million dollars and bring a total of 125 new jobs to the local community over the next five years, Hu Lirong, president and CEO of CW Bearing USA Inc., told Xinhua in a recent interview.
With the capacity and capabilities of designing, testing, engineering and assembling in the new manufacturing facility, the company aims to sell 500 million bearings in North America by 2025, Hu said.
As the product lines are almost automated, the new jobs to be created by CW Bearing are mainly technicians and engineers that know how to fix machines. The company has hired around 50 local employees and collaborated with the University of Michigan in research and internship programs, according to Hu.
“It marks a big step forward of transformation and upgrading of CW Bearing,” Hu Xiangeng, Chairman of Cixing Group, the parent company of CW Bearing, said Friday at an opening ceremony of the manufacturing facility.
That’s the best annotation of the CW development philosophy, which is “globalization of market, internationalization of talents, and high-end oriented products,” he said, noting Chinese companies have to catch up with world-class technology by internationalization.
The privately-owned Cixing Group, established in China’s eastern coastal province of Zhejiang in 1985, has become a global manufacturer of ball bearings for electrical motors, gearboxes, power tools and automakers, with offices in Asia, Europe and North America.
The CW Bearing set up its first U.S. operation in Southern California in 1993, and began to build its American headquarters and manufacturing facility in Northville, Michigan, in late 2015.
Jay Click, vice president for CW Bearing’s North American operations, said one of the reasons for building manufacturing facility here is to shorten the delivery time and better serve U.S. auto manufacturers, as the company is a Tier 2 supplier to Ford and General Motors.
Cheaper costs of land and energy in the Midwest, tax abatement from the local government, and good relations between Michigan and China are also important factors that induce the company to invest here, according to Click.
“This is a very important greenfield investment by Chinese companies in this state. It is a new progress for China-Michigan investment cooperation,” said Chinese Consul General in Chicago Hong Lei.
He hoped that CW Bearing would deliver its promise to provide high-quality products to American customers and create more jobs for the city of Northville, the county of Wayne and the state of Michigan.
As the United States steps up efforts to restore the nation’s manufacturing sector, Chinese companies investing in the Midwest is also entering a new phase of rapid growth.
Chinese companies have invested over 20 billion dollars in the nine U.S. states of the Midwest region as of 2016, creating over 45,000 jobs, according to China General Chamber of Commerce – U.S.A.
Byron Schneidman, a partner of RSM US LLP, an audit, tax and consulting firm based in Chicago, said Chinese investment in the United States helps create jobs and it’s unfair to blame China for the loss of U.S. manufacturing jobs.
Take the U.S. automotive sector for example, the sector is heavily automated and now producing at full capacity, and it’s not realistic to bring most auto jobs back to the United States, he said.
The United States has been losing manufacturing jobs for a long time and that’s because the way goods are produced has changed largely due to technological advances instead of trade agreements, echoed Jeffrey Schott, a trade expert and senior fellow at the Peterson Institute for International Economics, a Washington-D.C.-based think tank.
“The proof of that is we don’t have a declining manufacturing sector, we have a very healthy and productive manufacturing sector and our manufacturing output is near a record-high level,” he said, adding “we’re just using fewer workers to do that.”
While there’s great uncertainty over renegotiations on the North American Free Trade Agreement (NAFTA), Click said CW Bearing would stick to its plan to build a new manufacturing facility in Mexico next year.
“The operation here is made for the U.S….in Mexico, it’s going to be made for customers in Mexico,” Click told Xinhua, adding the company will leverage Mexico as a springboard to explore the Latin American market because Mexico has free trade agreements with Brazil and many other countries.
The leaders of Brazil and Argentina have also vowed to pursue closer ties with Mexico and other Latin American nations alarmed by U.S. President Donald Trump’ s promises to tear apart trade deals to protect American jobs.
Trump said on Sunday that he may terminate the 23-year-old NAFTA because Mexico and Canada are “being very difficult.”
“We are in the NAFTA (worst trade deal ever made) renegotiation process with Mexico & Canada. Both being very difficult, may have to terminate?” Trump said on the twitter.
However, Schott warned that the costs of breaking up would be very high for all three economies, as North American integration has been going well for over 25 years.
“If the U.S. withdrew, it would cause significant pain for many U.S. exporters including many farmers that rely on the Mexican market for a large share of their crops sales,” he said.