Chinese Auto Glass Manufacturer Outsources Jobs

In a twist, a Chinese auto glass manufacturing firm has moved 2,000 jobs from its Chinese facilities to a former General Motors assembly plant in Moraine, OH. The Fuyao Glass Industry Group, owned by Chinese billionaire Cao Dewang, reopened the plant in October and could add as many as 1,000 more workers in the coming months.

The Moraine, OH assembly plant had produced small trucks and SUVs, including the S-10, the GMC Envoy and the Chevrolet TrailBlazer. GM idled the facility in 2008, and Fuyao Glass Industry Group purchased it in 2014.

The company, which supplies auto glass for both General Motors and Volkswagen, found it less expensive to manufacture glass in the United States than to manufacture it in China and ship it to the United States.

The company reported profits of $370 million in 2015. Dewang made the difficult decision to move the company’s North American operations to Moraine in response to what he characterized as China’s high taxes and high labor costs.

In addition to reducing Dewang’s overall costs, the move may shield the company from onerous tariffs being considered by the incoming Trump administration. Fuyao Glass has invested more than $1B in its US operations.

Glass is typically produced locally in relation to the manufacturer’s target market, so it’s not entirely surprising that Fuyao Glass would want a North American production facility. Producing glass locally allows the manufacturer to reduce its transportation costs, improve transportation logistics and respond more easily to market demand.

According to Dewang, he pays about 35% more in taxes on his facilities in mainland China than he does on his facilities in the United States. Additionally, the Chinese government has increased social welfare payments and value-added taxes on manufacturing firms. Dewang says that wages in the US are about 8 times higher than the wages he pays to workers in China, but the tax assessments increase his overall costs for Chinese manufacturing.

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