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Here's What Happens When a Chinese Firm Buys a Closed GM Plant · Trumponomics

• 0:00
  Speaker 1: We can't continue to allow China to rape our country,
• 0:04
  Speaker 1: and that's what they're doing. It's the greatest theft in
• 0:08
  Speaker 1: the history of the world. That's Donald Trump speaking at
• 0:11
  Speaker 1: a rally almost a year ago. His message that China
• 0:14
  Speaker 1: stole American jobs by taking away factories and using unfair
• 0:18
  Speaker 1: trade practices resonated so well that it helped deliver a
• 0:22
  Speaker 1: surprise election victory. In fact, China has provided a lifeline
• 0:27
  Speaker 1: to manufacturing in some of America's hardest hit cities. Take Moraine, Ohio,
• 0:32
  Speaker 1: where a Chinese company took over a closed General Motors
• 0:36
  Speaker 1: plant and turned it into a center for windshield glass.
• 0:40
  Speaker 1: As Trump prepares this week for his first ever meeting
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  Speaker 1: with Chinese President shi Jinping, we're taking a closer look
• 0:46
  Speaker 1: today at the relationship between the world's two largest economies.
• 0:50
  Speaker 1: The truth is that it's a lot more complicated than
• 0:53
  Speaker 1: you might suspect. Welcome to Benchmark. I'm Scott Landman. Joining
• 1:07
  Speaker 1: me as a guest co host is my colleague Andrew Mayetta,
• 1:11
  Speaker 1: Bloomberg reporter here in Washington who covers international economics and trade.
• 1:15
  Speaker 1: Will also speak with a local official in Moraine who
• 1:18
  Speaker 1: helped bring in the Chinese investment. Then we'll talk with
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  Speaker 1: an economics professor in Ohio to give us some more perspective.
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  Speaker 1: But first, Andrew, thanks for being here, Thanks for having me. So, Andrew,
• 1:29
  Speaker 1: you visited this plant, the fu Yea Glass factory last
• 1:33
  Speaker 1: year and wrote about it. What did you find there?
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  Speaker 1: It was really interesting, as you mentioned that plant had
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  Speaker 1: previously been empty for empty for several years. It was
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  Speaker 1: previously a GM plant that produced Chevy trailblazers, I believe,
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  Speaker 1: but it was closed in GM's restructure and following the
• 1:54
  Speaker 1: financial crisis, and a Chinese company called fu Yeau Glass
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  Speaker 1: came in and at that facility and has since been
• 2:02
  Speaker 1: raped ramping up hiring. They make UH car windshields there,
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  Speaker 1: um and virtually everyone that I talked to in town
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  Speaker 1: thought it was a good thing. I mean, what a
• 2:13
  Speaker 1: lot of people said was, you know, those jobs don't
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  Speaker 1: pay quite as well as the jobs at GM, but
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  Speaker 1: it's better than an empty plant. That was the kind
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  Speaker 1: of overwhelming message that I got from people. And you know,
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  Speaker 1: I think it's an interesting illustration of the complexities of
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  Speaker 1: Chinese investment in the US. I mean, as on one hand,
• 2:34
  Speaker 1: you have politicians on campaign trails kind of vilifying Chinese investment.
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  Speaker 1: On the other hand, you have places like Moreno, Ohio
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  Speaker 1: looking for capital, looking for investors in in their economies. Yeah,
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  Speaker 1: it really was a contrast when we are hearing all
• 2:51
  Speaker 1: this rhetoric during the campaign season, not just from Trump,
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  Speaker 1: but you know also from some of it from the
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  Speaker 1: Democratic side that uh, you know, critical of China and
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  Speaker 1: the and the need to level the playing field, bring
• 3:02
  Speaker 1: manufacturing jobs back and so forth. Well, let's find out
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  Speaker 1: more from somebody who's been closely involved in this issue.
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  Speaker 1: Michael Davis, director of Economic Development for the City of Moraine,
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  Speaker 1: is joining us on the phone now. Mike, thanks for
• 3:18
  Speaker 1: being with us today. You're welcome. I'm happy to join in. Mike.
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  Speaker 1: Can you tell us a little bit first about the
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  Speaker 1: history of manufacturing in your area and what's happened to
• 3:29
  Speaker 1: it over the past years, kind of setting the scene
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  Speaker 1: for us. Sure, we we have always had kind of
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  Speaker 1: a significant presence of manufacturing in some respects. You could
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  Speaker 1: have called us a GM town. We are a entering
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  Speaker 1: suburb of Dayton, Ohio, and uh at one time in
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  Speaker 1: the seventies and eighties, GM was probably employing when you
• 3:54
  Speaker 1: include their suppliers upwards the twenty people in the city.
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  Speaker 1: UM as years went by and various consolidations and UM everything.
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  Speaker 1: As we pushed into the two thousand's, GM was still
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  Speaker 1: employing about four thousand people, and it was very prevalent
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  Speaker 1: operation manufacturing, manufacturing operation in our community. And then in
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  Speaker 1: two thousand nine is when we were hit with the
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  Speaker 1: closure of the plant. UM leading to that at the
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  Speaker 1: time of their closure, they were building I believe his reference,
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  Speaker 1: the Chevy Trailblazer, the GMC envoy, UM, the SOB nine X,
• 4:36
  Speaker 1: and a couple of others or utility vehicles. And so
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  Speaker 1: how did the deal with FU Yeah, then come about
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  Speaker 1: after the closure and how did how did you help
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  Speaker 1: make that happen? When when some of the economic downturn happened,
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  Speaker 1: you could kind of say that Moraine was the microcosm
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  Speaker 1: of the national economy. We UM, really all you had
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  Speaker 1: to do was take a look at Moraine and see
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  Speaker 1: what was going on across the entire country. And so
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  Speaker 1: the first thing that we did is we really we
• 5:01
  Speaker 1: went out to try to understand maybe what other communities
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  Speaker 1: across the country had done or had experience when they
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  Speaker 1: had a large manufacturer closed. And really what we did
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  Speaker 1: is we said, Okay, we have a talented workforce, we
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  Speaker 1: have over four million square feet of existing manufacturing space. UM.
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  Speaker 1: You know, instead of harping on these as negatives, let's
• 5:21
  Speaker 1: turn around and use these as resources and positives to say,
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  Speaker 1: you know, this is why you need to come here.
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  Speaker 1: We we have the skill, labor already in place, and
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  Speaker 1: we've got space that UM is located in good proximity
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  Speaker 1: on Interstate seventy and reasonable and cost and had received
• 5:38
  Speaker 1: a lot of updates over the years as general motors
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  Speaker 1: continue to invest money into the facility, so it was
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  Speaker 1: in relatively good shape UM. Based upon that, we just
• 5:48
  Speaker 1: continued to try to increase the visibility working with the
• 5:52
  Speaker 1: State Ohio, and we had finally in had received kind
• 5:58
  Speaker 1: of a state uh so I selection inquiry for a
• 6:01
  Speaker 1: project called Projects Southbound, and that's really what led to
• 6:06
  Speaker 1: the initial communication and the startup and trying to attract
• 6:10
  Speaker 1: what would ultimately be if we a and did you
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  Speaker 1: have were their incentives involved that either Moraine or your
• 6:16
  Speaker 1: county or the state provided uh all that this was
• 6:20
  Speaker 1: definitely a collaborative effort. A lot of partnership went into this,
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  Speaker 1: and there there were incentives at the state level, and
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  Speaker 1: then we had to you know, initially, I think there
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  Speaker 1: was about five to seven states that were competing for
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  Speaker 1: this effort, and there was more than one site, even
• 6:34
  Speaker 1: in the state of Ohio. So the state and syentioms
• 6:37
  Speaker 1: were based on those final two sites in Ohio, and
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  Speaker 1: we were still competing against Michigan as well and h
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  Speaker 1: ultimately Montgomery County. The city of Moraine had to step
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  Speaker 1: in and provide additional assistance to kind of separate ourselves
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  Speaker 1: out from the other competing site that was that was
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  Speaker 1: in Ohio. Michael, what would you say has been the
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  Speaker 1: effect on the community, On the local community of Moraine.
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  Speaker 1: I mean, as I mentioned, a lot of folks that
• 7:02
  Speaker 1: I talked to said they thought it was a good
• 7:05
  Speaker 1: thing that the Chinese were coming in and investing in
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  Speaker 1: that plan. But you know, from time to time I
• 7:09
  Speaker 1: did run into people and said, hey, look sure sure
• 7:13
  Speaker 1: look back wistfully on those on those well planing uh
• 7:17
  Speaker 1: GM jobs with the defined benefit pension plans. I mean,
• 7:21
  Speaker 1: what would you say the overall effect has been. I
• 7:23
  Speaker 1: think the overall effect has been positive from the standpoint
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  Speaker 1: that when we did the initial attraction it was going
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  Speaker 1: to be a two hundred million dollar investment in about
• 7:32
  Speaker 1: eight hundred jobs, and after working with the Chairman and
• 7:36
  Speaker 1: his staff and understanding the success they're gonna happen here,
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  Speaker 1: the acquisition of a glassmaking facility in mal Zion, which
• 7:44
  Speaker 1: is outside of Chicago in Illinois, and that proximity really
• 7:49
  Speaker 1: encouraged the chairman to take a look at both the
• 7:52
  Speaker 1: production for the new vehicle glass but as well as
• 7:55
  Speaker 1: the aftermarket, and then encouraged the second investment announcement literally
• 7:59
  Speaker 1: year later. The first was in January fourteen, the follow
• 8:03
  Speaker 1: up was in January fift and so what ultimately has
• 8:07
  Speaker 1: happened is we now have two thousand folks that are
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  Speaker 1: employed in the facility. There's been six hundred million dollars
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  Speaker 1: pumped into it, and that investment continues to increase um.
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  Speaker 1: What we've seen the overall impact on the community is that,
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  Speaker 1: you know, Moraine took a hit that was well over
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  Speaker 1: of our operating budget, and we've now been able to
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  Speaker 1: really kind of infuse some of those dollars from this
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  Speaker 1: investment back in the community with capital improvements, road infrastructure
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  Speaker 1: and various things that are benefit to both are corporate
• 8:42
  Speaker 1: citizens and the folks who drive into the city every
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  Speaker 1: day as well as our citizens who live here. Well,
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  Speaker 1: that really sounds like it's been a net positive for
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  Speaker 1: the community. But Mike, what about the political side of things?
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  Speaker 1: That anger over China really touched a vein not only
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  Speaker 1: in Ohio but across the country. Trump won the state
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  Speaker 1: of Ohio by eight percentage points, which really was an
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  Speaker 1: unexpectedly large margin. Do you think that people in your
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  Speaker 1: area might have less anger towards China as a result
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  Speaker 1: of this investment by Fuya? You know, that's probably kind
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  Speaker 1: of hard to gauge. UM. I think a little more
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  Speaker 1: time would be needed to to to understand that. What
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  Speaker 1: I will say is that, um, this investment, you know,
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  Speaker 1: kind of is relatively new, and even though it's substantial
• 9:30
  Speaker 1: and one of the largest direct foreign investments in the
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  Speaker 1: country over the past ten years, UM, at the time,
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  Speaker 1: I think that the entire presidential race and everything was ongoing,
• 9:39
  Speaker 1: was I don't think there was enough exposure on this
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  Speaker 1: investment to where it was maybe as well known to
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  Speaker 1: the national community and economy as it should have been.
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  Speaker 1: And I also think that Chairman Chow deserves a lot
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  Speaker 1: of credit in really initiating such a large investment that
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  Speaker 1: we believe and from what we're hearing is spurring other
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  Speaker 1: folks to take a look and other Chinese companies to
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  Speaker 1: take a look at investing here and realizing that they
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  Speaker 1: can be successful. Yeah. Can you talk a little bit
• 10:07
  Speaker 1: more about what it's like to work with the Chinese investors?
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  Speaker 1: I mean you talked about Chairman Chow, I mean I
• 10:13
  Speaker 1: interviewed him. How different was the actual experience on the
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  Speaker 1: shop floor than what has perhaps depicted when people think about,
• 10:23
  Speaker 1: you know, what Chinese investors are like. I think, first, um,
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  Speaker 1: my experience has been nothing but positive throughout the entire process.
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  Speaker 1: They were very deliberate and understanding. But you know, you're
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  Speaker 1: looking at this uh ginormous property with three acres and
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  Speaker 1: you know, four million square feet, so they really got
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  Speaker 1: down to the details to understand the operational cost uh
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  Speaker 1: the utilities. You know, we we bring out, brought a
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  Speaker 1: lot of partners in, and then we had to work
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  Speaker 1: through the understanding of Okay, what can we do to
• 11:00
  Speaker 1: be cost competitive on all aspects utilities and workforce to
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  Speaker 1: make this happen. Um, as far as you know, on
• 11:09
  Speaker 1: the on the workstop floor, it's my understanding that things
• 11:14
  Speaker 1: over there, they're ironing out you know, the maybe some
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  Speaker 1: communication efforts, and there were also you know, in the
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  Speaker 1: middle of this monster development and huge expenditure that there's
• 11:26
  Speaker 1: kind of a learning curve as they're pushing forward. UM.
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  Speaker 1: You know, their commitment the actual acquisition and closing of
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  Speaker 1: the property was in twenty in May. We're almost at
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  Speaker 1: three years and they've invested again nearly six hundred million dollars.
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  Speaker 1: They are up and running, they're employing two thousand people,
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  Speaker 1: and uh, you know, the hope is that in eighteen
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  Speaker 1: they actually be turning a profit. And in that process,
• 11:52
  Speaker 1: you know, there there there's been two editions of over
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  Speaker 1: two thousand square feet that's been added, and there has
• 12:00
  Speaker 1: also been the leasing of the remaining portion of the
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  Speaker 1: GM facility that was divided out, which I think they're
• 12:07
  Speaker 1: releasing about another two d and sixty thousand square feet there.
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  Speaker 1: So yeah, i'd say there's been some growing pains in
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  Speaker 1: respect to UM understanding what they initially we're going to
• 12:17
  Speaker 1: need and where they are now. As far as you know,
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  Speaker 1: a labor on the manufacturing floor, I'm not really able
• 12:25
  Speaker 1: to comment on that. I do know that interviews are
• 12:28
  Speaker 1: held here often and most people are very excited that
• 12:30
  Speaker 1: they're here and happy to to be an employee of
• 12:34
  Speaker 1: of who you one last question before we wrap up, Mike,
• 12:38
  Speaker 1: should President Trump come and see this factory in Moraine?
• 12:42
  Speaker 1: Have you invited him to come out there? I what
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  Speaker 1: I can tell you is in October of last year
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  Speaker 1: there was a grand opening. I know there were a
• 12:50
  Speaker 1: lot of Chinese dignitaries that were here, and there were
• 12:53
  Speaker 1: a lot of folks from Washington, d C. That we're invited,
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  Speaker 1: and several of our congressmen also attended. I do not
• 13:00
  Speaker 1: know at that time if whether President Obama or Hillary
• 13:05
  Speaker 1: Clinton or Donald Trump were invited to that UM. What
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  Speaker 1: I would say is that if you want to showcase
• 13:11
  Speaker 1: across the nation UM a beautiful direct foreign investment that
• 13:17
  Speaker 1: has proven to be tremendously successful and is continuing to grow.
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  Speaker 1: I think I think anybody UM they would like to
• 13:24
  Speaker 1: see that replicated across the country should come and take
• 13:27
  Speaker 1: a look. And that train whistle sounds like it's time
• 13:30
  Speaker 1: to wrap up here. Mike, thanks so much for taking
• 13:33
  Speaker 1: the time to speak with us today. You're welcome. Now
• 13:43
  Speaker 1: for some broader perspective, let's go to Susan Helper. She
• 13:47
  Speaker 1: has been an economics professor at Case Western Reserve University
• 13:51
  Speaker 1: in Cleveland for twenty years, and also recently served as
• 13:55
  Speaker 1: chief economist at the U S Commerce Department. Her research
• 13:59
  Speaker 1: has focused on how to revitalize US manufacturing. Sue, thanks
• 14:04
  Speaker 1: for being with us today. Thank you. Now, we've been
• 14:07
  Speaker 1: talking about the fu y Out glass factory in Moraine,
• 14:11
  Speaker 1: hearing the story about that. How would you sum up
• 14:14
  Speaker 1: the bigger picture with manufacturing in Ohio and across the
• 14:18
  Speaker 1: United States in recent years? So across the US, um
• 14:24
  Speaker 1: we've seen since between about nineteen sixty and about two
• 14:27
  Speaker 1: thousand UM there were between fifteen and seventeen million manufacturing
• 14:32
  Speaker 1: jobs and just sort of fluctuated regularly with the business cycle.
• 14:37
  Speaker 1: Starting in two thousand, there was this historic decline. We
• 14:40
  Speaker 1: lost of manufacturing jobs between two thousand and two thousand
• 14:44
  Speaker 1: and ten, and then about eight hundred thousand of those
• 14:48
  Speaker 1: came back or have come back since two thousand and then.
• 14:53
  Speaker 1: It's been kind of stable since then. In Ohio is
• 14:58
  Speaker 1: part of that. Pick sure, there's been a general move
• 15:03
  Speaker 1: of manufacturing both out of cities and out of the North,
• 15:09
  Speaker 1: and so existing cities manufacturing heavy cities like Cleveland and
• 15:15
  Speaker 1: Dayton and Toledo have been hurt a lot um the
• 15:19
  Speaker 1: suburbs less so of those cities, But overall, I think
• 15:24
  Speaker 1: the manufacturing employment in Ohio has been slightly worse than
• 15:29
  Speaker 1: those national trends that I've stated. So, so when you
• 15:32
  Speaker 1: talk about the decline of those manufacturing jobs, both in
• 15:35
  Speaker 1: Ohio and across the nation, how much of a villain
• 15:39
  Speaker 1: has China been in that decline? Well, this is quite
• 15:43
  Speaker 1: a contentious topic. I think that the best research has
• 15:49
  Speaker 1: been done by David Otter of m I T and
• 15:53
  Speaker 1: colleagues Gordon Hanson and David Dorne, and they've found um
• 15:59
  Speaker 1: about twenties I percent of this decline that I mentioned
• 16:02
  Speaker 1: in manufacturing overall can be attributed to the rise of China.
• 16:08
  Speaker 1: There's a couple of other studies that find using a
• 16:11
  Speaker 1: different method, that find a similar decline. There's these studies
• 16:16
  Speaker 1: have been challenged, but but I think that that that
• 16:18
  Speaker 1: it's the auditor enhancing has filled the gold standards, so
• 16:21
  Speaker 1: it's it's a significant a part of the decline is
• 16:25
  Speaker 1: due to China. See what do you make of the
• 16:27
  Speaker 1: argument that President Trump has made as president on the
• 16:32
  Speaker 1: campaign trail that he can bring the jobs back to America,
• 16:37
  Speaker 1: based on your understanding of how the manufacturing sector works,
• 16:42
  Speaker 1: the history of the sector, how realistic is that? So
• 16:46
  Speaker 1: I think the jobs could be brought back. I'm not
• 16:50
  Speaker 1: sure that any of the policies that Trump has announced
• 16:54
  Speaker 1: so far as the administration, you know, would be sufficient
• 16:57
  Speaker 1: to do that. But those are two very different questions.
• 17:02
  Speaker 1: One of the things so, so eight hundred thousand jobs,
• 17:05
  Speaker 1: manufacturing jobs came back to the US between two thousand
• 17:07
  Speaker 1: and twenty fifteen, and there's some analysis done by the
• 17:11
  Speaker 1: White House Council of Economic Advisors at that time that
• 17:13
  Speaker 1: showed that a lot of that was because of a
• 17:16
  Speaker 1: structural change and the way companies thought about manufacturing in
• 17:21
  Speaker 1: the US, partly as a result of government programs, partly
• 17:25
  Speaker 1: as a result of changes abroad, and partly as a
• 17:28
  Speaker 1: result of companies doing a better job of understanding their
• 17:32
  Speaker 1: own costs. Um So, one of the things that companies
• 17:35
  Speaker 1: measure really well is their direct costs of factory labor.
• 17:40
  Speaker 1: And that's the one cost that falls when you go
• 17:42
  Speaker 1: to a company a country like China. Uh. Lots of
• 17:46
  Speaker 1: other costs rise, but they rise in ways that are
• 17:48
  Speaker 1: really hard to capture in existing accounting systems. You know,
• 17:51
  Speaker 1: so you may take longer to debug apart because you're
• 17:54
  Speaker 1: talking to somebody at different time zone in a different language. Um,
• 17:59
  Speaker 1: your engineer travel there, and then they lose a bunch
• 18:01
  Speaker 1: of time both there and on the way back to
• 18:04
  Speaker 1: the jet leg Uh, you have a lot longer lead time. UM.
• 18:09
  Speaker 1: These are things that have been very hard to value.
• 18:11
  Speaker 1: And Uh. Increasingly companies are understanding that those costs are
• 18:15
  Speaker 1: are actually quite high. And then the costs that they
• 18:19
  Speaker 1: do measure are also rising. So, particularly wages in China
• 18:22
  Speaker 1: are rising. Um. And so there's a bunch of factors
• 18:27
  Speaker 1: that are causing companies to come back. And then I
• 18:30
  Speaker 1: think under Obama there were some policies that that helped
• 18:33
  Speaker 1: with that, so creating of programs that facilitate the creation
• 18:38
  Speaker 1: and introduction of new manufacturing technologies, that helped train skilled
• 18:42
  Speaker 1: manufacturing workers, um, et cetera. Now you've mentioned that there
• 18:47
  Speaker 1: were eight hundred thousand manufacturing jobs that came back. Can
• 18:52
  Speaker 1: we get to a point where you restore the many
• 18:55
  Speaker 1: millions that have been lost over the last twenty years?
• 18:58
  Speaker 1: Is that even possible? It seems to be what President
• 19:01
  Speaker 1: Trump wants. And how much of a role could Chinese
• 19:05
  Speaker 1: investment such as the glass investment. How much can that
• 19:10
  Speaker 1: play a role in boosting these manufacturing jobs within the
• 19:14
  Speaker 1: borders of the United States. So yeah, so I think
• 19:18
  Speaker 1: it's unrealistic to bring back, uh, you know, five million jobs.
• 19:23
  Speaker 1: And I guess I occupy somewhat of an odd space
• 19:25
  Speaker 1: in this debate. You know, it seems like the polls
• 19:27
  Speaker 1: are either zero jobs can be brought back, um because
• 19:31
  Speaker 1: it's changed, or you know, they can all come back,
• 19:34
  Speaker 1: and I, you know, I think that some could come back.
• 19:36
  Speaker 1: I mean, so if you think about a country like Germany, uh,
• 19:40
  Speaker 1: wages are higher than they are in the US, and
• 19:42
  Speaker 1: they have of their GDP and manufacturing, we have about
• 19:47
  Speaker 1: twelve So you know, let's say we I don't think
• 19:51
  Speaker 1: it would be a stretch with good policy to say
• 19:54
  Speaker 1: we could get you know, fifteen to eighteen percent of
• 19:56
  Speaker 1: our GDP and manufacturing UM, and that would you raise
• 20:01
  Speaker 1: the percentage of employment. So manufacturing is more productive on average,
• 20:04
  Speaker 1: so it's about nine percent of employment is in manufacturing.
• 20:07
  Speaker 1: So you know, maybe we get to twelve percent of
• 20:10
  Speaker 1: employment or something in manufacturing. That's uh, that's a few
• 20:15
  Speaker 1: million jobs more than more than nothing, more than nothing, UM.
• 20:21
  Speaker 1: I guess I also care about the kind of jobs
• 20:24
  Speaker 1: that we bring back, and dangerous low wage jobs that
• 20:30
  Speaker 1: don't have much of a career path. You know, I'm
• 20:34
  Speaker 1: I don't see a reason to kind of prioritize those
• 20:37
  Speaker 1: jobs in whatever sector they're in. You know, the reason
• 20:40
  Speaker 1: that I'm interested in bringing back manufacturing jobs is that,
• 20:43
  Speaker 1: on average, manufacturing jobs pay more, have a career path
• 20:47
  Speaker 1: for people of a variety of educational backgrounds, tend to
• 20:51
  Speaker 1: be associated with innovation. Um. But if the manufacturing jobs
• 20:56
  Speaker 1: in question don't do those things, then you know, I
• 20:59
  Speaker 1: personally am less interested in policy that brings them back. So, Sue,
• 21:02
  Speaker 1: what do you think the American rust belt is going
• 21:05
  Speaker 1: to look like in fifteen to twenty years? Um? Kind
• 21:08
  Speaker 1: of described to us what you think it's going to
• 21:10
  Speaker 1: look like? And can you also weave in how you
• 21:13
  Speaker 1: see China fitting into that equation? So I guess I see,
• 21:19
  Speaker 1: you know, two paths, a good path and a bad path,
• 21:23
  Speaker 1: And to some extent you know you can see mixes,
• 21:26
  Speaker 1: but to some extent you know their trajectories and with
• 21:30
  Speaker 1: their own virtuous, ambitious cycles. UM. So I think the
• 21:37
  Speaker 1: positive path is well to step back. I think the
• 21:40
  Speaker 1: issues with American manufacturing have been that, you know, we're
• 21:44
  Speaker 1: kind of stuck in the middle. We're not innovative as
• 21:48
  Speaker 1: innovative as Germany, and we're not as low wages Mexico
• 21:53
  Speaker 1: or China. And you know, I personally would love to
• 21:55
  Speaker 1: see us move in a Germany direction. UM obviously not
• 21:59
  Speaker 1: imitate eat in Germany, but but adopting some of the
• 22:03
  Speaker 1: things that seem appropriate and giving them American twist. And
• 22:06
  Speaker 1: you know what could that could mean is there's a
• 22:07
  Speaker 1: lot of new technologies that are that are possible, So
• 22:11
  Speaker 1: things like robotics, things like additive manufacturing, uh, things like
• 22:18
  Speaker 1: what's called industry four point, where you have a add
• 22:20
  Speaker 1: a lot more data in the manufacturing UM and this,
• 22:25
  Speaker 1: you know, makes it possible. One way of adopting all
• 22:27
  Speaker 1: this technology is a way that complements workers and so
• 22:31
  Speaker 1: then workers have access to the data these sensors are
• 22:34
  Speaker 1: providing and they can themselves make tweaks the production process.
• 22:38
  Speaker 1: And so then you get UM workers that are extremely
• 22:42
  Speaker 1: productive and they're tied in both detail with detailed knowledge
• 22:47
  Speaker 1: to the shop floor, but also have an understanding of
• 22:51
  Speaker 1: what they're doing. The principles that can be promoted to
• 22:54
  Speaker 1: be supervisors or go on and get further education and
• 22:57
  Speaker 1: to say becoming engineers. UM. So this is not this
• 23:02
  Speaker 1: is somewhat like the path of a Siemens plant that
• 23:05
  Speaker 1: I visited in North Carolina, where they basically invest a
• 23:08
  Speaker 1: couple hundred thousand dollars in an apprentice uh and these
• 23:12
  Speaker 1: people when they complete the apprenticeship, they're making about sixty
• 23:16
  Speaker 1: dollars a year. UM. So these are you know, good jobs.
• 23:20
  Speaker 1: They had the option to go on and get further
• 23:22
  Speaker 1: school and become a degreed engineers. So that's you know,
• 23:26
  Speaker 1: I think a path that would be great for individual
• 23:28
  Speaker 1: workers be great for the economies in which they're employed.
• 23:31
  Speaker 1: I think there's another path, which is um. You know,
• 23:36
  Speaker 1: the US still has a lot of population density it
• 23:40
  Speaker 1: uh uh is an attractive market. UM. As wages rise
• 23:49
  Speaker 1: abroad in countries like China and Vietnam and Mexico, as
• 23:54
  Speaker 1: shipping costs rise, uh, it becomes attractive to bring assembly
• 24:01
  Speaker 1: of heavy stuff back to the US. And typically those
• 24:06
  Speaker 1: jobs aren't done in a particularly skilled way. You're just
• 24:10
  Speaker 1: kind of snapping stuff together. UM. Companies try to do
• 24:16
  Speaker 1: it very quickly and without a lot of training, and
• 24:18
  Speaker 1: you know, pay people eight to ten to twelve dollars
• 24:21
  Speaker 1: an hour. Uh, that's another path. Well let's talk well,
• 24:26
  Speaker 1: let's talk about that. That is the I think the
• 24:29
  Speaker 1: key point the Fuyout glass plant as uh, you know,
• 24:33
  Speaker 1: as the local official told us, it's it's brought jobs back.
• 24:36
  Speaker 1: It's been it's been a net positive for the local
• 24:39
  Speaker 1: economy there. You know clearly, um, you know, bringing a
• 24:44
  Speaker 1: dead General Motors plant back to life is something that, uh,
• 24:48
  Speaker 1: that that can help the community. But are those the
• 24:51
  Speaker 1: kinds of jobs? Is this is this investment by big
• 24:55
  Speaker 1: Chinese company a you know, really a net positive for
• 24:58
  Speaker 1: the economy and work or is it or or is
• 25:02
  Speaker 1: it not the kind of manufacturing that would really help
• 25:06
  Speaker 1: the economy. You know, it's got elements of both. So
• 25:10
  Speaker 1: it's paying you know, twelve dollars an hour, which is
• 25:13
  Speaker 1: above the Ohio minimum age or the federal minimum age. Um.
• 25:18
  Speaker 1: On the other hand, I guess I don't understand, you know,
• 25:22
  Speaker 1: so much about the path for advancement. We know that
• 25:26
  Speaker 1: it's been a pretty dangerous plant that you know, Ocean
• 25:30
  Speaker 1: doesn't go after a lot of plants, and the fact
• 25:33
  Speaker 1: that they've had repeated investigations and paid a couple hundred
• 25:37
  Speaker 1: thousand dollars and find that, again not typical UH Ocean's
• 25:41
  Speaker 1: finding power is quite low. So I think that we
• 25:46
  Speaker 1: need to push harder on these well on all employers. UM.
• 25:52
  Speaker 1: I think that there are attractions, you know, I think
• 25:54
  Speaker 1: Chinese companies have discovered as American companies have that it's
• 25:59
  Speaker 1: you want to supply the US market. There's a lot
• 26:02
  Speaker 1: of advantages to doing it from the US. And you
• 26:06
  Speaker 1: can imagine even that plant adopting different kinds of production
• 26:11
  Speaker 1: recipes where you have more productive workers who are well
• 26:14
  Speaker 1: trained UH and UM, able to innovate, and able to
• 26:21
  Speaker 1: sell higher end products. So I would you know, push
• 26:25
  Speaker 1: particularly before giving that company any more incentives to expand
• 26:29
  Speaker 1: that that they UH, you know, at a minimum, fully
• 26:33
  Speaker 1: correct these safety violations. I know they've invested several million
• 26:37
  Speaker 1: dollars in doing so is that enough, I don't know.
• 26:40
  Speaker 1: And then push, you know, let's create a career path,
• 26:43
  Speaker 1: let's figure out you know, involving workers in UH innovation
• 26:48
  Speaker 1: and in debugging of new processes is a way to
• 26:52
  Speaker 1: both justify higher wages and benefit the company. So so,
• 26:57
  Speaker 1: just to wrap up, what would you say is kind
• 26:59
  Speaker 1: of the big picture here for Chinese investment in the
• 27:02
  Speaker 1: U s economy, in particularly the manufacturing sector. If I'm
• 27:05
  Speaker 1: a worker in Moraine, Ohio at the moment, how optimistic
• 27:10
  Speaker 1: should I be about these types of investments, especially with
• 27:13
  Speaker 1: the President Trump and Chinese President Hijin pingg about to
• 27:17
  Speaker 1: meet now. So I think there's gonna there's reasons for
• 27:20
  Speaker 1: the Chinese to want to invest in the US. UM.
• 27:23
  Speaker 1: You know, it's an attractive market, and UM, it's going
• 27:26
  Speaker 1: to be attractive for them to supply it from the US.
• 27:29
  Speaker 1: And I think it's incumbent upon policymakers to make sure
• 27:34
  Speaker 1: that those are good jobs and that the Chinese adapt
• 27:37
  Speaker 1: to the characteristics of the American workforce, which is more
• 27:42
  Speaker 1: educated than perhaps the workforce that they've been exposed to
• 27:46
  Speaker 1: in China, and that they contribute to educating that workforce.
• 27:50
  Speaker 1: And you know, I think there's a potential for a
• 27:53
  Speaker 1: usually beneficial relationship and uh, maybe pushing a little harder
• 27:58
  Speaker 1: on both the safety and the wage questions. UM can
• 28:01
  Speaker 1: can do that, UM, And I think we've you know,
• 28:03
  Speaker 1: we've seen a few Chinese companies that have actually moved
• 28:06
  Speaker 1: in that direction. All right, Well, we'll see how that
• 28:09
  Speaker 1: plays out. And thank you very much for joining us today,
• 28:13
  Speaker 1: Professor Helper. So, Andrew, what's your takeaway from all this?
• 28:22
  Speaker 1: What what did what did we learn about that that
• 28:24
  Speaker 1: you didn't pick up during your reporting trip out there? Well,
• 28:28
  Speaker 1: what I heard is that these towns like Moreno Ohio,
• 28:32
  Speaker 1: they want the capital, and China has deep pockets and
• 28:36
  Speaker 1: it has lots of capital. So it's a natural relationship.
• 28:40
  Speaker 1: It's a mutually beneficial relationship. What I took away from
• 28:45
  Speaker 1: Sue at Case Western was it what's good for companies
• 28:50
  Speaker 1: and what's good for a town's revenue base is not
• 28:54
  Speaker 1: necessarily good for the American worker. Yeah, Andrew, it's really remarkable.
• 28:58
  Speaker 1: I mean, if we could see President and Trump go
• 29:00
  Speaker 1: out there, uh, for example, and visit that plan and
• 29:03
  Speaker 1: get a different perspective from somebody who talked so much
• 29:06
  Speaker 1: during the campaign about China raping, uh, raping this country,
• 29:11
  Speaker 1: all the unfair trade practices and so on and so forth.
• 29:14
  Speaker 1: I mean, he softened some of that rhetoric since he
• 29:17
  Speaker 1: became president. He's meeting with President Chief and paying very shortly.
• 29:22
  Speaker 1: But you know, there's definitely more wrinkles in this relationship
• 29:26
  Speaker 1: between the two countries than most people know about. Yeah,
• 29:30
  Speaker 1: I think he would see that that those some of
• 29:32
  Speaker 1: those jobs have come back. But I think the other
• 29:35
  Speaker 1: thing he will see is on that assembly line, there's
• 29:37
  Speaker 1: a heck of a lot more automation than there used
• 29:39
  Speaker 1: to be. There's a lot of robots putting together those windshields.
• 29:43
  Speaker 1: So bringing jobs back is not as simple as just
• 29:46
  Speaker 1: moving pieces around on a map. When you bring jobs
• 29:50
  Speaker 1: back over the borders, sometimes those jobs changed. So I
• 29:53
  Speaker 1: think that the picture he would see would be perhaps
• 29:55
  Speaker 1: a lot more complicated than the one he has conveyed.
• 29:58
  Speaker 1: But bringing those jobs could definitely use from some help
• 30:02
  Speaker 1: from China, at least as we've seen from this investment.
• 30:05
  Speaker 1: For sure. Right, China is not simply a villain, that's
• 30:10
  Speaker 1: for sure in this story. All Right, Benchmark will be
• 30:13
  Speaker 1: back next week, and until then, you can find us
• 30:15
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• 30:18
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• 30:22
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• 30:24
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• 30:33
  Speaker 1: M A Y E D a Benchmark is produced by
• 30:37
  Speaker 1: Sarah Patterson and the head of Bloomberg Podcast is Alec McCabe.
• 30:41
  Speaker 1: Thanks for listening, See you next time. Four