China has almost 1.3 billion people served by a 2.5-million-mile electric power grid. Rolling blackouts have become commonplace, which is a problem in an economy second in size only to the U.S.
To keep this bright spot from falling dark too often, China has struck a deal with Waco-based Time Manufacturing/Versalift. Xuji Electric, a subsidiary of China’s State Electric Grid, needed a partner as it expands infrastructure and improves power reliability. It chose Time in a “landmark venture,” according to a news release Time made available to the Tribune-Herald this week.
Time will unleash its ability to make aerial lifts, bucket trucks and digger derricks at a facility planned in China. A spokesman for the company said technicians have booked flights for meetings with Xuji Electric there.
“This is good news for Versalift and its employees, including those in Waco,” said Curt Howell, president and CEO of Time Manufacturing.
He spoke Thursday at Baylor University’s 13th annual Global Business Forum, which this year brought together professors, business owners, diplomats and Chinese officials to discuss U.S.-China trade relations. The forum came amid growing conflicts between the nations over tariffs and intellectual property.
Next week, Treasury Secretary Steven Mnuchin and other U.S. representatives will head to Beijing for an eighth round of trade talks, the Associated Press reports. President Donald Trump has threatened an uptick in tariffs to address steel dumping, technology theft and other polices he considers unfair. The sides have reached a temporary truce, according to reports, but Trump has said he will proceed with levies if negotiations stagnate.
Howell, whose office is in Waco, has served as Japanese business operations for Chrysler Corp., and speaks Mandarin Chinese along with four other languages.
During an interview, Howell said he entered into the agreement aware of China’s tough negotiating tactics and reputation for pursuing trade secrets. He said Time will closely guard proprietary information involved in crafting lifts that can stretch between 29 feet to 215 feet into the sky, and are used in the utility and construction trades in Europe, Asia, Africa and North America.
Despite its international reach, literally and figuratively, nearly 600 of its 1,000 employees are based in Waco, Howell said. He said Time has 15 openings locally, and he expects hiring to continue unabated.
Howell said the partnership calls for Time/Versalift to retain control of design, component sourcing, quality assurance and safety inspections. Xuji Electric will oversee marketing, sales and customer relations. The two sides will collaborate on identifying distributors in China, and lining up “upfitters” who can install lifts on chassis produced in China and elsewhere.
Howell, during an interview, said the deal could generate demand for “thousands of additional lifts,” meaning more work locally. Though crews in China will assemble lifts in that country, Time/Versalift stands poised to ship parts to its new trading partner overseas. Meanwhile, until that plant is up and running, Time will continue to send there fully assembled lifts.
“We will pay whatever tariffs we have to pay, of course,” said Howell. “But our dealings with China have gone smoothly for the most part, free from political involvement, because they need what we can provide.”
Asked to discuss specifics about demand for Time/Versalift products in China, Howell said he would prefer not mention exact numbers publicly. He did say there are 4,000 insulated bucket trucks in China to serve the 2.5-million-mile grid, while 200,000 are available for the 2-million-mile grid in the U.S.
“You do the math,” said Howell with a smile.
Trade tensions between China and the United States are nothing new, said Steve Gardner, who directs Baylor’s McBride Center for International Business and served as host for much of the forum held through Friday.
“Back in 2009, President Obama slapped a 35 percent tariff on Chinese tires to stop a surge of imports. The tariff was phased out in 2012, and the Obama administration claimed that it saved 1,200 jobs in the tire industry,” Gardner said. “However, the Peterson Institute of International Economics found that it had also raised tire prices and destroyed about 3,700 jobs in the retail sector.”
In the past, Gardner said, tariffs generally have inflicted damage on the economies of both countries. The potential for more carnage is high, he said, “because we are toying with higher reciprocal tariffs on a much wider range of products.” He said he hopes the tit-for-tat does not explode into a full-blown trade war, “because our economies are interdependent now.”
“A trade war would be horribly destructive,” he added.
Gardner, in an email response to questions, said he is aware of one concession on China’s part, adoption of a new investment law that will take effect in 2020. It promises transparency in foreign investment policies, to allow foreign-invested enterprises to compete in the Chinese market on an equal footing, and to protect intellectual property. He said these moves will benefit the Chinese economy in the long run, attracting foreign investment at a time the country’s Gross Domestic Product growth has slowed from an average of nearly 10 percent from 1989 to 2017, to about 6.6 percent in 2018, according to some estimates, possibly as low as 2.2 percent.
The slowdown, Gardner said, “gives us stronger bargaining power, but it is not in the interest of the U.S. to push China over the edge into a financial crisis that could harm the global economy.” He reminded that China holds more than $1 trillion in U.S. Treasury securities. A liquidity crisis and sell-off “could raise U.S. interest rates and throw our economy into recession.”
Li Qiangmin, Consul General of the People’s Republic of China in Houston, opened Baylor’s forum with a keynote address in which he urged U.S. and Chinese leaders to “seek common ground” with sit-down discussions. He discussed China’s commitment to a vibrant world economy, to addressing its pollution problem, and becoming more transparent in its dealings.
Wayne Hampton, a longtime Waco manufacturing executive who now teaches international business classes at Baylor, said the consul general’s comments rang hollow.
“What he’s saying is what the government of China wants us to believe,” said Hampton, who attended the forum. “Everyday grassroots business people know China does not operate that way. I know from experience.”
Hampton said that as president of Waco Composites, which makes bulletproof panels, he had witnessed what appeared to be theft of the company’s intellectual property, with a Chinese competitor offering a similar product with backing from the Chinese government.
“I put them out of business with a price war,” Hampton said.