May 8, 2018: Daniel Howes, The Detroit News
Detroit — When family-owned Paslin Co. decided to sell itself to a Chinese group, the biggest challenge facing then-COO Kerry Hammer and company leadership was fear.
Would metro Detroit jobs staffing the supplier of robotics systems to global automakers get shipped overseas, its people wanted to know? Two years later, he says the answer is the same as it was the day they sold the company to Zheijiang Wanfeng Technology Development Co.: No.
“It’s been what some people might call a marriage made in heaven,” Hammer, now CEO of Warren-based Paslin, said at this week’s opening of Michigan-China Week, organized by the Michigan-China Innovation Center to host some 150 business leaders from six provinces across China. “Our turnover is down, and our morale is up.”
Welcome to the (potentially) virtuous circle of business exchange between the town that put the world on wheels and the country that now claims the world’s largest auto market. Both have something the other side wants, and both are willing to take risks to get it
A growing number of Chinese players angling to catch up in the auto space are looking to places like Michigan for expertise in next-generation technology. And they’re doing it even as companies like Paslin, with limited financial resources but a hunger for growth, seek access to foreign markets to fuel expansion.
Because of its automotive heritage, Michigan arguably has the richest cluster of engineers and skilled trades workers in the world. That’s proving a powerful draw to Chinese automakers and suppliers looking to push beyond the country’s borders and into the rich U.S. market.
The U.S. affiliate of Changan Automobile, Ford Motor Co.’s joint-venture partner in China, established a research and development center in Plymouth. Shanghai Automotive Industries Corp., General Motors Co.’s JV partner in China, opened a North American operations center in Birmingham. Nexteer Automotive, a former GM parts supplier owned by China’s Pacific Century Motors., is headquartered in Auburn Hills.
Founded in 1937 as a small machine shop, Paslin grew into a successful supplier of automated assembly and welding systems. It claims partial parentage of the body shop that builds Tesla Inc.’s flagship Model S, and its systems assemble the frames for Ford Motor Co.’s F-150 pickups. Yet without a partner, management concluded its growth was limited to North America.
Enter Wanfeng. A report in China Daily at the time of the transaction called the deal a “win-win.” It quoted Wanfeng’s chairman, Wu Jinhua, saying the “acquisition could not only help Paslin realize its globalization, but also enhance Wanfeng’s competitiveness in industrial robot system integration technology.”
Rightly or wrongly, that’s precisely the point. In exchange for Paslin gaining access to more markets and more capital, a Chinese player in the country’s centrally controlled push outside its borders gets access to world-class technology — eventually making it a direct competitor to U.S.-based rivals.
Since 2000, according to state figures, some 300 Chinese companies have invested $4.2 billion in Michigan, much of it in manufacturing. Chinese firms account for 6,000 jobs across the state, ranking Michigan No. 3 in the country for the number of investment deals by Chinese companies.
“Michigan has really out-punched its weight in terms of securing Chinese investment,” says Brian Connors, executive director of the state-backed Michigan-China Innovation Center. “We have dominated in getting Chinese automotive investment.”
But the landscape is changing. Urged by the Communist Party-controlled government, key Chinese industries — especially its fast-learning auto sector — are seeking opportunities to plant roots in the U.S. market. And trade wrangling between Chinese President Xi Jinping and President Donald Trump is raising the chance that China will drop rules limiting foreign ownership of its auto sector to no more than 50 percent.
Still, Michigan’s business and political leaders should understand “there is great connectivity” in China “between enterprises and the government, and between the government and the Communist Party,” Connors adds. “The terrain changes. It’s a pivotal time in the relationship. The most fascinating thing about it is the complexity.”
And as Michigan’s automotive sector — powered increasingly by its interests in China and its regulatory bias for autonomy and electrification — tilts increasingly toward the world’s largest market, that complexity is only likely to grow.