Chinese glass maker brings new life to former GM Moraine plant

DAYTON, Ohio -- General Motors' former Moraine assembly plant -- little more than a cavernous empty concrete shell since GM closed it in 2008 -- is bustling with activity.

Welders are putting the finishing touches on an assembly line that has begun to crank out windshields and windows.

A dozen orange Kuka robots -- shrouded in plastic wrap on the factory floor -- await installation for another assembly line. And a truck idles at the loading dock while workers load the plant's first shipment: a batch of windows for Hyundai's assembly plant in Alabama.

For Fuyao Glass Industry Group Co., the Moraine plant's new owner, that first shipment is a timely symbol of the company's emergence as a global supplier.

With 65 percent of China's automotive glass sales, Fuyao dominates its home market. And with 18 percent of the global market, Fuyao is challenging heavyweights such as Pilkington, Saint-Gobain and Pittsburgh Glass Works.

Until recently, Fuyao was content to ship glass from its network of plants in China. Then the company opened a $322 million plant in Russia in 2013 to serve Europe. Now it is spending $400 million to convert Moraine, near Dayton, into a central production site for North America.

John Gauthier, president of Fuyao Glass America Inc., says he'll have the annual capacity to produce windows for 4 million vehicles by the end of 2016.

"Our timing is good," Gauthier said. "There is a real capacity shortage with glass in the U.S. right now. We'll suck up some of the excess demand that the other companies are struggling to meet."

Fuyao is part of a wave of Chinese suppliers using acquisitions to transform themselves into global players. Some of those deals have been blockbusters:

• Last year, Yanfeng Automotive Trim acquired a 70 percent share of Johnson Controls Inc.'s $8.5 billion interior trim division. Yanfeng, which has a network of plants in North America, is now one of the world's largest producers of interior trim.
• In March, China National Chemical Corp. acquired Italian tire maker Pirelli for $7.7 billion. Pirelli, which operates tire factories in Georgia and Mexico, gives the state-owned Chinese company a North American foothold.
• In September, AVIC Automotive Systems bought sealant supplier Henniges Automotive for an estimated $1 billion. Four years earlier, AVIC was part of a joint venture that purchased Nexteer Automotive.

According to research firm Dealogic, 2015 will be a record year for Chinese acquisitions of foreign automotive manufacturers. This year through Nov. 10, Chinese global automotive acquisitions totaled $9.3 billion, up from $845 million for all of last year. The Pirelli deal accounts for the bulk of that figure, but the overall trend is clear.

Fuyao joined the trend last year when it bought the Mount Zion, Ill., float glass plant -- which makes raw glass -- from Pittsburgh Glass Works for an undisclosed sum. The company spent $200 million to restart one of two glass furnaces in the once-shuttered plant.

Judging by the level of automation, however, Moraine will be Fuyao's showcase factory. When everything is up and running next year, the production lines will have as many as 400 robots.

That's more automation than in any of Fuyao's glass fabrication plants in China, where wages are much lower, Gauthier notes. But if China's labor costs are so low, why doesn't Fuyao continue shipping all its glass from its home market?

"Natural gas costs three to four times more in China, and electricity prices are two to three times higher," Gauthier said. "And we don't have to ship our glass 6,000 miles."

After Moraine reaches full production, Gauthier says Fuyao's Chinese plants will play the role of "safety valves," shipping products when North American capacity is tight.

Gauthier says the Moraine plant has one more advantage: It's just a couple of miles from Interstate 75, with easy access to assembly plants from Michigan south to Tennessee, Alabama and Georgia.

Customers include GM, Volkswagen, Fiat Chrysler, Hyundai, Kia, Honda and Magna International. And because Fuyao does business with virtually every international automaker in China, the company expects to attract more customers as it expands in North America.

The mastermind behind Fuyao's expansion is its founder, Cao Dewang, a classic example of an up-from-dirt Chinese entrepreneur.

Cao started as a fruit and tobacco vendor on the streets of his hometown of Gaoshan, in China's coastal Fujian province.

In 1983, Cao was offered a contract to run an inefficient state-owned glass plant where he had worked as a salesman. Four years later, he launched his own automotive glass company, and he licensed technology from PPG Industries to modernize production.

After Cao acquired Moraine, he dispatched a couple of dozen key managers to oversee its renovation. Gauthier, the plant manager, is a former PPG manager who once ran the Mount Zion plant.

If Moraine hits its annual production target of 4 million window sets, that plant would have enough capacity to supply nearly 25 percent of all light vehicles produced in North America.

That's not bragging, Gauthier insists. And he adds: "That's our goal."