Caixin
Aug 29, 2019 02:29 AM
BUSINESS & TECH

‘American Factory’ First-Half Profit Grows 16.4% to $21 Million

An employee drives a utility car past the float glass packaging area at the Fuyao Glass America production facility near Dayton, Ohio. Photo: Bloomberg
An employee drives a utility car past the float glass packaging area at the Fuyao Glass America production facility near Dayton, Ohio. Photo: Bloomberg

The Chinese automotive glass factory in Ohio featured in Netflix’s first documentary film produced by the Obamas reported double-digit growth in revenue and profit less than three years after it was built in an abandoned General Motor site.

Fuyao Glass America Inc., the American arm of Fuyao Glass Industry Group, posted revenue of $2.65 billion for the first six months of 2019, a 13.7% year-on-year increase, and a net profit of $20.9 million, 16.4% higher than a year ago.

The film is about how Fuyao Glass Industry Group, China’s biggest automotive glass maker, dealt with East-West cultural differences in the revival of the rust belt plant. It has set off widespread media buzz and debate over whether the Chinese way is better.

Fuyao bought the Dayton, Ohio, factory in 2014 and spent two years and more than half a billion dollars refurbishing it as a key part of Fuyao’s global empire of automotive glass manufacturing.

Put into production in October 2016, the factory incurred a net loss of $41.6 million that year. Within just a year, however, the American unit swung to a profit of $754,500 in 2017. In 2018, its net profit jumped to $34.3 million on revenue of $4.75 billion.

“American Factory,” the first film from former U.S. President Barack Obama and First Lady Michelle Obama’s production company, captures the frustration Fuyao faced at first when its Chinese managers found that the American workers in Dayton seemed lazy and inefficient, while the workers complained about low wages, long hours and safety hazards.

In sharp contrast, Chinese migrant workers at a Fuyao factory in China chanted slogans every morning, worked 12-hour shifts and went home once or twice a year, the film shows.

Fuyao’s American unit also benefits from its nonunionized workforce. About two-thirds of the Ohio factory’s 1,500 workers voting in 2017 against forming a union. In the film, Fuyao founder and Chairman Cao Dewang threatened to shut down the factory if a union came in.

The parent company’s first-half report shows that overseas sales accounted for nearly half of the company’s total revenue, up from a 38.65% share a year ago.

America is Fuyao’s most important overseas market. Fuyao currently has a 17% share of the U.S. market, supplying glass to GM, Ford Motor and Japanese auto makers in the U.S., according to a research report by Ping An Securities.

The parent company’s net profit dropped nearly 20% to $2.09 billion in the first half of 2019, reflecting slowing global and domestic economic growth and continued weakness in the auto industry. The parent’s total revenue expanded 2% to $14.36 billion.

As the plant’s share of overseas sales grows every year, any sharp fluctuation in the exchange rate could impact the company’s results, Fuyao said in its financial report. Producing and selling through the American factory could help Fuyao to mitigate exchange-rate risks.

Contact reporter Denise Jia (huijuanjia@caixin.com)


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