When AGCO Corp. invests half a billion dollars in China over the next three years, most of it will go to the same city.
Changzhou, China, an hour west of Shanghai by bullet train, is already the site of the tractor maker’s largest factory in the country, but the temporary facility opened with a $50 million investment in late 2010 was just the beginning.
Next month Duluth-based AGCO plans to begin building a new factory to produce tractors, engines and drivelines to supply the China market as well as its other plants around the globe, Gary Collar, AGCO’s Beijing-based senior vice president for Asia said in Atlanta.
He laid out plans for the new factory during a May 22 seminar at the Ritz-Carlton Buckhead hosted by Changzhou Mayor Yao Xiaodong, who was leading a delegation of about 75 people to Atlanta, Chicago and five other U.S. cities.
AGCO’s factory will be on a different site than the current facility, which the government provided rent-free to lure the company.
Now Changzhou has become the epicenter of AGCO’s growing China operations, which also include a few offices and an assembly plant for high-horsepower tractors in the northeastern Heilongjiang province, which is home to many large state-owned farms.
With 20 percent of the world’s people but only using 10 percent of its arable land, food security is a huge challenge for the Chinese government, Mr. Collar said.
“You can see that efficiency and productivity are going to be key as China develops its agriculture business, and machinery is a big part of that,” he said.
The new factory will employ 1,500 workers and will churn out 20,000 tractors, 36,000 engines and 36,000 drive lines per year at full capacity. Production is to begin during the second quarter of 2013.
The company has plenty of reasons that about $300 million of its planned $500 million in China investments will end up in Changzhou, Mr. Collar said.
It’s located in the Yangtze River Delta, a major manufacturing region anchored by Shanghai, and comes with a cluster of farming and construction equipment companies. The city also has huge vocational training centers that ensure companies access to skilled workers.
“You just don’t find that all over China,” Mr. Collar said.
One of the biggest factors, though, was support from the Changzhou city government and its foreign investment bureau.
“If you haven’t seen China, you need to get there. If you’re not operating in China yet, you need to. And when you take a look at places to manufacture, whether it’s in petrochemicals, biotechnology or heavy manufacturing like we do, you’d better be in Changzhou,” Mr. Collar said.
Changzhou’s service was also the driving force behind Atlanta-based Novelis Inc.’s decision to build a $100 million plant there to make aluminum sheets for automotive manufacturing, John Gardner, the company’s chief sustainability officer, said at the seminar.
When looking for a site, Novelis submitted 100 questions to the Changzhou investment promotion agency. They were answered in detail by relevant city departments in just one day.
“It’s absolutely people that made the difference for us,” Mr. Gardner said.
Novelis, which operates recycling plants and provides rolled aluminum for beverage cans and other products, is focused on cars as automakers seek to make lighter vehicles with better gas mileage, he said.
Mr. Yao, the Changzhou mayor, told GlobalAtlanta he traveled to Atlanta to build on these partnerships and welcome more Atlanta companies involved in its target industries: clean energy (including solar), information technology, biopharmaceuticals, machinery manufacturing and others.
“It’s really true that Atlanta and Changzhou are highly complementary to each other,” he said.
Changzhou has about 3,400 foreign companies that have invested a cumulative $32 billion in the city.
Mr. Yao assured the crowd that they would feel at home in the city of 5 million people, which was ranked No. 9 on a Forbes list of best commercial cities in China.
“In the city, you can easily find McDonald’s, Walmart, Starbucks, (Dairy Queen) and Subway,” he said, adding that the Bus Rapid Transit system, or BRT, allows travelers to move throughout the city for about 10 cents per journey.
Though Changzhou held a similar seminar in Atlanta last year, the relationship hasn’t all been one-sided.
Atlanta has also been courting investment from Changzhou companies. During his remarks, Jorge Fernandez, vice president for global commerce at the Metro Atlanta Chamber, said he visited the city after Atlanta Mayor Kasim Reed’s March trip to China. He added that a delegation from Atlanta was also in Changzhou as he spoke.
Bill Cronin, vice president at Invest Atlanta, visited prospects with Mr. Fernandez in April. He told GlobalAtlanta that Changzhou is a city that American business leaders should know about but don’t.
“It’s one of those ones that has that wow factor of, ‘Here’s a city that I’ve never heard of before that has 6 million people, more skyscrapers than Buckhead in a row,’ and yet … it’s not something that you hear about,” Mr. Cronin said.
The May 21 event was organized by the Chicago-based U.S.-China Chamber of Commerce in partnership with the World Trade Center Atlanta and the Changzhou government.
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