North Carolina woos a Chinese tire-maker — and lands the biggest rural manufacturing investment in state history.
Challenge: Attract a large-scale manufacturer paying competitive wages to eastern North Carolina.
Solution: Years of infrastructure planning yield a pad-ready site, and state and local officials work over several months to build trust and forge a strong relationship with a China-based company.
By Mark Tosczak
When North Carolina economic-development officials toured the company’s manufacturing operations in Weihai, China, in June 2017, they knew they were looking at the factory of the future.
“It’s all air-conditioned, it’s robotic, it’s spotless,” says N.C. Commerce Secretary Tony Copeland, who led the state delegation. “It’s incredible.” But that summer, as Copeland marveled at the manufacturing sophistication, he was unsure whether it would be part of North Carolina’s future.
State and local officials had been pursuing Triangle Tyre Co. since the early spring. The company, which was founded in China’s Shandong province in 1976, makes more than 22 million tires annually. When Triangle announced in December it had given the 1,507-acre Kingsboro megasite in Edgecombe County the green light for its first U.S. manufacturing operation, it was a potentially transformative economic-development win for the region: Edgecombe’s unemployment rates had been among the highest in the state in recent years, and the new jobs will pay an average annual wage of $56,450, about 70% higher than the county average. Initial plans call for $580 million in capital investment and the creation of 800 jobs.
“What this really fits into is the governor’s vision … and my vision of bringing large-scale manufacturing back to rural North Carolina,” Copeland says. Landing the deal involved a combination of relationship-building and a rich incentives package, including a pad-ready site with roads cut in, utilities ready to be connected and the ground prepped for a builder to construct the concrete slabs on which factory buildings will sit. In all, state and local incentives could total as much as $152 million.
Since 2015, Chinese firms have faced higher import duties on tires made at home and shipped to America, prompting a U.S. factory-building spree. Other Chinese tire-makers have announced plans for new plants in South Carolina and Georgia.
Triangle Tyre ranked as the world’s 16th-largest tire-maker based on estimated 2016 sales, according to industry publication Tire Business. Its subsidiary, Triangle Tire USA, established its headquarters in Franklin, Tenn., in 2016. The company had opened a technical center in Akron, Ohio, in 2011 to focus on the U.S. market.
Once it is up and running at full capacity, the Edgecombe County operation will roll out an estimated 6 million tires per year. They won’t be the first Tar Heel-made tires, though. North Carolina is the nation’s third-largest tire-producing state, churning out some 75,000 tires a day. South Carolina is No. 1, with Oklahoma the second-biggest producer.
The U.S. Tire Manufacturing Association says the industry directly provides 16,368 jobs in North Carolina. Bridgestone Americas, the U.S. arm of the world’s largest tire-maker, employs about 2,000 people at a plant in neighboring Wilson County. In 2016-17, the Japanese company announced a 10-year, $344 million expansion. Akron, Ohio-based Goodyear Tire & Rubber Co., the third-largest world tire-maker, employs about 2,500 at a plant in Fayetteville in southeastern N.C. And Japan’s Yokohama Rubber Co. announced plans for a 56-employee R&D center in the Charlotte suburb of Cornelius in April 2018.
When state officials first learned about Project Diamond, the code name for the Triangle Tyre expansion, they only knew it was a manufacturer in the automotive industry. Consultants from Deloitte’s Chicago office who had been scouting sites for Triangle Tyre contacted officials at the Economic Development Partnership of North Carolina, the Cary-based organization that assists with business recruiting. Given the criteria — a large industrial site, available workforce and good transportation infrastructure — Edgecombe’s Kingsboro megasite was a logical fit.
The county had been working on the megasite for years, says Oppie Jordan, vice president of the Carolinas Gateway Partnership, an economic-development agency covering Edgecombe and Nash counties.
“It just didn’t happen overnight,” she says. “That was something I had been working on for probably 15, 16 years.” In 2012, the megasite was designated a CSX Select Site, a certification awarded by the Jacksonville, Fla.-based railroad company based on size, access to rail, proximity to highways and other infrastructure criteria for industrial development.
In 2016 — before Triangle Tyre was even on the radar — the state provided $1.7 million for water, sewer, road infrastructure and a groundwater study at the site, and the Golden LEAF Foundation awarded the partnership $7 million for additional infrastructure. Golden LEAF deploys funds derived from the 1998 tobacco settlement to assist rural communities.
The company will take about 400 acres that offer access to U.S. 64 and CSX rail and are 10 minutes from Interstate 95. Raleigh-Durham International Airport is an hour away, while Rocky Mount, population about 55,000, is less than 15 minutes.
Project Diamond began to crystallize in late April 2017, when Triangle Tyre executives visited the site. North Carolina officials were aware the company was visiting other U.S. locations, including Laurens County, Georgia.
“We flew the site with them in a helicopter,” Copeland says. “They got to walk on the site. They got to examine the community, the livability.” After that meeting, state officials continued to exchange information with the Deloitte consultants, sending details on workforce, utilities and more. In early June, Copeland and Norris Tolson, president of Carolinas Gateway, took a group to visit Triangle Tyre executives in Weihai, a city of about 2.8 million just across the Yellow Sea from South Korea.
“[They weren’t] showing their hand,” Copeland recalls, “but we believed they were down to one other state.” With more than a half-billion-dollar investment at stake, establishing a trusting relationship with Triangle Tyre was critical, he says. As a former assistant secretary at the N.C. Department of Commerce and an attorney who ran his own site-selection firm from 2008-13, Copeland had experienced working with Chinese companies.
One selling point was that other large Chinese companies have invested in North Carolina. Lenovo, a Chinese computer-maker, purchased IBM’s PC business in 2005 and based the U.S. business in the state, while China’s WH Group bought pork giant Smithfield Foods in 2013.
“North Carolina is not unknown among Chinese business circles,” Copeland says. Nonetheless, when the Tar Heel delegation left China, Triangle Tyre hadn’t made a decision.
On June 21, another group of Triangle Tyre executives, including the company’s vice chairman, dined with Gov. Roy Cooper in the Governor’s Mansion before returning to the Commerce Department to negotiate into the evening. “We knew they were serious then,” Copeland says, but Georgia was also still in the running when company executives returned to China.
One key to the deal, Copeland and Jordan say, was being able to provide the pad-ready site. With the help of legislation passed as negotiations proceeded, the state enlisted the N.C. Department of Transportation, which has engineering and contracting capabilities. Other partners included the North Carolina Railroad Co. and Richmond, Va.-based Dominion Energy.
On July 25, a call was scheduled between Triangle Tyre’s top executive, Chairman Ding Yuhua, and Cooper to work out the final broad strokes of a deal. (Yuhua died in June 2018.) Most of the details had been settled, but a few key points remained up in the air. When the call ended, the state had secured the largest manufacturing investment ever in rural North Carolina.
The Triangle Tyre plants will be the company’s most advanced. “You’re going to have more or less 800 people … making 6 million tires a year,” Copeland says. “If that had been 20 years ago, you would have had 4,000 people doing that.”
But that kind of high-tech manufacturing, which relies heavily on robotics and computers, is how North Carolina is reviving manufacturing in places that have lost investment and jobs to foreign factories with cheaper labor over the last 25 years. These plants require a different kind of worker, someone who might be more adept with a keyboard and coding than a wrench or welding torch. On many of Triangle Tyre’s assembly lines in China, tires aren’t touched by a human hand until the quality control inspection, says Jordan, who visited the plants in summer 2018.
A big part of the incentives package was a $10 million Advanced Manufacturing Training Center, funded by another Golden LEAF Foundation grant and run by Edgecombe Community College. The training center, which will be located at the Kingsboro site, is designed to serve Triangle Tyre initially, says Harry Starnes, vice president of instruction at the college. However, it could also help other employers.
“We’ll be working with other companies as the needs arise, so we’re really excited about how we can do that,” he says. Edgecombe Community College already runs a four-week class for potential Bridgestone workers in Wilson. Starnes expects to run a similar class for Triangle Tyre, as well as provide other specialized training.
Triangle Tyre has been closely involved with the training center. Starnes has visited China to learn more about the company and its worker-training needs. The community college, which hadn’t finalized plans for the building as of fall 2018, has modified original blueprints based on what Starnes learned in China. For example, it has reduced the amount of flex space, which college officials originally thought could be used to house a partial assembly line for training. Instead, more square footage will be devoted to classrooms and labs.
Starnes wishes he had more students going through Edgecombe’s manufacturing-related training programs. Students who enter the community-college programs, he says, often do so in the same county where they anticipate getting a job after graduation. With hundreds of high-paying Triangle Tyre jobs coming to Kingsboro over the next couple of years, that wish may just come true.