Editor’s note: This story is completely updated with this report from Wesley Brown.
Making good on a seven-month old promise to bring a major employer to the Arkansas Delta, Gov. Asa Hutchinson announced a deal with China’s largest cotton textile manufacturer to invest $410 million to retrofit a 1.4 million square foot cotton-spinning, garment factory in Forrest City.
At a packed press conference at the State Capitol, Hutchinson, state Economic Development Director Mike Preston and Yafu Qiu, chairman of the Shandong Ruyi Technology Group, announced the Chinese company will locate its’ first manufacturing operation in North America in the Delta city, creating up to 800 jobs that will pay more than $15 an hour when operational.
“This is something that is going to have a tremendous impact on a county and a region that has lagged behind the national employments statistics,” Hutchinson said, citing the 4.8% unemployment rate in St. Francis County. “So, this is not only great for Arkansas, but it is great for a region of the state that is going to get an economic boost, to a region that much deserves it and worked very hard for it.”
Hutchinson, who has made two trips to the Shandong Province in China since Preston was named the state’s top job recruiter in April 2015, said he believes the Ruyi announcement was the largest economic development project in the Delta in terms of total investment and jobs.
“From my memory and understanding, this is the largest job announcement in the Delta in recent history,” the governor said. “You can correct me if I am wrong, I think this beats them all.”
Under the memorandum of understanding Hutchinson signed with Qui at the Governor’s Conference room, Ruyi plans on processing more than 200,000 tons of Arkansas cotton annually at the Forrest City facility. And it was not lost on the Ruyi chairman that Arkansas is the fifth largest cotton producer among all states, producing more than 840 thousand bales in 2016.
“Cotton growing is a very modern agri-business. We will leave that to the professionals in (Arkansas),” said Qui, speaking through an interpreter. “Our manufacturing facility in Arkansas will become the first milestone of Ruyi’s steps into the U.S. We are dedicated to provide the product with cutting edge technology and superior quality.”
VACANT PLANT TO BE REMODELED
Ruyi plans to begin renovating the vacant and aging Sanyo building in late 2017. The former Sanyo factory, which was built in 1977, saw peak employment of more than 750 workers in the late 1990s when workers there manufactured high definition LCD and plasma TVs.
But the cavernous factory has been empty for more than a decade after the former Japanese electronics company shut down production in Forrest City as the plasma TVs became outdated. Once necessary upgrades are complete, Ruyi hopes to begin production at the cotton-spinning textile factory by mid-2018.
According to state economic development officials, the state of Arkansas has agreed to provide cash incentives up to $4 million and payroll rebates of approximately $11 million to support the project. Locally, Forrest City and St. Francis County are expected to boost the incentive package with about a $1 million in cash and other inducements.
Preston called the landing of the Ruyi project a team effort between local and state economic development officials, including state lawmakers and Forrest City officials. The AEDC chief said he and his team began recruiting Ruyi to Arkansas after meeting company officials on an official Far East nearly eight months ago.
“When looking to expand into North America, world-class international companies continue to choose Arkansas,” Preston said. “The hundreds of jobs to be created by Ruyi will have an economic impact beyond eastern Arkansas into the entire state. Today’s announcement is further proof of Arkansas’ international momentum.”
Added Kay Brockwell, economic development consultant for Forrest City: “This project is tremendously important to Forrest City and St. Francis County not just for the great jobs it brings to our region, but also for the value to the cash crop on which the Arkansas Delta economy has been based for more than 100 years,” said Brockwell, who was also involved in the recruitment of Hino Motors to eastern Arkansas nearly
SHANDONG PROVINCE CONNECTION
Hutchinson and Preston noted that Ruyi is from the same region as Sun Paper Co. and Suzhou Tianyuan Garments Co, two other Chinese companies from the Shandong province that have announced major economic development projects in Arkansas over the past 12 months.
Almost exactly a year ago, Hutchinson signed a similar memorandum of understanding with Sun Paper to invest more than $1 billion to build a bio-products mill in South Arkansas that will create 250 new jobs at an average salary of $52,000 a year. In March, the Chinese paper giant’s Arkansas subsidiary, Sun Bio, filed its initial application for a Title V air permit with the state Department of Environment Quality, jumpstarting the countdown for construction to begin on one of the largest economic development projects ever in south Arkansas.
In October, Hutchinson penned the deal with Suzhou Tianyuan, a Chinese sport apparel manufacturer that will invest more $20 million and bring 400 jobs paying $14 an hour and benefits to the Little Rock area. Three weeks ago, Little Rock Port Authority officials said the garment maker signed a lease to locate in the authority’s industrial park on the Arkansas River.
At that time, Hutchinson also said other Chinese prospects were interested in prospective site locations in the Arkansas Delta, including several vacant industrial sites across the region that once served as the hub for the state’s blue-collar focused clothing and shoe manufacturing sector.
“I knew that whenever we were negotiating and signing the agreement with Tianyuan that we were negotiating Ruyi to come to Forrest City, but obviously it takes time,” Hutchinson said of his early talks with the Chinese cotton-spinning conglomerate. “But I consider this to be the biggest trophy we could bring to the Delta …”
Founded in 1972, Shandong Ruyi Technology Group Co. Ltd., owns the two largest comprehensive textiles and garment industry chains in the world. Its business is spread throughout France, Japan, Australia, New Zealand, India, Pakistan, United Kingdom, Germany, Italy and other countries, including other regions in China. The Chinese conglomerate has a total of 30,000 employees across two publicly listed companies, as well as 20 wholly owned and holding subsidiaries. In China, Qiu said the company he heads is the largest of the more than 45,000 competitive textile and garment enterprises across the Far East nation.
Qui said after looking after several other states, Ruyi chose Arkansas for two reasons: cotton and the ease of working with AEDC and other state officials.
“You must be asking why such a Chinese company parachuted into Arkansas. Those factors were a crucial point to making this decision,” he said.
Hutchinson and Preston said they are eager to keep the current streak of economic development wins going in China, especially in the Shandong region that Qui boasted is home to Confucius and that nation’s garment industry. Hutchinson credited Lindsay Liu, director of Arkansas’ China office in Shanghai, for cultivating a number of prospects in the region.
Preston said the governor and members of the AEDC staff have additional trade missions planned for later this summer, including a trip to the Paris Air Show and a third tour of the Far East. Those overseas journeys will be Hutchinson’s sixth and seventh international trade excursions in his tenure as governor. In 2015, the governor made trade visits to Cuba, Europe, and the Far East, where he was able to lay the groundwork for the Sun Paper deal and other smaller projects.