After seeing thousands of nondurable apparel manufacturing jobs leave eastern Arkansas since the early 1990s, Gov. Asa Hutchinson and his economic development team are bringing 400 of those jobs back to the state.
In a press conference with reporters at the State Capitol on Thursday (Oct. 20) via Skype, Hutchinson and Arkansas Economic Development Director Mike Preston announced the signing of a memorandum of understanding with Chinese sport apparel manufacturer Suzhou Tianyuan Garments Company that will invest more $20 million and bring 400 jobs paying $14 an hour and benefits to the Little Rock area.
“I am thrilled to announce that Tianyaun has chosen Arkansas as their North American home,” Hutchinson told reporters. “Arkansas’ strategic location will give them great access to the U.S. market and beyond.”
Hutchinson also said the MOU with Tianyuan and an earlier deal signed in April with Chinese paper goods manufacturing giant Shandong Sun Paper Co. illustrates the growing relationship the Arkansas government and business community is fostering with the Chinese people.
“What is [impressive] to me is the significant influence and presence and global significance that Arkansas has in China,” the governor told reporters from Beijing. “If everyone in Arkansas could see the role that we play in this country – I think it would make every Arkansan proud of our entrepreneurs and businesses and the global impact that we have from the state of Arkansas. Of course that comes with the exchanges that we have from the presence of Wal-Mart, Tyson and Cobb-Vantress … here in China, as well as the continued influence we have in soliciting direct China investment in Arkansas.”
Hutchinson made the surprise announcement concerning the Tianyuan deal on the final day of his six-day long trade mission, which began and ended in the Chinese capital city of Beijing. The small Arkansas trade delegation – which also included AEDC’s director of Asian business development, Mark Hamer, and Hutchinson’s chief of staff, Allison Williams, and an Arkansas state trooper – visited five Chinese cities in four provinces over a six-day period.
The trip will also include a visit to the Shandong Province, the eastern China region where Sun Paper’s international headquarters is located. With the Tianyuan deal now in hand, Hutchinson and Preston have collared two major deals with top Chinese companies and promised more are on the way.
Tianyuan is a garment maker specializing in the production of casual and sport apparel, including garment for Adidas, Reebok and Armani. The Chinese manufacturer’s annual production rate is nearly 10 million articles and clothing and currently supplies 90% of the garments marketed by Adidas, which is the second-largest global sports and apparel maker behind Nike.
AEDC OFFERS MULTIMILLION TAX INCENTIVE DEAL
According to the MOU signed by Hutchinson and Tianyuan executives, the Chinese apparel giant will hire 400 full-time workers primarily from Arkansas within four years of starting operations in central Arkansas.
AEDC is offered an incentive package that will include five-year, 3.9% annual tax rebate worth nearly $1.6 million annually. Other incentives include a $1 million infrastructure assistance grant for building improvements and equipment purchases, as well as a $500,000 stipend for worker training.
AEDC will also help provide assistance in helping Tianyuan get 20 work visas for company executives who will live in Arkansas or travel between the U.S. and China on business related to the Little Rock manufacturing plant. The Chinese garment maker also will receive abatement of up to 65% of property taxes from the city of Little Rock and Pulaski County.
Preston said Tianyuan has not yet found a location for its Little Rock manufacturing operation, but hopes to complete that process in the next few weeks. According to the MOU, if a suitable manufacturing site is not found in central Arkansas, Tianyuan’s second option would be securing another location within Arkansas. The AEDC chief said the Chinese company selected Little Rock as the location of its new facility because of its strategic location with the North American marketplace, centrally located between Canada and Mexico and with access to a number of transport options and infrastructure.
HUTCHINSON: MORE JOBS ON THE WAY
In response to questions from reporters, Hutchinson said state economic development officials have been in talks with Tianyuan executives since early in 2016. The conversations also led to Tianyuan officials visiting other prospective site locations in Arkansas, including several vacant industrial sites in eastern Arkansas – once the hub for the state’s blue-collar heavy garment and shoe manufacturing sector.
Hutchinson said some people may be wary of a Chinese manufacturer coming to Arkansas or the U.S., when the eastern part of the state lost thousands of those jobs in the late 1990s and early 2000s that were then outsourced to the Far East and Mexico.
“When you talk about us bringing a garment manufacturer back to Arkansas, it is probably met with some initial skepticism because everyone thinks ‘we lost shoe manufacturing and we lost of our apparel manufacturing in the past,’” Hutchinson said. “[But], this is an opportunity for the Delta in terms of this company … and others that we might recruit in the future. I will tell you that on this trip we have met with apparel manufacturers that are looking at eastern Arkansas and the Delta. Those are ongoing discussions.”
Hutchinson said Chinese President Xi Jinping has publicly stated he is interested in moving more huge garment manufacturing industry and other top industry in that country to the U.S. to be nearer America’s highly influential consumer marketplace. He also said Wal-Mart’s reshoring initiative has also had an impact on bringing some of those nondurable manufacturing back to the U.S.
Wal-Mart Stores CEO Doug McMillon said in June during the retailer’s manufacturing summit that the retailer needed suppliers to help the company reach the goal of bringing $250 billion in manufacturing investment back to the U.S.
“Your feedback is important to us as we try and achieve this $250 billion investment in U.S. made goods. We don’t manufacture things so we need your help. … We want to drive growth and be a place you can count on for growth year after year. We set an objective with Wall Street to grow our business by $45 billion to $60 billion over the next three years and we can’t do that without you,” McMillon said during the summit.
HIGHER-SKILLED JOBS, AGRI PUSH
Unlike in the past industrial, assembly-line setting, many of the new jobs coming back to the U.S. are technical positions that include robotics and other technology that requires higher skilled American workers. Hutchinson said he believes some of those jobs will eventually make their way back to eastern Arkansas.
“Now we see that same manufacturing wanting to come back to the U.S.,” the governor said. “It will be interesting to watch as to how the [Chinese] garment industry will unfold in the coming years and how Arkansas can be a participant of that.”
Before leaving on his trip last Saturday (Oct. 15), Hutchinson said he hoped to talk with top government officials in Beijing about removing some trade barriers and promote the state’s agriculture and farming sector, particularly the state’s rice and poultry. Hutchinson said he was able hold meetings with top Chinese officials about the avian flu ban on U.S. poultry products, restrictions on rice exports to China, and a U.S. complaint with the World Trade Organization that blocks some American agriculture commodities from entering China’s growing consumer marketplace.
Hutchinson said China is not importing U.S. rice because top officials have not signed a final trade agreement with the Obama administration that would open the door for Arkansas farmers to enter the huge Chinese consumer market.
“I urged the [Chinese] ministry of agriculture, as well as the central government to approve the public safety agreement on U.S. and Arkansas rice so we can once again start exporting to this country,” he told reporters. “That seems to be a long process, but our voice is important in letting them know how important this is to Arkansas.”
Hutchinson and his economic development team were scheduled to leave China on Thursday and return to Arkansas by late Friday. This is the Republican chief executive’s second trade mission to China since he took office in early 2014, and after making job recruitment and economic development his top priority as governor.