Don Pierson (second left), Secretary of Louisiana Economic Development, and Charlie Yao (second right), CEO of Yuhuang Chemical Industries Inc., pose for a photo with other participants after receiving the Outstanding FDI Partnership award at the China General Chamber of Commerce-USA's 2019 annual gala in New York City on January 7 (COURTESY PHOTO)
The U.S. state of Louisiana and China's Shandong Yuhuang Chemical Group received the Outstanding FDI Partnership award, an annual foreign direct investment (FDI) honor presented by the China General Chamber of Commerce-USA at its 2019 annual gala held in New York City on January 7. The award recognized the $1.85-billion green field investment made by Yuhuang Chemical Industries Inc., the U.S. subsidiary of the chemical group, which is one of the largest Chinese FDI projects in the United States. Before the event, Don Pierson, Secretary of Louisiana Economic Development, sat down with Beijing Review reporter Yu Shujun to talk about Louisiana's longstanding partnership with China. Pierson also expressed his hope for the end of trade tensions between the two countries. Edited excerpts of the interview follow:
Beijing Review: How did Yuhuang Group initially seal such a large deal? How is the project progressing?
Don Pierson: First of all, an important longstanding relationship exists between Louisiana and China. Each year we import about $1.3 billion in goods from China. But China also represents a major market for Louisiana, where each year we export $7.9 billion in goods and agricultural products.
Beyond agricultural products like soybean, corn and cotton, we produce oil and gas and other types of advanced chemicals. Those components make up the bulk of the $7.9 billon that we trade with China.
From this important trading relationship, it became apparent that there is great opportunity in Louisiana for investment from China to produce important chemical products. This is happening with Yuhuang and also with another company Wanhua, which is bringing $1.2 billion in investment to Louisiana.
We're seeing that these partnerships are actually building pathways to a win-win situation, bringing these advanced chemicals back to China or allowing Chinese companies to put them on global markets. At the same time, they are becoming a source of construction, jobs and some important business infrastructures in Louisiana and the United States. We continue to have important dialogue with Chinese companies.
Approximately, 50 percent of the Yuhuang project has been completed and we anticipate that it will be finished and in production by the end of 2020. In the next 18 or 20 months, it will actually go online. The construction elements are all proceeding very well.
Since it's a chemical project, how has the company addressed environmental issues and local residents' concerns?
Yuhuang Inc. has demonstrated an outstanding engineering plan for the construction of a state-of-the-art facility that is in full compliance with all U.S. environmental protection requirements. Thus, all the things that are important such as water offtake, waste water treatment and air emissions have the very best available technology and required elements to meet the standards established by the Federal Government and our state's Department of Environmental Quality. A great deal of very rigorous engineering and permitting has already taken place to ensure that when this plant goes online, it's an outstanding example of compliance with all the very stringent rules and regulations that govern our environmental quality. In addition, it will be monitored over its lifetime operation in the United States.
The region has long hosted ExxonMobil, Dow Chemical, Germany's BASF and other big names in refinery and chemical manufacturing. People here have a familiarization with this industry. Many have grown up in families near these plants and know that the plants present great economic opportunities in terms of jobs for communities. For a long time this has been our heritage. These companies act responsibly and are well received in our local communities.
What kind of benefits can the Yuhuang project bring to the local economy?
Currently, we are only in the initial stages of construction. The benefits are perhaps a little over the horizon. That's not to say we haven't already received key employment from construction. There are more than 100 U.S. companies—small businesses, law firms, environmental firms, engineering firms and construction firms—that have participated in the foundation of the project. The jobs that exist on the Mississippi are from the manufactured components brought in that need to be offloaded. There's a tremendous amount of effort that goes into the construction of a $1.85-billion plant and so with the current funding that's been deployed, more than $750 million has greatly benefited a large number of companies engaged in the construction, engineering and permitting of the plant.
We see it as a win-win operation and an opportunity for Chinese investment in the United States to be built by U.S. construction, engineering and environmental companies. Once it goes online, it will employ 200 U.S. workers who will receive a good salary.
We know that these types of facilities will then have a multiplier effect that will create many more jobs outside the boundaries of the plant. It will become very useful, helpful and powerful in the local economy over the long term.
How has the China-U.S. trade dispute affected Louisiana's trade and investment relations with China?
Louisiana is on the frontlines of being impacted by the current challenges and discussions that are proceeding between China and the United States. We hope that the talks will not be protracted. I think the sooner both sides come together and reach an agreement it will be helpful. No one is currently winning. Both nations are being impacted at the economic level by the difficulties presented by the current situation.
Since China is a large agricultural client to Louisiana and the United States, it has impacted our food production and our farmers. Moreover, since it has also affected global trade, it has impacted our port systems, which are not moving the tonnage that they typically move. So, for the United States, it's a challenging period that we hope doesn't last much longer, where agreements and fairness can be worked out by both parties and we can move into 2019 and beyond with this behind us.
Certainly, from the perspective of Louisiana and the United States, it's holding us back. Important negotiations need to be completed.
Do you think that imposing tariffs can bring manufacturing jobs back to the United States?
Manufacturing jobs are a very interesting topic today. They are being highly impacted by globalization, the development of technology, robotics, artificial intelligence (AI) and sophisticated software.
We're transitioning from a manufacturing environment to one that incorporates so much more information technology. Every element of an economy is being affected by the acceleration age. The changes in medical procedures, food production and retail distribution and sales, along with autonomous vehicles, are very impactful.
I think it's associated not so much with any one country, but rather with the advance of technology. Therefore moving with advanced manufacturing and staying with technology and software developments, robotics and AI are important for a nation, a state or a region in order to maintain a competitive position in the global economy.
Major Chinese Investment Projects in Louisiana
Yuhuang Chemical Industries Inc.
After selecting Louisiana for a major methanol production complex, Yuhuang Chemical Industries Inc. began construction on a world-scale methanol facility two years ago as part of a $1.85-billion project that ultimately will include three phases. In addition to creating 200 direct jobs with an average annual salary per capita of $85,000, plus benefits, the Yuhuang project will result in an estimated 1,250 new indirect jobs and will generate 2,100 construction jobs at peak building level. YCI Methanol One is the first phase of the project and is being completed with joint-venture partner Koch Methanol Investments LLC, and will include 100 permanent direct jobs after creating 1,500 construction jobs.
Wanhua Chemical Group Co. Ltd.
In April 2017, Governor John Bel Edwards and Chairman and CEO Liao Zengtai of Wanhua Chemical Group Co. Ltd. announced the company will develop a chemical manufacturing complex in Louisiana. The $1.12-billion project will produce methylene diphenyl diisocyanate. It will create 170 new direct jobs with an average annual salary per capita of $70,440, plus benefits. Louisiana Economic Development estimates that the project will result in another 945 new indirect jobs, for a total of 1,115 new jobs in the state.
Copyedited by Rebeca Toledo
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