Joint ventures give China edge
By LARRY RINGLER Tribune Chronicle
YOUNGSTOWN — It’s well known that China is quickly becoming the world’s manufacturing center.
It might not be as obvious that it’s also closing the gap in research and development, which someday will be the seed corn of China’s homegrown manufacturing base.
That’s why two area business and labor leaders say it’s important to tap the skills of U.S. engineers, production experts and other skilled workers who face losing their job at shrinking American companies.
Think Warren-based auto parts maker Delphi Packard Electric. John Russo and Jim Cossler certainly are.
‘‘Delphi is in the forefront of making components for wiring harnesses. They could leave their technology in joint ventures that aren’t competition to them,’’ said Russo, codirector of Youngstown State University’s Center for Working Class Studies in Youngstown and a recent visitor to China.
Delphi Packard has a proven ability to generate patents. The Community of Science database of patents for the Warren-Youngstown area lists the Delphi Corp. division with 82 patents from 2000 to 2004 — more than the next seven companies combined.
Such brainpower is needed to keep pace with China, which is getting technology from joint ventures with Delphi, General Motors Corp. and other U.S. companies that are jockeying for a piece of the burgeoning market.
Russo got a sense of China’s meteoric growth as he recently visited Nanjing in eastern central China and Shanghai on China’s eastern coast.
Delphi Corp., he said, is investing $50 million to employ 1,500 Chinese engineers by 2009. The knowledge the Chinese glean from Delphi likely will help fledgling Chinese car companies such as Geeley Holding Co. and Chery Automobile Co. to export cars to the U.S., he said.
Chery, which is China’s largest car company, could start shipping vehicles to the United States by 2009, especially if it gets a $200 million investment from billionaire investor George Soros. Auto industry trade paper Automotive News carried a story last week that Soros may pump that much into Chery to help the company begin exports.
Russo noted Chinese automakers such as Chery, Geeley and Brilliance Automobile Corp. that make their own vehicles can export them. Shanghai GM, a joint venture with General Motors Corp., and other such collaborations can’t export their products.
China has encouraged joint ventures because the country lacked the technical expertise needed to design and build vehicles. Joint ventures also allowed vehicles to be made more cheaply because the Chinese company didn’t need to develop its own research and development, Russo said.
The same American technology that China covets would be valuable in the Mahoning Valley, Russo and Cossler said.
Cossler, whose Youngstown Business Incubator includes fast-growing software company Turning Technologies Inc., said he was ‘‘stunned’’ when he saw some of Delphi’s software.
‘‘I’m sure they don’t want rivals to have it, but we see it as of tremendous interest to any company that does business in electrical controls,’’ he said.
‘‘Delphi always focuses on making their plants as efficient as possible,’’ Cossler added. ‘‘We’d love to work with Delphi to examine the intellectual property they use. If they’re laying off some engineers, we’d like to help those engineers start new technology companies in the Mahoning Valley.’’
Delphi Packard’s parent, Troy, Mich.-based Delphi Corp., filed for Chapter 11 bankruptcy reorganization last October. Deep wage and job cuts for hourly workers have garnered most of the headlines, but the company also plans to shed *thousands* of engineering and other white-collar jobs.
Cossler and Russo noted Delphi holds the patents on inventions and processes developed by its employees. The division is a world leader in designing and building complex wiring harnesses that most often are used in vehicles to power the growing array of electronic devices, but which also could be used in computers, appliances and medical equipment.
They believe that by licensing the technology or forming a joint venture with a startup company, Delphi could benefit as the new company explores different markets for the product or process.
‘‘Our suggestion,’’ Cossler said, ‘‘is to take the training and experience of those workers and think electrical controls outside (Delphi’s) vertical markets.
‘‘We need innovative ways to work with Delphi on new technology that they may not even recognize,’’ he added.
Delphi Packard is well aware of the role its technology could play in local startup companies. The division held discussions last year about what role it might play in the incubator program but no talks have been held lately, spokeswoman Ann Cornell Vickers said.
‘‘The incubator is Ö a great idea for the area,’’ she said, ‘‘but we’re a company in bankruptcy, so we’re not able to enter into funding development of other companies. We need to focus on getting this company turned around.’’
Delphi Packard already has a number of agreements to license its technology, Cornell Vickers said, adding, ‘‘We’d certainly entertain discussions with the incubator.’’
She said she didn’t know the terms to which departing engineers would have to agree, such as promising not to develop products that would compete with Delphi Packard.
‘‘The particulars would have to be done in private discussions,’’ she said.
Cornell Vickers said Delphi Packard also has a number of engineers and other workers who can either retire or who are close to retiring. The company has announced its intention to trim its salaried work force globally, but no plan has been communicated to workers.
‘‘Everything right now is at the choice level’’ as to whether a salaried worker will decide to retire or leave, she said.
‘‘We’ve had some excellent engineers leave and go to work at universities. They may consider taking some of their expertise and parlay that into a development at the incubator or other companies,’’ she said. ‘‘Their knowledge doesn’t end just because they retire.’’