Trump is in China. Vitro is a cautionary tale of Chinese investment

MEADVILLE, Pa — President Donald Trump is in China, courting new trade deals with Beijing. One glassmaker in the U.S. is warning that their top Chinese competitor exemplifies the risks of letting China in.

CNBC last week visited a Vitro glass plant in Meadville, Ohio, with Rep. Ro Khanna, D-Calif., who is the top Democrat on the U.S.-China select committee in Congress. The plant is helping produce glass for solar panels, and has long produced automotive glass.

CNBC travelled with Khanna throughout the Rust Belt as part of his “Heartland Tour,” a multi-state swing through the country’s industrial heart to highlight the growth of U.S. manufacturing and the risks from China, the U.S.’s chief competitor.

During Khanna’s visit, executives from Vitro aimed their fire at chief rival, Fuyao, and warned that without protection, all competitors in the glass industry would be pushed out.

“If we don’t do something about this, there’s only going to be two of us,” one Vitro executive told Khanna at the meeting. “China has deeper pockets than before, so eventually what they will do is they’ll make sure they completely destroy the competition, and then they’ll bring up the prices.”

“We definitely have to do something about this, otherwise Fuyao is going to be managing the business here,” the executive said.

The dynamic underscores the risks that come with allowing Chinese investment in the U.S. at a time when Trump is in Beijing and could strike a deal to allow even more investment. And lawmakers in the Rust Belt are fretting that Trump will strike a deal that allows further hollowing out of the U.S. manufacturing industry from automotive glass to autos themselves.

Vitro and Fuyao both make automotive glass and sell to major automakers such as General Motors and Ford. Vitro is headquartered in Mexico and operates this Meadville factory along with numerous others in the U.S. Fuyao operates a large factory in Moraine, Ohio, which it purchased over a decade ago and was initially welcomed by leaders in the state. The plant was the subject of the 2019 Netflix documentary “American Factory” that was produced by Barack and Michelle Obama’s production company.

Vitro says it and other Fuyao competitors cannot match the prices the Chinese company offers. They said during the visit that they don’t see a way to produce glass in a way that matches Fuyao’s prices, given the industry’s maturity and associated costs.

A Fuyao spokesperson brushed aside concerns that it is undercutting its competitors.

“A reliable indicator of your strength in the brand is when a competitor resorts to such claims,” the spokesperson said. “Our prices are reasonable, and customers choose Fuyao based on a comprehensive evaluation of technological expertise, product quality,…