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How Chinese Textiles Filled Sanyo’s Old Role as Forrest City HeroLock Icon

6 min read

The 161-acre property at 333 Sanyo Road in Forrest City had seen a Far Eastern stranger ride to its rescue before.

But this time, it was love at first sight.

Forrest City, 45 miles west of Memphis, was seeking a suitor for a massive former TV factory shuttered in 2007 by Sanyo Electric Co. Ltd., the property’s first white knight.

Shandong Ruyi Technology Group of China was looking for the right spot for its first U.S. facility, a vast yarn factory capable of consuming Arkansas’ entire annual cotton crop.

Kay Brockwell, the Forrest City economic development consultant who helped play matchmaker in September 2015, quickly realized over a flashlight-lit study session on railroad tracks by the plant — and then again over dinner the next night in Memphis — that the town of 14,000 had Ruyi hooked, along with its $410 million project. Sanyo Road will soon be Ruyi Road.

“I was stunned, and the other economic development people were, too, that this was moving so fast,” said Brockwell, of Future Focus Development Solutions LLC. “It was one of those wonderful pieces of serendipity that happen sometimes, and thank God for them.”

From that early embrace, 800 badly needed jobs could sprout in Forrest City, where the rolling hills of Crowley’s Ridge interrupt miles and miles of flat Delta farmland.

Ruyi’s two-phase refitting and construction plan for the site just off Interstate 40 is expected to begin by the end of the year, and the facility could be buying cotton from Arkansas farmers and spinning it into yarn by late 2018.

“Our cotton industry, from growers to ginners and warehousers, are extremely excited and optimistic about the potential,” said Andrew Grobmyer, executive vice president of the Agricultural Council of Arkansas and an adviser to the National Cotton Council. He said the mill could help east Arkansas overcome recent economic doldrums with hundreds of new jobs and a “greater capture of value from cotton grown in Arkansas” and beyond.

“Ruyi Technology Group coming to Forrest City is the largest economic development success in the Delta in recent memory,” Gov. Asa Hutchinson told Arkansas Business. “It is our second-largest investment from China in terms of capital, but the largest from China by the number of jobs created.”

Hutchinson said that beyond providing starting wages above $15 an hour, Ruyi also plans to buy 800,000 bales of Arkansas cotton each year. While that may not move the national market, it’s a big deal for Arkansas growers. “This is equivalent to a full year’s current production” in the state, the governor said.

A String of Successes
The governor returned Nov. 7 from an Asian trade trip and a stop in Shandong, a north China coastal province across the Yellow Sea from the Koreas.

The governor was coming off a string of successes in wooing Chinese businesses. Shandong Sun Paper Industry JSC Ltd. started it in April 2016, announcing a $1.3 billion pulp mill project south of Arkadelphia; its groundbreaking looks likely next summer if clean-air permits come through. In October 2016 apparel maker Suzhou Tianyan promised a $20 million factory in Little Rock, and Pet Won Pet Products of Shandong followed this April with a $5 million commitment for a pet-treat factory in Danville. Ruyi’s pledge to Forrest City was announced in May.

At a stop in a neighboring province, Anhui, Hutchinson met with representatives of Hefei Risever Machinery Co., which makes machine parts and revealed plans this month for a $20 million plant in Jonesboro.

“To get to Risever headquarters in Hefei,” Hutchinson wrote in a weekly message, “go to Shanghai, take a left, and 300 miles later, you arrive in the little community of 8 million people.”

During Hutchinson’s trip, Chinese officials “reaffirmed Ruyi’s commitment to the project and their excitement about their future in Arkansas,” Hutchinson said.

The site Ruyi picked in Forrest City, named for the Confederate cavalry general Nathan Bedford Forrest, has been a fixture in the Delta since Warwick Electronics Co. started making Sears TV sets there nearly 60 years ago. By the mid-1970s, as Japan was making great inroads in American industry, quality problems with Warwick TVs led Sears to ask the Sanyo Electric Co. to step in.

Japanese managers and Arkansas laborers worked hard to bridge a cultural divide, and their success made news in The New York Times and Washington Post, which titled its article “A Curious Marriage.”

The Sanyo plant grew to employ some 2,500 workers, but by the 2000s new flat-screen TVs were crippling the market for picture-tube models like those made in Forrest City. In 2007, Sanyo shut down the factory.

Eight years later, Shandong Ruyi was scouting for a manufacturing site in several states, but it wasn’t considering Arkansas. Shandong Ruyi’s Chairman, Yafu Qiu (pronounced Chew), then got some friendly advice from a neighbor, Hongxin Li, chairman of Shandong Sun.

Take a look at Arkansas, said Li, who was impressed with the state’s business climate and the incentive package he got for putting his mill in near Arkadelphia. “Chairman Qiu and Chairman Li are friends, and their headquarters are close together in Shandong,” said Brockwell, the economic developer. “So Ruyi tacked Arkansas onto their U.S. tour pretty much as an afterthought. I got a call from the Arkansas Economic Development Commission on a Tuesday and they said somebody wanted to look at the Sanyo plant on Thursday. Could I show it?”

She ended up two nights later on the tracks near the plant as darkness fell, studying maps by flashlight with Qui and his colleagues and “donating blood to the Forrest City mosquito population,” Brockwell said.

By the time she got home to Jonesboro about 11 p.m., AEDC officials were back on the phone, seeking a meeting with city and county officials. “I called the Forrest City mayor [Larry S. Bryant] and the St. Francis County Judge [Gary Hughes] and asked if they had plans the next night. One of them did, and I said, ‘Cancel them.’ ”

By the time the Arkansas contingent had finished dinner with Ruyi officials at Mulan Asian Bistro in Memphis, the deal was basically done. Ruyi Executive Vice President Jane Liu translated, and “Mayor Bryant and Judge Hughes were both absolutely exceptional through the whole process,” Brockwell said.

Still, purchase details on the 1.4-million-SF factory, warehouse and office complex had to be worked out. “That wasn’t drawn out, either,” Brockwell recalled. Olymbec, the Montreal real estate investment and management firm, wanted $10 million for the property. Months later, it settled for $6.5 million, and the sale closed in the weeks before the May announcement. Commercial Advisors LLC, the Memphis affiliate of Cushman & Wakefield, facilitated the deal.

The project received three state incentives: $4 million in grants from the AEDC based on job creation; 10 years of an annual cash rebate equal to 5 percent of total payroll from created jobs; and a sales tax refund on building materials, taxable machinery and equipment.

Ruyi is also getting $1.5 million in cash from Forrest City and St. Francis County, which each have economic development tax levies, Brockwell said.

A Year Till Production
The first phase of the project will be turning the vast manufacturing floor where Sanyo made TVs into a yarn-spinning floor. Next will be building two more manufacturing floors, each 250,000 SF, to the east. “Ruyi is ready to put out an RFP to contractors who want to bid on the project, and if the bids are back in quickly, construction could start around the first of the year,” Brockwell said. “Since it’s almost as quick to build from scratch as it is to retrofit, I still think we’re talking about a year, ballpark, until they’ll be in production.”

Though Ruyi will export the yarn it produces initially, AEDC Director Mike Preston says it could eventually put a manufacturing unit next door to turn the yarn into fabric. “What they are excited about is we have a large cotton supply,” Preston told the USA Today Network.

Brockwell, who was involved in siting major projects involving Toyota, including the Hino Motors plant in Marion that started making axles and suspension parts for Toyota Tundras in 2006, said she couldn’t overstate the impact Ruyi is likely to have in Forrest City.

“We’ve seen a significant uptick in interest in commercial projects since this was announced, and I think we’ll see major development along I-40, including hotels and restaurants,” she said. “I think it’s going to be huge.”

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