CHINA-OWNED MILL RAISES CONCERNS IN CANADA

Byline: Brian Dunn

MONTREAL — A conglomerate owned by the Chinese government is planning to build a textile plant in Drummondville, Quebec.
The city council of Drummondville, which is located about 70 miles northeast of Montreal, approved the $30 million sale of land to Worldbest Group for the construction for the plant, which is expected to create 380 jobs.
The Quebec government will contribute up to $2.6 million in funding for construction.
Worldbest officials did not respond to requests for comment and no further details were available regarding start-up date, production capacity and whether the plant will export to the U.S. or Mexico. However, its location within the NAFTA region means that there would be few barriers to any such exports.
“A lot of industry people are very curious about this investment, since most Chinese money either goes into the Vancouver or Toronto area and very little in Quebec,” said Bob Kirke, executive director of the Ottawa-based Canadian Apparel Federation, which represents manufacturers and suppliers. “This investment is very much out of step with other trade developments, especially with the Caribbean initiatives with the U.S.”
Vancouver and Toronto, located on the West Coast of Canada also have sizable Chinese immigrant populations, largely because the region is close to Asia.
However, Kirke noted it was a timely announcement as Drummondville lost about 400 jobs last year after the closure of Celanese Canada and Cavalier Textiles.
Having a plant in Canada would allow Worldbest to take advantage of the tariff-preferred-levels rule of the NAFTA trade agreement. TPLs allow each of the NAFTA-member countries to import fabric, cut and sew it into garments locally and then export it into the other NAFTA nations without paying duty on the cutting and sewing.
While Mexico’s TPL quotas have been filled for the last few years, Canada’s are not as heavily used, according to sources.
Kirke said that Worldbest is probably aware of this program.
“The Drummondville mill is going to produce NAFTA-qualified fabric in order to ship to the U.S.,” he said. “The guy who runs the company is a former textile ambassador in China so he knows what he’s doing.”
One local knitter isn’t too happy about the news, noting Worldbest is government-owned and alleging that, as a result, it is not necessarily in business to make money.
“It’s a disaster,” said Claude Helwani, who runs Tricot Liesse, a maker of novelty fabrics for both Canada and the U.S. markets.
“The textile industry is shrinking here and if it wasn’t for NAFTA, there would be no textile industry left in Canada today. They got a freebie from the Quebec government.”
China Worldbest is one of the largest state-owned conglomerates in China with 32 affiliates and more than 50,000 employees. It is also the largest textile company in China, accounting for about 70 percent of the conglomerate’s operations.
In addition, it holds a 10 percent stake in DuPont Fibers Ltd. a Lycra spandex fiber production plant in Shanghai. It has also worked with BASF on a nylon joint venture.
The company also owns plants making lighting products in Mexico.

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