Fauquier to Far East
Asian business interests
By Paul Smith – Staff Writer
As he looks out toward Ashby Gap from his hillside house near Marshall, the Far East pops to mind.
“It used to be so primitive over there,” Steve Roszel says. “In the 1960s, Indonesia housing consisted of huts. Now, especially in Jakarta, it’s a modern infrastructure backed by a strong economy.”
Mr. Roszel made his fortune in the offshore construction industry, building oil-drilling platforms. He has strong ties, past and present, to Indonesia. His son Tom lives there.
The 82-year-old retiree, along with others from Fauquier, experiences firsthand what a booming global economy means to the Far East.
Mr. Roszel and Richard Wong of Singapore own Viking Hot Dogs, a fast-food restaurant chain specializing in beef and chicken frankfurters. They have eateries in Singapore, Hong Kong and Malaysia.
“The hot dog company is probably worth at least $1 million in Singapore dollars,” says Mr. Roszel, who owns 20 percent of Viking Hot Dogs. As of Friday, 59 cents in U.S. currency equaled a Singapore dollar.
The “big boys” of industry — General Electric, Coke, etc. — got active in the Far East, especially China, 10 or 15 years ago.
But companies with less than $5 million in annual sales remain newcomers to the business surge in the Far East.
“In the past five years, we’ve seen a large increase of Virginia companies take the step or at least explore the possibility of doing business in China,” says Paul Grossman Jr., director of international trade for the Virginia Economic Development Partnership.
Rex Cooper, president of Warrenton-based Cooper Instruments, says his company’s export business in the Pacific Rim “has taken off in the last few years.”
Cooper Instruments, with annual sales in excess of $1 million, manufactures specialized measurement devices.
Mr. Cooper says sales in seven Far East countries account for only 10 percent of the company’s total revenues, but that figure should jump in the future.
“I’ve found that when U.S. sales lag, our export business provides a great buffer,” Mr. Cooper says. “We have kind of a niche market. We deal with low quantity, customized items.”
In China last year, foreign direct investment and export earnings totaled $491 billion, according to the China State Securities Bureau.
International Monetary Fund officials predict China’s economy will grow at 8.5 percent this year, compared to 4.6 for the United States.
Ulrich Schlegel, senior vice president for McLean-based World Resources Co., in February oversaw the opening of a recycling plant in Shanghai — one of China’s oldest industrial bases. WRC has operated a plant in Taiwan the last few years.
Mr. Schlegel, who commutes to work each day from his home near Warrenton, has worked 25 years with World Resources Co. — a multimillion-dollar global recycler of metals extracted from wastewater sludge.
“The cost of labor is so much lower,” Mr. Schlegel says of a major reason his company expanded to the Far East. “The workforce is very skilled and educated. I don’t see an end to the growth potential.”
WCR also operates recycling plants in Germany, Arizona and Pennsylvania.
Barriers exist, but advantages outweigh pitfalls for U.S. companies exporting items overseas.
“Sometimes the greatest hurdle or risk is the protection of their intellectual property,” Mr. Grossman says. “There’s also the issue of piracy.”
Mr. Cooper says piracy and counterfeiting of products remain issues nationally and internationally. The U.S. Trade Representative’s annual report, known as the Special 301 Report, notes that several countries have made strides toward addressing piracy and related issues.
“The No. 1 advantage (for doing business) has to be the size of the market,” Mr. Grossman says. “With a billion people in China, say 20 percent are in a position to afford things like TVs, cars and electronics. Who wouldn’t want to sell products to 200 million people?”
However, sometimes American businesses lose the battle against China and other countries.
Keller Manufacturing closed its furniture plant in Culpeper 18 months ago because of competition from the Far East, resulting in the loss of 145 jobs.
“Keller made all of its furniture from solid wood, which costs a lot of money,” Culpeper County Economic Development Director Carl Sachs says. “They found China was importing items that looked identical but were of lesser quality.
“Keller was being undercut in price by imports from the Far East. It wasn’t the only factor they left Culpeper, but it was a significant one.”
Between 1998 and 2002, Keller’s sales fell more than 40 percent. Mr. Sachs estimates the plant closing cost the local economy $5 million annually.
Executives at 109-year-old Keller hope certain adverse trends will become the company’s salvation.
This year, at Keller’s manufacturing plant in New Salisbury, Ind., the company has begun to import hardwood furniture from China.
Mr. Sachs says some companies that left the United States for Mexico have started leaving Mexico for the Far East because of inexpensive labor and a large workforce.
“I think the outsourcing (to the Pacific Rim) will continue, and it’ll cause a gap in America’s jobs,” Mr. Sachs says.
Says Mr. Grossman: “Sure, you can blame international competition for the loss of jobs in the U.S. and we know it happens, but much of the machinery in Chinese factories is made in the United States. In a way, it’s a tradeoff.”
China’s entry into the World Trade Organization spurred added consumer confidence, increased trade and more capital investment, according to Mr. Grossman.
Staying ahead of the competition requires creativity and diversity, says Mr. Schlegel.
“Obviously, you have to hire the right people. But one must adapt and develop new resources. That market has become more than just farm fields and rice patties.
“Twelve years ago, you’d see just a few lights over the skyline of Shanghai. Today, you see skyscrapers, new apartments, new roads — it’s amazing.”
You may contact Managing Editor Paul Smith at 347-5522, extension 238, or by e-mail at email@example.com