By Theron Larkins
Staff Writer
LIMESTONE, Maine — The Loring Development Authority met last week within the Loring Commerce Center, in Limestone. The LDA building was the site for the gathering, as board members took their seats in the LDA board room to discuss the current economic developments regarding the former Air Force base, turned business park.
After a brief overview of the budget and its unanimous acceptance, the board turned its focus to the Maine Military Authority, located on the former Loring Air Force Base, and the projects that MMA is currently looking to undertake, projects that according to LDA President and CEO, Carl Flora, look very promising. One of these projects drawing a large amount of attention from people in the area is the potential future project between MMA and Norinco Motors, a Chinese manufacturing corporation, also known as China North Vehicle Corporation.
The Chinese corporation is looking to expand its worldwide development into not only new territory like North America, but a new manufacturing field, such as railway cars. With recent railway derailments occurring more often than ever, and tragedies like the one in Lac-Megantic, Quebec less than a year ago, it’s becoming imperative that railway cars be manufactured with the highest standard of quality, as well as regulation. This is something MMA and the LDA hope Norinco will be able to do, should they be able to expand their “diversified manufacturing company,” as Flora called it, into North America, and into the railcar business.
“They believe a compelling case exists for the manufacturing of railcars, especially here at Loring, where they have identified us as not only a place, but the place to set up this manufacturing center,” said Flora.
China North Industries Group Corp. (CNGC/Norinco(G)) is based in Beijing, China and was founded in 1979. It is a group that is divided into four main sectors and has over 300 sub-elements, including factories, research institutes and trading companies. These sectors include defense products, heavy-duty equipment, optical-electronic information technology and specialized chemicals. China North Industries (Norinco), is a subsidiary and also the main import-export company of Norinco(G).
Norinco(G) owns trading companies and manufacturing enterprises and nearly 100 overseas affiliates, distributed across many countries. It is known for cooperating with well-known domestic and overseas petroleum and mineral enterprises in the fields of exploration, development, production and trading. Furthermore, Norinco(G) is known outside of China for its high-tech defense products.
In 1993, the import of most of Norinco’s(G) firearms and ammunitions into the U.S. was blocked under new trade rules when China’s Most Favored Nation status was renewed. In 2003, the U.S. State Department declared sanctions on Norinco(G) for selling missile components to sanctioned states like Iran. These sanctions led to a prohibition on imports to the U.S. concerning the remaining types of firearms and ammunition not covered by the 1993 ban. From 2002 to 2007, the U.S. government has sanctioned the company seven times.
Despite the Norinco group’s issues with sanctions in regard to military defense products, there is still a compelling business opportunity the group hopes to capitalize on at Loring, as Norinco hopes to provide a new supply of safe railcars during a time when such a thing is so scarce. After the economic downfall of 2008, and during the recession that followed, rail companies began scrapping a large majority of their old railcars.
“When the economy went soft it just so happened that steel was becoming valuable, so a lot of companies that were operating rail lines decided to scrap a large chunk of their steel,” said Flora. “Now that the economy is rebounding and the rail industry is experiencing a lot of growth, they don’t have even the old rail cars and most of the cars they do still have don’t comply with updated safety standards.”
Not even a year removed from the tragic derailment occurring in Lac-Megantic in July 2013, there is a growing sense that rail lines and manufacturers of things like rail cars, are not living up to safety standards. However, the controversy cannot be blamed solely on one company, or individual, because the issue of what safety standards should be put in place is not something anyone can seem to agree on, as Flora went on to point out.
“To make matters worse the National Transportation Safety Board has yet to come up with a new set of safety standards, for all to follow,” said Flora. “Norinco would be faced with a couple of things. First, they still need to do their due diligence to identify which part of the nation would be the best part to occupy. Next, they are faced with some complexity when it comes to this new set of (safety) standards.”
Flora explained that the issue of these new safety standards is still a “moving target” with no foreseeable end in sight. Flora also brought up railways like BNSF, the second-largest freight railroad network in North America, and how they have recently announced their intention to come up with their own set of safety standards they believe will surpass any the federal government may come up with. If BNSF were to come up with a set of standards exceeding those put in place by government regulation it would certainly benefit everyone, in regard to safety. However, the inability of the government to act may cause the railway industry some future trouble, as networks and manufacturers simply can’t wait much longer.
Still, Flora believes Norinco is in a promising position, where he believes they have the proverbial “tiger by the tail.”
“Overall, I think they’re looking into the right business, at the right time. Now, it’s just a matter of them being able to pull everything together in the right amount of time,” Flora said. “They need to make sure that Maine and the United States is the right place for them to be.”
Flora explained to the board that the LDA has been working with Norinco to come up with a memorandum of understanding (MOU). He called the draft MOU a “very rough draft” that is still in the early stages, but claims it is an important trust-building process they’ve begun with the Chinese group.
“At this point, this is kind of the preliminary document for the venture. It doesn’t have a lot of teeth,” said Flora. “However, it does talk descriptively about who’s going to be doing what and looks ahead at what the goal is, how we’re going to get there and what steps are necessary and next in line for definining our business relationship.”
As Flora stated, the process is still in the very early stages, and no accurate figures have really been established due to the size and scale of the potential project.
“This won’t be something where Norinco will just come to Loring and rent a space from us, then pay us a certain amount of money,” said Flora. “They’re really looking to establish something that will be beneficial not only now, but in the future. It’s not the type of business venture we’re necessarily used to, but we’ll be working closely with them to come up with the right move forward. Our compensation will likely be something success-based.”
Further discussion of the potential partnership with Norinco will be discussed in upcoming LDA meetings. The next meeting will be held at the LDA building on Wednesday April 9 at 9:30 a.m.
