When Meridian Lightweight Technologies' factory in Eaton Rapids, Mich., exploded into flames in May, the impact shook the industry.
In addition to injuring two employees, the fire halted production of Meridian's die-cast magnesium dash structures, a critical part in a slew of popular North American-made vehicles, including the Ford F-150, BMW X5, Chrysler Pacifica and various models from General Motors and Mercedes-Benz. Without it, vehicle assembly lines around the U.S. came to a halt, and purchasing managers began to search the world for alternate sources of the large lightweight part.
The crisis played out for weeks. Missing the Meridian part, Ford temporarily laid off workers at its F-150 factories and took a second-quarter earnings hit.
But with all the attention focused on the crisis, scant mention was made of who owns Meridian — Wanfeng Auto Holding Group, of Shaoxing, China.
As a newcomer to the North American auto industry, Wanfeng remains little-known, and its executives even less so.
That's not the case in Wanfeng's home market, where its colorful chairwoman, Ailian Chen, is a national business celebrity.
New era in China
In Chinese media reports and on the company's website, Chen, 60, is portrayed as a dynamic leader of a diversified company, one of the biggest in China, and she and her husband are one of China's wealthiest families. Public photos and news stories find Chen dressed in bright pinks, oranges and reds amid rooms full of men in drab blacks and grays.
Wanfeng's success reflects the intertwining of Chinese Communist rule and a new era of bold capitalism and private wealth.
In China, "Business is like a big, connected family," says Coco Kee, managing partner at Kee Global Advisors investment company in New York, who was born and educated in China.
"The government is the parent who grants permission to the business owner, the child. The government says, 'Would you like a piece of candy? Well, you need to follow these rules.' The candy might be a license, a low-interest loan, or subsidies on a land lease."
- Wanfeng Auto Wheel: Producer of aluminum alloy wheels
- Meridian Lightweight Technologies: North American supplier of magnesium structural parts
- Paslin Co.: Detroit-area manufacturer of automotive robotics
- Diamond Aircraft Industries: Producer of small aircraft, with manufacturing operations in Canada
Under that scenario, Chen is playing by the rules and thriving. She drives a Rolls-Royce and buys companies she deems interesting, including an airplane manufacturer with operations in Canada. She has ordered the construction of a Versailles-like corporate headquarters in Shaoxing, with sumptuous gardens and fountains. At the same time, she is a representative of the Chinese Communist Party and has arranged for party operations to locate in Wanfeng's office building.
Wanfeng employs and trains its own company militia, a unit of hundreds of uniformed workers who can be called up by the government to battle forest fires, fight floods or deal with other national emergencies.
Chen's life is almost a fable of China's own miraculous climb to prosperity. Although references in Chinese press reports can be contradictory, Chen is described as having been a small-town truck driver or tractor driver who had the chutzpah to borrow a small amount of money from a local bank to begin manufacturing motorcycle wheels in 1994.
As chairwoman, she has regularly declared brave new directions for the company. She ordered a move into aluminum alloy auto wheels, and Wanfeng is now China's largest producer. In 2000, she directed a move into automaking. Wanfeng pursued that business, selling a total of about 100,000 vehicles, until pulling out in 2006. According to Dream Chaser, a biography about her published in China, she made the dramatic decision to exit automaking not because the venture was faring poorly, but because she learned of corruption in her management ranks.
What about Wu?
Largely missing in press pieces are clear references to her husband, Wu Liangding, and his role. Her biography does not mention his name. Wu, counted as one of the richest individuals in China, made his fortune in textile machinery and real estate and has a net worth of about $1.1 billion as of Oct. 24, according to Forbes. Some press reports state that it was Wu, not Chen, who founded Wanfeng. One report claims that Chen once worked for Wu's company, another that Wanfeng was spun off from Wu's textile machinery company, Zhongbao Holdings.
Clearly, though, Chen is acting chief of the company, which went public in 2016. A push that same year into robotics resulted in a second North American automotive acquisition: Paslin Co., of the Detroit suburb of Warren, for $302 million. Paslin got its start in 1937 stamping auto parts; today, it primarily supplies welding robots as a unit of Wanfeng Technology.
Chen more recently directed the company to enter the aviation business. Late last year, it acquired a 60 percent stake in Diamond Aircraft Industries Inc., a producer of small airplanes with operations in Canada.
Still, five years ago, when Wanfeng representatives walked into Meridian's North American corporate offices in Strathroy, Ontario, to discuss its acquisition, the local team knew of Wanfeng as a company, but not much else.
Serious about acquisition
As Meridian executives sat on one side of the conference table and Wanfeng on the other, it was not clear to Meridian which of Wanfeng's subsidiaries was proposing the deal, according to Chen's biography. Details of the meeting have been corroborated to Automotive News by Meridian's CEO at the time, Eric Showalter.
Showalter informed the Wanfeng visitors that they were not the first Chinese suitor to visit Meridian with an acquisition proposal, according to the book. The others who came to discuss buyouts, he told them, had left and never been heard from again.
But this visit was different. Chen had determined that it was time for Wanfeng to diversify into magnesium auto parts and to enter North American manufacturing.
Encouraging but cautious, Showalter nonetheless told the visitors that if they were truly serious, they would have to leave a nonrefundable $8 million deposit on the acquisition and also meet a short deadline for completing the deal.
Wanfeng met the requirements, and the deal went through in a matter of weeks for a final price of about $250 million. The purchase made Meridian, with sales of about $430 million a year, a wholly owned unit of the Chinese manufacturer.
It happened, Chen's biography makes plain, because she wished it to happen.
You can reach Lindsay Chappell at firstname.lastname@example.org