Another dispute over tooling in China

Itasca, Ill.-based office products maker Fellowes Inc. is tangled in a trade dispute with a former partner in China that is getting attention from the U.S. State and Commerce departments. According to reports by Paul Merrion at our sister newspaper Crain's Chicago Business, part of the dispute is over the ownership of nearly 1,000 tools used to injection mold components for the company's office shredders. Merrion's explained in an earlier story that Fellowes started making inexpensive shredders in China in 1998, with production handled by two firms owned by a family named Zhou. In 2006 Fellowes formed a 50-50 venture with Jiangsu Shinri Machinery Co. Ltd., identifed as being part of a large holding company owned by the Zhou family. By 2009, the JV had about $150 million in sales and 1,600 employees. Then there was a dispute between the partners, and by November 2010 production shut down. Ownership of the tooling is still being decided by the court, and Fellowes had to build new tooling in order to continue production. The latest: U.S. Commerce Secretary Gary Locke wrote a letter to U.S. Sen. Richard Durbin, D-Ill., letting him know that the department is involved in the case. The letter, according to Merrion's latest story, says that Locke wrote that "We have made the Chinese authorities aware of the impact this case could have on the investment climate of China, and Jiangsu Province in particular, and the importance the U.S. government places on ensuring fair, open and speedy resolutions of this and other commercial disputes." This sort of dispute definitely plays into the hands of U.S. molders and toolmakers. Some will try to scare OEMs into avoiding offshore manufacturing. So don't be surprised if you start getting emailed links to this story.