Shandong Ruyi to invest $410 mn to convert old TV plant into yarn mill

Chinese textile producer Shandong Ruyi Technology Group is planning to invest $410 million to convert a former television factory into an 800-employee spinning yarn mill scaled to use 200,000 tons of cotton each year. A yarn mill big enough to consume the Arkansas Delta’s entire cotton harvest will open in Forrest City and export yarn worldwide through Memphis and Western ports.

Investing in a yarn mill represents a full turn in China-Delta relations since Memphis cotton merchant Dunavant Enterprises sold the first load of U.S. cotton to China in 1972, after the Cold War thaw between Beijing and Washington.

While farmers in the Delta regularly have shipped cotton to China ever since, this region never developed the textile business evident in the yarn, fabric and garment plants that grew up in Florida, North Carolina and South Carolina.

Those states suffered when the U.S. textile industry was stricken by imports in the 1990s and 2000s, though the industry in recent years has shown signs of coming back through investments made largely by Chinese and other foreign companies.

Arkansas state officials opened discussions in 2015 with Ruyi officials who were made aware of Arkansas through Shandong Sun Pulp, which is building a $1.3 billion paper mill in South Arkansas at Arkadelphia. Ruyi and Sun are based in the same Chinese province, Shandong.

Arkansas state economic development director Mike Preston said that Ruyi would export yarn and eventually could open a manufacturing plant next door able to turn yarn into fabric.

Preston said that they have a large cotton supply and they are excited about it.

Ruyi’s cavernous yarn mill would provide a ready market for farmers throughout the cotton-growing states, including Mississippi and Tennessee.
Shandong Ruyi’s high-tech mill will ramp up in stages beginning with about 400 employees earning average wages of $15.25 per hour.

According to experts, despite the plant’s size, it is unlikely a single mill can drive up cotton commodity prices in a nation whose harvest typically exceeds 14 million to 17 million bales. Producing yarn at full capacity, Ruyi would buy 200,000 tons, or 833,000 bales of cotton. Arkansas farmers last year produced about 800,000 bales. That’s a lot of cotton.

Yarn exports would be trucked or railed to Memphis and West Memphis and could be railed to Long Beach, California, Preston said.

Most of the yarn is expected to be used in Ruyi’s own plants after Ruyi converts the former Sanyo factory 50 miles southwest of Memphis into a mill. It is expected to open in summer 2018 after workers are trained in local community colleges.

Ruyi grew from a minor government-owned woolen mill in Jining, center of a coal and grain region 300 miles south of Beijing, to operate 13 textile industrial parks in China. Ruyi, founded in 1972, last year bought French fashion producer SMCP SAS from New York investor Kohlberg Kravis Roberts for $1.48 billion.