GRAND FORKS — The chief operating officer of a proposed Grand Forks corn-milling facility says he doesn’t anticipate ever being asked by his company to gather military or technological intelligence about the United States or nearby Grand Forks Air Force Base. Further, he said if he is asked, he won’t provide it.
“I know we’re not going to be asked to be collecting any intelligence on Grand Forks Air Force Base, so I would just state that. I can’t stress it any more than that,” said Eric Chutorash, COO of Fufeng USA, a subsidiary of China-based Fufeng Group. “Me personally, I wouldn’t provide it. I don’t believe the team being built there would provide it. That’s the big thing with the staffing of a plant. Our HR director, commercial director and sales team and engineer, they’re from here – they’re not people transferred from China. The workers in the plant will be Americans. I can’t imagine that anybody in the facility would participate in that.”
The proposed plant’s proximity to Grand Forks Air Force Base has been among concerns voiced by opponents of the plant, which has passed through a series of steps en route to ultimately being approved by the Grand Forks City Council. Now, the future of the project is in limbo after a group of residents this week submitted a petition that appears to have the requisite number of signatures needed to send the issue to a citywide vote.
The plan has sparked considerable controversy, centered on resident concerns about the environment, property annexation, temporary tax breaks, military security and the fact that many view China and, and its Communist Party, as a U.S. enemy.
Chutorash this week spoke with the Grand Forks Herald during a live broadcast, marking the first extended interview he has given to address concerns that have risen up around the proposal.
Following is a transcript of the first half of the 45-minute discussion, edited for brevity and clarity. Part 2 will be published in an upcoming edition of the Herald.
Q: Why was Grand Forks chosen for this plant? And what other cities were considered?
Chutorash: We started with well over 25 sites and narrowed that down to eight and ultimately had two finalists. When we’re working on a project like this, with this level of complexity, I can’t say, there’s just one reason. It’s a complete basket of goods as far as inputs and outputs and looking at what makes sense for your cost structure and location. From the very beginning, when we visited back in fall of 2020, there were a lot of unanswered questions. It wasn’t a site that had a bunch of existing infrastructure, and there’s probably more questions than answers. But that visit was very positive. We met with a lot of different stakeholders, and just were impressed with how fast really all the vested parties came together.
And so with that comfort, and we liked how it was that team approach to bring it all together. … We just started to look at it as “how do we get to a yes?” I think I was on the phone with the EDC three, four times a week … and we eventually got there.
In terms of other communities, we’ve signed (non-disclosure agreements) so we still really aren’t disclosing that at this point, in fairness to them.
Q: What variables in Grand Forks stand out?
Chutorash: Corn is our biggest input cost. We saw that there weren’t other processors in the area, and there was corn availability. I would say that was in the strong positive column. Natural gas as a whole — we know North Dakota had it, though not necessarily a pipeline ran to the site. That was kind of that final last hurdle that we got over. Availability of water, the wastewater and some of the plans, items and discussion over the past couple of months. But, weighing that against logistics is a challenge, right? It’s a very north site, and it’s not necessarily close to the customers. So we had to weigh it against that, versus the other sites that were probably more in the central corridor. But in the end, we feel we made the right decision … We have a very good comfort level with the community as a whole.
Q: This is Fufeng USA’s first American plant. How would you describe the company’s future plans in North America 10 years from now?
Chutorash: This is our first plant. We’ve picked a site that we think can grow, not just in the short term but also the long term. I know, there’s some questions on why 370 acres, and what are they doing with the rest? That was a view to the future – we didn’t want to buy a small site, and then we were boxed in and then we had no room to grow. So, that was part of that future planning as well. Where will we be in 10 years? Hopefully we’re twice the size and still growing. It has a lot to do with success of getting up and running and how we get to the market and making sure that we have sales that meet what we’re producing.
Q: Can you share with us the company’s financial thinking about an investment in Grand Forks? And how do you know that this will be a profitable venture?
Chutorash: If we take a step back to why the U.S., the company was built by our chairman, really starting from nothing and he grew it to a five plant, multi-billion-dollar company. We already have sales established in the U.S. and we have for some time. … So (the financial thinking is) diversifying that supply chain and manufacturing base and, I guess, just following aspirations. There’s an individual that wants to build a global company and global means outside of China and in other places. Corn is favorable in the U.S., and energy is probably about the same. And I think we all appreciate that fixed costs are more expensive in the U.S., but when you start looking at freight and transportation, it can make sense here. So the decision was made to (come to) the U.S., and then came the site selection process. We’re confident with where we’ll be in a product cost model and that we can be competitive in the U.S. against domestic producers today, and the imports that are coming in. And you also have that greater contact to the end customer.
Q: Can you definitively say that no part of Fufeng group uses forced labor, such as Uighur Muslims, or any products produced by forced labor?
Chutorash: Correct. Yeah, none of our plants use forced labor. That’s been shared by a third-party audit that was conducted. … That was based on requests from customers here. … To my knowledge and the company’s knowledge, it’s not in our facilities and it’s not in our supply chain.
Q: A reader writes to us to say that they don’t trust the Chinese Communist Party at all. They asked us to press you on why we should trust China-based Fufeng Group. I’d like to ask a question about the heart of that concern, which is really about the relationship between the Chinese government and Chinese businesses? How closely are those related to one another? And what does that mean for Grand Forks?
Chutorash: Typically, there are two types of companies in China. There are ones that are independent of the government and those are the ones that we see listed on the Hong Kong exchange. And then there are companies that are state owned, and they’re the ones that are listed on that China exchange. We’re obviously the first version, listed on the Hong Kong exchange. So we don’t have any government or Chinese ownership in the company. I mean, our stakeholders are, you know, the chairman that holds the largest stake, and then, you know, institutional investors from that. So really it wouldn’t be the government having any input into our operations, really, at all. There’s no reason to.
I would parallel it to the U.S. government, from any publicly traded company. They don’t have any input or stake into their daily operations, except for through whatever laws they pass or regulations that may impact those businesses. So this is a U.S.-based company that’s going to fall under U.S. laws and really have more of a relationship with the U.S. government, and be impacted by what the U.S. government does than any impacts that the China government would have.
Q: Regarding rising anti-Asian sentiment in the U.S.: I wonder if anyone on your team watching this discussion has felt that? Or if you feel that there are any China-related concerns about Fufeng group that are inappropriate?
Chutorash: The concerns raised and things that I’ve seen written, I would say are unfounded, and therefore kind of inappropriate. They’re not not proven and they’re just stated. The anti-Asian sentiment that was coming across the US probably a year or so ago, my two counterparts, Jack and Kevin, they were here, and they were with me in Chicago, and I asked them: What do you feel? They said, “it’s great. We love the Midwest, everyone’s so friendly to us. … We still view Grand Forks that way.” … The two of them are now up in Grand Forks and that’s been their experience up until – I shouldn’t even say it – but up until like a month ago. But even then, they’re getting a lot more people that come up to them and say, “Hey, we’re sorry, guys.” …. There’s obviously some of it that’s in the community, clearly, but I’m not going to base the community on the actions of a few.
Q: Will Fufeng be bringing in Chinese nationals to work in this facility? Will there be a required number of Chinese nationals working there.
Chutorash: No. The company’s approach to this from the beginning was hiring Americans (to staff) an American plant. In terms of, in some of the things I’ve said or seen or read (people think) we’re going to bring 300 (Chinese) people to work in the plant. That’s impossible. We’re not going to get 300 working visas. It’s not even a possibility.
Q: Another reader contacted us to recall that several summers ago, the stench coming from a business north Route 2 made it impossible for people to enjoy doing any outdoors activity for several weeks. With Fufeng, how can Grand Forks be sure that this kind of problem would not occur again?
Chutorash: I can’t really speak for that company. But from our standpoint, corn wet-milling has been around almost 200 years. I’ve personally been to four or five plants, not part of Fufeng, and Fufeng operates five of these plants. I think we have a very good knowledge of the operating plant, we know how to start it up, we know how to address upsets, and we know how to keep it in balance. And if you do those things, you’re not going to have those types of issues.
Q: What do you think the plant will smell like, especially for nearby neighbors.
Chutorash: This will be the newest (corn wet mill in the nation) and I think we understand the sources of odor and how to control it so I don’t expect that there’s going to be offensive odors that are leaving the plant.
Q: Some say it will smell like cornflakes. Agree?
Chutorash: Yeah. When I started working in corn wet-milling, I was told “burnt cereal.” So maybe burnt cereal is cornflakes. But even that, those plants over time, they don’t have that smell. Technology gets added and even that (smell) doesn’t tend to be the case, when the odor management is done differently. So there’s definitely going to be corn wet mills out there that have a very strong smell like that, and there’s going to be ones that you’re right next door to and you don’t smell anything.
Q: Just to be clear, it sounds like you’re saying this plant will be the latter. Will it have any smell, in your opinion?
Chutorash: I don’t want to sit here today and say no one will ever smell anything. I don’t think that’s fair to say. That’s the goal we’re going to strive to and that’s how we’re laying out the site, to keep things from the boundaries as much as possible that we think can cause concern. I mean, it’s in our best interest that the plant doesn’t smell, either. We don’t want community complaints and government complaints and things of that nature. Go back to the site selection process, when I was looking at different locations, that’s what I liked about Grand Forks. Where are the houses? Where’s the nearest residence? There’s nothing nearby, at least within the range that I would be used to there being an issue. So we took that into consideration when we selected the site. You know, am I going to say, you stand across the street and you’re never going to smell the plant. I’m not going to say that. But when we start getting out a wider range, I’m pretty confident we can keep the smell down.
