Shenzhen-based BYD failed to deliver jobs or pay California minimum wage
Electric-bus maker has employed only 40 workers at Los Angeles plant and been fined US$100,000 for violating minimum wage law
At the height of the recession, Los Angeles officials spent a year and a half wooing a Chinese hi-tech business to open its North America headquarters in the city, with Governor Arnold Schwarzenegger travelling to China to persuade its executives.
When the deal, which included nearly US$2 million in tax subsidies, was announced in 2010, Mayor Antonio Villaraigosa heralded the potential for hundreds of "high-paying green-collar jobs" from the company, BYD, which was looking to sell its electric cars, solar panels and batteries in the US market.
Since then, the company, which has said it will create dozens of jobs in its suburban manufacturing plant, has secured contracts worth more than US$40 million with the Los Angeles and Long Beach transport authorities to produce electric buses that will run on city streets.
But three-and-a-half years after its initial promise, the company has employed fewer than 40 workers in Los Angeles, and at least five of them are Chinese workers there temporarily, being paid in yuan an amount less than US$8 an hour, California's minimum wage. After an investigation this month, state officials fined the company US$100,000 for violating the minimum wage law and failing to provide sufficient documentation of pay.
As state officials continue to court Chinese investment - Governor Jerry Brown travelled to China this year and spoke effusively about the country's role in the state's future - the city's experience with BYD could serve as a cautionary tale. And more important, state investigators say, it could signal a shift in the way multinational companies fill jobs.
The state investigation comes as BYD continues to court transport officials across the country to win contracts for electric buses, in some cases promising that their buses will be manufactured in the United States.
"You cannot pay people in Chinese dollars with Chinese standards while they are doing work in America," said Julie Su, the state labour commissioner who ordered the investigation into the company. "If this is the tip of the iceberg, you could see this ruining all kinds of industries."
Officials with BYD - the letters stand for "Build Your Dreams" - say they plan to appeal against the citation, arguing that Chinese workers there on legal work visas are not subject to state labour laws, including the minimum wage.
Michael Austin, a company spokesman, said the Chinese workers would leave the United States within a few months. California labour officials say that, regardless of their visa status, the workers are entitled to the state minimum wage.
Last year, the company won a bid to make 15 buses for the city of Long Beach, which had secured a federal grant to create zero-emission buses. This year, Los Angeles transport officials agreed to buy as many as 25 buses from BYD.
In its proposal, the company said it would hire employees locally - company officials say that, for every bus that is ordered, they need one or two local workers. At the same time, the company is trying to persuade transport agencies to buy the buses by offering up a prototype built at its headquarters in Shenzhen. Last month, the Metropolitan Transportation Authority in New York began testing a BYD all-electric bus along some routes.
BYD officials say they expect to hire more engineers in the coming months and would continue to bring workers from China to help train new employees.
Chinese workers told investigators that they were working in Los Angeles for one to six months, living in dormitory-style housing in the San Gabriel Valley, a heavily Asian suburban area just east of Los Angeles. One worker said they were earning US$1.50 an hour plus a US$50-per-day allowance.
"Workers in this kind of underground economy may not know what their rights are," Su said. "It doesn't matter where a company is based. If an employee is working here, the company has to abide by California law when they're doing work in California. In no scenario is it permissible to cycle people through to get around our state's laws."