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A look at Evergrande Auto's Tianjin factory: the number of employees has been reduced to more than 40

2024-08-14

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The scorching summer cannot hide the loneliness of Evergrande Auto's Tianjin factory.

Recently, a reporter from the "Daily Economic News" came to Evergrande Auto's Tianjin factory, Hengchi New Energy Vehicle (Tianjin) Co., Ltd. (hereinafter referred to as Hengchi Auto), located on Gaoxin 2nd Road, Binhai Science and Technology Park, Dongli District, Tianjin. The first thing he saw was more than a dozen cars parked scattered on the road outside the south gate of the factory, few people walking on the park roads, and overgrown weeds in the park.

Photo by Li Xing, reporter of China Business Network

"The factory is in a state of suspension, and there are only a few dozen people working in the factory." A staff member who was on duty at the gate of the Hengchi Automobile Complex pointed to the vehicles parked on the road and told reporters that from the vehicles parked at the gate, it can be seen that there are very few people working in the factory now.

"The factory used to have five or six hundred people, but now there are only more than 40 people left in the park." An insider close to Hengchi Automobile revealed to reporters.

“80% of wages paid”

In August last year, Evergrande Auto resumed production after receiving strategic investment from Newton Group (NWTN.US), a listed company held by the UAE sovereign fund. At that time, the reporter walked outside the South Gate Complex of Hengchi Auto and saw that both sides of the road and the internal parking lot were full of private cars of different brands, and there were also many buses for picking up employees to work.

A year later, the reporter visited Hengchi Automobile's Tianjin factory again and saw only a dozen private cars parked on both sides of the road and an empty parking lot. In the Hengchi Automobile complex, only one office was lit, and only a few employees were vaguely seen working at their workstations.

"At present, the factory has stopped production, and the remaining staff are mainly company leaders, team leaders and workers in charge of the day and night shifts in the workshop." said the above-mentioned person familiar with Hengchi Automobile.

According to the above-mentioned insider, when the factory was at its peak of production, Hengchi Automobile would arrange more than ten shuttle buses to pick up and drop off workshop employees. However, starting from October last year, the number of shuttle buses for picking up and dropping off employees was gradually reduced until the production was stopped, and there were no more shuttle buses.

In August 2023, Evergrande Auto, which had just been suspended for more than a year, announced that it had received its first strategic investment of US$500 million from Newton Group. Another RMB 600 million in transitional funds will be received in batches starting from five working days after the announcement. The proposed transaction between the two parties will be completed in the fourth quarter of 2023.

In the eyes of the outside world, this money from Newton Group is a "life-saving money" for Evergrande Auto, which has been losing money for many years. However, on the evening of October 8, 2023, Evergrande Auto issued an announcement stating that due to the changes in China Evergrande, strategic investor Newton Group has suspended its transitional funding support for the company and renegotiated the adjustments required for the proposed transaction plan. On April 5 this year, the strategic investment agreement signed between Evergrande Auto and Newton Group was officially terminated.

On April 30, Evergrande Auto admitted in its 2023 annual financial report: "Due to funding reasons recently, the group has arranged for some employees to take holidays and the Tianjin factory has suspended production."

However, the reporter learned from the above-mentioned insider close to Hengchi Automobile that Hengchi Automobile has stopped production since the beginning of this year, and the number of employees has been decreasing. "Except for 13 security guards, there are only more than 40 employees working at Hengchi Automobile at present." The above-mentioned insider close to Hengchi Automobile revealed to the reporter that there are more than 50 inventory vehicles parked in the Hengchi Automobile factory.

Recently, there have been reports that "Evergrande Auto dismissed employees without reason and stopped paying social security". In this regard, the above-mentioned insider revealed to reporters: "At present, the wages of employees working at Hengchi Auto are paid normally, but only 80% is paid every month."

On August 8, the reporter called the relevant person in charge of Hengchi Automobile, but he remained silent on the questions raised by the reporter regarding the current situation of Hengchi Automobile, the number of employees working normally, and the payment of employees' wages. He only replied, "I don't know, I'm not sure."

However, regarding the social security payment situation, the relevant person in charge of the Evergrande Auto Tianjin Factory replied to the reporter: "It is being paid normally."

Stamping workshop has been rented out

The reporter saw no signs of production in the Hengchi Automobile Park, whether it was the paint shop at the south gate, the body shop or the sub-assembly shop to the west, but there were occasional loud noises from the stamping shop to the east. "It seems that production has stopped inside, there are not many people working, and the shuttle buses to pick up employees have also stopped," a staff member who was working outside told the reporter, "but there are large trucks pulling goods out of the east gate of the factory every day."

The reporter saw at the scene that the door of the stamping workshop was open, and people were walking around in the workshop, as well as a small forklift. "The factory has been shut down for a long time, and a company called Tianqi Mould is producing stamping parts inside." A staff member who was on duty at the east gate of Hengchi Automobile told reporters, "Tianqi Mould has been producing inside for quite a long time."

The reporter also found that the open storage area outside the Hengchi Automobile stamping workshop was stacked with a large number of metal racks with the words "Tianqi Mould" printed on them. For this reason, the reporter called the securities department of Tianqi Mould, and the relevant staff replied: "We have a production line in the Hengchi Automobile factory, and the equipment is our own."

Public information shows that Tianjin Auto Mould Co., Ltd. was established in December 1996 and listed on the A-share market in November 2010. The company's business scope includes mold design and manufacturing; stamping parts processing, riveting and welding processing; automobile body and process equipment design and manufacturing; aerospace product parts, tooling and ground support equipment design and manufacturing, etc.

It is reported that the production capacity of Tianjin Auto Mould's stamping business is mainly distributed in Tianjin and Anhui. Among them, the Tianjin area mainly supplies FAW Toyota, Great Wall Motors, Beijing Benz, BMW Brilliance, BAIC Group and other automakers; the Hefei plant mainly supplies NIO.

The above-mentioned insider close to Hengchi Automobile told the reporter that there are more than 20 Tianqi Mould workers engaged in stamping parts production in Hengchi Automobile's stamping workshop. "Tianqi Mould is just renting Hengchi Automobile's stamping workshop to produce related stamping parts." The above-mentioned Tianqi Mould Securities Department staff emphasized.

The difficulty of "turning the tables" increases

Currently, two subsidiaries of Evergrande Auto, Evergrande New Energy Automobile (Guangdong) Co., Ltd. and Evergrande Intelligent Automobile (Guangdong) Co., Ltd., were bankrupted and reorganized by individual creditors on July 25. On August 5, Evergrande Auto issued an announcement stating: "The relevant local people's court held a hearing on the bankruptcy reorganization of the relevant subsidiaries on August 2, 2024, and the relevant local people's court ruled that the relevant subsidiaries entered the bankruptcy reorganization procedure."

Prior to this, Evergrande Auto was required to return a total of approximately RMB 1.9 billion in rewards and subsidies to relevant local administrative departments due to breach of contract.

In the eyes of the outside world, the requirement to return about 1.9 billion yuan in rewards and subsidies, as well as the proposed order to Tianjin Evergrande to suspend production and sales, is undoubtedly "adding insult to injury" for Evergrande Auto, which has long been insolvent. "If all of these are officially implemented, it will be very difficult for Evergrande Auto to turn things around," said Cui Dongshu, secretary general of the National Passenger Car Market Information Joint Conference, in an interview with reporters.

In the industry's view, the series of news recently disclosed by Evergrande Auto will increase the difficulty and cost of its restructuring, and will have a negative impact on potential investors who are interested in participating in Evergrande Auto's restructuring.

Currently, Evergrande Auto has about 3.145 billion potential shares for sale (accounting for about 29% of all issued shares) to be acquired. Although more than two months have passed, the equity acquisition project has not made any progress.

"Hengchi Automobile is such a big 'plate' here, it is impossible for it to be shut down forever. It depends on how the relevant departments deal with it in the future." The above-mentioned person familiar with Hengchi Automobile told the reporter of "Daily Economic News".

Daily Economic News

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