Senators call for investigation into Vertex’s pending transfer to Chinese corporation

Senators call for investigation into Vertex’s pending transfer to Chinese corporation

WILMINGTON, NC (WECT) - A bipartisan group of more than 40 senators sent a letter Wednesday to the Committee on Foreign Investment in the United States to call for an investigation into Wilmington-based Vertex Railcar Corporation and its pending stock transfer to a Chinese corporation. The letter comes just over two months after more than 50 members of Congress sent the same request to CFIUS.

The letter, addressed to Treasury Secretary Jacob J. Lew, called on the CFIUS to review the transfer on the grounds that it is a potential threat the United States economy and national security.

Should the transfer be approved, China Railroad Rolling Stock Corporation would own a majority share of Vertex, according to the letter.

"The Obama administration has a responsibility to review foreign investment transactions that could have national security repercussions – especially when related to critical infrastructure like railroads, public health systems and water systems," Sen. Jerry Moran (R-Kan.), one sponsor of the letter, said. "This bipartisan effort pushes the Committee on Foreign Investment in the United States to go through the appropriate review and determination processes already codified in law. In this instance, given the Chinese government's role and relationship with involved parties, it would be careless to allow the transaction to be completed without investigating the potential security implications.

Similar to the letter from Congress members, the senators wrote, "CRRC has already begun to underbid domestic competitors for railcar contracts in Boston and Chicago," signifying that American railcar manufacturers must now compete against all the resources of the Chinese government.

The senators went on to say that CRRC ownership "would likely shift the bulk of railcar production to China, leaving only low-paid assembly jobs left in the United States – dealing a significant blow to the foundries and steel manufacturers who have supplied the domestic railcar industry for decades."

"We know that Chinese corporations use their vast state-sponsored resources to force out homegrown competition and this buyout will mean that fewer American railcars will be built with made in America iron and steel and assembled by American workers who are paid decent wage," said Sen. Tammy Baldwin (D-Wis.), another sponsor of the letter. "As a matter of both national and economic security, we must ensure that our American manufacturers and workers have a level playing field on which they can fairly compete and succeed."

The letter then shifted focus of a government effort to increase safety of rail cars, particularly those carrying crude oil, saying, "[the senators] believe there is a significant security interest in ensuring that there remains a domestic railcar industry.

The senators also said American manufacturers have recently accused Chinese government-backed companies of stealing trade secrets through hacking.

Foster Sayers, general counsel for Vertex, provided the following statement in response to the letter:

Our goal remains very much the same: to create jobs and economic opportunity for Wilmington and the state of North Carolina. As such, Vertex has proactively reached out to CFIUS to formally file for a review. We just received confirmation yesterday from CFIUS that they received our request, and that their review is officially underway. We will receive word from the committee within 30-75 days. Upon completion of the review, we will be certain to provide updates.

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