Chinese Dryall Tug-of-War

China plays tug-of-war with U.S. over drywall

Aaron Kessler & Joaquin Sapien
October 25, 2010

A federal investigation into contaminated Chinese-made drywall has been a long, hard tug-of-war for U.S. investigators trying to pry information from Chinese government officials and manufacturers.

When a team of investigators traveled to China last year, the tug-of-war became physical, with a Chinese official trying to wrest a piece of drywall from an American's hands.

The federal probe is the largest defective product investigation ever conducted by the Consumer Product Safety Commission. But almost two years after it began, the CPSC still has not been able to figure out what materials in the Chinese drywall are triggering the release of sulfur gases. The gases have a chemical smell and have corroded wiring and appliances in thousands of U.S. homes. They have also been linked to respiratory ailments, nosebleeds and sinus problems.

The best chance for solving the mystery came last year, when a team of CPSC investigators traveled to China to inspect drywall manufacturing plants and gypsum mines. But the trip did not go as planned, according to CPSC officials, including an inspector who was part of the group, who spoke with the Herald-Tribune and ProPublica.

Chinese government officials interfered with their investigation by rushing the Americans through inspection sites, blocking their attempts to ask questions and take samples and engaging in a coordinated campaign to intimidate them, the CPSC officials said. At one point, a crowd of employees was ordered to block the entrance to a gypsum mine and encircle the Americans.

"We were surrounded," the inspector said. "There were five of us and fifty of them."

The CPSC officials interviewed for this story, including the inspector, spoke on condition of anonymity, citing the ongoing nature of the investigation.

Most of the manufacturing companies the Americans visited refused to disclose even the most basic information about the chemicals they put into their drywall or the manufacturing processes they use. The U.S. team was also barred from properly inspecting two mines they had arranged to visit.

Despite these limitations, the Americans noticed serious quality control problems at all the plants and mines they visited. The inspectors were so desperate to get samples that they slipped away from their government handlers twice, to buy drywall directly from vendors. The vendors said at least one brand of drywall being sold in China smells so bad that contractors refuse to buy it.

China's failure to cooperate with the CPSC on drywall demonstrates how little recourse U.S. consumers have when they buy defective products imported from abroad, public interest advocates and international trade experts say. Twenty percent of all U.S. imports come from China, according to U.S. Census bureau statistics. Only Canada sells more goods to the United States.

"It shows that an agency like the CPSC has no leverage to get a foreign government to cooperate if that government doesn't want to," said Pamela Gilbert, executive director of the CPSC during the Clinton administration. "I believe that's true with all the regulatory agencies that have had trouble with Chinese products."

Gilbert pointed to a range of defective products that China has exported in recent years, including pet food, toothpaste, pharmaceuticals and children's toys.

The problem will not be resolved, she said, until "the highest levels of the U.S. government, like the State Department, get involved." CPSC officials close to the drywall investigation told the Herald-Tribune and ProPublica that they have asked the State Department and the White House for help in dealing with the Chinese, but they would not provide details about the discussions.

This week, a CPSC delegation led by Chairwoman Inez Tenenbaum, is in Beijing for trade talks with China. Tenenbaum is expected to discuss the drywall investigation, along with other product safety issues.

Tense visit

The CPSC officials who spoke with Herald-Tribune and ProPublica about the 2009 trip to China said their government hosts were cordial when they arrived, but that the relationship quickly became tense.

The Americans shared a bus with officials from China's General Administration of Quality Supervision, Inspection and Quarantine, known as AQSIQ, which employs more than 30,000 throughout the country. More local officials followed in black sedans, with a new group switching in each time the team crossed into a different region.

"It was very carefully choreographed," one of the U.S. officials said. "We spent a lot of time with party officials and not as much time in the plants as we wanted to do."

The Americans had spent months preparing for their trip. They visited U.S. sites where gypsum, a white sedimentary rock used to make drywall, is mined. They studied how another form of gypsum - known as flue gas desulfurization gypsum or FGD gypsum - is produced from ash created by coal-fired power plants. They also visited drywall-manufacturing plants where they were told which chemicals went into the final product.

The CPSC officials said they could not name the U.S. or Chinese sites they visited because of confidentiality agreements and legal prohibitions.

The team's first stop in China was a plant in the city of Linyi in Shandong province. Both Taishan Gypsum Co. and Knauf Plasterboard Tianjin, the two companies accused of manufacturing most of the defective drywall exported to the United States, have said the gypsum they used may have come from mines in Shandong. Taishan's manufacturing plant also is in Shandong province.

Although the plant managers were polite, they would not reveal the chemical additives they used or explain how they monitor quality. What the team saw was not encouraging.

"Gauges weren't labeled, the plant was very dirty, and it was clear that there were very few process controls," the CPSC inspector said. Without proper gauges, workers could not monitor temperature, consistency or other quality measures as the material made its way down the line.

The team also did not see any documentation for the raw gypsum that was arriving from a nearby mine. In the U.S., the CPSC official said, gypsum is labeled with a truck number, load number and other information that identifies its origin and consistency. "They didn't have any of that," the official said.

When the U.S. team began taking photographs inside the plant, their government handlers got nervous. When they asked for a sample of the finished product, they were offered a precut piece of drywall that had been laminated in plastic.

Eventually the plant manager gave them what they wanted - a sample right off the assembly line - but a government official grabbed it from the CPSC official's hands.

"Then we snatched it back. Eventually, we won the tug-of-war," the CPSC inspector said.

The Chinese officials were infuriated.

"The handlers all began talking real loud on their cell phones," the inspector said. "They were obviously upset and told our translator that they were angry that we took photos and samples at the plant. We were told that there would be no samples and no photos at the next stop."

Mob scene

When they stepped off the bus at the next stop, a gypsum mine, about 50 employees blocked some of the mine entrances and began taking pictures of the Americans. "The clear aim was to intimidate us," the CPSC inspector said.

The Americans had hoped to gather samples and learn how the miners avoided deposits of sulfur or other minerals that some scientists suspect may be causing the drywall problem. "But they refused to answer any of our questions," the CPSC inspector said. "They wouldn't let us grab a sample."

The visit was supposed to last several hours, but it was over in less than 30 minutes.

CPSC officials said they phoned the U.S. Embassy in Beijing from the bus and said that the Chinese officials were interfering with the investigation, but the CPSC would not tell the Herald-Tribune and ProPublica how the Embassy responded.

As the bus approached a second mine in Shandong province, an overpowering sulfur smell seeped inside. The CPSC team also smelled what seemed to be a strong animal odor. They were told it came from a nearby hog farm. But there was no farm in sight.

At the mouth of the mine the inspectors were shocked to see miners separating pieces of rock by hand - a process CPSC officials said is unheard of in the U.S. and that the inspector described as "ludicrous." Modern mines have tools and testing equipment to ensure that the rock they are extracting is gypsum and that it is pure enough to be used for purposes like drywall.

"They weren't doing any kind of testing, they were just looking at it," the CPSC inspector said. "You need to make sure as you're mining that you're not straying into other areas. They looked like they were straying and then just trying to sort out the bad stuff by hand as it came out."

Asked why the company was not testing for contaminants, the CSPC team was told the mine was fulfilling its contract with its customers and there was no government requirement to do so.

The team tried to get a sample of the rock.

"When I tried to go over and take a sample out of a huge pile of rocks, I was told it was too dangerous because of the machinery nearby," the CPSC inspector said. "But there was no equipment anywhere near it."

Instead, the inspectors were handed a "white pristine sample of rock" that looked "nothing like what was piled up on the ground."

"It looked like a showpiece that you would put on your desk," the inspector said.

The U.S. Geological Service later confirmed that the rock was gypsum, but there was no way of knowing if it came from the mine the Americans had visited.

The CPSC "really suspected this mine as having problems," the inspector said. "I was well-briefed before I left. We had a list of questions. None of them were answered."

Another hasty tour

The second plant the group toured made its drywall from FGD gypsum. Using this form of gypsum in drywall is increasingly popular in the U.S. as well as in China, because it is cheap and plentiful. FGD gypsum is so similar in chemical composition to naturally mined gypsum that manufacturers say it is difficult to tell whether drywall has been made from one source or the other.

Again, the Chinese officials tried to rush the Americans through the plant.

"They wanted us in and out of that plant in ten minutes," the CPSC inspector said. "But we just took our time, which made them really upset."

The lights had been turned down low, making it difficult to see, through problems clearly stood out, such as the lack of labels on gauges. The U.S. team asked about details such as chemical additives, oven temperature, water content and process time. They received no answers.

The team wanted a drywall sample off the line, but were refused. The Americans finally managed to get the plant manager to at least turn over a sample of the FGD gypsum the company was using.

But only one of their questions was answered: How did the plant keep track of where the coal ash came from?

The question was an important one, because without proper documentation it is impossible to track drywall made with tainted gypsum back to its source. In the U.S., deliveries of mined gypsum or FGD gypsum come with a certificate that is supposed to specify critical details such as water and sulfur content, CPSC officials said.

The answer surprised the team: the FGD gypsum came from five different power plants, and when it arrived it was dumped together in a big pile.

"I asked if there is some kind of conformity certificate that says where all the material is coming from. They said no," the CPSC official said.

Back to Beijing

The last plant on the trip used both FGD and naturally mined gypsum. It was southeast of Beijing, in the city of Tianjin. Tianjin is home to a plant owned by German-based Knauf Group, whose Chinese subsidiary, Knauf Plasterboard Tianjin, is one of the main players in the U.S. drywall crisis.

The managers at the plant seemed more eager to cooperate, and they shared the full list of chemicals used in their product. The operation was also more modern than the others they had visited. But again there was a quality control problem.

"If I were to build a plant, this one had a lot of what I'd like to have in it. But despite all of this good stuff, all of its raw materials were commingled and dumped," the CPSC inspector said.

That meant there was no way of tracking where the gypsum used for a particular batch of drywall had originated.

Dan Harris, an attorney specializing in international law with Seattle-based Harris & Moore, said he was not surprised about the lack of documentation in China's drywall industry.

"There are a lot of industries where the Chinese don't track goods terribly well," said Harris, who has clients in the U.S. and China but is not involved in the ongoing drywall litigation. "Until there is a reason to keep better records, they aren't going to do it. Perhaps this will be the reason."

'Quite a Spectacle'

As their trip drew to a close, the CPSC team returned to Beijing for a final set of meetings with Chinese officials - and they decided to make a last ditch effort to collect more drywall samples.

"We were not happy with the samples we had," the CPSC inspector said.

That night, three of them slipped out and took a taxi to a small Beijing street market, where they had been told drywall was sold. They bought as many kinds of drywall as they could find, cutting small samples from each piece and cramming them into their backpacks.

"The vendors were kind of shocked," the CPSC inspector said. "They couldn't understand why we would buy the whole sheet and then cut a small piece out of it."

The next morning, the CPSC team along with a delegation from the U.S. Embassy headed out in Embassy vehicles to their meeting with Chinese administrators and scientists.

On their way, simply by chance, they spotted a large building supply market. On their lunch break, still dressed in business suits, they asked their U.S. Marine driver to rush them back to the market.

More than 20 vendors were selling various brands of drywall, and the team asked the vendors questions they could not get answered by the Chinese companies they visited. "We actually got more information from them than from anyone else," the inspector said.

"It was quite a spectacle. People wondered what are all these Americans were doing here," one of the CSPC officials said. "We were there for about two hours, putting drywall samples into our backpacks and briefcases."

The vendors told them the quality of the drywall they dealt with varied widely. They said some of it had a foul odor, and one vendor mentioned a specific brand that was known for its bad smell. The vendor was shocked when the Americans asked to buy some.

"He said he didn't have any because his customers all complained about it," said the CPSC inspector, who declined to divulge the brand.

The team sent the samples back to the U.S. through its embassy in Bejing, because they worried that Chinese officials might seize them at the airport.

"We didn't want to take a chance," the inspector said.

No more information

China has not provided any more information to the CPSC since the U.S. delegation returned home 14 months ago.

In May, the CPSC released test results of 10 Chinese drywall samples collected in China and the U.S. which released the highest levels of sulfur gas. At least three were among those gathered on the CPSC's trip to China. Those were manufactured in 2009, more than a year after Chinese-made drywall began causing corrosion and health problems for U.S. homeowners.

The agency is continuing to test the samples, but it still has not determined what is causing the problem. The CPSC officials interviewed by the Herald-Tribune and ProPublica said that without more information from China about raw materials and production methods, they may never be able to answer the question.

Florida Sen. Bill Nelson, whose state has been especially hard hit by the drywall problem, said China's treatment of the CPSC team as revealed by the Herald-Tribune and ProPublica was "inexcusable."

"The president should consider the strongest economic sanctions against China until they own up to their responsibility to American consumers," Nelson said.

Nelson has been pushing the State Department and the Obama White House to take a stronger stance with the Chinese over the drywall issue. Earlier this year, Nelson wrote to Secretary of State Hillary Clinton after he briefly confronted Chinese President Hu Jintao and was told the Chinese premier had not heard about the problem.

The State Department responded in June, telling Nelson that Chinese officials claimed the matter was "under careful review," and that the U.S. was urging them to consider a "fair arrangement to benefit the Americans who have suffered."

The State Department would not respond to specific questions from the Herald-Tribune and ProPublica about the CPSC's China trip or whether it has offered any more help to the agency since then. Instead it sent a statement saying it "believes that coming to a fair resolution of this trade-related problem is a matter of great importance to the United States, and should be of similar importance to China."

A White House spokesman did not respond to questions from the Herald-Tribune and ProPublica for this story.

Earlier this month, an attorney representing Taishan Gypsum Co. - which is controlled by the Chinese government - suggested that the company's executives still are not convinced that their drywall is problematic.

"They absolutely do not understand why their high-quality drywall allegedly emitted excessive amounts of hydrogen sulfide," Joe Cyr, Taishan's lawyer, told the New Orleans federal judge overseeing the combined drywall litigation.

Harris, the trade attorney, said China has little incentive to cooperate.

"The Chinese government doesn't care at all about homeowners in the U.S.," Harris said. "Let's face it. They care about protecting companies in China. If that means not sharing samples with the U.S., then that's what they are going to do."

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