When Pete Patou opened Rocco’s Steaks Diner in an industrial corner of Pennsauken 25 years ago, Aluminum Shapes exploded with three crews manufacturing aluminum scaffolding and truck parts at one of South America’s largest employers. Jersey. Workers placed food orders and Patouhas delivered breakfast trays and lunches by the hundreds to the factory gates.
“Lots of business, lots of people,” Patouhas said at his small restaurant on John Tipton Boulevard and River Road in Delair, a few hundred yards from the American flag flying at the entrance to the Aluminum Shapes complex.
But the factory is now vacant, save for security guards, as it awaits a rebirth, in part as an Amazon-style fulfillment center. Aluminum Shapes – whose workforce once numbered 3,000 before dropping to 111 employees – closed after a bizarre chapter in which the plant was controlled by Chinese billionaire and aluminum kingpin Zhongtian “Big Boss”. Liu, who ran Asia’s largest aluminum extrusion company, China Zhongwang.
Prosecutors said the scam dates back to 2010, when the U.S. Commerce Department discovered Chinese companies were selling large amounts of aluminum into the U.S. market. The agency imposed crushing tariffs on Chinese producers to stop the flow.
Liu’s companies have been accused of devising an elaborate scheme to avoid paying tariffs from 2011 to 2014. The aluminum pallets were imported as finished goods, a distinction that would allow Liu’s companies to dodge a whopping 374% tariff. And to be sold, the pallets would have to be stored in warehouses in California, Mexico and Pennsauken, and eventually remelted into other products.
A multi-year federal investigation found that Liu’s companies were secretly exporting 2.2 million spot-welded aluminum pallets to the United States to evade anti-dumping tariffs on aluminum tubing.
In August, a California jury found six companies linked to Liu guilty of defrauding the United States of $1.8 billion in aluminum pallet duties. A judge set the sentence for February 28.
Federal prosecutors said the four warehousing companies and two aluminum companies, all based in California, were “effectively owned and controlled” by Liu.
A spokesperson for China Zhongwang disputed this, telling Forbes in August that the six entities “did not [current] relations with China Zhongwang and Mr. Liu. The spokesperson said the Chinese company abides by laws and regulations and that Liu resigned as chairman of China Zhongwang for health reasons in 2017. Liu, a defendant, has yet to appear in court. . Multiple attempts by The Inquirer to reach him failed.
Neither Aluminum Shapes nor its South Jersey executives have been charged, although the 2019 indictment cited Aluminum Shapes as integral to Liu’s scheme.
The South Jersey manufacturer filed for bankruptcy protection in Camden in August, owing millions to suppliers and others. Aluminum Shapes has also faced significant fines for dozens of federal safety violations, resulting in part in the death of a worker.
The plant continued to operate until November, when a Bala Cynwyd property company purchased the complex and its contents at a bankruptcy auction for $32 million. The company, Velocity Venture Partners, thinks it can bring back 500 manufacturing and warehousing jobs.
“They just turned everything off” and walked out, Velocity co-founder Tony Grelli said. “Nothing has been downgraded. Nothing came out of here. So if I knew what I was doing, I could go back and start one of the presses. Set it on fire.”
Motorists crossing the high-arch Betsy Ross Bridge in New Jersey may read “ALUMINUM SHAPES” in red capital letters on the roof of the plant. Shapes, a manufacturer since the 1950s, produced the scaffolding for the Statue of Liberty and Washington Monument restorations and remained one of the largest aluminum extruders east of the Mississippi River. Extrusion is a process in which manufacturers force aluminum alloy through a die to form tubes or shapes.
Over the past decade, the complex was also part of a web of businesses, shell companies, trading companies, and warehouses linked to “Big Boss” Liu who began his rise as an oil tycoon. aluminum in 1993 as a small producer in China and became one of the global aluminum magnates.
Jeff Henderson, chairman of the Aluminum Extruders Council trade group, said “Aluminum Shapes was not a central player” in the trade battle between U.S. producers and China Zhongwang, but it did play a role.
“It was just a takeover by the Chinese,” as China was targeting the U.S. aluminum market, Henderson said. “[Aluminum] is a strategic metal and they know it.
An initial public offering in Hong Kong for Liu’s aluminum giant in 2009 made Liu one of China’s wealthiest industrialists. His current net worth now exceeds $1.5 billion, according to Forbes. As part of his dealings, Liu was linked to a Mexican company that stockpiled 6% of the world’s aluminum inventory – enough for 77 billion cans of beer – as part of an apparent plan to ship aluminum. Chinese aluminum via Mexico to the United States to evade customs duties.
The Wall Street Journal reported that Liu’s machinations had become an obsession for American aluminum makers because they feared a crash in aluminum prices. Liu, who is said to live modestly, holds a Maltese passport through a scheme allowing wealthy people to buy citizenship, according to media reports. When a reporter interviewed him in 2016, the tycoon claimed he lived in an apartment inside the factory in Liaoning, northeast China. “These things have nothing to do with me,” Liu told the reporter, referring to Mexican society.
Liu took control of Aluminum Shapes in December 2012, according to the California indictment.
Under Liu’s direction, the defendants “would store and cause to be stored aluminum extrusions in the form of pallets … at warehouses in Irvine, Ontario, Fontana and Riverside [in California] and at Aluminum Shapes in New Jersey,” the indictment states. By stocking the aluminum pallets, defendants “maintained the pretense that sales of aluminum pallets … were genuine sales to customers in the United States.”
The U.S. Attorney’s Office said “there were no customers for the 2.2 million pallets imported by Liu-controlled companies between 2011 and 2014, and no pallets were ever sold.” .
At the time Aluminum Shapes sought protection from creditors, the company owed $1.8 million to PSE&G., more than $2 million to a Teamsters health and welfare fund, and $421,685 to the company of marketing Harris, Baio & McCullough, according to bankruptcy papers.
Edmond M. George, a partner at Obermayer Rebmann Maxwell & Hippel who represents Aluminum Shapes, said the bankruptcy filing had nothing to do with the California verdict. He did not answer the other questions.
Several scrap dealers said they were over $1 million short. They sold door and window frames and vehicle rims to Aluminum Shapes to recast into new products. They “hurt us,” said Mitchell Goldberg, president and owner of Northeast Metal Traders in Philadelphia. He owed $172,872.
Aluminum Shapes also had a big bill with the Occupational Safety and Health Administration, or OSHA: $1.9 million in safety fines. An employee was fatally injured after being run over by plant equipment in 2016. Federal investigators later learned that employees were burned when they entered a tank to drain sludge. Supervisors told them to wash off the chemical burns and return to the tank. They suffered other burns, including one hospitalized.
When OSHA imposed the fine in 2017, the agency said the company had a long history of failing to meet safety and health standards and fined it for 51 violations.
OSHA agreed in December to reduce the penalty to $1 million. Jeffrey S. Rogoff, New York Regional Counsel for the U.S. Department of Labor, said that “while this settlement may never reverse the senseless loss of life and serious injury that has occurred, it goes a long way to ensuring employer responsibility and to provide key worker protections to prevent future incidents.
As the economy shifts to online shopping, developers have repurposed older industrial buildings with high ceilings and large floors such as aluminum extrusions for distribution and fulfillment centers.
Amazon, the online shopping giant, operates about 60 warehouse-like facilities in the Philadelphia area.
Grelli and Zach Moore, the co-founders of Velocity and both 28, met at Drexel University, where they graduated in 2017. The company owns and operates six million square feet of industrial space in the Philadelphia area.
In 2019, Velocity purchased an adjacent building from Aluminum Shapes in Pennsauken. It is 100% leased to three tenants for warehousing and distribution, Grelli said. A tenant provides bedding and household items to Amazon for order fulfillment.
Velocity executives had their eye on the 25-acre Aluminum Shapes property before the bankruptcy.
During a recent tour, the nearly 600,000 square foot complex was eerily quiet. Aluminum Shapes websites are always available online. But the main factory phone numbers listed on the web didn’t match anyone.
An auctioneer had red-marked the company’s push-button telephones, chairs, filing cabinets and conference tables for sale.
“All of these things are going to come out of here,” Grelli said. “We’re going to end up with a big shell.” Velocity plans to scrape floors, install new lighting, and make many other improvements.
Sixty percent of the complex could be leased to aluminum or metal companies, Grelli said. Velocity has sold three of the largest Aluminum Shapes presses to two different aluminum groups. They might be too big to economically relocate, and the new owners could operate them onsite under long-term leases with Velocity, Grelli said. A group could rent the six-furnace foundry.
The remaining 40% of the complex, with dozens of truck docks, could be leased to specialty manufacturers, distributors or service companies.
Grelli said they intended to rebrand the complex as Pennsauken Logistics Center II and put “Velocity Ventures” on top of the plant, erasing the “Aluminum Shapes.”