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China's Fireworks Industry Struggling

Fireworks factories in China are being pushed close to bankruptcy as the cost of raw materials rise and ports refuse to ship the dangerous cargo abroad.

LIUYANG, China (AP) -- Chen Tiezhong will likely spend the Fourth of July worrying about the future of his sprawling fireworks factory. China, where fireworks were invented, is running short of ports from which to ship the dangerous cargoes abroad.

China's fireworks industry provides 98 percent of America's overall needs, and 80 percent of the pyrotechnics needed for professional displays. But the U.S. fireworks business stands to lose $25 million to $30 million this year because of lost orders, says Julie Heckman, executive director for the American Pyrotechnics Association.

A Missouri firm says it backed out of some shows because of the shortage. Meanwhile, some Chinese factories are being pushed close to bankruptcy.

"Our factory will be forced to close, whether we want it or not," said Chen Tiezhong at his sprawling 500-employee operation in Liuyang in central Hunan province.

His factory is one of 900 around this small city that is known as China's fireworks capital. A traffic circle features a massive metal sculpture of rockets soaring and bursting into flower-like shapes. The Chinese word for fireworks is "yanhua" or "smoke flowers."

Most of the factories are far from town, tucked safely away among the farms in surrounding hills and valleys.

Chen rattles off a litany of woes: micro-thin profit margins, rising labor costs and soaring prices for raw materials.

Now, the closure of some Chinese ports to fireworks may be the final straw.

In February, a blast at a fireworks warehouse led to a ban on fireworks shipments at the southern port of Sanshui, Guangdong province, which previously handled 20 percent of China's pyrotechnic exports.

Then, in late March, officials stopped fireworks shipments at Nanshan, another Guangdong port, after inspectors found explosives that had been declared as something else.

Guangdong may not allow fireworks shipments to resume, because the province is trying to shift its economy to more sophisticated goods.

Adding to the industry's woes, China has ordered major ports such as Shanghai and Hong Kong to suspend shipments of explosives as part of tightened security ahead of August's Beijing Olympics.

"It's been extremely difficult," Chen said. "There is simply no way out even if we're willing to pay 10,000 yuan RMB (more than $1,400) extra for each container."

In China, 30 to 40 percent of fireworks for overseas customers have not shipped, forcing many of the country's 7,000 factories to curtail or even stop taking overseas orders, said Liu Donghui, the secretary-general of China-based International Fireworks Association.

On the U.S. end, 10 percent to 15 percent of orders didn't show up, said Heckman.

China ordinarily sends 9,000 shipping containers of fireworks a year to the U.S., she said, and the shortfall "is by far the most difficult challenge the U.S. firework industry has had to face."

Matt Sutcliffe of Premier Pyrotechnics, Inc. in Richland, Mo., realized six weeks ago that he would run short and have to cancel some shows. He said he contacted every company he knew to pick up the slack, but "No company that I talked to said they could take additional shows."

Heckman said this year's shortage would probably go largely unnoticed by Independence Day spectators because retailers and pyrotechnicians will be sharing their stockpiles.

"As competitive as this industry is, we bleed red, white and blue, and we'll do anything to try to make certain each community gets their Fourth of July Independence Day show," she said.

Liuyang's factories alone produced $1 billion worth of fireworks last year, some $430 million of it to meet overseas orders, the association's Liu said.

Chen's Southern Fireworks Manufacture Co. includes a cluster of long single-story concrete buildings. Inside, women sitting at concrete tables paste together rocket tubes with labels in Russian. Some stick fuses into loaded fireworks and bind them together.

Most of the work is done by hand because machines can overheat or throw sparks, Chen said.

Red strips of paper glued to each building door carry a Buddhist inscription for good luck.

"It's getting harder and harder to find people who will do this work," said Chen. "They think it's too dangerous. They can find work in other factories that don't deal with explosives."

The most dangerous job is loading the gunpowder. This work is done in 130 small concrete buildings, little bunkers scattered around the site or partially dug into hillsides.

"Only one person works in each structure," Chen said. "If there's an explosion, there will be little or no damage to the surrounding buildings and workers."

At Jinlian Fireworks Manufacturing and Export Co., also in Liuyang, U.S. sales once accounted for one-third of the business, but that's going to change. "We are not taking overseas orders," said Song Wei, a manager. "We dare not."

Only one shipping company, Denmark-based AP Moeller-Maersk, is willing to transport fireworks used in U.S. shows.

The shipping problems are likely to hit hardest at smaller makers, and this may be the government's intention. It's often the small companies that embarrass the country by employing children, polluting or producing shoddy goods.

But Chen said he can't imagine the government allowing so many businesses to collapse in an industry with centuries-old roots in Chinese culture, and put so many people out of work.

"If we're not making fireworks," he said, "we'll have nothing to eat."

Editorial assistant Didi Tang in Beijing contributed to this report.