Monday, March 26, 2012

In 2008 Crane Collapse, Scrutiny on Supplier of Part

Crane operator tells court that he lacked the math skills needed to measure the damaged crane part, while prosecutors claim the contractor decided to put money ahead of safety, an accusation his lawyers deny.

The worker began scouring the Internet, following his boss’s orders to find someone who could build a turntable for a crane, and finish it faster and for less money than the estimates given by two American companies. Prosecutors claim the contractor decided to put money ahead of safety, an accusation his lawyers deny.

He found what he was looking for in China: RTR Bearing Company Limited, whose Web site suggested, in broken English, a 10-year track record of making parts for major manufacturers around the world. “We have two factories, one independent QC center and one Export trading Company with totally 109 employees,” the site says. “We’ve built up good relationship with our customers all over the world.”

During the month long manslaughter trial in New York of James F. Lomma, whose company owned the crane, which collapsed and killed two workers on the Upper East Side four years ago, there has been ample testimony about the failed weld on the turntable that led to the collapse, and how the Chinese company was unable to satisfactorily perform a vital weld on the turntable.

But little has been said about another aspect of the company: its description of itself was largely inflated or simply not true. The company, RTR Bearing Company Limited, was only six months old when it was contacted by the worker, Tibor Varganyi, to make a new turntable assembly, according to an affidavit by RTR’s owner, Joyce Wang, in a related civil suit.

Mr. Varganyi had thought Ms. Wang, then 26, was a sales representative for RTR. She was actually the company’s founder. “My company, RTR, has a very small office with seven workers, including me,” Ms. Wang wrote in a 2009 affidavit. “RTR does not employ any engineer, has no factory and does no manufacturing.”

Prosecutors have sought to highlight what they have characterized as Mr. Varganyi’s and Ms. Wang’s “collective incompetence,” and the lack of judgment in the decision to allow RTR to make the critical part — even when it became apparent that the company did not know how to do so. Nevertheless, the arrangement also underscored the risk in trusting a far-flung company whose credentials on Web sites and brochures are difficult to ascertain.

The overstatements by RTR are a common problem for Western companies looking for suppliers in China, and not all buyers are eager to uncover the truth, said Paul Midler, author of “Poorly Made in China: An Insider’s Account of the Tactics Behind China’s Production Game.”

Mr. Midler, who lives in Hong Kong, said he had accompanied western buyers on visits to Chinese manufacturing plants and watched as agents like Ms. Wang described themselves as factory owners while the actual factory owners pretended to be plant managers.

“Chinese sellers can make all manner of false claims,” Mr. Midler said in an e-mail. “It really is relatively easy to perform basic due diligence in China, but relatively few American importers do any of it.” American entrepreneurs, he added, tend to think, “‘if all this is legitimate, we could make a fortune.’ Sometimes we really are our own worst enemy.”

Prosecutors have said that is the calculus Mr. Lomma made, putting money ahead of safety, an accusation his lawyers deny.

In 2007, a crack was found in the turntable assembly of one of Mr. Lomma’s cranes when it was in use at another work site, and the city Buildings Department ordered Mr. Lomma to repair it before putting it back into service. It became clear that the damage was too severe to repair and that a new assembly would have to be built.

After estimates from the original manufacturer and a second United States company came in higher and more slowly than Mr. Lomma liked, he told Mr. Varganyi, his crane mechanic who had worked on cranes for four decades, to find a cheaper and faster alternative.

Mr. Varganyi found Mr. Wang’s company on the Internet; its Web site said that RTR was established in June 1998, when Ms. Wang, who majored in Russian at a Chinese university, would have been 17.

Asked about the discrepancies between her affidavit and the Web site, Ms. Wang replied in an e-mail, “We do not have our own factory, the two factories in the Web site means our cooperate factories. We are agent for their product in exporting.” Mr. Varganyi’s only contact with RTR was in e-mail exchanges with Ms. Wang. He never spoke with her on the phone or visited China. Nor did he request a list of references. He testified that Mr. Lomma never expressed interest in the supplier, only in the price and time estimate.

More than 90 e-mails between Mr. Varganyi and Ms. Wang were filed as evidence in the criminal case. Many show Mr. Varganyi, whose formal education ended in the ninth grade in Hungary, and Ms. Wang struggling with English and complex measurements.

After seeing what Mr. Varganyi called his hand-drawn “cartoons” of the large bearing, Mr. Wang wrote back expressing doubts that her company could handle a weld that played a role in holding the turntable atop the crane tower. She did not let on that some other company would actually be doing the welding.

“Just discussed with our general engineer,” she wrote, adding that the last time her company did a similar bearing it had not done the weld “because in the crane it is a very important part, and we are afraid the weld technic we had is not good, because normally we didn’t do that.” The e-mail continued, “And honest speaking we don’t have confidence on this welding.”

Mr. Varganyi sent Ms. Wang several pages of welding instructions he had from an American supplier. Ms. Wang wrote back “we fully understand your meaning on this.”

"If have any require, please feel free to contact with me!” she added.

In early 2008, the first bearing from RTR arrived and was put atop the crane at 91st Street. A second one arrived soon after and was found to have a defective weld. But that did not cause Mr. Lomma’s company to double-check the weld on the crane at 91st street. On May 30, 2008, the large bearing within the turntable assembly that RTR supplied to Mr. Lomma’s company broke off at the weld that Ms. Wang had been concerned about. The operator’s cab and the boom plummeted 20 stories, killing the crane’s operator, Donald Leo, 30, and a worker on the ground, Ramadan Kurtaj, 27.

Mr. Lomma’s lawyers have said they will show that the failing of the weld was a symptom, not a cause of what actually caused the collapse. They have said that the crane’s heavy boom rose too high, putting too much stress on the turntable.

Mr. Varganyi, who pleaded guilty to criminally negligent homicide to avoid a prison sentence, testified that he regretted not getting an engineer involved in the discussions with Ms. Wang. “That was my mistake,” he said. The civil cases in which Ms. Wang’s affidavits were filed were brought by the families of the two men who died. Those cases have been on hold pending the outcome of the criminal trial in State Supreme Court in Manhattan.

Ms. Wang filed the statement from the American embassy in Paris after lawyers for Mr. Lomma filed a subpoena with Google seeking e-mails between her Gmail account and Mr. Lomma’s company. She wrote that she worked for other bearing suppliers for two years after college before forming RTR. Her given name is “Jun,” not Joyce. She said her company acts only as an agent for actual factories, taking sales orders and finding the best price from manufacturers.

Last week, Alvaro Ortega, a co-founder of a Miami-based bearing company, testified that he had ordered a bearing through Ms. Wang. But when it was delivered, his quality control department rejected it.

He said that after he placed the order, he toured a plant that Ms. Wang had worked with in China and found outdated equipment and a “pretty dirty environment” with poor lighting.
“I was surprised to see that in that environment they could still assemble the piece,” he said, adding, “Their quality control was basically nonexistent.”

By Russ Buettner
The New York Times