PF secrets plot smashed in US as two are seized by FBI

Two former employees of Metaldyne Corporation based in Plymouth, Michigan, were arrested last month by the FBI on a complaint and charged with stealing trade secrets detailing the company's powder-forging (PF) technology.

Metaldyne is one of the leading pioneers of the PF connecting rod that has grown increasingly popular with the auto giants over the past 20 years (See Metal Powder Report, February 2005).

Anne Lockwood, 52, former vice president of sales, and Fuping Liu, 41, who had moved to GKN Sinter Metals as their director of technology in Shanghai, China, were charged with taking proprietary information from Metaldyne without authorisation and giving the information to a Chinese company intent on manufacturing PF connecting rods.

FBI agents arrested Lockwood at her home while Liu was seized at an hotel near Detroit Metro Airport, the day before he was to return to China. They appeared before US Magistrate Judge Mona K Majzoub and were charged with taking and transmitting trade secrets, and with conspiracy. "Ms Lockwood was released on $10,000 unsecured bond and was required to turn in her passport," said Assistant US Attorney Terrence Berg. "Mr Liu was detained pending a hearing to determine whether he is a risk of flight." Liu is currently in a federal halfway house and has surrendered his passport. If convicted, Lockwood and Liu face a maximum penalty of 10 years in prison or a $250 000 fine, or both. But the FBI is investigating the charges and will determine whether to seek a much more serious felony indictment. The United States has prosecuted several cases involving theft of trade secrets under the Economic Espionage Act of 1996 which allows 15 years' imprisonment and $500 000 in fines.

According to the FBI affidavit, Metaldyne spent more than a decade and millions of dollars developing special metal connecting rods for large truck engines built by Chicago-based International Truck and Engine, a unit of Navistar International. The rods generate millions in sales for the Metaldyne, the FBI said.

As described in the affidavit, Lockwood and Chongqing Huafu were planning not only to use Metaldyne's technology but also to utilise the same supplier network to produce the rods.

In August 2004, Chongqing Huafu sent a message to Mueller-Weingarten, seeking a proposal to build the German company a production line to build the rods, the FBI said.

In 2002, Metaldyne had approached Huafu about a joint venture to make another product, but it specifically rebuffed an overture by the Chinese company to build metal connecting rods, the FBI said.

Chongqing Huafu had sought to make the parts in 2002, but Metaldyne declined, saying the product was "too vital to its core business to outsource," the FBI said.

Huafu sent Mueller documents that "detail the set of capital equipment comprising Metaldyne's North Vernon production line that manufactures the International Connecting Rod," FBI Special Agent Edwards wrote in the court filing.

Another company, Abbott Furnace, also received unsolicted e-mails from the Chinese firm that contained Metaldyne's trade secrets.

The Chinese company had information that only a company insider could have -- and not an outside supplier, the FBI said. Both suppliers contacted Metaldyne, who then contacted the FBI
Metaldyne learned about the release of its proprietary information last summer from several PM equipment suppliers that had received formal requests for quotes (RFQs) for process equipment from Chongqing Huafu Industry Co, Ltd. in China. The RFQs contained very detailed engineering and cost information identical to Metaldyne's PF connecting rod technology. A Metaldyne spokesperson said, "We're confident that through the judicial process that our intellectual property will be protected."

Lockwood resigned from the company in February 2004. She also worked for Metaldyne's predecessors, MascoTech Sintered Components and Exotic Metals. Liu joined MascoTech's North Vernon, Ind., plant in 1998 and worked in Metaldyne's Shanghai office before leaving in April 2004 to work for GKN Sinter Metals there as director of technology. He began his PM career around 1995 with Cloyes Gear where he was chief metallurgist. He is also charged with stealing internal cost and technical information from GKN.

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