The real question: How much has already been spent for infrastructure etc, by State of Wisconsin, counties and cities on the project?
Exclusive: Foxconn reconsidering plans to make LCD panels at Wisconsin plant
Jess Macy Yu, Karl Plume
5 MIN READ
(Reuters) - Foxconn Technology Group is reconsidering plans to make advanced liquid crystal display panels at a $10 billion Wisconsin campus, and said it intends to hire mostly engineers and researchers rather than the manufacturing workforce the project originally promised.
FILE PHOTO: A shovel and FoxConn logo are seen before the arrival of U.S. President Donald Trump as he participates in the Foxconn Technology Group groundbreaking ceremony for its LCD manufacturing campus, in Mount Pleasant, Wisconsin, U.S., June 28, 2018. REUTERS/Darren Hauck
Announced at a White House ceremony in 2017, the 20-million square foot campus marked the largest greenfield investment by a foreign-based company in U.S. history and was praised by President Donald Trump as proof of his ability to revive American manufacturing.
Foxconn, which received controversial state and local incentives for the project, initially planned to manufacture advanced large screen displays for TVs and other consumer and professional products at the facility, which is under construction. It later said it would build smaller LCD screens instead.
Now, those plans may be scaled back or even shelved, Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters. He said the company was still evaluating options for Wisconsin, but cited the steep cost of making advanced TV screens in the United States, where labor expenses are comparatively high.
“In terms of TV, we have no place in the U.S.,” he said in an interview. “We can’t compete.”
When it comes to manufacturing advanced screens for TVs, he added: “If a certain size of display has more supply, whether from China or Japan or Taiwan, we have to change, too.”
Rather than a focus on LCD manufacturing, Foxconn wants to create a “technology hub” in Wisconsin that would largely consist of research facilities along with packaging and assembly operations, Woo said. It would also produce specialized tech products for industrial, healthcare, and professional applications, he added.
“In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment,” Woo said.
Earlier this month, Foxconn, a major supplier to Apple Inc., reiterated its intention to create 13,000 jobs in Wisconsin, but said it had slowed its pace of hiring. The company initially said it expected to employ about 5,200 people by the end of 2020; a company source said that figure now looks likely to be closer to 1,000 workers.
It is unclear when the full 13,000 workers will be hired.
But Woo, in the interview, said about three-quarters of Foxconn’s eventual jobs will be in R&D and design - what he described as “knowledge” positions - rather than blue-collar manufacturing jobs. Foxconn is formally known as Hon Hai Precision Industry Co.
Rather than manufacturing LCD panels in the United States, Woo said it would be more profitable to make them in greater China and Japan, ship them to Mexico for final assembly, and import the finished product to the United States.
He said that would represent a supply chain that fits with Foxconn’s current “fluid, good business model.”
Heavily criticized in some quarters, the Foxconn project was championed by former Wisconsin Governor Scott Walker, a Republican who helped secure around $4 billion in tax breaks and other incentives before leaving office. Critics of the deal, including a number of Democrats, called it a corporate giveaway that would never result in the promised manufacturing jobs and posed serious environmental risks.
The company’s own growth projections and employment goals suggest the taxpayer investment would take at least 25 years to recoup, according to budget think tank the Wisconsin Budget Project.
Foxconn CEO Gou plans to meet with Wisconsin’s new Democratic governor, Tony Evers, a past critic of the deal, later this year to discuss modifications of the agreement, according to the source familiar with the company’s thinking.
U.S., China face major differences amid trade talks
Evers could not be reached for comment.
Currently, to qualify for the tax credits Foxconn must meet certain hiring and capital investment goals. It fell short of the employment goal in 2018 - hiring 178 full-time jobs rather than the 260 targeted - failing to earn a tax credit of up to $9.5 million.
The company may be prepared to walk away from future incentives if it is unable to meet Wisconsin’s job creation and capital investment requirements, according to the source familiar with the matter.
Reporting by Jess Macy Yu in Taipei and Karl Plume in Wisconsin; Editing by Jonathan Weber and Paul Thomasch
Our Standards:The Thomson Reuters Trust Principles.
Above is from: https://www.reuters.com/article/us-foxconn-wisconsin-exclusive/exclusive-foxconn-reconsidering-plans-to-make-lcd-panels-at-wisconsin-plant-idUSKCN1PO0FV
Wisconsin Is Finally Facing the Reality of Foxconn’s Plans
Tim Culpan
,
Bloomberg•January 30, 2019
Wisconsin Is Finally Facing the Reality of Foxconn’s Plans
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(Bloomberg Opinion) -- So Foxconn Technology Group may not make display panels in Wisconsin after all.
Those who’ve been following Foxconn for a long time won’t be surprised. Chairman and founder Terry Gou is as much a salesman as he is a manufacturer, having spent decades honing his pitch not just to clients but also governments.
Then-Governor Scott Walker, backed by President Donald Trump, loved exactly what he sold: the promise of thousands of jobs to make stuff in the U.S. Walker loved it so much that he pledged as much as $3 billion in sweeteners, a deal that likely cost him his governorship.
Now, according to a Reuters interview with one of Gou’s right-hand men, such plans to manufacture display panels may be scaled back or even shelved.
“In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment,” Louis Woo was cited as saying. Woo was one of the key architects and negotiators behind Foxconn’s deal with the state.
Foxconn’s Wisconsin-made screens likely would have been put into televisions. Woo this week admitted that “in terms of TV, we have no place in the U.S. … We can’t compete.”
If Foxconn can’t be competitive making electronics in the U.S., nobody can.
Woo’s admission doesn’t appear to come from any change in Foxconn’s deal with Wisconsin, or even any shift in the macroeconomic environment. It’s simply a matter of economic reality. The same reality that existed when Trump was handing out red truckers hats and promising to Make America Great Again.
Two years ago this week I wrote that Foxconn’s U.S. panel project didn’t make sense, evidenced by a comment Gou himself made saying that such plans weren’t a promise but a wish.
Wishes don’t always come true. I believe now, as I did then, that it would not be in Wisconsin’s interests to be closely tied to the flat-panel industry because it’s a highly cyclical, cost-sensitive business. One that would likely see massive job cuts not long after large-scale hiring.
Foxconn is now publicly conceding that manufacturing panels in Wisconsin isn’t viable, but still thinks it can hire just as many as originally promised. Instead of factory workers, Woo said they’ll hire for research positions as well as back-end packaging and assembly employees. Frankly, that’s wishful thinking because the U.S. doesn’t have much of a talent pool to dabble in these areas.
In 2018, the first year of the Wisconsin experiment, the company couldn’t even hit its employment target. Instead of creating a very modest 260 full-time jobs, Foxconn filled just 178 positions, Reuters reported.
Now that Foxconn is acknowledging the truth about manufacturing in America, it might be time for the country to face that same reality.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.
For more articles like this, please visit us at bloomberg.com/opinion
©2019 Bloomberg L.P.
Above is from: https://news.yahoo.com/wisconsin-finally-facing-reality-foxconn-081006427.html
Foxconn pulls back on its $10 billion factory commitment
Danny Crichton@dannycrichton / 5 hours ago
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Well that didn’t last long.
In 2017, Foxconn announced the largest investment of a foreign company in the United States when it selected Mount Pleasant, Wisconsin for a new manufacturing facility. Buttressed by huge economic development grants from Wisconsin, an endorsement from President Trump, and Foxconn CEO Terry Gou’s vision of a maker America, the plant was designed to turn a small town and its environs into the futuristic “Wisconn Valley.”
Now, those dreams are coming apart faster than you can say “Made in America.”
In an interview with Reuters, a special assistant to Gou says that those plans are being remarkably scaled back. Originally designed to be an advanced LCD factory, the new Foxconn facility will instead be a much more modest (but still needed!) research center for engineers.
It’s a huge loss for Wisconsin, but the greater shock may be just how obvious all of this was. I wrote about the boondoggle just a few weeks ago, as had Bruce Murphy at The Verge a few weeks before that. Sruthi Pinnamaneni produced an excellent podcast on Reply All about how much the economic development of Mount Pleasant tore the small town asunder.
The story in short: the economics of the factory never made sense, and economics was always going to win over the hopes and dreams of politicians like Wisconsin governor Scott Walker, who championed the deal. Despite bells and whistles, televisions are a commodity product (unlike, say, airfoils), and thus the cost structure is much more compatible with efficient Asian supply chains than with American expensive labor.
Yet, that wasn’t the only part of the project that never made any sense. Foxconn was building in what was essentially the middle of nowhere, without the sort of dense ecosystem of suppliers and sub-suppliers required for making a major factory hum. (Plus, as a native of Minnesota, I can also attest that Wisconsin is a pile of garbage).
Those suppliers are everything for manufacturers. Just this past weekend, Jack Nicas at the New York Times observed that Apple’s advanced manufacturing facility in Austin, Texas struggled to find the right parts it needed to assemble its top-of-the-line computer, the Mac Pro:
But when Apple began making the $3,000 computer in Austin, Tex., it struggled to find enough screws, according to three people who worked on the project and spoke on the condition of anonymity because of confidentiality agreements.
In China, Apple relied on factories that can produce vast quantities of custom screws on short notice. In Texas, where they say everything is bigger, it turned out the screw suppliers were not.
There are of course huge manufacturing ecosystems in the United States — everything from cars in Detroit, to planes in Washington, to advanced medical devices in several major bio-hubs. But consumer electronics is one that has for the most part been lost to Singapore, Taiwan, Korea, and of course, China.
Geopolitically, Foxconn’s factory made a modicum of sense. With the increasing protectionism emanating from Western capitals, Foxconn could have used some geographical diversity in the event of a tariff fight. The company is Taiwanese, but manufacturers many of its products on the mainland.
And of course, a research center is still an enormous gain for a region of Wisconsin that could absolutely use high-income, professional jobs. Maybe the process of rolling out a next-generation manufacturing ecosystem will take more time than originally anticipated, but nothing is stopping further expansion in the future.
Yet, one can’t help but gaze at the remarkable naïveté of Wisconsin politicians who offered billions only to find that even massive subsidies aren’t enough. It’s a competitive world out there, and the United States has little experience in these fights.
Above is from: https://techcrunch.com/2019/01/30/foxconn-pulls-back-on-its-10-billion-dollar-factory-commitment/?yptr=yahoo
Reuters