Conn Job: Foxconn Wisconsin Manufacturing Cancellations, US Labor Costs Too High

-edited

Foxconn already scaled back its Wisconsin plans and is about to do so again. US labor costs are too high.

Reuters reports Foxconn Reconsidering Plans to Make LCD Panels at Wisconsin Plant.

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.

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.

Revival Not

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.

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.

Conn Job

Rather than manufacture 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.

In terms of TV, we have no place in the U.S.,” he said in an interview. “We can’t compete.”

This was a "Conn" job from the get go. Foxconn had to know US labor costs would be too high. The company never intended to manufacture here.

The clear intent was to gain access to US engineers and researchers.

Had Foxconn stated that upfront, there would have been no deal. So Foxconn promised 13,000 jobs and got $4 billion in tax breaks.

Mission Accomplished

Foxconn will lose those tax breaks because it will not meet hiring goals, except its own of course. The entire purpose of this con job was to hire the brightest US engineers.

The manufacturing jobs will be in China with assembly in Mexico. Foxconn gets US engineers.

Mission accomplished.

Mike "Mish" Shedlock

Comments (37)
No. 1-20
Realist
Realist

If America wants to compete in this type of manufacturing endeavour, wages must drop to be competitive. On the other hand, if you are really hiring skilled engineers for research jobs, then you end up with high paying positions. If you want a high paying job, acquire the necessary skills.

Curious-Cat
Curious-Cat

This seems to be a common story. States and localities grant tax advantages only to have the number of jobs be less than promised. Delaware spent $30 million in infrastructure to attract AstraZeneca several years ago. That ended with AZ tearing down 340,000 sq feet of research lab space several years later with jobs disappearing. Bloom Energy was attracted to the state by promising jobs which have never showed up. Part of Bloom's incentive package is being paid for by an energy surcharge each Delawarean pays on their electric bill. Buying jobs with tax incentives does not seem to be a great strategy for the taxing authorities.

Curious-Cat
Curious-Cat

Every worker who is willing to work for lower wages in order for this to be a competitive strategy, please raise you hand. Yeah.... I thought so. And last I heard about half of college grads were not working at jobs within their discipline two years after graduation. College degrees are not guarantees to high paying positions.

gregggg
gregggg

Wouldn't you know it after all that crooked eminent domain wrangling June 2018... "More than four square miles of Mount Pleasant were declared Monday to be a blighted area, giving the Village Board further leverage to seize property by eminent domain for Foxconn Technology Group’s massive manufacturing complex and surrounding development. Trustees voted 6-1 to declare as a blighted area some 2,800 acres of open farmland and a few dozen homes".
Blighted farmland?

Aaaal
Aaaal

LMAO! This is what a bought Wharton degree gets you. Incompetent, clueless twit.

themonosynaptic
themonosynaptic

"The manufacturing jobs will be in China with assembly in Mexico. Foxconn gets US engineers."

It was the same with the Carrier plant that Trump claimed he had saves. Carrier pulled a fast one on him, saving engineering jobs on the East Coast but closing down the other factories and moving them to Mexico as soon as Trump and the media spotlight moved away.

thimk
thimk

wondering if tariffs had something to do with it. Foxconn is following the standard play book. R&D in the US. Component build in China, final assembly in Mexico. May also be a land/fresh water grab also.

shamrock
shamrock

Um, where will the engineers come from? There already aren't enough, and Wisconsin is not a location which will attract many millennial's away from Austin, San Jose, and New York. Big H2-B push coming up?

2banana
2banana

Somehow I think there is waaaaaaaay more to this story.

We used to have journalists that used to investigate this kinda of stuff.

Rather than just say "US labor costs too high (like this wasn't researched and understood in great detail beforehand)" and "Trump man baaaaad..."

Like there is now a new far left wing anti-business Governor of Wisconsin - is he destroying this deal to pay back unions? These were nearly all non-union jobs.

or

Owen-Corning did not get any deals (near the same terms) to come to Wisconsin to build their TV glass panel factory so Foxconn determined to get these panels elsewhere?

Brother
Brother

Foxconn may be big but they don't have a market share in TV's. China mfg's Sony, Samsung & TCL has been price dumping in our market for at least 3 years. They have built huge plants that can make displays for everyone in the world. Please try to follow the slow moving ball.

lol
lol

The "slave labor" is too high!!Avg wage in US is less than $10 an hour,mexican $2 an hour,Chinese roughly $1-$1.5 an hour,so can you reall blame them?

Mish
Mish

Editor

Yes please follow the ball

  1. Focxonn initially planned to manufacture advanced large screen displays for TVs

  2. Foxconn later said it would build smaller LCD screens instead.

  3. Foxconn won't build any screens or LCDs

Yes, please keep your eye on the ball

pgp
pgp

The brightest engineers don't all live in the USA... besides the plethora of PhDs from India and Asia resident on B1 visas. However what a USA based research facility populated by US citizens does offer is full access to ITAR regulated technologies and ideas. It's nice to think the USA is the technological center of the world but actually its more a case of throwing $600 billion at the defense industries to get a 100 million dollars worth of usable innovation 10 years hence.

Mike 2112
Mike 2112

Yes, compared to places with much weaker labor and environmental laws the USA is a more expensive place to manufacture.

Sechel
Sechel

The only way we're going to revive low tech manufacturing where wages are an obstacle are either going to be reduce pay, depreciate the dollar or simply build automated factories which provide few jobs.

Trump wants the U.S. to be a leader in commodity type products, steel, aluminum , TV's(I think he was particularly vocal about the Japanese and TV set dominance in the 1980's). This is a fool's errand

U.S. should realize its an advanced economy with high wages. We can't compete with the Chinese and Mexico for low wage jobs, nor should we. We should be focusing on advance service sector and niche manufacturing such as specialty steel, specialy chemical, accounting advisory, software, engineering etc

The model where advanced TV's are designed and marketed in the U.S. but manufactured over-seas makes a great deal of sense to me. It provides some jobs while keeping prices low for consumers. I guess we can say that if the TV sets aren't made in America there's no point but why turn down high paying design and marketing jobs. America is good at design and marketing. It's a strength.

KidHorn
KidHorn

Foxconn making LCDs in the US never made sense. Almost all LCDs are made in China. The entire supply chain is there. Why would anyone make LCDs in the US? It would be like building a corn processing plant in Hawaii.

Sechel
Sechel

Let's see we 're complaining that countries with $2 wages don't buy many American products and that companies prefer to manufacturer where labor costs are low.

frozeninthenorth
frozeninthenorth

The surprise is that this is a surprise! I presume that the only ones that are surprised are those who refuse to believe that someone is ready to work for $2 per hour is more economical than someone who earns $40 per hour. Hello GOP and its fans...

RonJ
RonJ

“In terms of TV, we have no place in the U.S.,” he said in an interview. “We can’t compete.”

Then there are the H1B's brought in to put currently working Americans out of a good paying job right in our own country, as the immigrant will work for less pay.

Ted R
Ted R

Sounds like a con job to me to. China is good at doing that.