Economy

Foxconn factory: Is Trump luring the Asian manufacturer to the US?

Foxconn is reportedly considering building a $7-billion TV screen plant in the US. But the announcement comes as the largest contract electronics maker is automating many of its factory jobs.  

Terry Gou, founder and chairman of Taiwan's Foxconn Technology, is shown on a screen during the third annual World Internet Conference in Wuzhen town of Jiaxing, Zhejiang province, China, Nov. 17, 2016. Foxconn is considering investing $7 billion in a TV plant in the US.
Aly Song/Reuters
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Your next flat-panel television could be marked with the label, “Made in USA,” Foxconn chairman and chief executive Terry Gou indicated on Sunday, two days after President Trump’s “America first” inauguration speech.

Foxconn, a Taiwanese company that is world’s largest contract electronics maker, is considering investing at least $7 billion to build an advanced display manufacturing plant in the United States, Mr. Gou told reporters in Taipei. The proposal would be planned with its subsidiary, Sharp Corp., which Foxconn acquired last year.

Since Mr. Trump was elected in November, several American manufacturers have already canceled plans to move facilities abroad. Carrier, an Indianapolis maker of air conditioners and heating furnaces, agreed to halt its plans to move about 1,000 jobs to Mexico in a deal struck with Trump. Ford Motor Co. also announced it would scrap a $1.6-billion assembly plant in Mexico, and instead add 700 jobs in Michigan, a response to the tax and regulatory policies the automaker expects under Trump and a Republican Congress.

But a Foxconn plant in the US would be different: It wouldn’t be a re-shoring of jobs once lost to Asia or Latin America. It would be a Taiwanese corporation bringing jobs across America's borders. 

How that will materialize remains unclear, however. Gou has estimated an American display plant could create 30,000 to 50,000 jobs. But preliminary estimates come at a time when manufacturing is trending towards automation and even robotics. Will these jobs, then, be on the factory floor, or in engineering and product management? More important for consumers, how will state and federal rules and regulations affect pricing, as analysts have speculated an American-made iPhone would surely be more expensive?

Gou’s comments on Sunday confirm speculation about Foxconn’s involvement in an agreement reached between Trump and the head of Japan’s SoftBank Corp. SoftBank’s chief executive, Masayoshi Son, pledged in a meeting with Trump in December to invest $50 billion in the United States. As the president and Mr. Son fielded questions in the lobby of Trump Tower, the telecommunications executive was photographed with a document that inadvertently showed Foxconn would invest $7 billion in the United States and SoftBank an additional $50 billion. Those investments, read the document, would equal 100,000 new American jobs over the next four years.

Shortly after the meeting, Foxconn issued a brief statement saying that it was in “preliminary discussions for potential investments” to expand its activities in the United States, according to The Wall Street Journal.

Gou clarified on Sunday the timeline of events, He said he had talked to Son, a close friend, about the potential of the television manufacturing in the United States. The country is the second-largest market for televisions, but has no panel-making industry, he said.  

"I thought it was a private conversation, but then the next morning it was exposed," he said. "There is such a plan, but it is not a promise. It is a wish."

Foxconn has been trying to turn that “wish” into a reality for several years. In 2014, Gou said the company planned to relocate capital-intensive and high-tech manufacturing to the United States, its largest market, The Wall Street Journal reported then.

"Automation, software and technology innovation will be our key focus in the US in the coming few years," Gou told reporters.

This focus included studying the feasibility of building an advanced manufacturing plant in the United States that is capable of producing liquid display screens larger than 60 inches, Gou said. He said it is currently difficult to ship such large TV screens to the US from Asia.

Then, last week the financial newspaper Nikkei reported Foxconn and Sharp have began studying the possibility of building such a liquid crystal display panel plant in the US, a Sharp executive told the newspaper.

This facility, people familiar with the discussions told the newspaper, would be approximately the same size as the world’s largest panel plant for LCD TVs, in Guangzhou, China. The Chinese facility, to be built with the local government at a cost of about $8.69 billion, is scheduled for completion in the fall of 2018.

Nikkei speculated that Trump’s stated intention to slap tariffs on products imported from China played into Sharp and Foxconn’s considerations. And that was before Trump’s inauguration speech, in which he described the state of American manufacturing.

“One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind,” said the president on Inauguration Day. “From this day forward, it's going to be only America first – America first.” 

Trump’s message during the campaign and following the election has influenced the decisions of American manufacturers. In addition to Carrier and Ford Motor Co., Tesla said that when its Gigafactory outside Reno, Nev., begins mass production that the plant will create 20,000 to 30,000 jobs once it is operating at full capacity.  

But analysts are raising questions about how Foxconn’s interest in building more products in the US, whether they are televisions or much speculated iPhones, will materialize.

In December, Dan Panzica, a manufacturing analyst with IHS Markit, who worked for Foxconn for several years, told the Journal that bringing Apple-related manufacturing jobs to the US would be difficult because the US lacks the population centers to support major manufacturing operations like the ones that exist in China. Such a comment likely relates as much to a $7-billion display panel factory as it does to China’s famous “iPhone City.”

Foxconn does already have logistics and research and development centers in the US. It has a plant in Virginia for packaging and engineering that employs more than 400 people, according to Agence France-Presse. Foxconn has also announced a $40-million investment in a facility in Pennsylvania to build precision tools and develop a robotics program, including funding $10 million worth of research and design operations at Pittsburgh’s Carnegie Mellon University. It also already has a manufacturing facility in Harrisburg, Pa., that employs about 30 people, Bloomberg reported in 2014.

The announcement came as an increasing number of technology companies were relocating manufacturing facilities to the US because they wanted their product designers to be near the manufacturers for quality control, Scott Andes, a senior policy analyst at the Brookings Institution’s Metropolitan Policy Program in Washington, told Bloomberg at the time.

Indeed, in a survey by the consulting firm Deloitte, global manufacturing executives predicted that the United States – now No. 2 – will overtake China as the most competitive country in manufacturing by 2020, according to the Associated Press. 

But labor and manufacturing in both the US and China are changing dramatically. One example is Foxconn, which plans to automate about 70 percent of factory work within three years; it already has a fully robotic factory, writes Lonnie Shekhtman for The Christian Science Monitor. 

This report contains material from Reuters. 

 

 

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