Yves here. In 2017, we wrote of Foxconn’s record of cheating on its plant deals and the fact that even if the Wisconsin agreement worked out as planned, the cost to the state per job created was so high as to be a giveaway. Sadly, things played out according to script.
First, from Foxconn’s Con: Seeking Whopping Subsidies for Wisconsin, Michigan Manufacturing Jobs…If They Happen:
Trump got a splash of good press in July when Apple supplier Foxconn announced a plan to bring as many as 10,000 jobs to the Wisconsin and invest $10 billion over 5 years. He’d hinted at a manufacturing deal a few weeks earlier.
However, given how states have fallen all over each other to give everything from auto plants to WalMart stores huge handouts, plus Wisconsin governor Scott Walker’s keen opposition to labor rights, there was every reason to doubt that this was much of a pro-worker development, or any kind of development other than PR. Techcrunch, in a late July story Foxconn’s long con, was dismissive:
Foxconn CEO Terry Gou and President Trump recently announced a plan to bring 3,000 jobs to Wisconsin at what appears to be a flat screen manufacturing plant.
The political press ate it up, alternatively excoriating the program for costing too much in tax breaks and crowing a win for Wisconsin’s conservative governor, Scott Walker.
I wouldn’t encourage either party to hold their breath.
Gou is in the habit of promising big and rarely delivering. Four years ago business journals crowed about a plan to bring a Foxconn flat screen manufacturing plant to Pennsylvania in 2013. The result? Foxconn opened an empty office in Harrisburg and nothing further has been done.
This behavior is not new. Foxconn has signed letters promising to build factories in Indonesia (2013), Vietnam (2007), and Brazil (2011). None of these were completed according to the original pie-in-the-sky spec. Reuters had this to say about the Brazil adventure:
When Taiwan’s Foxconn Technology Group agreed in April 2011 to make Apple products here, President Dilma Rousseff and her advisers promised that up to $12 billion in investments over six years would transform the Brazilian technology sector, putting it on the cutting edge of touch screen development. A new supply chain would be created, generating high-quality jobs and bringing down prices of the coveted gadgets.
Four years later, none of that has come true…
“It’s not a promise. It’s a wish,” said Gou in January when the idea of a US factory was first floated. I worry that this announcement, too, is a “wish.” Either way, Foxconn – and not the state – wins.
OpenDemocracy went through the math from the Wisconsin side:
Foxconn’s shoddy record isn’t the only red flag associated with this proposal. The electronics manufacturing giant has grown accustomed to major handouts from governments and, if their track record is any indication, they expect these freebies to keep flowing the entire time they’re in the country. In order for this plan to become a reality, the Wisconsin state legislature would need to approve $3 billion in corporate incentives to defray capital costs and workforce development costs. The math is startling: Wisconsin will pay out $230,000 in tax dollars for each one of the 13,000 jobs. This means Wisconsin taxpayers will shell out $66,000 per year to subsidize jobs that will pay less than the state average income. In a state experiencing its lowest unemployment rate in 17 years, it’s difficult to imagine there would be political will to pass this legislation…
It’s also worth asking what kind of jobs the Foxconn deal will create. Wisconsin Governor Scott Walker’s entire political career has been framed by his battle against organised labor. With funding from the Koch Brothers and other deep-pocketed out-of-state donors, he’s waged an unceasing battle against public sector unions, including teachers and other civil servants. He also helped make Wisconsin a ‘right to work’ state, which will make it much more difficult for Foxconn’s employees to join a union if they decide to. Under Walker’s watch, union membership has plummeted faster than in any other state in the country.
And an August report in the Madison State Journal said state legislators weren’t exactly wild about the scheme. Walker is pressuring the legislature to approve the Foxconn plan as part of approving the state budget, which means accepting a pig in a poke. Some lawmakers want to do more due diligence, which means voting on the Foxconn spending separately. From the article:
Republican lawmakers are split over how to move forward with a plan to send $3 billion to an electronics manufacturing giant promising to create 13,000 jobs in Wisconsin as questions surfaced about how the plan would affect the next state budget that is a month overdue.
Taiwanese technology company Foxconn wants to spend $10 billion to build LCD panels on a 20-million-square-foot, 1,000-acre campus of more than a dozen buildings in southeastern Wisconsin by 2020. Gov. Scott Walker signed an agreement to have a contract in place by the end of September.
But doing so requires approval from a Republican-controlled Legislature that still hasn’t passed a 2017-19 state budget. And despite a suggestion from Assembly Speaker Robin Vos, R-Rochester, on Tuesday that the Foxconn deal would have “almost zero” impact on the next state spending plan, questions surfaced from Democrats and Senate Republicans about whether more vetting was needed.
USA Today, using the fact that Michigan Governor Rick Snyder is also playing footsie with Foxconn as a news hook, raised doubts about the deals yesterday with its story, Analysis: Foxconn considers another plant in Midwest, but at what cost?:
Michigan Gov. Rick Snyder, on a nine-day trade trip in China, told the Associated Press there is a “strong possibility” Foxconn will come to Michigan after it chose neighboring Wisconsin for a $10 billion display panel plant with 3,000 employees that could swell to 13,000…
But the Wisconsin deal comes with a major caveat: It requires up to $3 billion in subsidies from state taxpayers — or $231,000 per job for 13,000 jobs. Put another way: state lawmakers are mulling a subsidy package nearly 50 times bigger than any previous one.
Now to the update from Common Dreams.
By Jake Johnson, staff writer. Originally published at Common Dreams
President Donald Trump, Wisconsin’s former Republican Gov. Scott Walker, and former House Speaker Paul Ryan (R-Wis.) spent a lot of time at press events and photo-ops last year touting the 13,000 manufacturing jobs Foxconn was supposedly going to create in the U.S., but—as with many of his job claims—the president’s soaring promises are looking increasingly hollow.
As Reuters reported on Wednesday, the Taiwanese tech firm—which Walker lured to Wisconsin with over $4 billion in taxpayer subsidies—is now saying “it intends to hire mostly engineers and researchers rather than the manufacturing workforce the project originally promised.”
In an exclusive interview with Reuters, Louis Woo, a special assistant to Foxconn chairman Terry Gou, said the company is completely walking back its plan to build $10 billion factory in Wisconsin.
“In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment,” Woo said.
SHOCKER—Foxconn was a MAJOR CON by Trump & Scott Walker. I'd like to hear a presidential candidate start pushing jail time for corporate welfare thievery https://t.co/eHYuqC1vbe
— Jordan (@JordanChariton) January 30, 2019
As Reuters notes, FoxConn “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.”
Trump bragged about his deal with Foxconn to bring jobs to Wisconsin. So far 178 people were hired—but the company is on track to score over $4 billion in incentives.
That's $22M per job. #WhatADeal https://t.co/FGfZ9L3IHD
— Swing Left (@swingleft) January 30, 2019
foxconn was supposed to employ 5,200 ppl by end of 2020; now looking closer to 1,000. “In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment," said CEO's asst.
….yes wisconsin paid $4 BILLION for thishttps://t.co/79WwUUZCab
— Sarah Holder (@ptsarahdactyl) January 30, 2019
“Foxconn took Wisconsin for a ride. Other states, beware the allure of the mega deal,” wrote Reid Wilson, reporter for The Hill.
News that FoxConn is slowly reversing its promises of manufacturing investment and job-creation will come as no surprise to progressive analysts and corporate welfare critics, who have argued all along that the sweetheart deal Walker and Wisconsin Republicans cut with FoxConn in 2017 was an “absolute fraud.”
“I remain skeptical that the Foxconn project will ever play out as advertised,” Greg LeRoy, executive director of Good Jobs First, told Bloomberg last week.
Following Reuters‘ report on Foxconn’s moves to renege on its previous job pledges, critics pointed to footage of Trump participating in a “groundbreaking” ceremony with Walker, Ryan, and Foxconn’s chairman at the site of the company’s planned facility last June, where he touted the 13,000 manufacturing positions the tech firm vowed to create.
“I’m thrilled to be here in the Badger State with the hardworking men and women of Foxconn working with you,” Trump declared during the event. “Moments ago, we broke ground on a plant that will provide jobs for much more than 13,000 Wisconsin workers. Really something. Really something.”
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Some additional points:
1. The point person for the state dealing with Foxconn learned about the change of plans from the Reuters report. Not a good sign.
2. Walker is trying to cover his ass by tweeting “no jobs, no tax credits.” This is literally true (if Foxconn hires NO ONE) but the tax credits are structured so that the cost to the state per job is substantially higher if employment is low. And at least a billion or so of public money is for eminent domain and new/expanded roads, which is sunk cost regardless.
3. The Reuters article says (paraphrasing) “the business environment has changed since we made the deal so of course the deal has to change.” Which is a pretty ballsy thing to say less than 2 years in to a 15-20 year deal, when it is not obvious that business conditions have changed in any meaningful way.
4. I think the state Repubs are correct when they say the problem is the new Dem Gov (by which they really mean the state’s voters, since the gov has only been in office for a couple weeks and not done anything yet). Had Walker won again, the Foxconn/Repub cabal could have continued scheming, hiding, lying, cheating, postponing, etc for the next several years. With this Gov, that is no longer possible.
I haven’t driven by there in a couple of months but last time I did, there was not much construction evident.
Good additions LiW.
It is not clear to me in which sense are you using the word “problem” here.
I live in Racine County. Nope, not much going on. But they bought up a whole lot of land. Yep, as usual, a handful (relatively speaking) of people got paid while the rest of us is holding that flaming bag of (family blog). A parting gift from Snotty Walker….
And there’s the rub. The land acquisition that got steamrolled through Racine county was enough for a 13,000 employee hub. Instead, it’s only going to be a 1,000 researchers, who aren’t as space-dependent as manufacturing. Which makes this whole thing a giant, subsidized land grab. Question is, for what? I’m not knowledgeable about the area to make an educated guess; maybe a local can offer an idea there.
Who owns the land currently – the state or Foxconn?
Foxx Con: https://www.google.com/search?q=wolf+little+red+riding+hood&safe=active&rlz=1C1GCEU_enUS820US820&source=lnms&tbm=isch&sa=X&ved=0ahUKEwi4svTWz5jgAhUKZawKHQLvCOQQ_AUIDigB&biw=1735&bih=895#imgrc=JTtBRppwTZmylM:
That ‘business environment has changed’ quote – has it anything to do with Apple not doing well?
At the peak of any market, crazy projections are common.
The other question is about the $3 billion incentives. Does it number change given this announcement, or has it already be given (for example, maybe the state government purchased land to lease it cheaply to Foxconn, but if Foxconn doesn’t need that land now, even cheap rent is more expensive than not having to rent something it doesn’t need – in this hypothetical case, it’s lose-lose for both parties)?
Aside from the infrastructure spending by the state and localities, I believe almost all of the rest is tax credits for job creation. None of those have been given yet (because Foxconn did meet even the very low threshold for employment to earn them for 2018). So good people should stop saying that Wisconsin has already given Foxconn $4 billion. Promised yes, but not yet given.
On infrastructure, one thing that is evident to locals but not included in the $4.8 billion is that the state has obviously sped up/redirected spending on interstates (which the state DOT awesomely calls “mega projects” to distinguish them from regular highway spending) to the I-94 corridor that passes by the Foxconn site. This section had just gotten a major rebuild (maybe 5 years ago?) but they have for the last year been redoing/expanding exits and I think even widening it further if memory serves.
If bringing “back” manufacturing jobs to the US was the most salient promise made by Trump, these news must be a blowback for his chances to repeat in 2020, aren’t they?
I doubt anyone who voted for trump, actually pays attention. Even if they are from wisconsin, and hear this in the news every day.
evidence based anything is strictly forbidden.
that depends.
here, the folks who voted and/or supported Cruz seem aware of all this.
These tend to be management or owners…so maybe this awareness is due to routine exposure to more business-ey press(ie: not just faux newts and rush radio clones)
regardless, like republican or democrat, lib or con(or progressive)…”trump supporter” is a too ambiguous term.
it’s interesting, perhaps, that the neolib order that discourages solidarity, including up to some monolithic solidarity, also leaves us discussing things in terms of monolithic movements and ideologies.
(and…shot through the art is reference to $4 billion in subsidies…and the public cost of each job. It’s somehow unremarked that this is in direct opposition to the official narrative of the gop/”conservative movement(tm)” for the last 40 plus years. That such tolerance for cognitive dissonance is routine is a worrisome indicator.)
Based on the Foxconn announcement, the manufacturing jobs will be R&D scientists and engineers with some small screen manufacturing using robotics. The blue collar workers will be able to build the road and building that the State of Wisconsin is paying for.
Bringing back manufacturing jobs to the US.
Hopefully, not Russian corporations setting up factories making S-400 mCissile defense system here.
And not Chinese corporations doing the manufacturing of Dongfen missiles here either.
So, it would seem that you should want to know about the who and what (is being made).
It is going to take a lot more than economic destruction of his voters to sway his base, per the ending of this interview: https://www.npr.org/2019/02/01/690603596/for-georgia-farmer-the-trade-tariffs-are-personal
Also from the Reuters report:
“[Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters] 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. […]”
Like Foxconn didn’t know what labor costs were in Wisconsin? What is this?
There was a post/discussion on this at Illinois’s major politics blog (Capitol Fax) yesterday – Illinois lost out on the “deal” and that started an endless rant about labor/workmen’s comp/union issues in the Illinois conservative media, led by the Tribune – anyway, long story, Illinois in-fighting, etc.
One commenter provided a link to a podcast detailing the “deal.” https://www.gimletmedia.com/reply-all/132-negative-mount-pleasant
Another suggested that Midwest states band together in confronting such offers, and that suspect deals offered by multi-nationals get the once-over from the entire group of states operating en bloc.
It was also noted that researchers tend to gravitate to large cities and may not be easy to attract to rural Wisconsin (though sb else stood up for Racine as a very nice place), sb else noted that they’d probably hire H1B tech people to staff it.
And there was considerable use of the word “Schadenfreude” with respect to how Illinoisans are feeling about this.
Kind of a wake-up call if anybody’s paying attention to their alarm clock.
IF these jobs ever materialize, there is a Foxconn building in downtown Milwaukee; that might be a large city that researchers would prefer.
Underling: Mr. Gou. The Board is demanding to know what you are going to do next. We have run out of places to set up factories that will never be built and grab their tax dollars instead.
Gou: Maybe a second or third world country?
Underling: After Indonesia, Vietnam and Brazil they are not falling for it anymore.
Gou: Perhaps the United States?
Underling: Not after how we screwed Pennsylvania over. No more Lucy and the Football there.
Gou: Hmmm. Where is Scott Walker these days?
Underling: (Aghast) He’ll never fall for it!
Gou: I will tell him that unions will be illegal with my workers.
Underling: He’ll fall for it. How many jobs will I say that it will create?
Gou: Any number you like. It won’t matter as in the end most of them will be Indian tech-workers on H1B visas anyway.
I know that’s parody but that list line (H1B visas) really stings. I used to work at a then-huge multinational engineering company (rhymes with scrotum-ola) just south of Foxconn Wisconsin. I’m white but I knew lots of Indian/Chinese engineers here on H1B visas and they would routinely get screwed by their immigration status. We had huge projects that would be staffed almost exclusively by H1B immigrants where 60-80 hour weeks with no overtime pay was standard. Then, if the project didn’t pan out they’d get let go and have to find a new job in 30 days or get deported. Lots of them had lived here for years, had families and kids in school.
Yep, I work at a financial institution with a significant representation of H1-B workers from that region. We see it all the time, mostly you can tell when it happens as out of nowhere, they’re scrambling to pay off their vehicle loans and trying to arrange a title transfer on a week’s notice (the latter of which isn’t really possible in the majority of cases). Ugly business all around, I can’t begin to fathom the stress these companies subject their guest workers to.
It’s why people are moving all over the country for a few months gig work and then they move again for their next real short term gig (if the alternative is getting kicked out of the country). I mean literally gigs nowhere near each other – in the south and then the north and then the west etc..
Well that and absolutely desperate American citizens as well (for whom it’s just about desperate economics not staying in the country). And this is widespread in some fields.
I’m sorry to hear about that JohnnyB. That last line I did not intend as parody but prediction based on how quickly this deal is being scaled back. I would not be surprised if at first opportunity that Foxconn sells this whole development leaving taxpayers to deal with the consequences. Depends on how the contract was written. Speaking of contracts.
I heard about one executive not that long ago who was given a golden contract with a new company. Come the first day he does not turn for work and announces that he will never turn up for work. But his contract guarantees several years pay and all the goodies that go with it and there was not a thing that the company could do because of the contract that they had signed with him. Contracts are important.
I guess it’s Terry Gou who will be writing “The Art of the Deal” part Deux.
H1B is a poorly designed visa in the first place. Being tied to a single employer for years is dispiriting. Compare this with the Self Employment Pass in Singapore and it’s like night and day. In the later, employees can jump around like a free agent and as such companies can’t repress their salaries that easily. Singapore also associates a minimum wage requirement for these pass holders that are quite high.
Typical government subsidy (to bring jobs) failure. What about that Amazon HQ?
If you actually want jobs … lower corporate tax to zero. Otherwise jobs will go where the taxes are the lowest.
This is bi-partisan failure. Unless Democrats try to jack up the corporate taxes, in which case they can own it.
If corporate tax rates are zero, they will still complain about labor cost, environmental regulations, sales taxes, etc. Corporate taxes are only on profit.. so they will consider all of the other costs first.
this is corps when someone tries to tax or regulate them…acted out live by soccer stars!
https://www.youtube.com/watch?v=l4PqtlkT2L0
If the corporate tax is zero, then businesses have to pay their employees more so they can pay the taxes. Somebody has to pay for government services, and the interest on the debt.
Oops. Can’t afford the labor. Sorry. Have to move to Brazil.
Our country is run by idiots and thieves.Or perhaps more accurately, idiotic thieves. And most are not in the government.
Sad.
Lol, right. Nope.
That only works if you a) you have a region with zero geographic, cultural, and infrastructural differences between subregions (i.e., if lowest tax burden were the only factor, there would be no businesses in NYC), and b) you have a very strict regulatory barrier between corporations and individuals. That was the problem in Kansas, they dropped the corporate rate and a whole bunch of individuals just incorporated themselves for no reason other than tax avoidance, and the public coffers drained.
Amazon is still the biggest tax suck this side of the military, with subsidies that dwarf the Foxconn deal.
That’s a big problem – corporations ptting one local government (city, county or state) against another.
We see it with professional sports teams, film productions companies, and now this. The problem is not limited to Wisconsin or its former governor.
Is there a non-partisan state agency in WI that reviews the numbers for deals they make? If not, there should be one. I think that would reduce excessive giving away by these local governments.
Wisconsin has two excellent state agencies – a Legislative Reference Bureau that helps legislators draft legislation so that it does what it is intended to do and a Legislative Fiscal Bureau that analyzes what things cost. Both are relics of the state’s mostly abandoned Progressive tradition. Word of mouth is that both have been weakened by retirements and quits due to Walker’s hatred of state workers and lack of respect for what they do but the fiscal bureau in particular still seems pretty competent. But, because they are state bureaucrats, they don’t do any publicity – just issue reports to the legislature.
Compared to most of these deals, there was a pretty healthy public debate about the Foxconn subsidies. In part, this was because awhile back the deals done to get public financing to the Milwaukee Brewers new stadium were particularly sleazy. (So sleazy that when our beloved, publicly-owned Packers tried shortly after to get their expected hand out for stadium renovations, they were rebuffed. Of course, they were not able to use the relocation threat.) But the Repubs had all branches of state govt so what the public thought didn’t really enter into the decision-making. This is one thing people many people really refuse to believe about these Repubs: they simply don’t care what the public thinks (except as it requires adjusting their messaging).
Well, at least the company is aptly named; Fox CON
What will it take for the American people to stop the long con and start fighting for our future?
I’m reading a book entitled “The Big Con,” by David W. Maurer, about the Golden Age of cons (1890-1920’s) in the US.
Written by a linguist who initially intended only to study the vernacular language of con men and grifters, (much of which we still use) my biggest takeaway from the book is that traditional confidence games and rackets have declined because everything else in society – health care, higher education, politics, you name it – has become a con and racket.
Interesting that. It kinda puts the 1973 film “The Sting” into context here-
https://www.youtube.com/watch?v=LN2hBOIXhBs
Why do it illegally and go to jail when you can just incorporate yourself and do it legally?
This saga has the feel of a giant Soviet factory designated to build ballet flats, and with great fanfare, Brezhnev & assorted apparatchiks each plunge a shovel into the ground, but due to a lack of leather, the Bolshoi goes wanting, and barefoot ballet becomes a thing.
To paraphrase the Russians: Our government continues to pretend to work and we taxpayers continue to over pay them.
They work. They just work harder for the ones that pay them more.
It gets worse. The former Gov’s guy at the development agency, WEDC, wants to give credits for jobs not even in Wisconsin!
“The head of the economic development agency, Mark Hogan, said in a letter to auditors that WEDC believed employees outside of Wisconsin should be counted because they are being directed by the Foxconn operation in the state, resulting in their wages being subject to state income tax”
https://www.apnews.com/bc881462d6464a688eb9a6d68239383e. Sorry link did not post
Voters will never wise up. We go from one huckster (you can keep your doctor) to the next (you’re going to get so tired of winning). It’s so much easier for them to just manipulate voters than to work to explain public policy that politicians don’t even bother.
That Kamala Harris CNN town hall was a good example. She had no idea what she talked about most of the time but by peppering in a few hot button phrases, the seals in the audience clapped and the lazy “journalists” failed to ask even rudimentary follow up questions.
She will be our next President, or else Trump will if she loses to him.
That’s quite a prophecy. Democrats deserve someone better than Harris. The rest of us do as well. Hopefully Dem primary voters learned their lesson from presumptive nominees.
No, she’s not likeable. She wears thin with more exposure.
And people will connect her nastiness, which will become more visible, with not having kids. America isn’t ready to elect someone who was never a parent to be president, particularly a woman. Wait till the right figures out how to spin that.
This morning’s news. Follow Molly Beck @mollybeck for politician statements and local reporting.
Milwaukee Journal Sentinel: Report: Foxconn suspending work on Wisconsin plant
http://www.jsonline.com/story/news/politics/2019/01/31/report-foxconn-suspending-work-wisconsin-plant/2730092002/
Thank you for posting this piece. Part of a long-term effort spanning decades to defund and disempower the American middle class. Those behind this massive scam and their minions deserve nothing but our contempt. There is a reason why the U.S. has fallen to No. 22 in Transparency International’s rankings of least corrupt countries, and IMO this deal is a poster child for the failure to significantly control corruption that is contributing to a crisis in democracy in the U.S. and around the world, one of their political objectives. IMO there are also reasons why Wisconsin was targeted, not the least of which is that state’s political history. But bottom line, considering the subject individuals and this company’s track record with labor and ongoing state subsidies, the good people of Wisconsin might consider themselves lucky that their payment of $4 billion in subsidies is likely the cap, as another pipe dream is proving hollow, despite the clear costs to public education, infrastructure and other government functions in the public interest.
America’s based on fraud.
Use that lens to begin all assumptions and things can only get better from there.
I think if they do go ahead with the FoxCONN, they still aren’t getting jobs for thousands of Wisconsin residents or US citizens. Not even for the R&D.
Water rights were part of this deal too. I wonder how that now plays if the site is more for R&D purposes.
TBD. In theory that could be really good news. Their right to take Lake Michigan water hasn’t changed but in theory their usage should be a lot lower. My understanding is that they were going to need to use huge amounts of water to repeatedly wash/rinse the flat glass panels, which it seems they won’t be doing now.
You’d think Wisconsin would have done their homework on Foxconn and acquisitions of companies in the dumper like Sharp and Toshiba PC subsidiary (toshiba saw the future and jettisoned its obsolete personal computer business to Foxconn). Add over-reach in near obsolete LCD and PC technology, over-production of Apple’s pricey OLED iphones and lag-time in R&D sends warning bells. I am no expert, but doing the same ole same ole is running in place. Maybe they should invest in treadmills.
Nikkei Asian Review reports “Foxconn’s moves to hold up planned investments come after the company took cost-cutting steps that included shedding 100,000 workers by the end of 2018. The business climate is even chillier now that top customer Apple delivered a shocking revenue downgrade in January, citing slowing Chinese sales.”
Not that I’m a techie, but I think its strange Foxconn would invest in manufacturing LCD screens since the newest technology coming out this February by their arch-enemy is Samsung’s bendable OLED phone screen and far ahead of the game, and especially Apple’s (yawn) iphone. Samsung launched OLED screens in 2013 and is the sole supplier for Apple’s iphones until recently with LG added as a supplier whose current orders are small. Also on the tech horizon is Micro-LED. So the question is why a manufacturing plant for the near to be obsolete LCD’s?
Answer: Foxconn is over-extended and slow to market changes and tech innovation. According to NAR, “Foxconn altered its plans for the Wisconsin investment, dubbed Project 868 internally, since it was first announced at the White House in July 2017. Instead of building what would be the company’s second 10.5-generation LCD panel factory after the Guangzhou site, Foxconn downgraded the project to sixth-generation technology for smaller displays.” I’m guessing LCD’s will not be manufactured in Wisconsin since the Guangzhou project, run mainly by a joint venture of Foxconn and its subsidiary Sharp, revised its timetable, only 20% to 25% of the planned monthly capacity will go into operation in the third quarter of 2019.
WSJ reported in November, Foxconn Tech Group are considering bringing in personnel from China claiming its struggling finding display engineers and ‘other’ workers. How often have we heard that fairy tale? FYI: US News reports: Last week, the Nikkei reported that Foxconn had let go around 50,000 contract workers in China since October, months earlier than normal.
Foxconn executive Louis Woo wrote, “As a company with operations around the world, we need to have the agility to adapt to a range of factors including global economic conditions.” After reading about current technologies and Foxconn’s liability acquisition of Sharp technologies in 2016 and Toshiba PC’s subsidiary in 2018, my guess is Foxconn is lagging in the tech race rather than their official press release gibberish blaming economic conditions and trade wars. Add in their August posted second-quarter net profit well below expectations as a rise in component costs and unsold inventory falling 20% short of analyst expectations. Foxconn makes roughly half its revenue from Apple, and once again, reported an 8 percent fall in December sales.
“Terry Gou”
Gou means dog in Chinese