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Supply Chain News: Manufacturing Giant Foxconn is Not Constructing a Huge Flatscreen Factory in Wisconsin – or Is It?

 

CEO Says US Manufacturing not Financial Feasible, then Reverses Himself after Trump Call

Feb. 6, 2019
SCDigest Editorial Staff

Last week, Terry Goo, CEO of Taiwanese contract manufacturer Foxconn, shocked the state of Wisconsin and much of the rest of the nation when he announced that company would not build a giant flatscren panel factory near Racine – a project that when first announced was said by the company to bring with it an amazing 13,000 job.

The biggest worry was whether enough workers could be found, as the state and local governments offered generous tax breaks and spent tens of millions buying and starting infrastructure improvements.

Supply Chain Digest Says...

Prior to the Wisconsin project, Foxconn's discussions to expand US manufacturing hadn't resulted in new factories.


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Then came the company's stunning announcement. After reconfirming the 13,000 coming jobs as recently as early January, Foxconn said there is unlikely to be any factory at all, with the plan instead for a "technology hub" that will employ mostly engineers and technicians, though it may include some assembly and packaging operations. Perhaps about just 1000 jobs would be created.

"In terms of TV, we have no place in the US," Foxconn CEO Terry Gou said last week. "We can't compete" producing in the US, he added.

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.

This amazing change has raise many question and political rancor, though whether state policies and actions were really any factor here is unclear.

Of course, at the time of the announcement, the Trump administration touted te news as a sign of the president's policy success and a return of growing manufacturing strength. Now, the administration seemed blind sides by Foxconn's change of plans.

President Trump made a call to Goo, and voila, the company reversed itself and said Friday that it has decided go ahead with the construction of a liquid-crystal display factory in Wisconsin afterall, two days after saying building such a plant would be economically infeasible.

Foxconn said it will build the plant to make small LCD screens after productive discussions with the White House and "a personal conversation between President Donald J. Trump and Chairman Terry Gou.”

"Our decision is also based on a recent comprehensive and systematic evaluation to help determine the best fit for our Wisconsin project," the company said. Foxconn said the campus would serve as both an advanced manufacturing facility and a technology hub for the region.


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The initial Foxconn announcement led some to question the viabilty of the plan itself, as Goo

himself seemed to do.

 

According to Crain's Chicago Business, for example, the materials needed to assemble LCD products are not manufactured in the US at a commercially viable scale. LCD manufacturing requires several internal components including glass, liquid crystal (which redirects light to create an image), electronic circuits, polarizing films (optical filters) and an LED backlight (illumination). Current suppliers of these materials include Corning, LG, Merck and Samsung, all of whom manufacture these components in East Asia.

 

This back and forth came after Foxconn fell short of a job-creation target in Wisconsin last year that were promised to obtain tax credits, though the very tight US labor market probably has played some role in the hiring short fall.

The Wall Street Journal reported late in 2018 that Foxconn wad considering bringing in engineers from China to Wisconsin as it struggled to find staff locally.

The Wall Street Journal also noted that prior to the Wisconsin project, Foxconn's discussions to expand US manufacturing hadn't resulted in new factories. In 2013, Foxconn said it might invest $40 million in Pennsylvania for manufacturing and research facilities. In 2014, Gou said he was studying the feasibility of an advanced-display manufacturing plant in the U.S. Neither idea made headway.

So what's really going on? Very hard to say, but SCDigest guesses the odds of a giant campus of factories and 13,000 jobs coming to Racine is very low indeed


What do you think of this Foxconn fiasco? Do you thing a factory will really be built?
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