Foxconn Weighs $7B U.S. Display Plant
bloomberg.com
bloomberg.com
>"In the future they may be paying some $500 more for [U.S.] products, but those do not necessarily work better than a $300 phone," he said, after urging U.S. authorities to provide concessions on land and electricity to facilitate Foxconn's manufacturing operations.
>Despite such U.S. investment, China remains a key market and the primary manufacturing base for Apple and Foxconn, and neither company is leaving anytime soon.
>"Yes, we will continue to add to our investments in China," Gou told reporters. "China is the world's biggest market, and why should we turn down the biggest market?"
>Meanwhile, although Apple's sales in the greater China region declined 30% year-on-year through the end of the September quarter, chief executive Tim Cook remained optimistic about the Chinese market.
This is another piece in the puzzle. For Apple, defending North American market is essential. Starting manufacturing in US might be admitting that it has lost Chinese and Asian markets.
Is China the biggest market as Gou told? For many consumer products and electronics China is the biggest or becoming the biggest market. Surprisingly many products are released first China only.
http://money.cnn.com/2015/10/14/news/economy/china-middle-cl...
>China's middle class is now the biggest in the world, and growing much faster than America's, according to research by Credit Suisse. There are 109 million Chinese with wealth of between $50,000 and $500,000.
Your link goes to page 2, this link goes to page 1.
If Asian markets have only fully embraced Apple with the release of the larger iPhone 6/6+ (record sales!), isn't it possible that these markets are still happy with their phones and see no need to update? There hasn't even been a new design since the iPhone 6.
the statistics that I found only talk about sales. This one counts Chinese users and Apple's share actually went up last month (?): http://gs.statcounter.com/vendor-market-share/mobile/china
If Apple pushes for all-glass design and fully adopts OLED it it may have to choose between the technological edge and diversified supply-chain.
Sharp (owned by Foxconn) is good candidate and this joint investment speculation supports it. Having joint operation would mean that Apple can be more involved in the process process.
I think this, along with augmented production systems requiring fewer workers, is why this factory is being contemplated.
The dollar climb has boosted American purchasing power dramatically. That is especially important for a nation that imports as much as the US does.
Americans can buy more with their wages than they could prior to the dollar climb. That covers nearly every economy the US imports from, as the dollar has gained against essentially every currency on the planet. Simultaneously, real wage growth has been outpacing inflation for years now and is set to continue to climb at an accelerating pace due to a dramatic decrease in labor slack in the last five years.
Real American wages increase with the dollar
Net-net, it'd be hard to say what happens long term in the economy because that has a lot to do with long-term changes in the macro environment, if economic growth remains strong consumers will continue to make out better, if the strong dollar ultimate hurts the economy (and that isn't impossible), a weakening economy hurts consumers more than the stronger dollar.
https://www.ft.com/content/c715e806-a66e-11e6-8b69-02899e8bd...
> Foxconn Technology Group Chairman Terry Gou told reporters in Taipei the company is considering a joint investment with Apple Inc. for a display manufacturing facility in the U.S.
I think that provides enough of a kernel of truthiness for Trump to declare "Apple is building a $7b factory, it's going to be yuge!".
There's also the threat of substantially increased tariffs that could make a panel manufactured by a <$3/hour worker cost as much or more than a panel manufactured by a >$10/hour American worker.
While everyone in the U.S. I think would agree that securing jobs for Americans would be great, you just can't bend the math enough to make it economical.
Why? Everything in that plant is going to be automated anyway.
Quoting a number of jobs at "30,000" is laughable. The only reason Foxconn would employ 30,000 people is because labor is so pathetically cheap in China. In reality, they will probably employ 300-500 so there is zero reason why they couldn't pay $18+ per hour.
The idea that Foxconn would be automated less than a steel mill is absurd:
http://triblive.com/business/headlines/9409484-74/ati-worker... "Only 32 workers are needed to operate Allegheny Technologies Inc.'s new $1.2 billion hot-rolling mill in Harrison, company officials say."
I am all for Foxconn having a plant here. We need to pull some of the semiconductor and electronics manufacturing back to the US for many reasons (keeping the knowledge, lower transport costs, quicker turnaround, etc.).
Unfortunately, large numbers of jobs really isn't one of reasons.
I was making a reply to a comment of $10 am hour vs $3 in China, in which I stated it would be a lot more than $10 for a U.S factory working - amd - I don't think anyone disagrees with securing American jobs, but the math wouldn't make sense.
The initial remark discussion and reply did not relate to Foxconn jobs vs automation.
The article states:
The facility would cost more than $7 billion and may create
an eventual 30,000 to 50,000 jobs, the publication cited
Gou as saying.
These kinds of numbers are also hugely inflated and based on the most optimistic metrics.
source: worked in pr
The more interesting question is how much of the cost of a display on a per display basis is human labor costs and how much is material and facilities costs? 10 people with a fully loaded cost of $500/hr is the same labor cost as 100 people with a fully loaded labor cost of $5/hr. And if they can make the same number of displays per hour does it really matter what the humans are paid?
I think it is completely reasonable to point out that US factories employ fewer employees per $ of production value than Chinese factories do so building a factory here will create fewer US jobs then building the same factory in China would create Chinese jobs.
However I also agree that generally these discussions involve pulling out one piece of the puzzle and creating the appropriate narrative from that rather than to comprehensively analyze the economics of building the displays locally versus in China.
From a policy perspective I expect a company could successfully argue to use money held overseas to pay an overseas general contractor to build a factory locally. If structured carefully this would allow for funds which are currently inactive to be repatriated without incurring a tax obligation by playing to the vanities of the current administration.
I'm not so sure in this particular case.
People who buy Apple products are (usually) already choosing a more expensive product based on fashion and image. I can see Apple increasing the price a bit and having a big marketing campaign about being "Made in the USA."
In general though, I don't know how it's expected to work. Ironically, I think a lot of the people making the biggest fuss about bringing back manufacturing jobs will be the ones least able to buy the products once the prices skyrocket.
These people just live in a different world.
http://www.forbes.com/sites/calebmelby/2012/11/12/breaking-d...
In many cases, I would gladly pay a few percent more to have jobs back in the US. It has a cascading effect that truly "lifts all boats." A hell of a lot more than corporate tax breaks.
That reminds me of the idea that climate change can be ameliorated by a few people volunteering to recycle or ride bicycles in lieu of structural changes. TL;DR: these fixes don't work without scale.
I remember a big push around retaining manufacturing jobs in the '80s. Everything from clothes to cars to appliances was touted as being Made in America. By my recollection, the cross-industry marketing spend must have been fairly significant given its prevalence. But it apparently didn't work, and now these products are in general not made in America.
My assumption is that industry tried getting people to buy stuff based on place of manufacture and it turned out that given a choice between "Made in USA" or a few dollars off, most people chose the cost savings. Most people weren't in a position to spend more of their limited funds to save a stranger's job. If this was indeed what happened, I suspect this effort is doomed again.
edit: found the photo: http://www.strangefarmer.com/images/content/184933.jpg
Everybody will say they want jobs back here, but given two identical products made in China and the USA most people will pick the cheaper one.
I'll pay for expensive jeans which will last over the cheap jeans which don't last a year. On the other hand, the fashion industry has a lot to answer for for making people always wanting the new and the trendy, even when it impacts the environment negatively (one pair of boots lasting 10 years vs one lasting a year, for example).
I don't even know why I'm replying here if you really don't know your parents could have bought an Android device that also works and is also a "serious phone" for half the price.
When pushed on the point that he just willingly spent more than that on the apple laptop, he said "yeah, but when you use one, people know you're using a quality laptop". Yes, to this man at least, status was worth almost a grand.
http://asia.nikkei.com/Business/AC/Foxconn-considers-7bn-US-...
This is how it happens in China too. The article mentions that a Chinese city would help invest $8.7 billion, rather than the central state.
> On Dec. 30, Gou announced that Osaka-based subsidiary Sakai Display Products and the southern Chinese city of Guangzhou would jointly invest 61 billion yuan ($8.77 billion) in an advanced panel facility.
And Pennsylvania trade office is working with Foxconn on another plant.
> In addition to the proposed display facility, Gou said Foxconn plans a new molding facility in the U.S., with the state of Pennsylvania a possible site following investment discussions with local officials. A representative from the Pennsylvania trade office attended Foxconn's party Sunday.
It's typically not the exec branches job to set up those deals. But it is great that Trump is willing to get on the phone to help get the deals done, that's seems unprecedented in recent years.
Most likely Trump would be focusing on the trade policy more generally or working with congress to reduce federal regulations. The Dept of Commerce could help promote the idea of operating in America. As well as via the Treasury Dept to simplify the tax code. And Congress to reduce taxation. Again this would apply to all companies, or whole industries, and (most likely) not give any individual companies special benefits in return for opening up shop.
These programs should be open to all companies, not just the Teslas and tbe Apples of the world. Governors and Presidents should not intervene on behalf of a single company. That isn't capitalism.
That way if something does work better (like ending the drug war) in one state, there will be a ton of data to reference and eventually good ideas will be adopted by other states.
States like California are big enough to be their own small countries anyway.
This was basically the idea when the US was founded but the federal government has only grown and every 4yrs the presidency becomes more important and given responsibility for everything. So no wonder the exec branch is growing in power - the citizens keep expecting them to be responsible for everything. It'd also protect against Donald Trump's from happening, the whims of one man should never be so influential.
Carrier didn't get bags of cash to create a handful of jobs.
It's a thousand jobs at an average of $31 per hour in wages, not to mention benefits.
It's up to $7m in incentives spanning ten years.
The jobs are worth about $850 million to $1 billion in total compensation over ten years. The $7 million represents less than 1% of that value. The income taxes, sales taxes, local spending, etc, etc, etc. is worth drastically more to that community and the state than the tiny $700k per year incentive.
Firt of all, it's much less than a thousand jobs if you discount the white collar managerial jobs that were never planned to be relocated. The number of overall jobs saved is around 800.
Of those 800, a significant number of them will be eventually automated or are already in the works. So your ten year figure is, in my opinion, a bit overly optimistic.
It was a symbolic show. Even if Trump did a Carrier-type deal every month for his entire presidency, it would be far less than one percent of jobs lost due to automation and offshoring in the past 20 years.
Even Forbes thinks it's bullshit: http://www.forbes.com/sites/eriksherman/2016/12/04/trumps-ca...
http://www.newsmax.com/Finance/StreetTalk/united-tech-donald...
https://www.engadget.com/2016/05/25/foxconn-replaces-60000-h...
So much for Trump's claim that the 50 billion investment is a guarantee. This is why I despise anyone who aids him in making up stuff. It gives false hope when we need to buckle down and realign our economy and government.
Europe would likely cost more than less for shipping.
(2) >> "may create an eventual 30,000 to 50,000 jobs"
Apple is a US company and likely trying to earn some goodwill with Trumps and the public. Foxconn is also looking for good will and to hedge against a possible trade war.
(3) >> "Apple is willing to invest in the facility together"
Speaks for itself.
North Africa is another great option in my opinion: e.g., Morocco or Tunisia. Cheap skilled labor with a growing economy, yet still close to Europe and (relatively) North America.