CEO Daily: Confusion Over Foxconn's U.S. Promises

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FOLLOW subscribe SHARE May 3, 2019 Good morning. David Meyer here, filling in for Alan from Berlin. What exactly is happening with Foxconn’s big Wisconsin display factory, which was supposed to bring 13,000 jobs to the Milwaukee area? It’s been one heck of a confusing ride. The $10 billion campus was supposed to be a large, cutting-edge LCD factory. Then, at the start of this year, the Taiwanese company was reported to be scaling back and altering those plans, in part due to high U.S. labor costs—the factory was now going to be a smaller engineering and research hub, employing around 1,000 people. Foxconn had only spent 1% of its promised investment by the end of last year. Now Foxconn chair and Taiwanese presidential hopeful Terry Gou has apparently “reaffirmed his commitment” to building a big factory, after meeting with President Donald Trump on Wednesday. Gou also met with Wisconsin Governor Tony Evers, whose predecessor Scott Walker partly lost re-election because of Foxconn’s $4 billion or so in state subsidies and incentives. Evers previously said the 13,000-jobs figure was “unrealistic,” but now he’s walked that back a little. “I’m not doubting their word, I'm just saying that we want as much clarity as we can going forward and we talked about what they're doing right now as far as building,” Evers told local papers after meeting Gou. Afterwards, Evers’s spokeswoman said he continued to maintain “healthy skepticism” of the jobs projection. All very opaque, and there are a lot of people’s credibility on the line here—not least that of President Trump, when it comes to his quest to return tech manufacturing to the U.S. Foxconn, of course, makes iPhones in China, the prime target of Trump’s trade offensive. Trump has repeatedly called for Apple to make its iPhones in the U.S. rather than China, but his pressure on Beijing hasn’t quite produced that effect. Instead, Foxconn is shifting a lot of its iPhone production from China to India. Wary of tariffs on imports from China, a couple hundred U.S. firms are considering doing the same thing. Getting Foxconn to make good on its commitments in Wisconsin would bolster Trump ahead of his re-election bid. “Mr. Gou is spending a lot of money in Wisconsin and soon will announce even more investment there,” White House spokeswoman Sarah Sanders said yesterday. But Foxconn’s recent dithering does not inspire confidence. If those promises don’t pan out, it will be a black eye for Trump—and Wisconsin taxpayers. More news below. David Meyer @superglaze david@dmeyer.eu . 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