Foxconn In Wisconsin: Good News And Bad News

[Initech]

Foxconn Technology Group Chairman Terry Gou announced from the White House Wednesday that the company will spend $10 billion to create a Wisconsin plant that will create many display panels and jobs. That sounds great but represents both good news and bad news.

Let's start with the good news.

First, the deal will create thousands of jobs. Foxconn said it will create 3,000 jobs over four years with the potential for 10,000 more. Wisconsin Governor Scott Walker more optimistically said it would create 13,000 jobs. So the number of jobs is uncertain, but even the conservative estimate means thousands of new jobs for Americans and that — especially in the beleaguered manufacturing sector — is a good thing.

Second, President Trump campaigned on reviving manufacturing in America and bringing jobs home from overseas, and Walker has campaigned on helping blue-collar workers. So the deal would clearly be a big win for both of them, and an even bigger win if Foxconn builds additional facilities in the U.S. and other companies follow their lead.

<snip>

Second, as the Washington Post reported Tuesday, lawmakers and other concerned citizens in Wisconsin are concerned that the state may give away too much in incentives to attract Foxconn. Those concerns are heightened by the facts that Walker is up for re-election next year, has a low approval rating, and has run as a job-creator.

Third, it is uncertain whether the promised jobs will be stable and pay a living wage. As for job security, both the BBC and MarketWatch reported in May 2016 that Foxconn had replaced 60,000 of its workers with robots.

<snip>

Foxconn is also known for a work environment so harsh it led to employee riots and suicides. The Fair Labor Association — a non-profit formed by Nike and others in 1999 after a series of sweatshop scandals — documented in 2012 major labor-rights violations at Foxconn facilities including excessive overtime and salaries that were too low to cover basic living expenses and sometimes not paid.

http://www.cnbc.com/2017/07/27/heres-whats-worrisome-about-foxconns-plan-to-build-a-plant-in-the-us-commentary.html

That last part is the most worry some.

[LisaM]

1. They also want to obtain a bunch of farmland to build this plant.

At least in the article I read yesterday, which might destroy some long-standing family farms.

[Bettie]

2. No doubt they will have jobs for a while

until their tax breaks and incentives run out.

Then, they'll move on to the next place, leaving a bunch of new unemployed people and empty buildings on what used to be farms.

Or, they'll staff the place with H1B visa holders and there will be maybe a dozen jobs for US citizens.

[octoberlib]

3. Foxconn is known for not following through on it's big pronouncements.

In 2013, the company earned headlines for a plan to invest $30 million and hire 500 workers for a new high-tech factory in central Pennsylvania. The state’s governor boasted about the deal. Economists wrote think pieces explaining how this was the leading edge of a U.S. manufacturing renaissance.

But once the attention died down and the politicians moved on, Foxconn never followed through with its plans in Pennsylvania


“While I welcome new businesses to the state, I want to ensure any state-subsidized private sector jobs offer a living wage and safe working conditions,” Senate Minority Leader Jennifer Shilling (D) said in a statement Wednesday. “This company has a concerning track record of big announcements with little follow through. Given the lack of details, I’m skeptical about this announcement, and we will have to see if there is a legislative appetite for a $1 [billion] to $3 billion corporate welfare package.”

Pennsylvania was not the only place that was disappointed by a promised Foxconn investment.

In 2014, the company signed a letter of intent to invest up to $1 billion in Indonesia. That investment has yet to occur. That same year, Foxconn said it planned to invest $5 billion over five years in India, creating 50,000 jobs. But three years later, Foxconn’s investment has amounted to only a small fraction of its original promise.

And there was Foxconn’s plans for a $5 billion investment in Vietnam and $10 billion in Brazil — both projects have fallen far short of expectations.

https://www.washingtonpost.com/news/wonk/wp/2017/07/26/foxconn-to-announce-new-factory-in-wisconsin-in-much-needed-win-for-trump-and-scott-walker/?tid=a_inl&utm_term=.0f233ccecba5

[Initech]

5. So Trump got duped by Foxconn then?

Wouldn't surprise me.

[matt819]

4. No need to worry about labor practices

This plant will never be built.

The Apple server farms may or may not be built, but it will have nothing to do with the madman in the White House.

[politicat]

6. 4 points

1) I'll believe it when I see it. Foxconn has talked a big game before without following through.

2) The question is what are they building -- a wafer fab? An assembly line? Some of both? Wisconsin's going to be a tough labor force to retrain for small electronics assembly. If they're building a wafer fab, that's going to be exceptionally difficult because Wisconsin doesn't have a clean-room labor force in place. For assembly, kinda the same. Depending on the exact location and what's up for production, it could be very difficult to obtain a workforce up to the tasks. I saw this in Phoenix Metro in the early 1990s, when Motorola and Intel were both trying to grow their wafer fab production lines. The extensive and inexpensive community colleges had very specialized programs for training those workers, and it was an 18 month investment for a clean room employee. If Wisconsin is not training those workers now, they won't have the labor force in place, and if Wisconsin expects to transition automotive and large appliance workers to small electronics, it's going to be a very painful and difficult transition if they're not training now.

3) Foxconn has labor issues, the same way most of China has labor issues. There's a legacy of institutional corruption, and that's going to cause clashes which could come from either side, because Wisconsin too has a now well-established legacy of institutional corruption. While Foxconn had a suicide rate (and while the nets were not addressing the underlying problem of suicide, they were definitely a step towards harm reduction) but it's important to recall that the Chinese reported suicide rate is around 22 per 100,000 population (The 2016 US rate is 13 per 100,000, which is at a 30 year high). Foxconn employs between 250,000 and 450,000 people, so their rate should be 55 to 100 per year, per national stats. There were 18 attempts in 2010 at Foxconn (the worst year), and under 5 per year since then. So... Foxconn is significantly under the average, not over it. But Wisconsin has a high level of depression, addiction and suicide now (nearly 19 suicides per 100,000 in 2015, and rising). The history of wage theft is going to require a strong state labor enforcement division, and Wisconsin doesn't have that right now.

4) We've tried bringing Asian manufacturing methods and 6+ Sigma quality metrics to the Midwest before. It was a miserable failure in automotive manufacturing. Even now, after 30 years in place in automotive, it's grudging and frequently sabotaged at the line and lower management levels (plus at upper levels because there's dysfunction between divisions, too). If we have not addressed the cultural conflict that makes those methods fail in that region, there's no reason to believe that new manufacturing is going to change that. (What that cultural disconnect is, I don't know. There are a lot of Industrial Psychologists and Sociologists who have been studying it for decades because it's an interesting set of case studies, and "culture of rugged individualism and stubborn cussedness" is not actually useful.)

[pansypoo53219]

7. dipshit walker will give them a pristine wetland of course.