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Foxconn looking to build $10B plant in inland China - report

post #1 of 21
Thread Starter 
Apple manufacturing partner Foxconn is planning to build a new $10 billion plant in the Chinese city of Chengdu, according to a new report.

Reuters reports that several company and government sources indicated Friday that Foxconn could invest as much as $10 billion to build the plant. The factory will be built in the city of Chengdu in Sichuan province, although sources were unable to give a timeframe for the project.

At least 20,000 workers, with half trained at the company's Longhua Shenzhen facility, would be employed at the plant initially, the report noted. By comparison, over 400,000 workers currently work at the company's flagship factory campus in Shenzhen.

Chimei Innolux, Foxconn's LCD panel subsidiary, already owns a plant in Chengdu and is waiting for government approval to upgrade to an 8.5-generation plant capable of producing larger panels, according to one source. Foxconn Chairman Terry Gou could reveal plans for the factory on a visit to the city next week, said another source.

Foxconn has been looking to continue to expand outside of its mega-factory in Shenzhen, also known as "iPod City," for some time. In June, rumors suggested that Taiwan parent company Hon Hai was looking outside of China for new operations, but the company quickly dispelled the rumors, highlighting its commitment to expand "extensively" in China. According to a July report from the New York Times, Foxconn is looking to move "hundreds of thousands of workers" inland to reduce costs.

A spate of worker suicides earlier this year at the Shenzhen plant has drawn criticism from international media, despite the company being exonerated of any wrongdoing by the Chinese government. In an effort to boost worker morale, Foxconn raised wages, cut overtime hours, and
post #2 of 21
Bring it on, Apple haters.

Proud AAPL stock owner.

 

GOA

 

Get the lowdown on the coming collapse:  http://www.cbo.gov/publication/45010

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Proud AAPL stock owner.

 

GOA

 

Get the lowdown on the coming collapse:  http://www.cbo.gov/publication/45010

Reply
post #3 of 21
What's wrong with these people? Crazy-drunk with optimism, so over-confident to invest like this in manufacturing capacity. Maybe they don't watch enough American tv.

/sarcasm/

I suppose they're going to call this one "iPad City." So deluded . . .
post #4 of 21
Quote:
Originally Posted by Flaneur View Post

Maybe they don't watch enough American tv.

I suppose they're going to call this one "iPad City." So deluded . . .

I think you might be watching to much CNN or O'Riley it's time you laid off the late night mate.

America is not the center of the universe my friend; there are plenty other countries that seem to be flourishing with great consumer confidence and spending.
post #5 of 21
Quote:
Originally Posted by Market_Player View Post

I think you might be watching to much CNN or O'Riley it's time you laid off the late night mate.

America is not the center of the universe my friend; there are plenty other countries that seem to be flourishing with great consumer confidence and spending.

That is why the US is in bad shape economically with an attitude like yours.
post #6 of 21
Quote:
Originally Posted by gerald apple View Post

That is why the US is in bad shape economically with an attitude like yours.

I do not live in the US mate, and have contributed nothing to their problems.
post #7 of 21
Workers on the coast getting too greedy? What, they want 60c/hour instead of 50c?
post #8 of 21
I guess they are finally running out of cheap labor, and have to move more and more inland to find more peasants and lower wages. We'll see if their tactics backfire and we will get worse quality iPods. I would rather see those iPods made in Mexico or brazil.
--SHEFFmachine out
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--SHEFFmachine out
Da Bears!
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post #9 of 21
Not happy in the US?

Move to China!
post #10 of 21
Quote:
Originally Posted by Flaneur View Post

What's wrong with these people? Crazy-drunk with optimism, so over-confident to invest like this in manufacturing capacity. Maybe they don't watch enough American tv.

I suppose they're going to call this one "iPad City." So deluded . . .

Foxconn does not just manufacture for Apple, they manufacture consumer electronics for many companies around the world. And in spite of the poor worldwide economy and the fact that there are plenty of people suffering, especially in the United States, there are also plenty of people who still have plenty of money (or even if they don't have plenty of money, they spend it anyway).

The proof? The fact that Apple has broken records every single quarter during the worst recession in 80 years and can't keep products in stock. The fact that in spite of rising prices substantially due to the weak dollar against the Yen, Nikon U.S. generally has at least 20% of its DSLR lens line out of stock at any given time and its new camera bodies are on allocation. There are lots of other examples.

Frankly, I'm a little surprised by the number of people I see on the NYC subways with the latest iPhone. Judging by their clothes and the stops they get on/off at, they frequently don't seem like people with lots of money, but somehow, they manage to come up with the money for the iPhone. There's a relatively high-end DVD/Blu-ray player equipment company called OPPO, which just discontinued two players because they could no longer obtain certain parts, but they have none of those models left in stock to sell. You would think in this economy, their warehouse would be filled with these models. Go on to Blu-ray.com and read the new release forums. There are lots of people on there who spend hundreds of dollars a month on Blu-ray discs. There are people on there with 300-500 disc collections. A 300 disc collection could easily have cost $7500 and that's aside from the hardware.

So while there are plenty of people in the U.S. who are without jobs and totally screwed, the 85-90% who do have jobs are still spending money, just not perhaps at the pace they were before the recession. But we can't have it both ways: we can't complain that Americans carry too much debt and that we're not a nation of savers, but then also complain when we stop spending money because we're nervous about the economy.

Maybe China is optimistic because they are investing in their future, especially in their infrastructure, something which the U.S. now refuses to do (although many European countries are doing in spite of the recession). As just one example, China is expanding their rail networks, most of it high-speed rail, to 120,000 kilometers by 2020. There are whole cities arising out of nothing and we also saw the incredible structures built for the Olympics. Twenty years ago, there was virtually no middle class in China. Today, at least in the large cities, there is a thriving middle class. China is also becoming a leader in solar power generating systems, something the U.S. should have been doing.

Obviously, not everything about China is great. The big cities are terribly polluted and there is still much lack of freedom of expression, there are many political prisoners, they don't pay much attention to international copyright, patent and trademark law, safety standards are lax, etc. But they are investing in their future. The current political wisdom in the U.S. is that the government shouldn't spend any money and we should let our infrastructure fall apart (along with the jobs that go with it) because there is hatred and mistrust of government for a variety of both good and bad reasons. IMO, some of the reasons the U.S. is such a mess is because we continually spend $ trillions on useless wars and we spend far more on prisons than we do on education.
post #11 of 21
Quote:
Originally Posted by Market_Player View Post

I think you might be watching to much CNN or O'Riley it's time you laid off the late night mate.

America is not the center of the universe my friend; there are plenty other countries that seem to be flourishing with great consumer confidence and spending.

I guess my late-night attempt at sarcasm didn't come through.

Quote:
Originally Posted by zoetmb View Post


. . . .

The current political wisdom in the U.S. is that the government shouldn't spend any money and we should let our infrastructure fall apart (along with the jobs that go with it) because there is hatred and mistrust of government for a variety of both good and bad reasons. IMO, some of the reasons the U.S. is such a mess is because we continually spend $ trillions on useless wars and we spend far more on prisons than we do on education.

This is more like it, except for that word "wisdom." It's more like a pathology created by fear-mongering media, spawning a new breed of hysterical people who fear change and progress.

In contrast, technology companies, especially Apple, are creating a revolution in portable connectedness right in the midst of this pathology. This may offer a cure for the disease. One can hope. It's the reason I follow the news about Apple, and why I am developing accessories for portable video platforms.

Terry Gou of Foxconn apparently has no doubts about the future. Ten billion $ indicates a lot of confidence.
post #12 of 21
Why can't Apple's board stipulate to Foxconn that they can have a multi-year contract with Apple products if they do so in a plant built in the U.S. I am sure that many states and communities would be delighted to provide financial incentives to build on their turf.

I know that my home state, Iowa, would provide a very attractive incentive package with an abundant skilled workforce available now. Microsoft and IBM have recently found that to be the case. Iowa is an aggressive growth, low tax, reasonable regulation environment with terrific access to infrastructure networks.

Come on Apple, bring some of those jobs back home.

Harvey Siegelman
Retired State Economist of Iowa
West Des Moines

An Apple shareholder and purchaser of Apple products since 1984.
post #13 of 21
Quote:
Originally Posted by hsiegelman View Post

Why can't Apple's board stipulate to Foxconn that they can have a multi-year contract with Apple products if they do so in a plant built in the U.S. I am sure that many states and communities would be delighted to provide financial incentives to build on their turf.

I know that my home state, Iowa, would provide a very attractive incentive package with an abundant skilled workforce available now. Microsoft and IBM have recently found that to be the case. Iowa is an aggressive growth, low tax, reasonable regulation environment with terrific access to infrastructure networks.

Come on Apple, bring some of those jobs back home.

Harvey Siegelman
Retired State Economist of Iowa
West Des Moines

An Apple shareholder and purchaser of Apple products since 1984.

That would be great. However, back of a dirty soggy napkin calculation estimates is the economics is just too compelling to build there, and still can air freight to US etc. But would like to see a real analysis rather than my guess. IMO labor rates should be 'minimized' as an economic comparative advantage except as a form of 'aid'. But that's a whole other very contentious discussion
Hokey religions and ancient weapons are no match for a good blaster by your side, kid.
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Hokey religions and ancient weapons are no match for a good blaster by your side, kid.
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post #14 of 21
as long as they keep the cool gadgets pumping out!
post #15 of 21
Apple needs to make things in the USA! They don't make anything right now. They just design things. It is sad that Apple can't take an additional five to ten dollars per product they manufacture and use it for wages for workers in the USA.

At first they should assemble products here since there are no manufacturers of those types of parts in the USA. Next they should start building the parts of some of the components in the USA. Eventually they could actually build something from top to bottom. Then how many people in the USA would be inclined to buy a Mac or an iPad instead of something coming from overseas?

It is known that there is a great cache of rare earth metals in the Northwestern US. That would make it possible for Apple to build their specialized parts in the USA. For those that don't know, China is now refusing to export their rare earth raw materials. It is demanding that the rare earth products be made in China for export. It's a smart move.

Come on Apple, manufacture things in the USA and contribute to our economy in a much bigger way. Apple can afford it and should do it.

If Apple can stand up for the environment why can't they stand up for their own countrymen and create some jobs at home?
post #16 of 21
Quote:
Originally Posted by hsiegelman View Post

I know that my home state, Iowa, would provide a very attractive incentive package with an abundant skilled workforce available now. Microsoft and IBM have recently found that to be the case. Iowa is an aggressive growth, low tax, reasonable regulation environment with terrific access to infrastructure networks.

I love your optimism about creating jobs in your state, but US manufacturing CANNOT compete with sub $1/hour wages. Additionally, and as much as people are in complete denial, Unions have destroyed what's left or our possible competing manufacturing chances. Their bloated wages/benefits, have make it extremely difficult for our 'skilled' workforce to compete. I don't care what the incentive a state has, when the Unions come in, companies want to run the other way. They simply don't have this problem overseas. It really is simple economics.
post #17 of 21
Boy, it would be nice (but not realistic) to see a plant like this built in the USA, EMPLOYING 400,000 Americans

Skip
post #18 of 21
Quote:
Originally Posted by hsiegelman View Post

Why can't Apple's board stipulate to Foxconn that they can have a multi-year contract with Apple products if they do so in a plant built in the U.S. I am sure that many states and communities would be delighted to provide financial incentives to build on their turf.

I know that my home state, Iowa, would provide a very attractive incentive package with an abundant skilled workforce available now. Microsoft and IBM have recently found that to be the case. Iowa is an aggressive growth, low tax, reasonable regulation environment with terrific access to infrastructure networks.

Come on Apple, bring some of those jobs back home.

Harvey Siegelman
Retired State Economist of Iowa
West Des Moines

An Apple shareholder and purchaser of Apple products since 1984.

You want to have Apple factories in the US? The iPhone touch screens are made by LG, and the flash modules are made by Samsung in South Korea. The batteries are made in China. The chips are made in Taiwan. The iPad, iPhone etc will not be made the US.
And guess where the biggest markets for Apple will be?
post #19 of 21
Quote:
Originally Posted by sheff View Post

I guess they are finally running out of cheap labor, and have to move more and more inland to find more peasants and lower wages. We'll see if their tactics backfire and we will get worse quality iPods. I would rather see those iPods made in Mexico or brazil.

Those cheap labors originally came from inland places to begin with. So quality won't suffer. The coastal areas are running out of cheap labors because the cost of living is getting too high to justify earning the same low wages and see their family only once a year. But if they bring the factory closer to where those people live, the same wage will still be acceptable.
post #20 of 21
Quote:
Originally Posted by xsu View Post

Those cheap labors originally came from inland places to begin with. So quality won't suffer. The coastal areas are running out of cheap labors because the cost of living is getting too high to justify earning the same low wages and see their family only once a year. But if they bring the factory closer to where those people live, the same wage will still be acceptable.

The Chinese economic growth is now moving inland. The largest market for Apple will now come from the Chinese inland. There are so many big inland Chinese cities that have populations the size of New York city.
post #21 of 21
at the risk of raising politics here: hopefully some of that money will be used to improve the working conditions and salaries of the factory workers at Foxconn.
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