Ground broken on Foxconn's first US factory, rumored to supply iPhone screens for Apple

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Foxconn chairman Terry Gou was joined by U.S. President Donald Trump, House Speaker Paul Ryan and others on Thursday as the company broke ground at a future factory in Mount Pleasant, Wis., which could potentially be turned to helping Apple.




Trump used the occasion to promote his goal of bringing jobs to the U.S., saying the factory will provide jobs for "up to 15,000 Wisconsin Workers," although reports have indicated the number will be 13,000. Foxconn is headquartered in Taiwan but operates most of its manufacturing in mainland China, Apple being a critical client thanks to products like iPhones and Macs.

Today, we broke ground on a plant that will provide jobs for up to 15,000 Wisconsin Workers! As Foxconn has discovered, there is no better place to build, hire and grow than right here in the United States! pic.twitter.com/tOFFodZYvK

-- Donald J. Trump (@realDonaldTrump)


The $10 billion factory is currently slated to produce LCD panels for TVs, but has been rumored as turning to iPhone and Mac panels in an attempt to cut costs. At the same time, any panels produced in the U.S. would have to be shipped overseas for final product assembly, which might negate any cost benefits.

Apple has some U.S. suppliers, but has had little assembly done in the U.S. for many years. The most recent product to be built in the country was the 2013 edition of the Mac Pro, now largely considered outdated.

To help Apple with iPhones, the factory would also have to expand into OLED. Two OLED-based models are expected to ship later this year, sized at 5.8 and 6.5 inches. A 6.1-inch LCD product is also predicted, and may even become the most popular, but Apple will likely transition to OLED iPhones completely within the next couple of years.

Local governments have reportedly been offering substantial amounts of taxpayer money to attract the factory, including $2.85 billion in income tax credits, $150 million in sales tax exemptions, and $764 million in incentives from Mount Pleasant and Racine County. The state of Wisconsin has pledged $134 million to improve nearby roads.
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Comments

  • Reply 1 of 23
    Mike WuertheleMike Wuerthele Posts: 6,516administrator
    As with the other article about the growing costs to Wisconsin because of this deal, we're going to start with this thread open for discussion. As a reminder, we didn't make this article partisan, and neither will you. This is not the place for your political manifesto.

    If you think your words are going to start an argument, then don't bother posting them.
    edited June 2018 macseekerlovemnfastasleepchristophbwatto_cobrajony0
  • Reply 2 of 23
    anantksundaramanantksundaram Posts: 20,353member
    I have no trouble at all with — in fact, I applaud — bringing manufacturing back to the US. But the deal involved at least $4B in subsidies. 

    40% (give or take) of the cost of investment in subsidies — is that really a good deal? Makes sports stadiums look cheap. 
    edited June 2018 singularitydysamoriajony0
  • Reply 3 of 23
    russwrussw Posts: 21member
    The politicians in Wisconsin have taken a big leap of faith that 13-15K jobs will be created by the plant (and many more in surrounding areas, of course). At this point, it seems they don't even know what sorts of jobs will be created or how many (13K or 15K). Will they require skill and pay higher wages or will they be jobs that don't' even require a high school diploma? Funny they can't even commit to what sort of product will be produced.

    https://www.jsonline.com/story/money/business/2018/05/04/foxconn-need-thousands-workers-entry-level-skills/578022002/

    Is this all worth $4B? Only time will tell but the community is investing in the future of their workforce so good on them. Hope it works out.
    dysamoria
  • Reply 4 of 23
    wizard69wizard69 Posts: 13,377member
    Interesting article but i really dont understand how people can believe a plant this size would be making iPhone screens. Especially LCD screens which are technology wise out mided for cell phone usage. So im thinking two things here. One is that the original stated intent is what the factory will focus on that being large screens for TVs and such. The other possibility is that they are working with Apple on a Micro LED screen. To put it another way there seems to be a developing over capacity with respect to small LCD screens. So it looks like the idea of LCDs being produced here for Apple is a bit of wishful thinking.
    watto_cobra
  • Reply 5 of 23
    rob53rob53 Posts: 3,010member
    I have no trouble at all with — in fact, I applaud — bringing manufacturing back to the US. But the deal involved at least $4B in subsidies. 

    40% (give or take) of the cost of investment in subsidies — is that really a good deal? Makes sports stadiums look cheap. 
    Exactly. The EU is complaining about Apple skirting taxes, this "deal" is a huge giveaway and appears to be costing the citizens of Wisconsin a ton of money. As far as Apple actually using it, that really doesn't matter as long as it's able to manufacture something used within the US. Of course it also appears no US agency is complaining about giving a foreign company all this money (bribes) to locate here.

    As with any corporate deal, there's always something political and I have to wonder who will be making money on this deal and who will be losing. I have a difficult time seeing LCD TV sets making a ton of money with the way they almost immediately drop in cost.

    If Foxconn would produce a might quality (4K, HDR, etc.) TV monitor without any garbage Android system inside, I'd buy it, but I think that ship has sailed. If Apple wants to produce computer monitors as well as their oft-mentioned full Apple Television at this facility, great. Just make sure the Apple TV simply has HDMI ports without any speakers since that's what the HomePod can end up being (kidding) and I think there would be a market.
  • Reply 6 of 23
    lkrupplkrupp Posts: 10,030member
    We in the St. Louis, Missouri area built an almost $1 Billion dollar football stadium to get the Los Angeles Rams into town. Twenty years later they demanded the taxpayers spend hundreds of millions more to bring the stadium up to current NFL “standards” or build a new one. We balked at that and the Rams pulled up stakes and returned to Los Angeles even though the owner, Stan Kroenke, was a St. Louisan. My point is once you commit and give the potential business what they want, and once the jobs and improved economy are actually reality, you become even more beholding to them when they ask for more and more down the road. So it’s a Catch 22 for cities and states. You want the business and jobs, you want the taxes and benefits those jobs bring, but you have to make a deal with the devil to get them. There’s also no effective way to keep this from happening as you are in competition with other cities who also want the business to locate there. Just look at the way cities fell all over themselves with proposals to get Amazon to locate their new headquarters there.
    edited June 2018 mwhiteRayz2016rob53dysamoriajony0
  • Reply 7 of 23
    jurassicjurassic Posts: 94member

    "... but Apple will likely transition to OLED iPhones completely within the next couple of years."

    Exactly. Since it will take a few years until the new plant is completed, and up-and-running, it is a safe bat that nothing produced in this factory will be used in future iPhones. And since larger LCD panels for iPads and Macs will cost more to produce here, and are also prohibitively expensive to ship to China (where iPads and Macs are assembled), those won't be produced in the new factory either.

    In other words, nothing that will be produced at this new Foxconn plant will be used for any Apple products.

    edited June 2018 Rayz2016JFC_PA
  • Reply 8 of 23
    wizard69wizard69 Posts: 13,377member
    jurassic said:

    "... but Apple will likely transition to OLED iPhones completely within the next couple of years."

    Exactly. Since it will take a few years until the new plant is completed, and up-and-running, it is a safe bat that nothing produced in this factory will be used in future iPhones. And since larger LCD panels for iPads and Macs will cost more to produce here, and are also prohibitively expensive to ship to China (where iPads and Macs are assembled), those won't be produced in the new factory either.

    In other words, nothing that will be produced at this new Foxconn plant will be used for any Apple products.

    Actually shipping costs are extremely cheap.   It is cheaper to ship one container, with thousands of boxes or products in ti, than it is to ship one box across the USA.  Bulk and contracted rates are surprisingly low.  

    As far as Apple ptoducts it is hard to tell.  The original talk about this factory didnt even include Apple.  My feeling here is that something else is going on to justify this plant as the industry is currently over supplied with LCDs.  It will be interesting to see what develops.  
  • Reply 9 of 23
    LoneStar88LoneStar88 Posts: 325member
    I have no trouble at all with — in fact, I applaud — bringing manufacturing back to the US. But the deal involved at least $4B in subsidies. 

    40% (give or take) of the cost of investment in subsidies — is that really a good deal? Makes sports stadiums look cheap. 
    Sports stadiums are not comparable entities. Sports are entertainment (consumption)—and major ones are for those with enough disposable income to afford the price of admission, season tickets, etc. They're also for seasonal and part time use.

    A factory will provide precious jobs and income for many thousands of citizens, year 'round and for many decades to come, as well as, eventually, an annual full tax base for local, state, and federal governments. The factory also produces valuable hard products essential to other industries.

    Quibbling about initial incentives is myopic.
  • Reply 10 of 23
    freerangefreerange Posts: 1,595member
    These types of highly subsidized deals are nothing more than extortion and misappropriation of limited financial resources. With $4 Billion in subsidies for 13,000 jobs (not 15,000 per the idiot with the shovel), that works out to almost $308,000 per job! This is insane! Who and what will suffer? EVERYONE in the state, education, healthcare, roads, bridges, local services... etc etc etc.
    rob53dysamoriajony0
  • Reply 11 of 23
    anantksundaramanantksundaram Posts: 20,353member
    I have no trouble at all with — in fact, I applaud — bringing manufacturing back to the US. But the deal involved at least $4B in subsidies. 

    40% (give or take) of the cost of investment in subsidies — is that really a good deal? Makes sports stadiums look cheap. 
    Sports stadiums are not comparable entities. Sports are entertainment (consumption)—and major ones are for those with enough disposable income to afford the price of admission, season tickets, etc. They're also for seasonal and part time use.

    A factory will provide precious jobs and income for many thousands of citizens, year 'round and for many decades to come, as well as, eventually, an annual full tax base for local, state, and federal governments. The factory also produces valuable hard products essential to other industries.

    Quibbling about initial incentives is myopic.
    That’s incorrect on a number of different levels. First, sports stadia are even better, since they’re a monopoly. You can’t consume their product (live) anywhere else, so consumers will have to come to them if they want the product. Something like a Foxconn factory can be set up anywhere, or its product can be purchased anywhere on the globe. Second, it does not make sense to call a stadium “consumption” and a factory “investment”. Factory outputs are intermediate goods that are consumed and put into products that the final user consumes. If you’re thinking of “investment” defined as something from which you expect to get future cash flows, then a sports stadium fits the bill as much a factory does — it is expected to produce cash flows in the future. Third, employment spillover effects are quite large for stadia as well: restaurants, clubs, mom and pop stores, hotels, Entertainment and media, etc etc. Fourth, there’s no reason to believe that stadia won’t stick around at least as long as multinational companies do: for example, the Red Sox have been in Boston far longer than Polaroid Corp. Companies can and do up and leave, or go out of business, all the time. 
  • Reply 12 of 23
    asciiascii Posts: 5,936member
    Factory jobs are great for social mobility I think. A person with little education can start doing a simple part of the production process and work their way up to more complex parts, gaining trade skills along the way.

    It's also psychologically healthier for a person at the end of a day to think about the things they made rather than just the shelves they stocked or tables they bussed. 

    These jobs are worth fighting for.
    dewme
  • Reply 13 of 23
    rob53rob53 Posts: 3,010member
    ascii said:
    Factory jobs are great for social mobility I think. A person with little education can start doing a simple part of the production process and work their way up to more complex parts, gaining trade skills along the way.

    It's also psychologically healthier for a person at the end of a day to think about the things they made rather than just the shelves they stocked or tables they bussed. 

    These jobs are worth fighting for.
    "person with little education" (other than being disrespectful) simply means an assembly line job that sooner or later will be taken over by robots. I had two summer jobs during college, spraying tomatoes as they were received by at a Campbell Soup cannery and an assembly line job at a Del Monte can manufacturing plant (yes, I was a USW, paid my dues and got almost $6/hr back in the '70s). Both of these company sites have been closed and I'm sure the Del Monte can plant has been replaced by fully automated production facilities. Neither of these jobs were going to lead to anything higher paying that a line supervisor. I wasn't going to be designing or building new machines. Maybe 1 out of a 1000 assembly line workers will advance to the kind of level you're talking about. Foxconn is making LCD panels, that's it. Nothing has been said about bringing secondary manufacturing or assembly to this plant has it? This plan will need to mechanize as many stages of manufacturing in order for it to be profitable and I doubt there's going to be 13000 employees after the plant has been built, unless the vast majority of them are sweeping floors. If Foxconn is hiring designers that's another thing but I have to wonder how many of them will come from Taiwan or mainland China. 
    dysamoria
  • Reply 14 of 23
    dewmedewme Posts: 4,388member
    ascii said:
    Factory jobs are great for social mobility I think. A person with little education can start doing a simple part of the production process and work their way up to more complex parts, gaining trade skills along the way.

    It's also psychologically healthier for a person at the end of a day to think about the things they made rather than just the shelves they stocked or tables they bussed. 

    These jobs are worth fighting for.
    I applaud your optimism and agree with the assertion that those employed in the Foxconn factory will derive human benefits from their employment. I’ve been through both work scenarios where single companies had a dedicated/captive manufacturing force and others that relied on contract manufacturing with a third party company that manufactured our products as well as our competitor’s products. In the captive manufacturing scenarios that I had exposure to the captive manufacturing employees were much more likely to experience periodic furloughs and layoffs than manufacturing employees working for a contract manufacturer. Employees working for companies like FoxConn should be able to stay employed through the cyclical ups and downs of companies like Apple or HP. Yes, this is an outsourcing scenario, but if the company providing the outsourcing services is hiring Americans locally then it simply provides another source of stable jobs. 

    The Wisconsin FoxConn plant may never build a single Apple product, assembly, or subassembly. So what? There are still plenty of manufacturers left in the US, even in Wisconsin and other parts of the midwest, and the option of outsourcing to FoxConn in Wisconsin may be deemed more politically acceptable than outsourcing to Mexico or Asia. The challenge for FoxConn will still be to manage its costs so it will still have to suppress wages, fend off unions, and lobby for import tariffs to remain competitive if it intends to compete against offshore manufacturing operations. Another approach would be to concentrate solely on the manufacturing of products that aren’t benefiting from offshore manufacturing. In other words, the best thing for FoxConn Wisconsin may be to avoid getting involved with Apple at all, at least around Apple products that are entrenched in offshore manufacturing. Building iPhone displays in Wisconsin and shipping them to China for assembly just seems like a load of claptrap from an operational standpoint. Building dashboard displays for automobiles and industrial HMIs may make a lot more sense.
  • Reply 15 of 23
    netroxnetrox Posts: 1,221member
    Is that the same ones that Gorilla Glass uses and also made in USA?
  • Reply 16 of 23
    asciiascii Posts: 5,936member
    rob53 said:
    ascii said:
    Factory jobs are great for social mobility I think. A person with little education can start doing a simple part of the production process and work their way up to more complex parts, gaining trade skills along the way.

    It's also psychologically healthier for a person at the end of a day to think about the things they made rather than just the shelves they stocked or tables they bussed. 

    These jobs are worth fighting for.
    "person with little education" (other than being disrespectful) simply means an assembly line job that sooner or later will be taken over by robots. I had two summer jobs during college, spraying tomatoes as they were received by at a Campbell Soup cannery and an assembly line job at a Del Monte can manufacturing plant (yes, I was a USW, paid my dues and got almost $6/hr back in the '70s). Both of these company sites have been closed and I'm sure the Del Monte can plant has been replaced by fully automated production facilities. Neither of these jobs were going to lead to anything higher paying that a line supervisor. I wasn't going to be designing or building new machines. Maybe 1 out of a 1000 assembly line workers will advance to the kind of level you're talking about. Foxconn is making LCD panels, that's it. Nothing has been said about bringing secondary manufacturing or assembly to this plant has it? This plan will need to mechanize as many stages of manufacturing in order for it to be profitable and I doubt there's going to be 13000 employees after the plant has been built, unless the vast majority of them are sweeping floors. If Foxconn is hiring designers that's another thing but I have to wonder how many of them will come from Taiwan or mainland China. 
    I didn't mean "person with little education," to be disrespectful, just literal. I think there needs to be a way in society for people who do not have an academic temperament to get a leg up. Being book smart is not a requirement for being a lovely or decent person.

    Yes, a cannery might not have must prospect for advancement but I think a technology factory would. And even if the cannery didn't have prospects within, you can get the first leg up there, proving that you can be a reliable person who shows up every day and doesn't complain, and then take the next step somewhere else.

    Also, regarding humans in manufacturing, as Elon Musk recently said "Humans are underestimated." He tried to make an almost fully automated production line for the Model 3 electric car and had to walk it back to the extent where his new philosophy is to use people first, and then automate things that are boring or repetitive for them. Why is this, sentiment? 

    No, its because at that factory designs are constantly evolving (that is, instead of having 1 model per year, you just constantly improve the product as you go, and a person who buys a Model 3 car 1 week later than someone else might get a slightly more refined product). And people tend to be better and quickly adjusting to new things whereas robots need reprogramming and retesting. Not all factories use constant iteration, but I suspect more will going forward, leading to humans being valuable again. 

    I personally think its great to see the US fighting for every job.
  • Reply 17 of 23
    dewmedewme Posts: 4,388member
    jurassic said:

    "... but Apple will likely transition to OLED iPhones completely within the next couple of years."

    Exactly. Since it will take a few years until the new plant is completed, and up-and-running, it is a safe bat that nothing produced in this factory will be used in future iPhones. And since larger LCD panels for iPads and Macs will cost more to produce here, and are also prohibitively expensive to ship to China (where iPads and Macs are assembled), those won't be produced in the new factory either.

    In other words, nothing that will be produced at this new Foxconn plant will be used for any Apple products.

    You may be correct. I believe FoxConn has done a masterful job of leveraging its association with Apple to garner a much better deal than other companies that are in the same electronics manufacturing services (EMS) outsourcing business as FoxConn, e.g., Flex LTD (Flextronics), could have obtained. FoxConn is by no means the only game in town. However, in many people's minds, especially the somewhat atrophied brained political variety, bringing a FoxConn operation to the US is synonymous with bringing "Apple manufacturing back to the US." Would the same level of publicity or more than generous taxpayer subsidies be afforded to FoxConn's EMS competitors, even ones that are better positioned and have proven track records with conducting global manufacturing operations that include significant US-based design and manufacturing components? No, or else it already would have happened. The Apple card paid off big time, even if it is a bluff. On the other hand, Apple may be totally in on the deal with handshake agreements with both FoxConn and the political players to direct some level of Apple operations into the Wisconsin operation, whether or not it's cost effective for Apple to do so.

    This is a super sweet deal for FoxConn without a doubt. I personally believe these EMS based operations are better positioned for longer term employment prospects for manufacturing workers in the locations where the plants are built compared to captive manufacturing, i.e., where the manufacturing employees work directly for the product manufacturer like Apple. Contract manufacturing operations have to remain competitive on a global basis to remain viable. It will be interesting to see how competitive FoxConn can be in areas like Wisconsin that have traditionally had captive manufacturing operations backed by strong collective bargaining agreements. Again, this is still outsourcing, but rather than a US firm outsourcing to a plant in Mexico or Asia it's outsourcing to a plant that's built around the Mexican or Asian manufacturing model that's physically located in Wisconsin. It will be interesting to see how the model works when moving from a low labor cost with nearby suppliers to a model based on higher labor costs and distant suppliers. For global EMS operations like FoxConn they can redistribute workload and different parts of their operations across different countries for cost and/or supplier reasons but it still must make sense on the bottom line. Finally, from what we're seeing they can also rebalance their bottom line with additional injection of taxpayer subsidies as long as they continue to maintain political capital with those who are profiting politically from their continued presence in the US. 

    edited June 2018
  • Reply 18 of 23
    k2kwk2kw Posts: 2,071member
    I have no trouble at all with — in fact, I applaud — bringing manufacturing back to the US. But the deal involved at least $4B in subsidies. 

    40% (give or take) of the cost of investment in subsidies — is that really a good deal? Makes sports stadiums look cheap. 
    Sports stadiums are not comparable entities. Sports are entertainment (consumption)—and major ones are for those with enough disposable income to afford the price of admission, season tickets, etc. They're also for seasonal and part time use.

    A factory will provide precious jobs and income for many thousands of citizens, year 'round and for many decades to come, as well as, eventually, an annual full tax base for local, state, and federal governments. The factory also produces valuable hard products essential to other industries.

    Quibbling about initial incentives is myopic.
    I think the quibbling is the only way they can criticize Trump when this is a big win for him and Republicans (He's done what Democrats should of been doing by being willing to end bad trade deals and put both pressure and incentives on Corporations) because Trump has essentially won Wisconsin in the 2018 and 2020 elections. 
    tallest skil
  • Reply 19 of 23
    dewmedewme Posts: 4,388member
    k2kw said:
    I have no trouble at all with — in fact, I applaud — bringing manufacturing back to the US. But the deal involved at least $4B in subsidies. 

    40% (give or take) of the cost of investment in subsidies — is that really a good deal? Makes sports stadiums look cheap. 
    Sports stadiums are not comparable entities. Sports are entertainment (consumption)—and major ones are for those with enough disposable income to afford the price of admission, season tickets, etc. They're also for seasonal and part time use.

    A factory will provide precious jobs and income for many thousands of citizens, year 'round and for many decades to come, as well as, eventually, an annual full tax base for local, state, and federal governments. The factory also produces valuable hard products essential to other industries.

    Quibbling about initial incentives is myopic.
    I think the quibbling is the only way they can criticize Trump when this is a big win for him and Republicans (He's done what Democrats should of been doing by being willing to end bad trade deals and put both pressure and incentives on Corporations) because Trump has essentially won Wisconsin in the 2018 and 2020 elections. 
    I suggest doing some research into foreign direct investment (FDI) over the past decade. The past two administrations have brought considerable foreign direct investment into the US (in excess of 1.5 trillion USD), mostly through traditional allies and trading partners who we are now systematically alienating. Don't succumb to the herd mentality. The information is out there to develop your own perspectives rather than blindly adopting someone else's rhetoric. 
    anantksundaramDrew354
  • Reply 20 of 23
    tallest skiltallest skil Posts: 43,399member
    freerange said:
    These types of highly subsidized deals are nothing more than extortion and misappropriation of limited financial resources.
    There is nothing “limited” whatsoever about the financial resources of all but a handful of the countries on Earth. It’s a series of magnetic states on a hard drive. There is nothing tangible about our entire financial system. They type more zeroes and more currency starts to exist. That’s it.
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