Howes: Foxconn's big reversal
Remember Foxconn Technology Group?
It was eyeing an investment in Michigan to the tune of $10 billion, but it ended up in Wisconsin. And it turns out that may be a good thing.
The Taiwan-based contract manufacturer now is reversing its promise to employ thousands of blue-collar workers making liquid-crystal displays outside Milwaukee.
President Donald Trump touted the deal nearly two years ago at the White House, on Twitter and in remarks calling it “the eighth wonder of the world.”
But a special assistant to Foxconn’s CEO this week told Reuters the group can’t build the glass panels in the States because they “can’t compete.” The project sold as a boon to Wisconsin’s blue-collar workforce instead would hire a lot more “knowledge workers” for research and development – if they hire them at all.
Turns out, delivering the big-ticket manufacturing renaissance promised by President Trump on his path to the Oval Office and since is proving more problematic than governing by tweet.
It’s complicated. By evidence of Foxconn’s latest bait-and-switch. By the negative impact of Trump’s own tariffs. By trade tensions with China and the European Union. By competitive pressure forcing companies like General Motors to move toward closing four U.S. plants. By what Foxconn calls changes in the “global economic environment.”
Foxconn already is notorious for talking big and delivering less – just ask folks in central Pennsylvania. They’re still waiting for the plant that never comes. So Foxconn is using the tense trade environment mostly of Trump’s own making to meaningfully alter its overall commitment to Wisconsin. This despite a $4 billion incentive package from Wisconsin taxpayers.
This wasn’t the prize that wowed Trump and then-Speaker Paul Ryan … or persuaded now ex-Governor Scott Walker to imperil his career to close a once-in-a-lifetime deal.
Eighteen months ago, the Milwaukee Journal reported that a Foxconn consultant, using company data, estimated 75 percent of 13,000 jobs to be created in the state would be “hourly operators,” and 18 percent would be engineers. Nine months later, a Foxconn official revised the hourlies down to roughly 33 percent and that number has since been lowered to 10 percent.
Big difference, proving that reality intrudes.
Liquid-crystal displays generally aren’t produced in the United States for a reason: American labor costs are too high, as Foxconn is confirming by what it’s doing, not what it’s saying.
And Detroit’s automakers are signaling that heaping tariffs on foreign steel, aluminum and maybe even finished vehicles built outside the States will have undeniable impacts on jobs, investment and the bottom line.
Numbers matter in business, that is until the rules of competition are outlawed. The Foxconn deal may turn out to be just what skeptics feared: too good to be true.
It was such a head-slapper at the time precisely because it promised comparatively high-wage jobs manufacturing a commodity typically sourced from lower-cost countries.
Michigan lost that round to a Great Lakes rival. If this keeps up, folks around here will barely remember Foxconn – except maybe the “con” part.
Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.