Foxconn Change Focus from Manufacturing Factory To Technology Hub

Foxconn technology

Foxconn Technology Group is shifting plans to make advanced liquid crystal display panels at a $10 billion Wisconsin campus and stated it intends to hire mostly engineers and researchers rather than the manufacturing workforce the project originally promised.

As per the sources, declared at a White House ceremony in 2017, the 20-million square foot campus marked the huge Greenfield investment by a foreign-based company in U.S. history and was praised by President Donald Trump as proof of his ability to strengthen American manufacturing.

Foxconn, a controversial state and local incentives for the project, originally planned to manufacture advanced large screen displays for TVs and other consumer and professional products at the facility, which is under construction. Later it said they would build smaller LCD screens instead.

Now, those plans may be scaled back or even shelved, Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, said Reuters. He told the company was still evaluating options for Wisconsin, but cited the steep cost of making advanced TV screens in the United States, where labor expenses are comparatively high.

“In terms of TV, we have no place in the U.S.,” he informed in an interview. “We can’t compete.”

When it comes to manufacturing advanced screens for TVs, he said: “If a certain size of display has more supply, whether from China or Japan or Taiwan, we have to change, too.”

Instead of LCD manufacturing, Foxconn wants to create a “technology hub” in Wisconsin that would largely consist of research facilities along with packaging and assembly operations, Woo said. It would also create specialized tech products for industrial, healthcare, and professional applications, he further said.

“In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment,” Woo added.

Earlier this month, Foxconn, a major supplier to Apple Inc., reiterated its intention to create 13,000 jobs in Wisconsin, but informed it had slowed its pace of hiring. The company originally said it expected to employ about 5,200 people by the end of 2020; as per the company source it stated that figure now looks likely to be closer to 1,000 workers.

It is unclear when the full 13,000 workers will be hired.

In the interview, Woo stated about three-quarters of Foxconn’s eventual jobs will be in R&D and design – what he described as “knowledge” positions – rather than blue-collar manufacturing jobs. Foxconn is formally known as Hon Hai Precision Industry Co.

Woo said it would be more profitable to make them in greater China and Japan, ship them to Mexico for final assembly, and import the finished product to the United States. He said that would represent a supply chain that fits with Foxconn’s current “fluid, good business model.”

Heavily criticized in some quarters, the Foxconn project was championed by former Wisconsin Governor Scott Walker, a Republican who helped secure around $4 billion in tax breaks and other incentives before leaving office. Critics of the deal, including a number of Democrats, called it a corporate giveaway that would never result in the promised manufacturing jobs and posed serious environmental risks.

According to budget think tank the Wisconsin Budget Project, The company’s own development projections and employment goals suggest the taxpayer investment would take at least 25 years to recoup.

Recently, to qualify for the tax credits Foxconn must meet certain hiring and capital investment goals. It fell short of the employment goal in 2018 – hiring 178 full-time jobs rather than the 260 targeted – failing to earn a tax credit of up to $9.5 million.