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Foxconn Sees New Source of Cheap Labor: The United States
hackingbear writes "Foxconn is planning to build manufacturing plants in the U.S., probably in cites such as Detroit and Los Angeles. 'Since the manufacturing of Apple's products is rather complicated, the market watchers expect the rumored plants to focus on LCD TV production, which can be highly automated and easier.' Foxconn chairman Terry Guo, at a recent public event, noted that the company is planning a training program for US-based engineers, bringing them to Taiwan or China to learn the processes of product design and manufacturing."
Detroit is centrally located, has very low wages and costs of living (compared to Los Angeles) and, thanks to the auto industry, has a very well developed distribution network via rail and the St. Lawrence Seaway. It also has a strong manufacturing history.
The road to tyranny has always been paved with claims of necessity.
For anyone that hasn't heard of this incident before...
Huh? You can't be for unions, but against union shops. If unions didn't have enforceable contracts with companies to only employ union members, then companies simply would never employ union members.
You have to understand the function of unions: to stabilize low-skilled, low-barrier-to-entry labor markets. There's no way to accomplish that stabilization without excluding some part of the labor market. They work by placing restrictions on the labor supply.
It my seem inefficient when you listen to anecdotes, but its often more efficient writ large. You need employment and wage stability in order for people to be able to save and plan ahead. It makes them more productive. You then reroute some of that additional gain to folks who got screwed, in the form of welfare.
That's the economic theory. Feel free to dispute the underlying premises, or debate the efficacy of the scheme. But its undoubtedly sound policy given the right circumstances.
Taiwan has the GDP per capita of Germany, is a democracy, is not communist.
Just saying.
The Wise adapts himself to the world. The Fool adapts the world to himself. Therefore, all progress depends on the Fool.
I don't know about LCDs, but most industrial processes need a lot of cleaning fluid. Electroplating and other coating and surface treatment processes often have to have metal contents in the effluent down in the parts per billion. There is a limit to what filtering, treatment and precipitation can achieve, and often the simplest solution (literally) is to use lots of water. (Before anybody gets uptight about nasty pollution from industry, the worst water pollution is actually the crap manufacturers put in shampoo, shower gel and the like, along with the hormones and antibiotics we and our farm animals leak out into the rivers and sewage systems).
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
I suspect a significant part of this decision comes from supply chain considerations. Consider that the US is still one of the largest markets for the electronic gadgets they make. If they ship their products on the ocean from China to the US, it will probably take 4 to 5 weeks to arrive in the US warehouses. Even if they go by air, it may take up to 14 days by the time it clears customs.
Now think about the volatile nature of the markets for these products - they are difficult to forecast accurately, and small things can cause large swings in demand... rushes on product that empty store shelves, or a popular review that points out some flaw in the product. Plus these products have a relatively short "shelf life" of being "hot". As an example, the Nexus 32 GB came out 6 months after the Nexus 8GB.
4 weeks of slack in your supply chain represents 4 weeks of tied up capital that is not doing anything but costing money. Additionally, it makes you 4 weeks further from being able to respond to changes in the market. Let's say your product has a fatal (in terms of the market... you have to hold it "just so" to get reception) flaw and sales tank sortly after launch. You already have 4 weeks of product sitting on the water. On the other hand, let's say the product takes off far more than forecasted. Store shelves are empty and it's going to be 4 weeks before you can stock them up again.
At the other end of it, because your supply chain is less responsive to the market changes, you have a greater risk of having more obsolete product at the end of its lifecycle. You can destroy it and write off the costs, or you can try to liquidate to make more revenue - but then you have old products competing against your new ones.
You can mitigate some of these issues by moving some of your manufacturing capacity to "near shore" or "on shore" with respect to the market you're selling in. You can still use "cheaper" Chinese production to manufacture some large percentage of your product line at cheaper cost, then use the nearby manufacturing to be able to quickly respond to market changes.
For a car analogy, 1 mile of train takes a long time to start and stop, but carries weight efficiently. 1 mile of trucks can start and stop much more quickly, but at greater cost. A combination of both probably gives you an optimal transportation mix - minimizing cost balanced with maximizing responsiveness.
Why does this keep getting spread? The US is the second largest manufacturing base in the world, second to only china and that just, just barely and despite having less than 1/3 the population and the presence of strong labor and environmentally laws. Just because the US doesn't make cheap (in terms of quality and type, not price) consumer products doesn't mean that the US doesn't know how to manufacture any more.