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Apple iPhone Supplier Foxconn Planning Deep Cost Cuts (bloomberg.com)
Foxconn, Apple's biggest assembler of iPhones, is planning to cut $2.9 billion from expenses in 2019 as it faces "a very difficult and competitive year." According to Bloomberg, citing an internal company memo, "The iPhone business will need to reduce expenses by [about $900 million] next year and the company plans to eliminate about 10 percent of non-technical staff." For reference, Foxconn's spending in the past 12 months is about $6.7 billion. From the report: Foxconn assembles everything from iPhones and laptop computers to Sony PlayStations at factories in China and around the world. Foxconn has been hit by a slowing smartphone market, while trade tensions with the U.S. add to global uncertainty. The company will conduct an in-depth review of managers with an annual compensation of more than $150,000, according to the memo. Other cuts include a planned [$433 million] reduction in expenses at Foxconn Industrial Internet Co., its Shanghai-listed offshoot. "The review being carried out by our team this year is no different than similar exercises carried out in past years to ensure that we enter into each new year with teams and budgets that are aligned with the current and anticipated needs of our customers, our global operations and the market and economic challenges of the next year or two," Foxconn said in a statement to Bloomberg.
"The iPhone business will need to reduce expenses by [about $900 million] next year ..."
... in order to achieve what? The level of profit desired by the investors? Will something bad happen if they don't get their fix?
I guess they can always turn the place into one of those "boutique" breweries...
“He’s not deformed, he’s just drunk!”
the company plans to eliminate about 10 percent of non-technical staff.
This sounds exactly like what I would say almost every large company that I've ever worked for needed to do very badly.
Not only do you get rid of the salary and benefit costs from these people, you also can reduce a lot of pointless process overhead and focus on what is more important, delivery of the end result.
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Could this be a sign of Apple moving production to the US I wonder? It'd make sense for them: the production is mostly automated anyway, and manual labor is a minuscule fraction of the overall cost. In fact, humans wouldn't be able to work on much of this stuff even if they wanted to: there are thousands of parts inside the phone, and they are 0.2mm across, hard to see with the naked eye. If it's just screwing the boards into pre-milled chassis, attaching the flexes, and slapping the screen on top, I don't see why it can't be done right here in the US, in e.g. Texas or another business-friendly state.
They make damn near everything electronic.
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there's still the environmental factors. You can't pollute the way you can in China. Cancer Villages haven't been a thing in America since the late 70s.
I'm guessing they just want to bump their stock price. No new video game consoles, the latest phones have been a bust and the cat's out of the bag on fixing your old iPhone's performance by replacing the battery. Their raw sales are probably just down.
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Interesting name for a company FoxCon Foxes connotation clever if not somewhat devious , or sexy. Con has many meanings... use your imagination. Fun aside, raises questions if this is unique to their scale and iPhone reliance, chance to automate as labor gets more expensive or broader declines in global economy.
This should be a warning sign to anyone who thinks Foxconn operating plants in the US will mean lots of local jobs and/or extra tax dollars. The company operates on razor thin margins and works it's employees under conditions to the absolute legal limit it can get away with. If opening a plant in the US comes with lots of tax breaks and cash rewards then of course they'll do it, but that's money coming directly out of the taxpayer's pocket. It will probably be a mostly automated factory with small numbers of actual employees on the ground. No matter how you mix it up, this is a company that is profitable because it's dwindling numbers of existing employees are not well paid and it will do everything it can to avoid paying any tax at all. Neither of those are good for the local community.
Could this be a sign of Apple moving production to the US I wonder? It'd make sense for them
It actually makes little sense. Most of the components are made in China, and many right in Shenzhen. If you run out of 0.2mm screws in Wisconsin, you shut down the assembly line. If run out in Shenzhen you send a guy on a bicycle over to the screw factory and he is back in 20 minutes.
Also, US tariffs on components are often higher than on finished products, and the paperwork and delay will be way worse on 100 components than on one phone.
Could this be a sign of Apple moving production to the US I wonder?
No, it is a sign of falling iPhone demand, between 20 and 30% fewer units.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
It actually makes little sense. Most of the components are made in China, and many right in Shenzhen. If you run out of 0.2mm screws in Wisconsin, you shut down the assembly line. If run out in Shenzhen you send a guy on a bicycle over to the screw factory and he is back in 20 minutes.
Funny. I have done just that in Detroit. Except the quarter million screws being used that day wouldn't fit on my bicycle, so instead I used a truck.
robot work lines are coming and china is going to have to deal with it.
Scott walker really fucked WI over on that deal
trump tariff are good at makeing US have production!
I wondered why all those managers took pay cuts to $149,999 a year. Then I read:
Your ad here. Ask me how!
I live about three miles from where they're building it, on the same main road as the plant even. It's being built, so they're not backing out, we sure as hell aren't getting what was originally planned though. I've already seen at least three other foreign (European) companies do the same thing in the country but in a much smaller level. They come here, get virtually free land and no taxes for a certain time if they located here... ALL THREE have no left or are preparing to leave, shockingly not long after the tax break ended.
We make Blackberries - do they call us the Blackberry maker? No. ...
We make Nokia phones - do they call us the Nokia supplier? No.
We make Nintendos, Xboxes and Playstations, but do they call us the console supplier? No.
But you build one fucking iPhone
But if demand rises in America due to production lines opening...you'll be able to send someone out for screws. Capitalism is like that. There's no reason why we have to waste tons of CO2 on dirty cargo vessels to ship parts from one end of the world to another. To say nothing of Foxconn's slave labor issues. Why did we ever let China into the WTO?
Shutting down free speech with violence isn't fighting fascism. It IS fascism!
Yeah, but try that with "counterfeit Maxim integrated circuits". Can't be done in Detroit. Shenzhen? No problem!
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Generally assembly lines don’t “run out” of stuff, because at those quantities it’s bought months in advance. I’m sure Cook could convince Trump that US manufacturing jobs need lower component tariffs. One phone call should be enough, in fact.
Given that their workers are making around $3/hour, why would they even have $150k/year managers? Never mind the fact that virtually every company in the world has a larger manager/employee ratio than what is healthy...
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That doesn't work, because it's a chicken and egg problem. If you build the factory first it will take years for local supply chains to catch up and supply it, during which time you have to import and warehouse everything. If you build the supply chain first it will sit mostly idle for years while demand ramps up.
And even if somehow that was overcome, it would be competing against an established manufacturing base with an established global market.
As for why you "let" China join the WTO, it's because if you didn't then the WTO wouldn't be half as relevant as it is. China would have created a competing organization with better terms, and the EU would have wanted to be in it, and Japan would have joined.
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Thank God Scooter Walker gave them billions of our tax dollars to burn through here in WI. I voted for Tony Evers. Don't let the door hit you on the way out Walker!
Could this be a sign of Apple moving production to the US I wonder?
If they do, they'll just move it to the new Foxconn plant going in here. They're not gonna change suppliers at this point, because who would they change to? They could afford to build their own plants, but I don't think they will until they can make them more automated than they could today. Maybe in the next decade, but not right now.
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The transport of an individual item will be cheaper than the individual items. Everything else is also made in China.
So there would be no gain for them. On top of that, the US is not the only place they sell to. By increasing taxes for import to the world, the rest will increase theirs as well. That would lower the demand even more.
And even the few people that arre needed would be cheaper in e.g. Mexico or, er, China.
Don't fight for your country, if your country does not fight for you.
Wha...? China was poor as shit before the WTO. It gave them access to our markets and made them into the titan they are today. We could have locked them out and kept them powerless and they wouldn't be the gigantic threat they are today. We built them up, we can tear them down.
Shutting down free speech with violence isn't fighting fascism. It IS fascism!
Before Walker was elected governor, Wisconsin had a massive budget deficit with out of control spending on special interest groups. People were fleeing the state, especially young, recent college graduates. By placing in several reforms, the state turned around to running a budget surplus and experiencing an economic boom.
You voted him because "Orange Man bad," and he shared the same letter in group of association. Your vote had nothing to do with policy, logic, or even rational self interest. You are the very reason democracy is beginning to fail. You have mentally degenerated to the point where you do not evaluate circumstance. You think joining a club installs supreme virtue, while belonging to another club is automatic dehumanizing evil. You operate at a level beneath rational thought. I would feel sorry for you, but I am more sorry for the suffering in the world that your mindset causes.
It should not matter if someone is a D or an R or a whatever. Only if their policies work, and promote a general well being. If you think the either side has a monopoly on good ideas or successful strategies to improve life, then you are not thinking. You are actually something of an embarrassment.
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Great idea. Sounds like what is exactly needed at apple.
Honestly it would not surprise me if Apple were manager heavy as it has been around for while.
On the other hand they seem to produce an awful lot of products with not very many people - so it would also not surprise me if management-wise they were still pretty lean (for a large company).
The one area where I feel like all companies should get a pass on that is retail, I'm don't think you can manage something like a large set of retail stores without quite a lot of managers to keep an eye on regional differences at varying levels of magnification.
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