Foxconn May Shelve Plans For $10 Bn, 13,000-employee Wisconsin Plant

In a major setback to the U.S. which is seeking to revive manufacturing, the Foxconn Technology Group is reportedly shelving its planned $10 billion investment in Wisconsin which would have created 13,000 jobs.

Foxconn, also known as Hon Hai Precision Industry and owned by billionaire Terry Gou, has most of its manufacturing operations in greater China.

The company’s re-thinking seems to have been borne by the high-cost factor involved in making advanced TV screens in the U.S., evident from the words of spokesman Louis Woo, reported Reuters.

The 20-million square foot campus in Wisconsin had given rise to many expectations. The company was offered liberal incentives to manufacture advanced large screen displays for TVs and consumer products. The project was even hailed as the biggest greenfield investment by a foreign company in U.S. history.

The project was described by President Donald Trump as a harbinger for reviving American manufacturing.

Taipei-based Foxconn Technology Group is an important manufacturing partner for Apple Inc. It assembles iPhones, computers, and Playstations in its factories in China and other parts of the world.

Foxconn’s retreat from the American project seems to be the fallout of the reigning market scenario as well. The demand for Apple’s iPhone and smartphones is dipping. Secondly, the escalating trade tensions between the U.S. and China will impact its production ecosystem.

Foxconn derives nearly half of its revenue from Apple, which is battling the falling revenue in the key Chinese market. Bloomberg News reported in November that Foxconn would cut expenses drastically in 2019.

Under the changed plan, the Wisconsin site would be converted into a hub for technology research, Reuters reported quoting Woo. The hub will have a higher focus on producing specialized products for industrial and professional applications.

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

A few months ago, the company said it is more interested in making smaller LCD screens in the U.S site. But the new announcement has annulled all that.

Outsourcing better

The company spokesman added that making LCD panels in the United States is not viable. Rather, offshoring the production in greater China, Japan, and Mexico then importing to the U.S as a finished product will make more economic sense.

Former Wisconsin Governor Scott Walker was a big force in bringing the Foxconn project to the state and helped the company with $4 billion worth tax breaks and incentives.