Foxconn’s fall from big apple to crabapple

Source:Global Times Published: 2019/1/31 21:18:40

Foxconn Technology Group is rethinking its plan to make liquid crystal display panels at a $10 billion Wisconsin campus. The company said it intends to hire mostly engineers and researchers rather than the 13,000 jobs the project originally promised.

US President Donald Trump took part in the groundbreaking ceremony for Foxconn's Wisconsin plant in June. The news triggered a debate over whether the project was a fraud. People also queried the government's promise of to bring manufacturing back to the United States.

The White House has been promoting its alleged revival of the US manufacturing sector in recent years. The government praises all the new manufacturing projects and especially those that return to the US. 

Trump criticizes companies such as Harley-Davidson for opting to manufacture its motorbikes overseas.

Foxconn's Wisconsin plant was a flagship for the US manufacturing sector revival. It has quickly shrunk from a great blueprint to a much smaller research project. Economic rules won't serve the needs of politics over a long period of time.

When Foxconn announced that it would invest heavily in Wisconsin, many people already knew that this would be an unprofitable investment.

The former government of Wisconsin planned to subsidize the project to the tune of $4 billion. 

But after the government transition in the state, the new administration considered the investment not cost-effective, foreshadowing Foxconn's change of tune.

Even if Foxconn does love the US, such a love can never precede its love of profit. Labor costs in the US are among the highest in the world and the upstream materials and accessories are far more difficult to come by in the US compared with economies like China's.

China has accumulated years of experience as a world factory. Few countries can match China's advanced infrastructure, spare parts support capacity, skilled industrial workers and stable political environment.

Even if some economies beat China in one field, their comprehensive abilities are still insufficient.

Any countries or enterprises that act against the laws of economics will not last long.

Global economic factors are realigned in accordance with economic law. As a highly developed economy, the US cannot resist the trend of losing some middle- and low-end manufacturing industry. 

Due to rising labor costs and environmental concerns, China's coastal areas cannot absorb the manufacturing sector either. Some factories will either shift to the inland regions or countries such as Vietnam which are at the lower end of the industrial chain.

Manufacturing plays a vital part in every economy. It flows with the changing trajectory of economic factors. A revival of manufacturing cannot be achieved via political means, but is subject to these economic factors and international trends. 

The current US administration has tried its best to revive the US manufacturing sector, which has bore some fruit. 

But still Foxconn's degradation from a big apple to a crabapple is politically embarrassing. 

This is a lesson. The US would be wiser to draw the lesson and respect the laws of economics.



Posted in: EDITORIAL

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