In early 2014, multinational electronics manufacturer Foxconn announced plans to move a portion of its operations to America. According to insiders, a new $30 million Foxconn factory in Harrisburg, Pennsylvania, will create 500 jobs when complete. The company is known for its relationships with several leading computer manufacturers, particularly Apple, for whom it makes iPods, iPads, and other products.
Until recently, most people associated Foxconn with its Chinese factories; for many, news of the Harrisburg Foxconn factory seemed an ironic reversal of fortune. Instead of relying on American business overseas, it seemed Foxconn had been lured to US soil.
Unsurprisingly, there is an agenda behind Foxconn's American manufacturing plant. In late 2013, talks between Foxconn Chairman Terry Gou and Tesla's Elon Musk led to plans for collaboration between the two companies. According to an Economics Daily report published in February 2014, Foxconn subsidiary Innolux will produce 17-inch flat-panel screens for Tesla vehicles. Thus, the reason for Foxconn's new presence becomes clearer.
Future Foxconn factory projects include 120-inch TVs for American customers; in fact, the company plans to start manufacturing televisions for Vizio in the fourth quarter of 2014. Vizio's large TVs would be much easier to produce in the US—not only from an overhead-cost standpoint but also from a shipping perspective. Oversized electronics cost more to ship and, because of their sizes and accompanying weights, are more easily damaged in transit.
According to Gou, Foxconn previously investigated the feasibility of a technologically advanced large-screen panel factory based in the US. At this stage, the location of Vizio's television-manufacturing facility has not been disclosed. Foxconn already makes many of Vizio's flat panel televisions abroad; none of them, however, are anywhere near as large as the upcoming 4K TV.
Gou, who founded the first Foxconn factory as Hon Hai Precision Industry Company Ltd. in 1974, is no stranger to innovation. In fact, he founded his company based on the belief that electronics would become commonplace in households all over the world—and that innovators and manufacturers would need low-cost electrical and mechanical parts. He based his business on a "lowest total cost" model and—perhaps predictably—major corporations such as Apple, Microsoft, Nokia, Sony, and Dell soon caught on.
For many manufacturers, outsourcing production to a Foxconn factory overseas initially seemed logical because of low production costs, which were based in part on comparatively lower wages paid to workers in countries such as China, Brazil, and Malaysia. However, when the recession ballooned in 2008, the US job market deflated while the concurrent Chinese economic boom created a brand-new middle class. Suddenly, China and the US found themselves on a distinctly level playing field.
Many jobs created by the Harrisburg Foxconn factory will doubtlessly be engineering positions, mechanical posts, and opportunities for computer technicians. Nevertheless, the high-profile production company's American manufacturing plant and overall interest in US ventures is a plus from an economic standpoint.
(Photo courtesy of Freedigitalphotos.net)
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