Foxconn to Build $10 Billion Factory in U.S. — 13,000 Jobs

Plans for plant in Wisconsin announced at White House ceremony Wednesday

Foxconn makes iPhones and other gadgets for Apple.
Foxconn makes iPhones and other gadgets for Apple. PHOTO: © BOBBY YIP / REUTERS/REUTERS

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Updated July 26, 2017 8:41 p.m. ET

Foxconn Technology Group, which helped turn China into the center of electronics manufacturing, said it would build a $10 billion plant in Wisconsin to make display panels used in televisions and other products.

The plan, announced Wednesday at a White House ceremony, marks the first major U.S. investment for Foxconn, the world’s largest contract manufacturer of electronics and the maker of iPhones and other gadgets for Apple Inc.

Foxconn, which also owns Sharp Corp. SHCAY -0.39% , said the factory would be the first in a series of U.S. investments. Company Chairman Terry Gou is betting the U.S. can rebuild an electronics supply chain that largely shifted to China and other lower-cost Asian countries in recent decades.

 Workers stand at the gate of a Foxconn factory in the township of Longhua in Shenzhen, Guangdong province. Foxconn is moving some operations to the United States. Photo: Reuters

The factory is expected to employ 3,000 people initially and as many as 13,000 people eventually. The state is providing Foxconn with a $3 billion, 15-year incentive package of tax credits, said Wisconsin Gov. Scott Walker.

President Donald Trump, who routinely invites CEOs to meet with him at the White House to showcase his emphasis on jobs, has vowed to revive U.S. manufacturing and singled out companies for criticism for building plants outside the country. Yet many major corporations have plowed ahead with plans to move factories to Mexico, underscoring the scale of the economic forces that confront Mr. Trump’s plans.

Asia’s sophisticated electronics supply chain and deep labor pool have made it the dominant power in producing devices ranging from TVs to smartphones. Mr. Gou and U.S. officials are banking on the display factory in Wisconsin becoming the cornerstone of a new manufacturing network.

The announcement confirms plans reported Monday by The Wall Street Journal. Foxconn was exploring investments in seven states including Illinois, Indiana, Michigan, Ohio, Pennsylvania and Texas. Some of those states, including Wisconsin, were pivotal to Mr. Trump’s victory in 2016, and are home to many of the working-class voters who were seen as key to his win.

Mr. Trump also foreshadowed Foxconn’s plans in an interview with the Journal Tuesday. In the same interview, he said Apple Chief Executive Tim Cook had committed to build three big manufacturing plants in the U.S. The remarks thrust Apple into an uncomfortable position, creating expectations it would build manufacturing plants in the U.S. for the first time in decades. Apple declined to comment.

A White House official said those plants were separate from the planned Foxconn facility announced Wednesday.

Jared Kushner, the president’s son-in-law and senior adviser who heads the White House’s Office of American Innovation, led discussions with Foxconn in recent months, along with Reed Cordish, assistant to the president for intragovernmental and technology initiatives. Both Messrs. Kushner and Trump met with Mr. Gou over the course of the discussions, a White House official said.

Wisconsin’s tax credits are tied to job creation, capital expenditure and purchases of construction materials, a state official said. In addition to the potential 13,000 factory workers, state officials said analysts with Ernst & Young estimate the plant will create 22,000 indirect jobs and another 10,000 construction jobs.

Mr. Walker said the plant could draw as many as 150 supporting suppliers to Southeastern Wisconsin and nearby states. Mr. Walker said the average salaries for the 13,000 jobs at the factory would be $53,000 annually, plus benefits.

The 20-million-square-foot campus will primarily produce high-resolution liquid-crystal displays, known as 8K resolution LCD, used in smartphones and car dashboards in addition to TVs.

The facility will be located in House Speaker Paul Ryan’s district, which stretches from just south of Milwaukee to the Illinois border, according to Mr. Ryan’s spokesman. The exact location is still being determined.

“We’re calling this corridor in Wisconsin the Wisconn Valley,” Mr. Walker said in an interview. He said the new Foxconn campus would be large enough to hold 11 Lambeau Fields, home of the Green Bay Packers.

Mr. Gou started Foxconn, formally known as Hon Hai Precision Industry Co. 2317 1.73% , in Taiwan in 1974 making plastic channel-changing knobs for black-and-white television sets. He turned it into the world’s foremost contract manufacturer and one of China’s largest exporters, making products for a range of other customers in addition to Apple. It operates factories across China, where it employs hundreds of thousands of workers, and last year reported about $140 billion in revenue.

Mr. Gou has wanted to open a U.S. display factory for years in hopes of reducing the costs of shipping large-screen TVs from Asia. In 2014, Foxconn raised the possibility of investing $40 million in manufacturing and research facilities in Pennsylvania. The project never made headway because U.S. local governments didn’t offer terms that were favorable enough, the Journal previously reported.

Speaking Wednesday at the White House ceremony, Mr. Gou said the Trump administration’s and Republicans’ support of American-made products gave Foxconn confidence that American manufacturing projects could be a success. “Because of you, we are also committed to creating great jobs for the American people,” said Mr. Gou, who met with Mr. Trump three times during the planning process.

Mr. Gou didn’t elaborate on how the displays would be assembled into TVs or other devices. Much of that work is currently done in Asia where an array of suppliers are based, making it easy to ship components to a plant to assemble products. Rebuilding a significant part of that supply chain in the U.S. would be a significant undertaking.

Many TVs currently sold in the U.S. are assembled in Mexico, so it is possible that the displays made in Wisconsin could be shipped across the border to be installed in TVs that are later shipped back to the U.S. for sale, said Paul Gagnon, who analyzes the TV set market for research firm IHS MarkIt.

“As far as what state are you going to build this in to make it most efficient, Wisconsin is a little far from the Mexican border,” said Mr. Gagnon. He added that there are components that will be needed to make the displays that will need to be shipped to Wisconsin or have supplier factories built to support them.

However, with the cost of resources in China rising, labor shortages mounting and automation increasing, now could be the right time for such an ambitious effort, said David Sullivan, a partner with Alliance Development Group, a Chinese-focused strategy firm that advises technology firms.

Write to Tripp Mickle at Tripp.Mickle@wsj.com and Rebecca Ballhaus at Rebecca.Ballhaus@wsj.com

Appeared in the July 27, 2017, print edition as ‘Foxconn to Build U.S. Plant.’

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One Response to “Foxconn to Build $10 Billion Factory in U.S. — 13,000 Jobs”

  1. daveyone1 Says:

    Reblogged this on World Peace Forum.

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