Foxconn Technology group

Foxconn Technology Group is a Taiwanese firm that specializes in contract manufacturing for technology behemoths. The company makes products for Google, Apple, Sony, and Microsoft, among others. The organization collaborates with internal enterprises and has a larger manufacturing capacity than any other entity. With 1.2 million employees worldwide, the corporation is by far one of the largest employers in the world (Sullivan, 2017). The majority of the organization’s operations are in China, where labor is both inexpensive and competent enough to meet the product standards. Although the organization’s manufacturing capabilities, its activities in developed countries are small, highlighting the necessity to diversify operations. Over reliance on a single country for production also puts the organization in the risk of facing challenges, in the event of tariffs and other export limitations on the host country. It is for this reason that there has been a growing need to diversify its operations into the developed world, with the set plan to establish a manufacturing plant in Wisconsin, which aims at creating jobs, as well as bringing back production of American technology products back to the United States. The move has vast advantages and limitations, which this analysis aims to uncover.

Foxconn’s Plan in Wisconsin

The set move into Wisconsin by Foxconn is termed to be the largest foreign investment in the United states, with the plant set to create 3, 000 jobs. The size of the factory is estimated at 20 million square feet, making it a very large project. The project is valued at $10 billion, making it a game changer, not only to Wisconsin, but also America as a whole (Sullivan, 2017). The technological buzz has resulted to a shift of production operations into China, taking away American jobs. Such a move is expected to counter this challenge, creating employment opportunities for Americans. The Republican governor of Wisconsin, Scott Walker is the man behind this deal, in an effort to deliver a promise to the people of Wisconsin to create a promised 250,000 jobs (Paquette, Frankel, and Shaban, 2017). The success of this project would majorly boost his credibility, amid approaching elections.

House speaker Paul Ryan is also a public proponent of the move, owing to the construction of the plan in his home district. The most vocal supporter of the plan is Donald Trump, who has depicted his public support for the project, owing to its job creation capabilities, as well as bringing back the manufacturing industry to the United States (Paquette, Frankel, and Shaban, 2017). According to the president, the project will help create jobs, boosting the economy. In his election bid, the president promised to make America great again, through creating manufacturing jobs that have been lost to the east. Success of this move will help support his claim, as it will bring in more jobs to the unemployed American population.

Reception by Wisconsin Leaders

The success of the plan so far is attributed to the political support backing the move, with the governor and other republican leaders in Wisconsin greatly supporting the move. The backing eases the process, in that policies have been created to help better the environment in which the organization will set up the new manufacturing plant. The support of the president is also another reason associated with the success experienced so far, in the successful negotiations that are underway. The Wisconsin assembly presented a bill, which allowed the organization to be accorded subsidies totaling to $3 billion, which is aimed to ensure the success of the operation, creating jobs for the Wisconsin people (Horowitz, 2017). This will be the largest subsidy accorded to a foreign company in the United States, which has already been passed into law by the governor. The project seems to bear fruit, with its onset expect to alter the current situation of the state of Wisconsin.

The assembly approved the bill in a ratio of 59-30, with even some Democratic Party leaders depicting their support for the bill. The creation of jobs promises to benefit all citizens of Wisconsin, and thus the associated support. However, some democrats are against it, with the claim that the tax burden imposed on the people of Wisconsin will be tough to bear, with analysts predicting a 25 year period prior visibility of the ripple effect of the investment. In the senate, the bill passed by 20-13 votes, majorly based on party affiliations. With time, the deal can be a reality, helping create jobs for the people of Wisconsin, with the factory (TV production) being the first in the country (Sullivan, 2017).

Expected Economic Impact

According to experts, the Wisconsin deal will create an additional 3,000 jobs on the commencement of operations, with a further increase to up to 13,000 jobs helping grow the economy (Sullivan, 2017). The magnitude of the project also promises to boost the economy of the state, owing to the activity brought about by the facility. With the creation of the plant, more people will move into the state and county, creating a large market and demand for products, which will improve the state of the residents. According to supporters of the deal, the organization will help create well-paying jobs, which will ensue that the people of Wisconsin have access well-paying jobs, available locally. The organization will bring about an increase in the money in circulation, which boost the economy of not only the state, but also the country as a whole.

There has been a growing need to bring manufacturing of American corporations to the local level, in aim to boost the economy. Cheaper labor sources in Asia pose a challenge to American workers, as they lose jobs to them, which limits economic growth in the United States. It is for this reason that the move is crucial in repairing this damage, in regards to the creation of numerous jobs, which were previously inexistent in the country. Through this plant, Foxconn plans to shore up its production activities in the United States, which will help better its position, owing to its collaboration with major American technology giants, as well as its over-dependence on the Chinese labor force. It is predicted that the ripple effect of the project will be felt in 25 years, despite the vast investment into the project (Horowitz, 2017). It is for this reason that the project has received opposition and criticism, pointing out as unrealistic and unproductive, in regards to economic betterment.

Opposition and Criticism

The move has been majorly criticized by democrats as well as America holding varying views into the idea, and the approach accorded to it. The major criticism associated is the fact that the people of Wisconsin will have to bear a large amount of taxes, which have been accorded as subsidies and tax breaks for the organization. In an attempt to woo the company into Wisconsin, the assembly issued subsidies that total up to $3 billion, which will be a tough costs to bear for the residents of Wisconsin. It is by far the largest tax subsidy 10 fold to be issued to a foreign company in the United States, raising a point of concern for the members of the public (Sullivan, 2017). However, proponents argue that the advantages of the deal greatly outweigh the depicted challenges, and that the move is only set to better the state, through job creation and an economic boost. The Koch Brothers also argue against the subsidies, in their support for a free market, and feel that the cost is too much for the people of Wisconsin to bear.

Another major criticism to the project is that Foxconn has been involved in numerous unsuccessful projects, where the organization pledges to create jobs and jumpstart the economy, but the reality merely meets the claims. I places such as Brazil, India, Indonesia, and Pennsylvania, Foxconn also made pledges to create jobs, falling short in all instances (Paquette, Frankel, and Shaban, 2017). The opposition argues that this is just another of those instances, with Foxconn expected to fall short of its promise, or worse, the deal fails to materialize and see the light of day. Cheaper ad skilled labor offered by Asia, more specifically China pose as a threat to this deal, as Foxconn has failed to succeed majorly in other countries, as it has in China. Setting up a manufacturing plant in a developed country is much more difficult, owing to higher wages, existent working policies, among other limitations not present in China.

Conclusion

Conclusively, it is evident that the Foxconn deal to set up a manufacturing plant in Wisconsin has stirred waves, developing major support as well as criticism. The successful execution of the project can help garner more jobs for Americans, which will help strengthen the economy. However, failure to meet the expectations will only worsen the situation, as the deal will cost the tax payers a large sum of money, which has been offered as subsidies to the organization. If the deal goes through, many Americas are set to benefit, resulting to a stronger economy, owing to the created well-paying jobs. A successful execution of the deal promises to heal the wounds developed as a result of the loss of American jobs to the Asian workforce, which offers cheaper and equally skilled labor, unmatched by those in developed nations, such as the United States.

References

Horowitz, J. (2017). Foxconn’s deal to create 13,000 jobs in Wisconsin: Where it stands. CNNMoney. Retrieved 16 October 2017, from http://money.cnn.com/2017/08/21/news/foxconn-wisconsin-deal-updates/index.html

Paquette, D., Frankel, T., & Shaban, H. (2017). Foxconn announces new factory in Wisconsin in much-needed win for Trump and Scott Walker. Washington Post. Retrieved 16 October 2017, from https://www.washingtonpost.com/news/wonk/wp/2017/07/26/foxconn-to-announce-new-factory-in-wisconsin-in-much-needed-win-for-trump-and-scott-walker/?utm_term=.c1c3bc7601fa

Sullivan, Z. (2017). Foxconn’s $10bn move to the US is not a reason to celebrate. [online] the Guardian. Available at: https://www.theguardian.com/technology/2017/jul/29/foxconn-china-apple-wisconsin-trump [Accessed 16 Oct. 2017].