Foxconn Sees New Source of Cheap Labor: The United States 430
hackingbear writes "Foxconn is planning to build manufacturing plants in the U.S., probably in cites such as Detroit and Los Angeles. 'Since the manufacturing of Apple's products is rather complicated, the market watchers expect the rumored plants to focus on LCD TV production, which can be highly automated and easier.' Foxconn chairman Terry Guo, at a recent public event, noted that the company is planning a training program for US-based engineers, bringing them to Taiwan or China to learn the processes of product design and manufacturing."
Re:poor choices for locations (Score:5, Informative)
Detroit is centrally located, has very low wages and costs of living (compared to Los Angeles) and, thanks to the auto industry, has a very well developed distribution network via rail and the St. Lawrence Seaway. It also has a strong manufacturing history.
Re:Get rid of the unions (Score:4, Informative)
Re:poor choices for locations (Score:3, Informative)
Re:Get rid of the unions (Score:4, Informative)
Citation for the parent post: Triangle Shirtwaist Company [wikipedia.org]
Re:poor choices for locations (Score:2, Informative)
It also is heavily unionized and being in a union is a way of life for some areas.
Re:Get rid of the unions (Score:3, Informative)
Why go that far back? Here's proof you still need unions today. [wikipedia.org]
Re:Learn design in Asia? (Score:1, Informative)
Joke all you want but I bet today you'd be happy if the Japanese copied American cars rather than designing their own?
And regarding the Lenovo vs Toshiba post above yours remember where each country is from.
And while their new stealth jet may be copying of an American design and they got their high speed train designs by building parts and later copying them now they build their own. And got fast trains.
They own what was once our Volvo cars. Huawei is about the same size as Ericsson. They do high voltage designs, construction equipment and so on.
They are of course not inferior to any other people. They are many and they are up and raising.
Soon you'll wish they was copying your designs rather than build better products.
Re:Get rid of the unions (Score:4, Informative)
Unions are parasites that ruined American labor.
They were a necessary evil to combat the exploitive corporations killing workers for profit (usually through negligence, but occassionally through murder). The corporations started it, then complained when the playing field was leveled. If the companies didn't fight so hard against worker rights, the unions wouldn't have gotten to where they are.
Re:Get rid of the unions (Score:5, Informative)
Huh? You can't be for unions, but against union shops. If unions didn't have enforceable contracts with companies to only employ union members, then companies simply would never employ union members.
You have to understand the function of unions: to stabilize low-skilled, low-barrier-to-entry labor markets. There's no way to accomplish that stabilization without excluding some part of the labor market. They work by placing restrictions on the labor supply.
It my seem inefficient when you listen to anecdotes, but its often more efficient writ large. You need employment and wage stability in order for people to be able to save and plan ahead. It makes them more productive. You then reroute some of that additional gain to folks who got screwed, in the form of welfare.
That's the economic theory. Feel free to dispute the underlying premises, or debate the efficacy of the scheme. But its undoubtedly sound policy given the right circumstances.
Re:Big mistake (Score:3, Informative)
The Government (under Clinton) provided the groundwork for the subprime crisis to begin with by rewriting the CRA and reapplying it to REQUIRE a certain percentage of loans to go to those who would otherwise not qualify. Remember, the CRA was signed into law by Carter. The rules and regulations of the CRA were tweaked by successive administrations to reel it in, or in the case of Clinton, to let more line out so the artificial bubble he rode during his 2nd term was intact (by perception) when he left office. That plus the 2004 SEC allowing these banks to borrow against 30x their working capital did a number on the economy. To say the Shrub was solely responsible is just like Obama saying Shrub caused him to run up the deficit at 4x the rate Shrub did. The concepts of the subprime crisis cross party lines, because most of the regulatory response to the Progressives' mis-characterization of Wall Street "being above the law" have done and will do nothing to fix the underlying problem that government meddling in the banking system is never for the reasons stated.
Re:poor choices for locations (Score:2, Informative)
The problem with OSHA fines is that they are rarely a set amount, and if you continue to actively ignore them they only get larger. I imagine the speed at which they get larger increases quite a bit if you habitually ignore multiple rules. Other than that you're probably about right. OSHA standards aren't hard to meet though.
Taiwan != China (Score:5, Informative)
Just saying.
Re:So it's come to this. . . (Score:4, Informative)
It's "socialism with Chinese characteristics".
No "communist" country has ever called itself communist, because, according to their dogma, communism would be the final stage of the development of their society, and they were on their way there (hence the need for the state and the accompanying oppression machine). The parties called themselves communist since, in theory, their ultimate goal was achieving that mythical communist society; but the countries themselves were always referred to as socialist (hence why it was USSR and not USCR).
Re:So it's come to this. . . (Score:2, Informative)
Err, 23 Million Taiwanese beg to differ... Foxconn is a Taiwanese company from a democratic-capitalistic country protected from a chinese invasion by the US.
Re:Get rid of the unions (Score:4, Informative)
Huh? You can't be for unions, but against union shops. If unions didn't have enforceable contracts with companies to only employ union members, then companies simply would never employ union members.
In Europe the law usually says you can't even ask if someone is a member of a union before employing them, and can't fire them for being one. Most people join unions because it is in their interest to be part of collective bargaining, but it is illegal to require joining to work somewhere.
Large amounts (Score:5, Informative)
Re:patent battle defense? (Score:5, Informative)
I suspect a significant part of this decision comes from supply chain considerations. Consider that the US is still one of the largest markets for the electronic gadgets they make. If they ship their products on the ocean from China to the US, it will probably take 4 to 5 weeks to arrive in the US warehouses. Even if they go by air, it may take up to 14 days by the time it clears customs.
Now think about the volatile nature of the markets for these products - they are difficult to forecast accurately, and small things can cause large swings in demand... rushes on product that empty store shelves, or a popular review that points out some flaw in the product. Plus these products have a relatively short "shelf life" of being "hot". As an example, the Nexus 32 GB came out 6 months after the Nexus 8GB.
4 weeks of slack in your supply chain represents 4 weeks of tied up capital that is not doing anything but costing money. Additionally, it makes you 4 weeks further from being able to respond to changes in the market. Let's say your product has a fatal (in terms of the market... you have to hold it "just so" to get reception) flaw and sales tank sortly after launch. You already have 4 weeks of product sitting on the water. On the other hand, let's say the product takes off far more than forecasted. Store shelves are empty and it's going to be 4 weeks before you can stock them up again.
At the other end of it, because your supply chain is less responsive to the market changes, you have a greater risk of having more obsolete product at the end of its lifecycle. You can destroy it and write off the costs, or you can try to liquidate to make more revenue - but then you have old products competing against your new ones.
You can mitigate some of these issues by moving some of your manufacturing capacity to "near shore" or "on shore" with respect to the market you're selling in. You can still use "cheaper" Chinese production to manufacture some large percentage of your product line at cheaper cost, then use the nearby manufacturing to be able to quickly respond to market changes.
For a car analogy, 1 mile of train takes a long time to start and stop, but carries weight efficiently. 1 mile of trucks can start and stop much more quickly, but at greater cost. A combination of both probably gives you an optimal transportation mix - minimizing cost balanced with maximizing responsiveness.
Re:patent battle defense? (Score:3, Informative)
We are heading toward just in time manufacturing. Where you it won't be built until you order it.
You're right. JIT's an ideal for supply chain efficiency, but the problem is that many purchases are impulse buys. The customer goes into a store to buy toilet paper and suddenly decides to buy the tablet computer they've been thinking about.
Plus, you can't do direct-to-the-consumer sales from China. Consumers have been made accustomed to getting the product they want right when the want it, which often means "now". When I finally decided to buy a tablet, I waited for the 32GB Nexus, then scoured around and finally bought from the company who could get it in my hands the fastest (turned out to be Staples). If I had to wait 2 weeks for it to come from China, I might just decide to cancel the order and wait for the next version - "I really don't NEED it". And that's the last thing you want your customers thinking.
JIT's great for efficiency, especially for commodity products that have a steady demand flow, but it's not very great for resilience/robustness of supply chains, particularly for products that have short lifecycles and "spikey" demand.
The hard part is getting organizations to consider the overall lifecycle costs of a product rather than looking only at the margin from the factory or landed cost. Sure, China will make and ship my widget for 50% of the cost of doing it locally, and that's what goes on the balance sheet of the P&L of part of the org that has the sourcing managers. But the 20% of lost sales due to an inability to meet demand doesn't get tallied at all, and while the discounted prices and lowered margins from the discount channel might show up on that P&L, the fact that you lost sales of your newer "full-price" products because customers bought the older cheaper older model don't. If you reward your sourcing managers for getting the lowest cost from the factory, and then reward factory store managers for being "profitable" selling discounted products, you've set up a perverse system of rewards that hurts your overall productivity.
When JIT will really work at the consumer facing part of the supply chain is when they can get the product "while they wait" (print-on-demand books) or within 2 days - before they've had too much time to consider canceling their order.
Re:This is good for the US (Score:5, Informative)
Why does this keep getting spread? The US is the second largest manufacturing base in the world, second to only china and that just, just barely and despite having less than 1/3 the population and the presence of strong labor and environmentally laws. Just because the US doesn't make cheap (in terms of quality and type, not price) consumer products doesn't mean that the US doesn't know how to manufacture any more.