Foxconn International Holdings, the Taiwanese manufacturer that has become one of the world’s largest employers thanks to booming demand for the Apple Inc products it assembles, is reportedly planning to open factories in the US. With an 800,000 strong workforce largely based in China, Foxconn is one of the businesses that has profited from the decline of Western manufacturing. Now the firm is apparently planning to reverse the labor drain by opening factories in the US. As labor costs surge in its home market Foxconn has been looking overseas for opportunities and sources have told Taiwanese trade publication DigiTimes that the company is evaluating US cities including Detroit and Los Angeles.
The news should cheer US President Obama, who has promised to create 1 million new manufacturing jobs over the next four years. However, Foxconn will have to adapt its formula because the US does not have armies of workers willing to survive on a few hundred dollars a month and live in dormitories as its Chinese staff do. In Foxconn’s huge assembly halls in China, iPhones and iPads are largely put together by human hands, with very little automation. In the US, sources say Foxconn will specialize in flatscreen TV sets, which are easier to assemble with the help of robots. Apple has for some time been planning to make an Internet-connected television set, which would essentially combine a TV screen with a computer. If the work is contracted to Foxconn’s rumored new factories, the iTV would be the first Apple product made in the US for some years.
The company declined to comment on its plans, but chairman Terry Gou revealed this week he was planning to invite dozens of American engineers to his factories in Taiwan and China to learn about manufacturing. Gou told a business meeting in Taipei on Wednesday that he did not believe Obama could succeed in moving production lines back to the US because Americans have outsourced those jobs for too long. However, he hoped Americans could learn how factories are operated so they can return home to set up facilities with automated equipment. Gou said he was already in discussion with the Massachusetts Institute of Technology about establishing an exchange program. Foxconn will have to adapt its working conditions to operate in the US market. Worker suicides, industrial accidents and riots have dogged its Chinese plants, which were recently discovered to be employing workers as young as 14.
Apple chief executive Tim Cook was prompted in January to appoint an external auditor, the Fair Labor Association, to evaluate conditions throughout its supply chain after a string of workers killed themselves and there was a lethal explosion at the company’s Chengdu plant, thought to have been caused by combustible dust. The company has cut overtime hours and announced a near doubling of salaries in China in recent months. It already has eight factories in Brazil and in September it signed a memorandum of cooperation with the Sao Paolo government to invest US$14 million in a technological industrial plant. Gou founded what is now Foxconn in 1974 with US$7,500 borrowed from his mother. The company listed in Taipei in 1991 and its largest single plant in Shenzhen, China, employs hundreds of thousands of people.