AFAIK the Wisconsin plant isn't going to happen. Even with the outrageous incentives, it will be more expensive than China. Because it isn't simple 'price of math of man hours in China <= price of man hours in America + savings in tariffs".
Set aside for a second the loss in margins due to absence of substantial ecosystem of parts and other manufacturing companies. The worker situation and protection in US would be a lot greater, which means 'less' productivity. So that man hour equation is a lot more complicated. That is unless a large scale automation of testing/validation effort kicks in. Again the technicians for those machines will be double or triple digit more expensive in the US (the rate at which income growth with skill rises in US is much higher - like most developed countries).
That deal, in the first place, was made possible because of multitude of reasons:
1. Foxconn saving their butt in case a horrible trade war happens between US and China, where the rumours were floating since way back before the tariffs actually came in effect last year (ref: Youtube video of Trump saying China, China, China)
2. According to Point 1, if China-US trade wars do hurt their business, fish for US tax incentives for minimal damage. Insurance.
3. The local Wisconsin representatives trying to win over voter base saying they will win jobs. These are the guys that screwed up. Just look at the scale of those incentives.
But we can see today, a trade war won't happen, atleast at the scale that will warrant an immediate start of manufacturing at the Wisconsin plant. This is because Trump and Xi know trade wars kill GDP, and GDP, with all its flaws is still the media's image of the long term economic growth.
> Is it that you're trying to route Chinese-made products through some minor step in India or Vietnam in order to say "no these really came from India/Vietnam, the tariff doesn't apply" and maintain capacity?
Possibly. India doesn't have the ecosystem for manufacturing many parts. So it might be the final step of assembly. Because the tariffs will be for phones, not for parts of phones. Though Indian government isn't stupid (I hope) enough to get the short end of that stick.
I'll go out on a limb and say that's all posturing. On both sides.
There is no way China will take the chance of losing its position as the manufacturing hub. They might throw a couple punches, but will make up sooner than a product release cycle.
I have some knowledge of the Kenosha-Racine area. The publicized plant plan was never going to happen. It was a corrupt political move from the start. If Foxconn ever gets up to 13000 jobs in Wisconsin, with the majority as skilled manufacturing jobs filled by US persons, I will eat my hat. Raw.
The region simply does not have the type of workers that the plant would require, and it does not have anything there to attract the required workers. I'm not sure where all that money was supposed to go, but it for danged sure is not going to residents and businesses in Kenosha and Racine counties. As far as I know, the Republican Party officeholders in Wisconsin paid millions of the people's dollars to a foreign company, with promises of billions more, just for enough dubious promises to win one or two elections. (But that isn't stopping the party supporters that I know from making jobs claims, of course.)
Wisconsin might end up paying $200k to $1M for each job that actually gets created. I'm assuming that at about $8k direct tax revenue to the state for each employee, that's a payoff period of 25 to 125 years. I estimated about 7% tax on $60k income, and about 2% property tax on a $200k house. As far as I am aware, it's the worst deal ever made in the entire sordid history of "buying jobs". I wouldn't even consider moving back, unless one or more of the principals involved in making that deal faced criminal charges under chapter 946, subchapter II [0]. And the incoming new governor is already walking back campaign promises to act tough on the Foxconn deal.
To say they "screwed up" is an understatement. They screwed everyone in the whole state, for decades to come, and a good number of people are screwed right now, near the construction site. Eminent domain has been used, as with Kelo v. New London, for the exclusive benefit of a private party. Environmental concerns are being met with waivers instead of oversight. Nearby municipalities are making infrastructure investments that will likely turn into bankruptcy if Foxconn does not deliver. Foxconn only hired 178 of the 260 it was supposed to have hired in 2018, and their jobs target for this year is 2080. Remember: the promised number was 13000 jobs total.
AFAIK the Wisconsin plant isn't going to happen. Even with the outrageous incentives, it will be more expensive than China. Because it isn't simple 'price of math of man hours in China <= price of man hours in America + savings in tariffs".
Set aside for a second the loss in margins due to absence of substantial ecosystem of parts and other manufacturing companies. The worker situation and protection in US would be a lot greater, which means 'less' productivity. So that man hour equation is a lot more complicated. That is unless a large scale automation of testing/validation effort kicks in. Again the technicians for those machines will be double or triple digit more expensive in the US (the rate at which income growth with skill rises in US is much higher - like most developed countries).
That deal, in the first place, was made possible because of multitude of reasons:
1. Foxconn saving their butt in case a horrible trade war happens between US and China, where the rumours were floating since way back before the tariffs actually came in effect last year (ref: Youtube video of Trump saying China, China, China)
2. According to Point 1, if China-US trade wars do hurt their business, fish for US tax incentives for minimal damage. Insurance.
3. The local Wisconsin representatives trying to win over voter base saying they will win jobs. These are the guys that screwed up. Just look at the scale of those incentives.
But we can see today, a trade war won't happen, atleast at the scale that will warrant an immediate start of manufacturing at the Wisconsin plant. This is because Trump and Xi know trade wars kill GDP, and GDP, with all its flaws is still the media's image of the long term economic growth.
> Is it that you're trying to route Chinese-made products through some minor step in India or Vietnam in order to say "no these really came from India/Vietnam, the tariff doesn't apply" and maintain capacity?
Possibly. India doesn't have the ecosystem for manufacturing many parts. So it might be the final step of assembly. Because the tariffs will be for phones, not for parts of phones. Though Indian government isn't stupid (I hope) enough to get the short end of that stick.