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Foxconn's history of broken promises casts a shadow on Wisconsin news
MARKETWATCH 10:58 AM ET 7/28/2017
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Foxconn (FXCOF) has reneged on promised deals in many countries and regions, including the U.S.

News that Foxconn(FXCOF) is planning to build a plant in Wisconsin was announced to some fanfare late Wednesday by Gov. Scott Walker and President Donald Trump.

Not everyone is cheering.

The Taiwanese electronics manufacturer is best known for making Apple's(AAPL)iPhone at factories in China, and Trump has been vocal about his desire to bring those jobs back to the U.S (http://www.marketwatch.com/story/trump-apples-tim- cook-is-promising-a-major-stateside-manufacturing-push-2017-07-25).

Foxconn's (FXCOF) chief executive, Terry Gou, joined Trump and Walker, along with Sen. Ron Johnson and House Speaker Paul Ryan, who represents the district in which the plant will be constructed, to unveil the news.

The plant will make liquid-crystal-display screens for TVs and other products, and will employ 3,000 workers initially, with the intent of growing that to 13,000 jobs over time, the officials said. Walker said the plant represents a $10 billion investment, with the state having chipped in a $3 billion, 15-year package of tax incentives.

Gou said in January, without offering details, that he was considering a display-panel manufacturing plant in the U.S. that would create up to 50,000 jobs.

But the details are important, given Gou's history of making and breaking promises in numerous countries and regions over the years, including in the U.S. A pledge to invest $30 million in a factory in central Pennsylvania in 2013 was also greeted with much ballyhoo, as reported by the Washington Post. (https://www.washingtonpost.com/business/economy/ how-foxconns-broken-pledges-in-pennsylvania-cast-doubt-on-trumps-jobs-plan/2017/03/03/0189f3de-ee3a-11e6-9973- c5efb7ccfb0d_story.html?utm_term=.248c1028f1c3)

The Brookings Institution heralded that news as a big win for the state (https://www.brookings.edu/blog/the-avenue/ 2013/11/25/foxconn-sends-a-manufacturing-message-with-new-pennsylvania-plant/) and validation of a strategy of creating mini--tech hubs, leveraging university, government and private research and development, as Pennsylvania had done in its capital city, Harrisburg, the proposed site of the plant, and the former steel town Pittsburgh.

"When it comes to advanced manufacturing, U.S. metro areas and regions that foster synergies between research, skills, and production will likely continue to be highly sought after from firms looking to move up the global value chain," the left-leaning think tank gushed.

Four years later, the factory has still not been built, to the disappointment of state officials. They are not alone. In 2014, Foxconn(FXCOF) promised a $1 billion investment in Indonesia, which has still not happened, according to the Washington Post. A pledge to invest $5 billion in Vietnam in 2007 has also failed to materialize, nor has the company met its promises for India.

Foxconn (FXCOF), which trades as Hon Hai Precision Industry Co. (2354.TW)has also been under fire over the widely reported issues of working conditions at its existing plants. Foxconn's(FXCOF)China plants have been the scenes of protest and periods of high suicide rates over the years.

Last year, The Wall Street Journal reported on the suicide of a 31-year-old man (https://www.wsj.com/articles/deaths- of-foxconn-employees-highlight-pressures-faced-by-chinas-factory-workers-1471796417) who had worked on the assembly line for just a month. The story highlighted the often harsh conditions for workers, who are housed in gender-separated dorms so that they can be called in at a moment's notice if Apple changes a design or needs to ramp up supply to meet a spike in demand.

Read also:Suicides Spark Inquiries (https://www.wsj.com/articles/SB10001424052748704026204575267603576594936)

The newspaper painted a grim picture of workers taking home about 1,400 yuan, or $211, a month, after deductions for the costs of food and housing. Even in China, that pay is difficult to live on, especially for workers with families to feed. Overtime, once easy to come by, has dried up since the peak iPhone years, and Foxconn(FXCOF) only allows workers who've recruited new employees to work overtime. Workers reportedly told the paper that some workers were offering to pay a stranger 200 yuan to work temporarily so that they would qualify for overtime.

Foxconn (FXCOF) and Apple declined to comment on the WSJ report.

Foxconn (FXCOF) shares have gained about 8% in 2017, while the S&P 500 has gained 10%.

-Ciara Linnane; 415-439-6400; [e-mail]


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07-28-171058ET
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