How the Foxconn factory in Wisconsin could reshape electronics supply chains

August 2, 2017 Tradeshift Editorial Team

Last week, Foxconn sent waves across the electronics industry by announcing plans to build a massive $10B plant in southeastern Wisconsin, creating 3,000 manufacturing jobs in the process.

The Taiwanese company, officially named Hon Hai Precision Industry Co., Ltd., is best known as a key supplier for Apple (coincidentally, over the weekend Apple opened its first store in Taiwan). It has made strides to overcome a reputation for poor working conditions in its overseas factories after several widely publicized tragedies.

The planned 20-million-square-foot complex will have a footprint three times the size of the Pentagon, and will produce flat-panel display screens for TVs and other consumer electronics.  

The fanfare of the news has been tempered by concerns over regulation exemptions and the steep tax breaks Wisconsin handed to the company as an incentive. Given that up to 25,000 jobs are projected to be created directly and indirectly, on paper, the factory should ultimately be a win for American manufacturing, particularly for consumer electronics, which everyone thought would never return.  

The investment is also a boost for electronics supply chains. By producing goods closer to U.S. customers, the savings in logistics and shipping costs can offset higher labor costs. The move will reign in Foxconn’s sprawling network of suppliers and parts distribution, and create an opportunity for transportation and logistics providers, like some of our customers, including DHL.

The Chicago Tribune quotes Kevin Considine, president and CEO of Lake County Partners, a nonprofit economic development organization: “A plant like that will have lots of multiplier effects. It will bring supply chain companies with it, so other companies will set up near it and around it, similar to what happens in automotive.”

Furthermore, bringing more production to the U.S. and other parts of the world with strong labor laws means less forced labor in the electronics industry.

As Asian manufacturers like Foxconn and Samsung move operations to the U.S., and U.S. manufacturers like Tesla open plants in Asia, it is a reminder that globalization and technology are leveling the playing field for everyone.

These complex supply chain dynamics mean that agile companies need to be prepared to adapt and change course. By investing in digitally connected, open global platforms and having their suppliers on a common network, companies have the tools to establish trust with their trading partners. Trust is what makes transactions possible, and transactions are the building blocks of trade.

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