Local time on October 7, 2022, Maryland, USA, US President Biden inspected the powertrain factory of Volvo in Maryland. Photo/IC photo
On October 7, 2022, the White House of the United States issued the "National Strategy for Advanced Manufacturing" stating that in order to consolidate and maintain its leading position in advanced manufacturing , 37 measures will be implemented in 11 fields including new energy, semiconductors, biomedical , and labor training in the next four years.
Recently, American media has frequently paid attention to the news that Foxconn is in Wisconsin factory, trying to figure out what happened to this project, which was praised by Trump as the "Eighth Miracle in the World" back then.
Foxconn Wisconsin factory failure cases are ahead. Whether the "National Strategy for Advanced Manufacturing" released by White House can restore the decline in the "manufacturing industry return" in the United States is intriguing.
"The Eighth Wonder of the World" project was stranded
Recently, American media has frequently paid attention to the news of Foxconn's factory in Wisconsin, trying to figure out what happened to the project, which was hailed by Trump as the "The Eighth Wonder of the World" back then.
In the eyes of American "Rust Belt" voters, Foxconn's investment in Wisconsin was once a sign of the "rebirth" and "return" of the American manufacturing industry. This factory, covering an area of more than 1.2 square kilometers, will be North America's first 10.5-generation LCD LCD panel production line (can efficiently produce large panels with a size of more than 60 inches), bringing 13,000 jobs to the local area. In 2017, Terry Gou stated in a statement that it would establish a "standard-level display manufacturing plant" in the "heartland of the United States", which would be an "extraordinary opportunity".
However, if we look at the relevant information about this factory in the past five years, almost all of them are suspension and changes: Foxconn canceled the plan to produce the 10.5th generation panels and decided to renovate the sixth generation panel factory. Soon the plan for this change was also stranded.
In the following years, there were reports that it would produce ventilators, Google servers, coffee robots, electric vehicles and the "AI 8K + 5G ecosystem", but these projects were ultimately failed to be implemented.
Comprehensive The Washington Post , Financial Times and other media tracking reports in recent years can be seen that this place has become a storage warehouse that completes a small amount of production from time to time.
Two major reasons why Foxconn failed to invest in Wisconsin
The biggest driving force behind Foxconn's investment in LCD panels in Wisconsin is campaign politics.
According to media disclosures such as Economist and The Verge, Foxconn's decision to build a factory in the United States also stems from direct pressure from the Trump administration. However, whether it is President Trump during the election or Wisconsin Governor Scott Walker , who is seeking re-election, he did not respond to the fact that the factory has been miscarried and failed to fulfill its contract since its establishment. Instead, he took Foxconn's factory, dome building, and ribbon-cutting activities of the Innovation Center as political achievements. Trump also left the famous saying "This will become the eighth miracle in the world."
In 2019, Walker failed to be re-election, Democratic Governor Tony Evers came to power, and Foxconn also became the "political burden" left by the previous term.
's decisions made under unstable political environment and under pressure have led to Foxconn's early commitment to producing LCD panels. Later, when building an innovation center and a "AI 8K + 5G ecosystem" that combines new energy vehicles, it lost the initial generous government subsidies and public support.
According to the 2021 agreement between Foxconn and the state government, the initial plan to create 13,000 jobs and spend $10 billion large LCD panel factory was abandoned. Foxconn promised to hire 1,454 employees and invest $672 million. The company's tax subsidy was cut from $2.85 billion to $80 million.
The second important reason for Foxconn's failure in investment in Wisconsin is that the development of the panel industry follows the logic of "latecomer advantage". The higher the number of panels, the larger the maximum size, the lower the cost, and the higher the production efficiency of the display.Therefore, high-generation production lines can "reduce dimensionality" to low-generation production lines in market areas and production capacity.
Foxconn's LCD project in Wisconsin was announced in 2017, and 2017 is a critical year for the global and Chinese panel industries. Based on the data from various research institutions, mainland China began to undergo the transfer of the panel industry around 2008 and experienced a period of development and expansion. Around 2017, it was a year when mainland China panels, especially super-large-sized LCD panels, were concentrated.
In 2017, the global output value of mainland China LCD (33%) and the global output value of large-size LCD panels (over 60 inches) (35%) both surpassed South Korea and became the world's first. The story of the development of the
panel industry is essentially the same as the logic of shield machine , photovoltaics, and new energy vehicles. The core advantage of high-end manufacturing is a complete industrial system and a large market. The former means the ability to enter, support and iterate throughout the entire process and field of the industry, while the latter provides sufficient market expectations for enterprises to dare to develop. Once an industry has been accumulated and developed in the early stage, it will form a very cost-effective scale advantage. This scale advantage is the fundamental reason why Foxconn decided to abandon its original factory building plan.
Today, the prospect of "manufacturing return" brought to the Wisconsin people by the local government and Foxconn have completely gone bankrupt. According to the Financial Times in October this year, the planners, trustees and people at the location no longer have hope for their development, and now they only hope that other companies will enter the factory or acquire it directly.
The basic contradiction hidden by election politics
For most Americans, "manufacturing return" describes a prospect of building a large number of new factories to absorb a large amount of labor. This description appears frequently during the campaign period. It actually represents the "return" of mid-range and even low-end manufacturing industries, contradicting the beautiful memories of the middle-class life that the working families in the United States around the 1960s, and strongly attracting votes from residents of the "Rust Belt". The "manufacturing return" in the sense of
is actually frequently regarded by politicians as a rhetoric since the Clinton era in the 1990s. Since then, claims such as “revitalizing American manufacturing” have become campaign slogans from time to time. Obama also repeatedly "callied" and "persuaded" the low-end manufacturing industry in the United States to return to the United States forum to produce, but no substantial policies were introduced.
Local time on June 28, 2018, in Wisconsin, USA, then-US President Trump and Hon Hai Chairman Terry Gou attended the construction ceremony of Foxconn's new factory in the United States and delivered a speech. Photo/IC photo
Serious polarization and employment problems have made the effect of this rhetoric peak during the Trump era, with remarks such as "we no longer make products" and "the United States must move Apple and its overseas companies back to the United States" becoming the "traffic password" for politicians to seek support. Foxconn's factory project in Wisconsin has also attracted widespread attention. However, decades have passed, and the actual benefits of this kind of rhetoric are obviously lacking.
This is essentially because there is a structural contradiction between the current industrial structure of the United States and its corresponding human resources allocation and the demands behind the above-mentioned "reflow".
Whether from the perspective of labor, land, raw material costs and profit margins, or from the perspective of labor productivity and environmental benefits, the United States' "return to" such labor-intensive manufacturing is not a realistic choice. In addition, whether it is establishing manufacturing factories with low technical barriers or providing subsidies to local declining industries, if forced to advance for political shows, it will be backfired by public opinion because it cannot obtain sufficient economic returns.
Three dilemmas raised by the US National Strategy for Advanced Manufacturing
Can the "National Strategy for Advanced Manufacturing" issued by the White House truly promote the "return of manufacturing" in the US?
The "reflow" or "revitalization" of the high-end manufacturing industry in the United States. As far as its domestic environment is concerned, the first problem to be solved is the current employment and matching the high-end manufacturing industry with sufficient quality and sufficient labor.
On the one hand, the employment problem in the United States is still serious, and high-end manufacturing cannot help solve this problem quickly. According to the analysis of consulting firm Deloitte, even under the influence of current relevant policies, the United States may have to wait until the end of the 1920s if it wants to generate large-scale manufacturing jobs. The contradiction between developing high-end manufacturing industries to maintain technological advantages and competitiveness and short-term employment goals will remain a difficult problem in the United States' internal affairs in the future.
On the other hand, labor education is a long-term investment. The National Strategy for Advanced Manufacturing has issued a warning that if no action is taken, the United States will generate more than 2 million manufacturing jobs by 2030. It is necessary to maximize the manufacturing labor force from now on, starting from three aspects: expanding the talent pool (female, minority and returnees), developing the education and training system (basic education and vocational education ), and strengthening the connection between employers and educational institutions (apprenticeship system and qualification certification).
In addition to labor issues, the National Strategy for Advanced Manufacturing also emphasizes two difficulties faced by the United States at home. One is that the United States has experienced a manufacturing trade deficit since 2001, and the other is that today small and medium-sized enterprises are facing more difficulties in supply chains. There is a connection between the two issues of
. The history of the manufacturing trade deficit in the United States is essentially a relationship with the history of industrial transfer in which its multinational companies look for raw materials, land and labor costs in the world, and eliminate backward production capacity and obtain excess profits. Compared with multinational giants, small and medium-sized enterprises not only bear the supply chain risks of more diversified industrial clusters in this process, but also bear the risks of high R&D expenditures, low commercial conversion rates, and being squeezed into survival space by large enterprises.
To this end, the National Strategy for Advanced Manufacturing proposed to provide support to small and medium-sized enterprises in terms of technology adoption, network security, worker training, and priority application and expansion of additive technology (3D printing technology). However, the level at which these strategies can be implemented remains to be further observed.
In terms of "establishing a flexible supply chain", the "National Strategy for Advanced Manufacturing" proposes to strengthen supply chain interconnection, investigate supply chain loopholes, and build an "advanced manufacturing ecosystem". Combined with the consistent practices of the U.S. government, trade crackdowns, technological blockades and strengthening coordination with partner countries in the industrial chain may be the direction of their future development.
High-end manufacturing, supply chain and labor are the three major areas of global manufacturing competition in the next decade, and are also the three major strategic goals formulated by the United States' National Strategy for Advanced Manufacturing. The failure of the Foxconn factory in Wisconsin shows that although the United States occupies a technological highland for high-end manufacturing, whether its advanced manufacturing industry can "return" and achieve the expected results is not a fixed number, and further observation is needed as the situation develops.
text / Senior researcher at the Beijing Think Tank Kong Xue
editing / Ke Rui
proofreading / Wu Xingfa
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