COMMENT:

Foxconn's Wisconsin plant would be the "eighth wonder of the world", Donald Trump said at a ground-breaking ceremony in June last year.

The US president took personal credit for the Chinese manufacturing giant - best known for assembling iPhones - setting up shop in North America, claiming a phone call he made was instrumental in closing the deal.

On the face of things, it looked good. Cowered by Trump's trade war and tariffs, Foxconn had decided to build a factory in Milwaukee to made LCD displays. It would employ 3000 Americans immediately when it opened its doors and 13,000 by 2022.

Advertisement

But even as construction began in June 2018, there were party poopers.

The Wall Street Journal pointed out Foxconn had been lured to Wisconsin by US$4 billion ($6.6b) in various government incentives - a staggering amount of corporate welfare (a major Bloomberg investigation, published this morning, raises the tally to US$4.5b).

The Journal also noted that while Foxconn had rosy targets, it was offering no guarantee of jobs at a time when automation is eliminating more and more roles in manufacturing.

And, worse, that Wisconsin taxpayers were "on the hook for 40% of the public bonds that finance the local expenses if the project flops."

Now it's looking as if the project has flopped.

Bloomberg reveals the Milwaukee plant employs just 60, earning US$14 an hour with no benefits rather than the US23/hour touted last year.

And, according to the news agency, the plant is only doing final assembly on LCDs made in Mexico.

That might be as good as gets. Reuters says Foxconn is now reconsidering its plans, and may not manufacture LCDs in the US at all.

Advertisement

Perversely, the fact that almost all of the 13,000 jobs have evaporated is good news for the state of Wisconsin, which Bloomberg says was effectively required to pay US$219,000 per job created.

Trump's focus on manufacturing jobs remains senseless at a time when America has transitioned to a service economy.

California-based Apple is the world's most valuable, most profitable company in part because it outsources the mean, low-margin business of assembly, mostly to Foxconn in China - where workers are willing to live onsite in cots, and tumble out of bed at 2am if an assembly line needs to be fired up at short-notice because Tim Cook had a last-minute change-of-mind about a certain iPhone feature.

Apple does create a lot of jobs in the US (it employs 47,000 Americans directly and another 300,000 indirectly). It's just that they're in roles like design, engineering and marketing.

Many of the manufacturing jobs that made America great in the 1940s and 1950s, simply don't exist anymore - beyond in Trump's head.