Business & Economy

Professor Jason Dedrick on Foxconn’s New Wisconsin Plant

Thursday, July 27, 2017, By Ellen Mbuqe

Technology expert and iSchool Professor Jason Dedrick offers insight on the news that Foxconn is opening a new plant in Wisconsin.

“Foxconn鈥檚 announced $10 billion investment looks like good news for Wisconsin. If completed, it would create a significant number of jobs for engineers and technicians, as well as construction workers as it is built. The question is whether this is a model for a resurgence of advanced manufacturing in the U.S.

The main issues are (1) whether the benefits outweigh the costs of various subsidies likely used to attract Foxconn鈥檚 investment, (2) whether this investment can attract other manufacturers of key components to the U.S., and eventually create a supply chain that can support final assembly of smart phones such as Apple鈥檚 iPhone, most of which are made by Foxconn, and other products that use flat-panel technologies, and (3) whether this investment will benefit laid-off U.S. manufacturing workers.

The first question can鈥檛 be answered fully without knowing the actual subsidies that were offered, but we can consider the benefits side of the equation.聽 First, the $10 billion figure is impressive, but most of it goes to purchasing expensive equipment to manufacture the displays, none of which is made in Wisconsin. The amount of money that will return to the state depends largely on the tax breaks given to Foxconn.

The second question is critical. The panels made in this plant could end up being shipped to China for assembly into products sold around the world鈥攖his is a global value chain after all.聽 In order to replicate the local supply chains in China, Korea and elsewhere in Asia, it would require hundreds of suppliers to locate in proximity to the Foxconn plant.聽 This is possible, but would take many years and probably large ongoing subsidies. Even then, labor-intensive final assembly of smart phones and TVs might end up in Mexico.

Finally, this investment will do little for laid-off auto or steel workers in the Midwest. Flat-panel production requires specialized skills, primarily engineers and technicians, who will be hired from wherever they are available. Some might be from local universities or other companies, but they won鈥檛 be at the unemployment office.聽 The U.S. produces great engineers, but they are in high demand, so Foxconn will compete with U.S. and multinational tech companies for a limited supply. Ironically, a large share of engineering students at U.S. universities are international students, who might be discouraged from coming to the U.S. by the current administration鈥檚 policies and rhetoric on immigration.”

Professor Dedrick is available to speak with the media on this issue. Please contact J.D. Ross, director of communications at the iSchool, at聽rossjd@syr.edu or 315.443.3094.