The deal to manufacture liquid crystal displays in the United States is a major turning point in the global manufacturing, which proves the United States is up to the task when it comes to modern manufacturing.
It’s a big win for the state and President Trump. Apparently, President Trump was looking out the window on a trip to Wisconsin when he spotted a vacant lot that was the footprint for an old Chrysler Motors plant and remembered when Foxconn came calling.
Critics point to $3.0 billion in local, state, and federal government breaks over the next 15 years, but such sour grapes would buttress the argument for lower taxes and fewer regulations. Plus, President Trump got Foxconn to actually step up. Remember back in 2013, when Foxconn promised to open a $30 million plant in Pennsylvania that would employ up to 500 people?
It never happened.
However, this is happening and it means a $10.0 billion investment; 3,000 to 10,000 jobs will be created, generating billions in economic activity. Moreover, there is talk that this is the first move in a series of new factories planned by Foxconn.
This news might also go a long way toward tamping down talk of a trade war. Yesterday, President Trump seemed to be backing off with harsh tariffs on Chinese steel, in part because such a measure would harm trade with larger nations that actually do honest steel trade with the United States.
Brave New World of Smart Factories
There were reports that seven to ten states vied for this deal. The reason why Wisconsin won goes well beyond tax incentives, along with an educated work force that played a big role as well. Wisconsin education ranks:
- #12 in 2-Year College
- #12 in 4-Year College
- #3 in HS Graduation Rate
- #1 in Pre-K Quality
The Terry Gou Story
It’s also a major win for Foxconn and its founder who started the business in 1974 with $7,500 and ten elderly employees. The first big win was channel-changing knobs for black-and-white televisions. Later, the Atari joystick took the company over the top and the rest, as they say, is history.
With 1.2 million employees in China alone, Foxconn is the poster company for lost opportunities in America. Now that manufacturing is becoming “smart,” there’s a good opportunity for America to reclaim its greatness as not only an incubator of ideas but also the place where those new ideas and products can be made.
There are a lot of Terry Gou’s in America; some are known to us and others are unknown, but at this very moment, they’re tinkering away in their garage.
The Federal Reserve
The Fed didn’t make any news yesterday, although they seem more committed to running off some of the assets on their balance sheet “relatively soon,” and the Street took it in stride. While they didn’t say the word, the Fed continues to think deflationary headwinds are still transitory.