Foxconn Needs to Bring in Asian Workers, Says Harvard Professor

America doesn’t have the talent to set up and run Foxconn’s new plant in Wisconsin
November 7, 2018 Updated: November 7, 2018

WASHINGTON—A news report revealed that the new Foxconn factory in Wisconsin is planning to bring in workers from China, leading some to call locating the plant there a fiasco. The news, however, is not surprising, says a business expert, as the company needs some special manufacturing skills that have to come from Asia.

“If Foxconn is trying to build a flat panel display factory, they would be crazy not to bring some workers in from Asia,” said Harvard Business School professor Willy Shih.

“These are expensive factories that have a lot of specialized equipment and need the people who know how to set up and run that equipment.”

The Wall Street Journal reported on Nov. 6 that Taiwanese Foxconn Technology was struggling due to a tight labor market to find personnel to help staff its large facility under construction in Racine County, Wisconsin. To overcome the problem, the company was considering transferring some of its workers from China, the report said.

The company plans to hire 13,000 employees, primarily blue-collar workers along with engineers and business support personnel.

All of the existing flat panel display factories in the world are located in East Asia, Shih said.

“You’re not going to find a lot of the skills that they need to run a factory like that successfully in Wisconsin because nobody in this country knows how to do those jobs,” he said.

The Wall Street Journal also reported that Foxconn executives were having a hard time convincing staff to relocate to the Wisconsin site.

“One engineer who declined to give his name said he wouldn’t want to move to a place he worried could be as cold as Harbin, a northern Chinese city known as ‘Ice City,’” the report stated.

Chinese were also concerned about the lack of diversity in Racine County, the report claimed, citing the fact that more than 80 percent of the population is white.

It would be fair to assume the company will need hundreds of engineers and specialists from Asia, said Shih.

Before joining Harvard, Shih spent 28 years in product development and manufacturing at large U.S. corporations including IBM and Eastman Kodak.

“You need industrial engineers, electrical engineers, mechanical engineers, you need specialists who understand how to use those types of machines, how to set up the automation,” he said.

Foxconn denied the report, saying: “We can categorically state that the assertion that we are recruiting Chinese personnel to staff our Wisconsin project is untrue.”

The company told The Wall Street Journal that it’s “Wisconsin first commitment remains unchanged.”

First US Plant

Foxconn, also known as Hon Hai Precision Industry Co., is the world’s largest contract electronics manufacturer. The majority of its factories are located in China, with nearly 1.3 million employees in the mainland.

The company is famous for being Apple’s manufacturing partner, producing about half of the world’s iPhones in its Zhengzhou plant in China. The facility can produce 500,000 iPhones a day, according to a New York Times article.

Other major clients of Foxconn include Sony Corp., Dell Inc., and BlackBerry Ltd.

The company announced last year, its plan to invest $10 billion over four years to build a 22-million square foot plant in Wisconsin that could eventually employ 13,000.

Trump praised Foxconn Chairman Terry Gou at a White House event in July last year, saying: “If I didn’t get elected, he definitely wouldn’t be spending $10 billion.”

To attract the investment, the state and the local authorities pledged $3.7 billion in tax and other incentives. Foxconn, however, has to meet certain hiring, wage, and investment requirements to receive those benefits.

The first U.S. plant will bring the manufacturer closer to its biggest market.

During his speech at the White House event, Gou said America lost its capability to produce TV.

“TV was invented in America,” he said at a White House press conference. “Yet America does not have a single LCD factory to produce a complete 8K system. We are going to change that,” he said, referring to the highest resolution technology in digital TV.

Erosion of Ecosystem

For decades, many large American companies moved their manufacturing operations to low-cost countries, primarily China. Such moves brought cost benefits and competitive advantage in the short-term.

But business leaders and politicians are now seeing the long-term fallout of these choices as the move led to the erosion of the industrial ecosystem in this country.

Millions of American manufacturing jobs were lost. In some industries, the United States has fallen behind in its ability to manufacture, innovate, and compete.

Shih, together with his colleague Gary Pisano at Harvard Business School, authored the book “Producing Prosperity: Why America Needs a Manufacturing Renaissance” in 2012.

In the book, Shih and Pisano argue that the skills, know-how, and capabilities underpinning an industrial community accumulate over time.

“Once you lose the capabilities, you can bring them back, but the level of investment, activation energy to bring back is higher,” Pisano said in a 2017 interview.

Bringing manufacturing and innovation capabilities back to the country will help create the workforce skills needed to produce next-generation technologies.

According to the U.S. Chamber of Commerce, the labor shortage and skills gap are serious challenges that face the country.

“We consistently hear from companies across a host of industries about similar difficulties in meeting their workforce needs,” a U.S. Chamber of Commerce spokesperson said in an email.

“It is critically important that the U.S. enacts policies, such as modernizing our broken immigration system and expanding job-training programs, to ensure sustained economic growth and job creation.”