Foxconn Reducing Dependency on Chinese based manufacturing facilities.

[alanmoser]

Summary

Foxconn increasing their non-China manufacturing presence in order to avoid tariffs imposed on electronics originated from China.

 

Quotes

Quote

“No matter if it’s India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each,” Liu told investors on a conference call, adding that while China will still play a key role in Foxconn’s manufacturing empire, the country’s “days as the world’s factory are done.” - Young Liu - Chairman Hon Hai Precision Industry Co. (Foxconn)

 

My thoughts

 With the increase of tensions between China and the USA, this shift of manufacturing process out of China will be a win for consumers. The cost of importing electronics from China have increase quite considerably over the last couple of years due to tit-for-tat increases in tariffs across the board. It is unlikely that these savings will be passed down to consumers in the form of lowered prices for goods, but it would reason to say that landed costs for the manufacturing to delivery will stay rather steady. 

 

Sources

 MACRUMORS - https://www.macrumors.com/2020/08/12/foxconn-says-chinas-days-as-worlds-factory-done/
Bloomberg - https://www.bloomberg.com/news/articles/2020-08-12/hon-hai-beats-profit-estimates-after-pandemic-spurs-apple-demand

[Eaglerino]

I'd happily pay more if my crap stopped coming from China

[Techstorm970]

Put some more manufacturing in Philippines, Thailand, India, Mexico, Vietnam if we can't reasonably bring it back to the USA!  All of those countries would appreciate the economic boosts and we'd appreciate the improved national security.  Hell, getting more stuff from Germany would work out well, too!
 

It's time to break away from the Chinese Censorship Party's bullshit!

[Bombastinator]

“Manufacturing presences “ are different from manufacturing.  Ireland did this.  The example I am thinking of is TVs. Dunno when it happened many years ago.  The TVs kept being made where they were.  The difference was the TV and the knobs were separately shipped to a factory in Ireland where the knobs were attached to the TVs making them “made in Ireland” and saving a tax.  Tax avoidance can get creative.  Subaru did this with pickup trucks in the US in the 90’s.

the Subaru brat was a pickup truck that was so small it was classed as a car if it had seats in the back. So they shipped the things to the US, paid the car tax (which was lower) pulled out the seats, and shipped them back to Japan separately to be used again.

[Donut417]

59 minutes ago, Bombastinator said:

“Manufacturing presences “ are different from manufacturing.  Ireland did this.  The example I am thinking of is TVs. Dunno when it happened many years ago.  The TVs kept being made where they were.  The difference was the TV and the knobs were separately shipped to a factory in Ireland where the knobs were attached to the TVs making them “made in Ireland” and saving a tax.  Tax avoidance can get creative.  Subaru did this with pickup trucks in the US in the 90’s.

the Subaru brat was a pickup truck that was so small it was classed as a car if it had seats in the back. So they shipped the things to the US, paid the car tax (which was lower) pulled out the seats, and shipped them back to Japan separately to be used again.

Samsung does  this with TV's. When I worked in retail all the boxes for Samsung TV's said "Assembled in Mexico". Mexico and the US have NAFTA, so Im sure that made their lives easier. 

[Trik'Stari]

Perhaps decentralized manufacturing is preferable.

[Donut417]

Just now, Trik'Stari said:

Perhaps decentralized manufacturing is preferable.

It is. It’s the only way to maintain a good supply chain. 

[Bombastinator]

6 minutes ago, Donut417 said:

It is. It’s the only way to maintain a good supply chain. 

“Decentralized manufacturing” and “good supply chain” are both extremely vague terms that probably have very exact definitions for some.  Basically buzzwords.

”decentralized manufacturing” could mean a lot of things.  The last time I heard a specific meaning for that term it was in reference to China’s “great leap forward” and mini steel mills.  Pretty sure that isn’t what is meant this time. “Good” is even worse.  As compared to what?  An evil supply chain?

[Drama Lama]

actually greater automation could mean a „ reversal „ of globalization because you are less dependent from wages for lots of workers and the shipping becomes a greater factor 

 

it would be cheaper having many small factories than having just one big factory 

Edited August 17, 2020 by Drama Lama

[Bombastinator]

43 minutes ago, Drama Lama said:

actually greater automation could mean a „ reversal „ of globalization because you are less dependent from wages for lots of workers and the shipping becomes a greater factor 

 

it would be cheaper having many small factories than having just one big factory 

Possibly in some situations.  The issue is transportation cost.  Transportation will be required.  Things are made of bits and it’s usually more than one kind of bit and the bits come from different places.  Some kinds of bits are easier to transport than other kinds of bits and the finished product is itself effectively a bit.  If transportation costs are really high multiple small factories can be cheaper.  If costs are really low a single large factory is cheaper.  Container shipping dramatically lowered production costs and single large factories sprung up.  Transportation costs are going up though so multiple smaller factories are becoming more viable for some things.  It remains all about the specific product though. 

[Trik'Stari]

1 hour ago, Donut417 said:

It is. It’s the only way to maintain a good supply chain. 

Decentralized or centralized? 

 

I'm beginning to think that the best solution for most of humanity's problems is decentralization and self sufficiency. 

[Donut417]

35 minutes ago, Trik'Stari said:

Decentralized or centralized? 

 

I'm beginning to think that the best solution for most of humanity's problems is decentralization and self sufficiency. 

Decentralized. We need production spread out. The issue would be consistency across all facilities however. 

[Trik'Stari]

15 minutes ago, Donut417 said:

Decentralized. We need production spread out. The issue would be consistency across all facilities however. 

Counter: We need fewer major corporations and more small local manufacturers, with a greater diversity of products and more competition.

 

We really need to amp up research and development for 3D printing. I think it could potentially be the way forward in this area.

 

Note: I am not arguing for government enforced breakup of major companies, just ending any and all practices that prevent them from failing and going bankrupt.

[Donut417]

23 minutes ago, Trik'Stari said:

We need fewer major corporations and more small local manufacturers, with a greater diversity of products and more competition.

The issue with that is you loose consistency. Especially important if you're going to sell Globally and can have the same items coming from multiple places. Plus smaller places tend to grow in to bigger places as time goes on. 

 

25 minutes ago, Trik'Stari said:

I am not arguing for government enforced breakup of major companies, just ending any and all practices that prevent them from failing and going bankrupt.

I think everyone can agree with that statement. 

[Donut417]

2 hours ago, Bombastinator said:

Pretty sure that isn’t what is meant this time

No Im speaking more of having facilities in multiple countries around the world. This way if a few facilities go down you're not really screwed 100%. 

 

2 hours ago, Bombastinator said:

good supply chain

By Good Supply chain I mean basically solving the issues we are having right now. When when one country who manufactures every thing goes down everyone is just screwed. By having multiple facilities and multiple nations exporting it solves the issue pretty quickly. Yeah, you will have reduced numbers as far as supply goes, but it won't be as bad as it was earlier the year. Where you couldn't find hardly anything. Of course this only covers getting stuff from manufacturing to distribution to local areas. Once you have to distribute to local areas things get kinda hairy fast. Because that requires lots of trucks and people who can drive them. 

 

Not sure about anywhere else in the world, but Michigan ALWAYS has trucker jobs available. ALWAYS. There is never enough drivers. 

[Bombastinator]

1 hour ago, Donut417 said:

The issue with that is you loose consistency. Especially important if you're going to sell Globally and can have the same items coming from multiple places. Plus smaller places tend to grow in to bigger places as time goes on. 

 

I think everyone can agree with that statement. 

People in Detroit won’t 

[Bombastinator]

1 hour ago, Donut417 said:

No Im speaking more of having facilities in multiple countries around the world. This way if a few facilities go down you're not really screwed 100%. 

 

By Good Supply chain I mean basically solving the issues we are having right now. When when one country who manufactures every thing goes down everyone is just screwed. By having multiple facilities and multiple nations exporting it solves the issue pretty quickly. Yeah, you will have reduced numbers as far as supply goes, but it won't be as bad as it was earlier the year. Where you couldn't find hardly anything. Of course this only covers getting stuff from manufacturing to distribution to local areas. Once you have to distribute to local areas things get kinda hairy fast. Because that requires lots of trucks and people who can drive them. 

 

Not sure about anywhere else in the world, but Michigan ALWAYS has trucker jobs available. ALWAYS. There is never enough drivers. 

Which means drivers make good money which means high transportation cost as they can only carry one maybe two containers at a time. Rail was a great way to transport stuff.  Almost as efficient as boat.   Need more rail.  Or perhaps not even more.  Just rehabilitate the bits that died. 

[Donut417]

11 minutes ago, Bombastinator said:

People in Detroit won’t 

Honestly man only 70% parts are even produced in the US. And Not all the car models are. I know my 06 Focus was built in Mexico. Manufacturing has been shrinking over the years in the Detroit area. In a few decades Detroit won't be known for manufacturing, because young people like in my generation and after did not go really focus on going in to those trades. Add in to automation that they have been doing. Much of the tool and die work is being done in China. So much so that one of the big 3 asked the Federal Government for an exemption so they could actually run parts out of China. Currently China builds the die's and sends them to the US for the parts to be ran here. My dad works in the industry and he see's what's going on. Most of the smaller tool and die shops are only hanging on by the skin of their teeth. Lucky for my dad he's about a year or two out from retirement. 

 

14 minutes ago, Bombastinator said:

Which means drivers make good money which means high transportation cost as they can only carry one maybe two containers at a time. Rail was a great way to transport stuff.  Almost as efficient as boat.   Need more rail.  Or perhaps not even more.  Just rehabilitate the bits that died. 

The issue with truck driving is you a required to get a CDL to do it. SO that means extra training. Depending on your CDL class you can only carry certain loads. On in to the fact that truck traffic has ruined the roads. ALSO back in 08  I would say is when companies started turning to use of owner operators. Because why own the trucks when your drivers can, and they have to be responsible for maintenance and for fuel and other things. Which means as a driver you didn't necessarily make a lot of money. Long Haul trucking is where the money is made but then you have no life. 

 

The issue with rail is well they literally cut my city in half with trains. So much so that the fire department had to wait 20 min for the tracks to clear and there was a FIRE on the other side. Thank You CSX. Its so bad that some crossings have cameras and you can download an app to see if it's clear. Also rail is only good for getting stuff to a general area like a city. Its not like a train can drop stuff off at the local Walmart. 

 

Most of America's rivers that have locks and dams on them need to replace them all. Stuff breaks a lot. 

this video talks about the issues the US has with its infrastructure.  Its so bad in fact that the port of New Orleans cant accept larger ships. Our poor infrastructure is costing our economy billions. So in a way Truck is probably one of the best ways to get stuff from point to point. Because the road network is probably in better safe than our ports and river network.