If Foxconn moves to US: Could that raise the cost of your iPhone?
A growing parade of companies such as General Motors, Carrier, China鈥檚 SoftBank, and now Taiwanese electronics manufacturing contractor Foxconn Technology Group, are boosting their US investments 鈥� raising the prospects for more US factory jobs in parts of the country that desperately need them.
Is this an emerging Trump-prodded shift that could ultimately halt the exodus of American jobs? Perhaps, but probably not, say business management experts. 聽
鈥淚t鈥檚 possible that it could lead to a manufacturing renaissance; I鈥檓 just really skeptical,鈥� says Ann Harrison, a professor of multinational management, business economics, and public policy at Wharton聽business school at the University of Pennsylvania.
Foxconn, the biggest private employer in China and the assembler of Apple鈥檚 iPhones there, is in talks with the Pennsylvania Department of Community and Economic Development about locating what is reportedly a $7 billion factory to assemble display screens for televisions and possibly the iPhone.
According to Nikkei Asian Review, Foxconn鈥檚 chairman Terry Gou said the potential investment will be done in partnership with Apple, and could go to Pennsylvania or whatever US state provides attractive enough incentives to win the deal. It , Mr. Gou has said, though it鈥檚 not clear whether those will be on the factory floor, or include the service and parts-making jobs that will be needed to support the new facility.聽
Despite criticism that President Trump takes credit for economic development wins that were in the works long before he won the election, it鈥檚 hard to imagine that his combative rhetoric, his attacks of Apple and others for making products abroad, and threats of 45 percent tariffs on imports from China and other countries, are not partly responsible for a spate of "Made in America" corporate decisions. 聽
聽that the deal has been in the works for a long time,聽though Pennsylvania鈥檚 office of economic development said in an email to 海角大神 that Gou contacted its office in Taiwan in December to inquire about incentive programs available for companies that want to locate in the state. The company already had invested in research聽and design operations in Pittsburgh, as the Monitor has reported.
Big tax, infrastructure, and workforce incentives from states could further entice Foxconn 鈥� or any other company weighing the costs of expanding in the United States. This, on top of Mr. Trump's promises to reduce corporate taxes and to chip away at the labyrinth of corporate regulations, could help balance the equation in favor of US manufacturing again, notes Morris Cohen, a manufacturing and logistics professor at Wharton.
鈥淚 think companies are looking at the environment and thinking we鈥檙e being encouraged to do this by our government in ways we鈥檝e never been encouraged before, so companies are lining up to say we want to be cooperative here, we don鈥檛 want to be viewed as a bad corporate citizen,鈥� says Professor Cohen.
But without government incentives, the numbers typically don't add up to make manufacturing in the US profitable. Labor here is expensive (relative to most nations) and there鈥檚 little infrastructure for large-scale factory operations, many argue. Ultimately, consumers would bear the brunt of rising production costs. As The Wall Street Journal reported in November, the price of a 32-gigabyte iPhone 7 would if it were assembled in the US from parts that were also made here.
But even if costs do rise for some consumer products, perhaps the value of employing Americans who lost their factory jobs to globalization would outweigh the higher prices, points out Professor Harrison.
鈥淚t鈥檚 likely that if you add up all the costs in terms of the increased price people will pay for electronics, that will be bigger than the number of jobs and wages created,鈥� she says. 鈥淏ut maybe America is in a position where it would give more weight to people who lost their jobs than to people who want to buy phones.鈥�
In the short term, says Harrison, Trump鈥檚 intimidation tactics could work. Possibly even without the tariffs on imports that many economists worry could spark a trade war that could undermine American exports. "If it would lead to a large-scale resurrection of manufacturing聽sector without tariffs, that would be an amazing outcome," she says.
But the long-term trend is toward automation in manufacturing plants, where robots are expected to continue replace humans doing repetitive work, she notes.聽鈥淲e need to think of better solutions,鈥� she says, such as reorienting our economy towards high-wage service jobs.
