Foxconn Plays the Trump Presidency Brilliantly

Rich Tehrani : Communications and Technology Blog - Tehrani.com
Rich Tehrani
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Foxconn Plays the Trump Presidency Brilliantly

Let’s start off with what will likely be taken poorly by U.S. workers… According to at least one company, you get paid more to be less loyal and show up to work less often than your Mexican counterparts.

Specifically, Gregory Hayes, the CEO of Carrier’s parent company United Technologies told Jim Cramer of CNBC:

So what’s good about Mexico? We have a very talented workforce in Mexico. Wages are obviously significantly lower. About 80% lower, on average. But absenteeism runs about 1%. Turnover runs about 2%. Very, very dedicated workforce.

That turnover rate means almost no retraining and compares to the U.S. rate in manufacturing of between 9% for voluntary and 15% for total turnover.

Put another way, the U.S. is a poor choice for manufacturing for a laundry list of reasons which include taxes, regulation and the workers themselves.

However the U.S. elected Donald Trump on a platform of bringing jobs to the U.S. – especially in the rust belt and he has been making good on this promise like no other president has made good on a promise. And that’s before he’s even gotten into office.

Specifically, Carrier will keep 1,100 jobs in the U.S. and US Steel could bring 10,000 jobs back.

The logical benefactor of a Trump presidency is Foxconn because U.S. companies will be able to shutter jobs in the U.S. by outsourcing work to this super-successful contract-manufacturer. It's a less obvious way of moving your manufacturing to a lower cost area. Of course Trump would eventually target Foxconn in retaliation – call them out, etc. He would make their life a living hell for being the reason U.S. jobs are disappearing.

This is why it was very smart of the company to be part of the recent Softbank investment in the U.S. – a staggering $50+ billion will be put into the American economy.

Another 50,000 plus jobs will be created as a result!

By making this news and announcement now, Foxconn insulates itself against negative tweets and comments from our new commander-in-chief in the future.

foxconn.jpg

Photo courtesy of CNN

The results will likely be a win for U.S. workers because some new jobs will come back to the U.S. and at the same time Foxconn gets to continue outsourcing globally to lower cost areas.

The biggest winner will be the shareholders at companies who continue to close U.S. factories and use Foxconn instead to make their products less expensively.



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