Foxconn update
UPDATE: Foxconn now says that it will indeed still build a factory, citing a conversation between CEO Terry Gou and Trump (h/t commenter Joel at Angry Bear). This is certainly clear as mud. As others have pointed out, several promised investments from Foxconn have failed to materialize at anywhere near the scale promised, including in Brazil, Pennsylvania, Indonesia, Vietnam, and India. So I am going to remain skeptical on what was a terrible deal in the first place.
Original AB post Foxconn is flailng in Wisonsin. Post on Wisconsin and Foxconn in 2017 Foxconn cashes in.
Brad DeLong featured a very informative story about this:
https://www.bradford-delong.com/2019/02/inside-wisconsins-disastrous-45-billion-deal-with-foxconn-bloomberg.html
Why do I say very informative? See my comment at Brad’s place.
I was thinking about how to illustrate what that Bloomberg story on Foxconn assembling LCD TVs in Wisconsin in layman’s terms. Suppose I went to Best Buy and spent $375 on a new TV. Best Buy’s take for distribution is likely $75 (20% gross margin) so the Wisconsin plant received $300. But wait – it paid the Mexican affiliate something like $270 for components. So its value-added was a mere $30 per TV. At $14 an hour for two hours worth of work, Foxconn Wisconsin covers its entire labor costs and pockets the rest as profits.
So yea – that expensive TV I just bought created 2 man-hours of American labor at a mere $14 an hour. Now if this Best Buy sold 1000 of these TVs a year, we would hire only one person at very low wages.