TAIPEI, Taiwan — The head of Foxconn Technology Group, having announced plans to step away from day-to-day operations at the world’s largest electronics provider, said Tuesday that he is mulling a run for president of Taiwan.
Terry Gou said he would make a decision “in a day or two” on a possible presidential bid, according to Taiwan’s official Central News Agency. He said that if he decided to run, he would take part in the opposition Nationalist Party primary rather than mount an independent bid.
The Nationalists favor closer ties with Beijing, a policy that accords with Gou’s massive business interests in China. Any candidate is expected to face a crowded field in the 2020 polls, in which President Tsai Ing-wen of the pro-independence Democratic Progressive Party says she will seek a second four-year term.
Gou told reporters Monday at an event in Taipei that he would step back from daily operations at Foxconn. He said he wants to work on a book about his management philosophy honed over 45 years and prepare a younger generation to eventually take over operations at the company.
Foxconn counts Apple, Google and Amazon as customers and has said it will build a manufacturing facility in the U.S. state of Wisconsin.
“The major direction of the company will still be guided by me. But I will gradually step back from the front-line operations,” the 69-year-old Gou said.
“I feel that I should tone down my personal influence … let young people learn sooner in order to take my position as soon as possible so that I can have more free time to work on long-term planning for the company’s future.”
Foxconn announced in 2017, to much fanfare, that it planned to invest $10 billion in Wisconsin and hire 13,000 people to build an LCD factory that could make screens for televisions and a variety of other devices.
The company said last year that it was reducing the scale of what was to be made in Wisconsin, from what is known as a Gen 10 factory to Gen 6. Those plans now appear to be in flux, although the company says its Wisconsin campus will house both an advanced manufacturing facility and a center of “technology innovation for the region.”
Foxconn earlier this year cited a changing global market as requiring a move away from making LCD panels in Wisconsin. Apple is Foxconn’s main manufacturing customer and it has forecast a drop in revenue from the Chinese market due to decreasing demand for iPhones.
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The iPhone and iPad maker is accused of breaching its promise to improve working conditions after the Foxconn revelations by using another supplier alleged to have broken 86 labour laws, including forcing pregnant women to work 11 hours a day, six days a week, standing up.
The US-based human rights watchdog China Labour Watch (CLW) also accused the company in question, Pegatron, of employing underage staff and discriminating against applicants shorter than 4ft 11in, older than 35 or from certain ethic minorities. The fresh claims of worker mistreatment are particularly embarrassing for Apple after it switched some iPhone and iPad manufacturing from Foxconn to Pegatron after intense negative publicity surrounding Foxconn.
Li Qiang, executive director of CLW, said: “Our investigations have shown labour conditions at Pegatron factories are even worse than at Foxconn factories. Apple has not lived up to its own standards. Apple is worsening conditions for workers, not improving them.”
Apple on Monday promised to investigate the claims and ensure “corrective actions” are taken. The company said it would force Pegatron to compensate for lost wages. “We are dedicated to protecting every worker in our supply chain,” a spokesman said. The Californian company said it had carried out 15 comprehensive audits at Pegatron factories since 2007, but admitted that many of the CLW claims were “new to us”. Apple confirmed CLW’s claim that some employment agencies were withholding worker ID cards and demanded Pegatron “put a stop” to it.
Jason Cheng, chief executive of Pegatron, said he would immediately investigate the allegations, many of which the company denied. “We strive to make each day at Pegatron better than the last for our employees. They are the heart of our business,” he said. “That’s why we take these allegations very seriously.”
CLW sent undercover investigators posing as employees into three Pegatron factories and conducted more than 200 interviews with staff. Its 60-page reportclaimed the majority of Pegatron’s factory staff worked 66- to 69-hour weeks, above the Chinese legal limit of 49 hours and Apple’s limit of 60 hours a week. Apple said its latest Pegatron survey found employees making its products worked 46-hours a week on average.
“In these factories, pregnant women were made to work the same long hours as other workers, putting in 11-hour days for six days per week,” the CLW report said. Chinese law restricts employers from asking pregnant women to work more than eight hours a day.
CLW also claimed Pegatron employs workers under 18 – breaching both Chinese law and Apple’s strict employment code. “Underage workers often enter the factories as student ‘interns’ required to work at factories by vocational schools,” the report said. Pegatron denied that it employed underage staff.
Pegatron, which recently won the contract to make Apple’s forthcoming cheaper iPhone, allegedly displays posters listing “hiring standards” that discriminates against minority groups. The list bans applicants who are less than 4ft 11in, over 35, pregnant, or from the Hui, Tibetan or Uighur ethnic groups. CLW also claimed that male applicants were forced to take off their shirts to prove they did not have tattoos.
It said the average hourly wage of Pegatron workers making Apple products is no more than $1.50 (£0.98) an hour, which it claims is not enough to live on and effectively forces staff to work overtime to earn a living wage.
The undercover investigators also claim Pegatron managers threaten and abuse staff. Managers are alleged to have said: “If you don’t obey, I will expose you to the blazing sun until 12 o’clock.”
The allegations come a year after Apple chief executive Tim Cook visited Foxconn’s Chinese factories and promised regular inspections of working conditions at its biggest suppliers.
“We believe that workers everywhere have the right to a safe and fair work environment, which is why we’ve asked the Fair Labor Association [FLA] to independently assess the performance of our largest suppliers,” he said. “The inspections now under way are unprecedented in the electronics industry, both in scale and scope, and we appreciate the FLA agreeing to take the unusual step of identifying the factories in their reports.”
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The entirety of President Trump’s job-creation strategy was visible July 26 during a White House ceremony to announce a deal bringing a $10-billion video-screen factory for the Taiwan electronics company Foxconn to southeastern Wisconsin.
The elements included a claim about the number of jobs that was unverifiable and not believable; a description of the cost and terms of the $3 billion in tax incentives dangled in front of Foxconn that concealed their astronomical cost for Wisconsin taxpayers; the presence of political sycophants (in this case, Vice President Mike Pence, Wisconsin Gov. Scott Walker and House Speaker Paul Ryan, [R-Wis.]) to attest to Trump’s role in negotiating the deal; and grandiose assertions by Trump himself that it’s all about him: “If I didn’t get elected, he wouldn’t be spending $10 billion,” Trump said of Foxconn Chairman Terry Gou, also in attendance.
Left unexpressed were doubts that the factory would ever actually be built, and that even if so, it would employ the extraordinary workforce of 13,000 that was claimed. Reporters on hand might have delved into that issue, but no questions were permitted.
So let’s provide some of the context that was overlooked on that occasion. Experts who have examined the proposed deal, which must be approved by the Wisconsin Legislature, have concluded that it won’t begin to pay off for state taxpayers for more than two decades, if then — or ever.
A good portion of the jobs will go not to Wisconsin workers, but to residents of Illinois, meaning that Wisconsinites will pay, and their cross-border neighbors will profit. The deal would exempt the Foxconn plant from a host of environmental regulations, placing the local water supply and ecology at risk.
In other words, the announcement was all flash and precious little substance. But what substance is known is disturbing.
“This is a transfer of wealth from Wisconsin taxpayers to Foxconn shareholders,” says Greg LeRoy, the head of Good Jobs First, which tracks government economic incentives handed over to corporations. LeRoy observes that even if the plant reaches its projected complement of 13,000 workers, that means the deal would cost about $230,000 per job.
“The average worker at Foxconn is never going to pay $230,000 more in state and local taxes than the public services she and her family will consume during her work tenure there,” he says. “For the taxpayers, it’s a guaranteed loser.” If the size of the workforce falls short, he noted, the cost per job could be much higher.
Under Gov. Walker, who briefly ran for the Republican presidential nomination last year, Wisconsin has been something of a sinkhole in economic development schemes. After Walker privatized the state’s main job-development agency, it became ensnared in scandal after scandalwhile failing to make much of a mark on job growth. The defining job program of Walker’s administration was a $6-million grant in 2014 to Ashley Furniture, which was allowed to lay off half of its 3,800 Wisconsin workers as part of the deal. A few weeks after the grant from the Wisconsin Economic Development Corp. was approved, Ashley’s owners donated $20,000 to the reelection campaign of the development group’s chairman, Gov. Walker.
The Foxconn proposal boasts similar elements of a glittery political veneer concealing signs of rot from the inside out. One blow was landed in Madison on Aug. 8 by the Legislative Fiscal Bureau, which analyzes bills with budget implications. Among other points, the bureau pointed out that Foxconn would receive at least $1.35 billion and possibly as much as $2.9 billion in tax incentive payments even if it didn’t owe any Wisconsin tax, that increased state tax revenue from job growth wouldn’t offset the incentive spending until at least 2042 — and then only if the full complement of 13,000 jobs was reached and all went to Wisconsin residents.
But the bureau acknowledged that anywhere from 10% to half of the jobs could go to nonresidents. That’s because the proposed factory site in the Racine-Kenosha area — Paul Ryan’s home district — is within easy commuting distance of Illinois. If there are fewer jobs, and fewer go to state residents, the bureau said, the break-even point could be years or decades later.
Whether the plant ever will host 13,000 workers is doubtful; the legislative analysis acknowledged that some estimates place the probable payroll as low as 3,000. Trump touted the plant as a “state-of-the-art manufacturing facility,” but state-of-the-art electronics factories are replacing human assembly workers with robots, a trend the efficiency-minded Foxconn is unlikely to abandon.
The most important aspect of Trump’s participation in the Foxconn announcement may be what is says about his job development policies. They don’t seem to be aimed at anything special except generating photo opportunities. Foxconn itself is getting a reputation for making lavish promises and letting them lapse, as appears to have been the case with a project the company touted for Harrisburg, Pa., in 2013. That deal was for a $30-million plant employing 500 workers. But the plant hasn’t materialized.
Ever optimistic, Pennsylvania officials participated in a seven-state beauty contest Foxconn staged this year, playing Pennsylvania and Wisconsin off against Illinois, Indiana, Michigan, Ohio and Texas in its quest for the most lavish state and local incentives. This race to the bottom has the effect of all but eliminating any genuine economic gains the ostensible winner can claim from landing the plant.
Yet Trump explicitly endorsed such interstate shakedowns in December, when he bragged about keeping a Carrier air conditioning plant in Indiana. Employers “can leave from state to state and they can negotiate good deals with the different states and all of that,” Trump said then. “But leaving the country is going to be very, very difficult.”
Even Trump’s victory in the Carrier episode was predictably ephemeral. Even though the company supposedly pledged to retain more than 1,000 jobs rather than move them to Mexico, in June it emerged that Carrier will lay off more than 600 of its workers by the end of this year.
In Wisconsin, Foxconn is insisting that the state Legislature enact the package of proposed incentives by the end of September, or no deal. That means that for all the preening at the White House last month, the deal may end up like others sponsored by Trump and offered by Foxconn: real hype and false hopes.
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