Despite media claims, new facility unlikely to be a Gen 6 manufacturer. So what will it be?
By
Bruce Murphy - Jan 23rd, 2020 02:06 pm
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Foxconn. Photo courtesy of Foxconn Technology Group. |
This week Foxconn’s founder and retired CEO
Terry Gou made a speech in Taiwan predicting that the Foxconn factory in Racine County will be
up and running this year, and employees working there “will help America boost manufacturing and build a supply chain.”
This came just a couple weeks after the company issued a
press release
touting it’s “nearly one-million-square-foot advanced manufacturing
facility at the Wisconsin Valley Science and Technology Park” in Mount
Pleasant. The early January release let us know that Foxconn “is able to
celebrate this significant milestone” of the “Building enclosure being
substantially complete for weather protection.”
“Nearly 8,000 tons of American steel was fabricated and installed,”
the release went on,” and more than 500 truckloads transporting supplies
were used for the roof construction. Full and complete enclosure of the
advanced manufacturing facility will continue through the beginning
months of 2020.”
Okay, so the building is, gosh, nearly enclosed and will have a very
fine roof. But what exactly will be manufactured in it? The media
continues to describe this as a Gen 6 LCD manufacturing plant, since
Foxconn has generally called it this.
So is that what will be building America’s supply chain in Mount Pleasant?
“I don’t think so,” says Harvard Professor
Willy Shih,
one of the few U.S. experts on LCD fabrication in answer to a query
from Urban Milwaukee. “Not for making LCD panels. Assembling products
that incorporate LCD panels, maybe.”
The reasons why it couldn’t be a Gen 6 manufacturing plant are many, as I’ve
previously reported.\
First,
a Gen 6 plant needs “a massive steel infrastructure to support a
vibration-free environment for equipment that has to do ultra precision
(manufacturing),” as Shih noted. That steel support substructure is no
small undertaking and could be up two floors deep in LCD plants — and
nothing like that was done for this building.
Second, this plant is just one story tall, and as Shih wrote for
Forbes: “LCD fabs (fabrication plants) are multi-story affairs. The main
equipment floor is sandwiched between a ground floor that is filled
with chemical pipelines, power distribution, and air handling equipment,
and a third floor that also has a lot of air handling and other
mechanical equipment…. When they bring the manufacturing equipment in,
they load it onto a platform and hoist it with a crane on the outside of
the building. That’s one way to recognize an LCD fab from the outside –
loading docks on high floors that just open to the outdoors.
”
Third, LCD plants are expensive, multi-billion structures. Shih
estimated that a real Gen 6 plant, if it was built in Mount Pleasant,
would have a price tag of around $5 billion. The spending on this is
nowhere near this: the plant is expected to be
valued at $400 million.
Meanwhile, company officials have given themselves all kinds of wiggle room, having
pushed back the date for Gen 6 manufacturing to 2022.
So whatever is going to happen in that nearly weatherized facility,
assuming anything does this year, it won’t be Gen 6 fabrication,
according to the company.
Pushing back the date to 2022 will give Foxconn plenty of wiggle room
as to what it manufactures. And as it happens, 2022 is when Wisconsin’s
race for governor will be held. Are company leaders waiting to see if a
candidate more sympathetic to them might be elected?
Back in December I wrote a story suggesting the state deal with Foxconn deal
looked dead.
It still does. So long as state officials insist that Foxconn live up
to its contractual promise to build a $9 billion, Gen 10.5 plant
employing 13,000 workers, Foxconn can’t get any state subsidies. And
while the Evers administration has made clear they will renegotiate the
contract based on what Foxconn is actually going to manufacture
(assuming that ever becomes clear), the original contract was so
lucrative for the company it has no incentive to agree to any changes.
Waiting another couple years to see if
Tony Evers retires or gets defeated is no big deal for a company that specializes in delaying and backing out of projects it promises.
But my story was wrong in suggesting Foxconn can simply walk away
from Wisconsin. And that’s because it has a local deal, which is far
from dead. The village of Mount Pleasant and Racine County jointly
approved spending at least $764 million (a figure 50 times higher than
the village’s budget) for land acquisition, road construction and new
sewer and water lines, all for the Foxconn project. In return Foxconn
has agreed
to pay local property taxes based on an assessed total of at least $1.4
billion in taxable improvements to the land it owns by January 1, 2023,
whether or not that amount of improvements has been created.
It’s this contract — and a concern that breaking the much ballyhooed
agreement with Wisconsin might leave any other state in America leery of
doing a deal with Foxconn — that’s the only thing keeping the company
here. The contract created by former Gov.
Scott Walker,
by contrast, has no way to stop the company — despite all the state and
local spending on the project already undertaken — from abandoning the
deal.
From: https://urbanmilwaukee.com/2020/01/23/back-in-the-news-foxconns-1-million-square-feet-of-what/