Milwaukee Biz Blog: Foxconn deal is flawed for state

Robotics, inevitable future obsolescence are concerns

Foxconn chairman Terry Gou and Gov. Scott Walker.

Last updated on July 2nd, 2019 at 09:12 pm

The Foxconn deal has a flaw that will be fatal to our state.

The clients of Foxconn want to best product in the fastest time at the lowest price. This cannot be produced with human labor, regardless of whether you are paying $1 an hour or $30 an hour to workers. The job requires robots to accomplish this for cost and, most importantly, for speed. When Apple, Samsung or Sony launch a product they want and need their product now, not in a few weeks or months. This need is driven by consumers.

Foxconn chairman Terry Gou at the Milwaukee Art Museum.
Credit: Arthur Thomas

This reality is not a surprise to Foxconn Technologies. They recently replaced as many as 60,000 workers with robotics at one of its Chinese factories, according to a story in the South China Morning Post.

Then there is the factor of obsolescence. The DVD, FAX, digital camera are among the products that fill the graveyards. They and other once popular products have been replaced by better and speedier inventions. Understand that the old factory economy is dead. Nostalgia cannot bring it back.

Will big screen TVs still be here in five years? Will broadcast or cable still be in play?

These are not the “wild cards” that futurists like me love to discuss, but the train running down the tracks.

Then there are elected officials who dream of new jobs in a past economy. Foxconn promises 3,000 jobs, but intimates 13,000 are possible, but Foxconn’s own actions indicate that this will not be in the cards.

Some elected officials are like those who go to see the play “Peter Pan.” They know that a boy cannot fly, but they don’t want to be told that Peter is being held up by wires. They want to believe because they have a need to believe. But the wires still exist.

It is not my purpose here to be critical of Governor Walker’s administration, but he and the state face a significant challenge in the current state budget, with expenses outstripping funds in transportation. In addition, Mr. Walker has populated much of his administration with political appointees who have little business experience. The Wisconsin Economic Development Corp. (WECA) which is evaluating the Foxconn deal has had a troubled history, with multiple leaders, a reputation where “pay to play” generates loans and where, in the past, no monitoring was done on loans, some of which defaulted. Hopefully new leadership has improved their accountability and skill set.

In short we have a business, Foxconn Technologies, which is motivated by making money. On the other side, we have an ambitious elected official who is motivated to fulfill a promise to generate jobs so he can be re-elected.

Foxconn will make the best deal possible by manipulating politicians who base their decision on hope and wishes.

In the long and short run, you know that Peter Pan flies because he is supported by wires.

Bob Chernow is a Milwaukee businessman and a futurist. He is the former vice chair of the World Future Society.

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