Foxconn – Plans Change… - Supply Chain Market Research

Foxconn – Plans Change…

10/1/2021

Foxconn – Plans Change…

On April 20 ‘Foxconn (2317.TT) Wisconsin Official Twitter (TWTR) Account’ announced that the Wisconsin Economic Development Corp (aka WEDC) had endorsed an amendment to the initial 2017 agreement, “…that will give Foxconn the flexibility to pursue business opportunities in response to changing global market conditions,” while also noting that “…original projections used during negotiations in 2017 have at this time changed due to unanticipated market fluctuations.”
The new agreement provides for:

Up to $80m in performance based tax incentives to Foxconn based on the creation of 1,454 qualified workers earning an average wage of $53,875 and target capital expenditures of $672m by 2026. The original agreement was for $2.85b in state tax credits and the hiring of ~13,000 workers over 10 years. None of the original goals were met to date.
Less product restrictions as to type of products or goods manufactured. The original claims were for a Gen 10.5 LCD production fab, which changed a number of times, decreasing to plans for vending machine production at the facility.
Preserves benefits of the EIT Manufacturing Zone, including market based energy rates and use tax exemptions. The original agreement bypassed many environmental and water use restrictions. No indication as to whether they have changed but not likely.

Foxconn sponsored a job fair on September 8 at the ‘Advanced Manufacturing Facility’ where they expected to hire 100 employees to fill a variety of manufacturing, information technology, and supply chain positions, despite the fact that it remains unclear what Foxconn currently expects to produce at the facility, although the company announced a partnership with Fisker Inc (FSR) to produce parts for electric vehicles including semiconductor products, along with ‘plans for electric vehicle manufacturing’.
That said, today Foxconn has disclosed plans to acquire a 6.2m ft2 assembly plant in Ohio, as part of a joint development agreement with Lordstown Motors (RIDE). The agreement, which is non-binding until completion, includes:

Purchase the Lordstown facility, excluding the motor assembly line, battery assets, and certain IP, for $230m based on Foxconn agreeing to manufacture Lordstown Motors Endurance full-size truck at the facility, along with employment agreements for Lordstown operational and manufacturing employees.
Purchase $50m in Lordstown Motors stock @ $6.8983/share and the issuance of warrants covering 1.7m shares exercisable for three years at $10.50/share.

While the Wisconsin “Wonder of the World” project was never intended for automotive production, there were local hopes that the talks with Fisker might evolve into something relating to the upcoming Fisker Ocean electric SUVs due out in 4Q or 1Q 2022. That possibility still exists to a degree, but the deal with Lordstown seems to have taken Foxconn’s focus away from Wisconsin, where little, if anything, has been produced, despite Foxconn’s insistence that they have spent ~$900m in Wisconsin, including the almost 1m ft2 ‘Advanced Manufacturing Facility”, a ~300,000 ft2 ‘Smart Manufacturing Center’, a
120,000 ft2 ‘Multi-purpose Building, and a 100 ft tall “High Performance Computer Data Center Globe’.
The company still touts their ‘3+3 corporate vision – electric vehicles, digital health, and robotics using AI, semiconductors, and 5G’ for the Wisconsin site, saying that that idea has “caught the attention of many businesses and investors from around the world who share their vision for the site, making the site and the region a new hub for next gen technological product design, jobs, investment, and smart manufacturing.” The problem is that we go by results rather than ‘vision’, especially one that includes all of the key buzzwords that investors seem to like to hear. The aerial images of the Foxconn site taken on 9/17/21 and 7/20/2021 don’t seem to indicate that anyone is ‘sharing the vision’, nor does the fact that little has been produced at the site other than construction jobs. With the Lordstown deal in the works, it looks like Foxconn might not be focused on its vision for Wisconsin at the moment.