If you have been reading the news this week you may have gotten some mixed messages on the future of American manufacturing. The big news is the announcement from Foxconn (the Taiwanese manufacturing giant that built most of your iPhone) that the company will build a $10 billion LCD display screen plant in Wisconsin. The move was touted by the president, and the factory could potentially employ 13,000 people. Reuters reported:
Trump praised Foxconn chairman Terry Gou at a White House event, asserting: “If I didn’t get elected, he definitely wouldn’t be spending $10 billion … This is a great day for America.”
Wisconsin Governor Scott Walker said at the White House his state will award $3 billion in incentives and sign a memorandum of understanding on the investment on Thursday.
He told reporters at the White House the state legislature will need to approve the $3 billion incentives package. About half is for capital costs and nearly half for workforce development. There are also some sales tax exemption incentives.
Foxconn, formally known as Hon Hai Precision Industry Co Ltd (2317.TW), said in a statement that the investment “signifies the start of a series of investments by Foxconn in American manufacturing in the coming years.”
Meanwhile, in Arkansas, America’s preeminent brick and mortar retailer, Wal-Mart, was making some changes to its online store policies that could hurt U.S. manufacturers. Previously Wal-Mart had only allowed U.S. vendors to sell on its e-commerce website. Now the mega-retailer is opening up its doors to vendors from China, Canada and the U.K. Reuters reports that Wal-Mart felt it needed to broaden its vendor base to compete with Amazon.
According to two sources with knowledge of the matter, Wal-Mart Stores Inc in February began inviting sellers from China, the United Kingdom and Canada to list on the marketplace section of Walmart.com, where it earns a share of revenue from goods sold and delivered to customers by third-party vendors.
Previously, it only allowed U.S. based sellers on the marketplace site, sources said.
Calling the unreported move a “measured approach,” Wal-Mart Vice-President of Partner Services Michael Trembley confirmed the invite-only program. He said foreign sellers currently make up less than five percent of its seller base.
Trembley said Wal-Mart’s move is focused on meeting customer demand for different types of products and increasing online assortment. Wal-Mart’s marketplace inventory has quintupled this year to 50 million items. That still pales in comparison to Amazon’s nearly 300 million products online, analysts said.
Perhaps as a way to save face, Wal-Mart also released a not-so-groundbreaking list of suggestions for bolstering American manufacturing. You have probably heard most of the ideas before, things like cutting regulation and training better workers. These are admirable goals to be sure, but reiterating them wasn’t absolutely necessary. Arkansasonline.com reports some wariness from manufacturers. Robbie Neiswanger writes:
Scott Paul, president of the Alliance for American Manufacturing, said a healthy amount of conversation regarding ways to strengthen U.S. manufacturing is already underway, so Wal-Mart’s proposed plan was not “groundbreaking.”
But Paul did agree with some of the retailer’s suggestions such as the emphasis on workforce training. He said others were much more “pro-Wal-Mart.” Paul pointed to the plan of harmonizing manufacturing regulations — including “Made in the USA” labeling — among government agencies as an example.
“I think having a broader set of stakeholders interested in the future of American manufacturing is a good thing,” Paul said. “But I also fear, in some ways, that Wal-Mart may also be saying, if you read between the lines, it may be hard for us to meet our Made in America commitment because policy is standing in the way. They’re kind of setting up that potential argument.”
I’ll be following the push and pull of America’s attempt at a manufacturing revival closely. A rejuvenation of America’s manufacturing economy could be great for the type of young workers who have been displaced in the job market since the Great Recession. Sign up for the Youngresearch.com Portfolio Strategy email to be sure you get my analysis every week.