- THE FOXCONN FOOTPRINT IS GETTING EVEN BIGGER.
TODAY, THE TAIWANESE TECH COMPANY ANNOUNCED IT'S BUYING AN
OFFICE BUILDING IN DOWNTOWN GREEN BAY.
THE SPACE WILL BE USED FOR AN INNOVATION CENTER TO DEVELOP
APPLICATIONS FOR FOXCONN'S 8K AND 5G DISPLAY TECHNOLOGY.
THE COMPANY SAYS IT'S THE FIRST TIME THESE DISPLAYS WILL BE
MANUFACTURED IN THE UNITED STATES.
THE CENTER IS EXPECTED TO EMPLOY ABOUT 200 PEOPLE.
THE FOXCONN GROUND-BREAKING THURSDAY BROUGHT NEWS THAT THE
MOUNT PLEASANT PRODUCTION PLANT MAY BE SCALED DOWN FROM THE
VERSION ORIGINALLY PLANNED.
THE COMPANY, HOWEVER, STANDS BY ITS COMMITMENT TO SPEND $10
BILLION BUILDING THE PLANT AND ITS PROMISE TO BRING UP TO
13,000 JOBS.
THE LARGER FACTORY FOXCONN SAYS IS PLANNED FOR THE FUTURE.
- BUT FOR NOW, PRODUCTS THAT USE SMALLER GLASS SCREENS WILL
BE MANUFACTURED INSTEAD OF THE ORIGINAL PLAN FOR LARGER DISPLAY
PANELS.
NONE OF THAT LESSENED PRESIDENT TRUMP'S ENTHUSIASM AND HIS
WISCONSIN WELCOME TO THE FIRM.
- SO EVEN AT THIS EARLY STAGE, THE ECONOMICS BENEFITS OF THIS
NEW PLANT ARE BEING FELT IN 60 OF WISCONSIN'S 72 COUNTIES
ALREADY.
DON'T WORRY.
IN ANOTHER THREE WEEKS IT WILL BE 72.
[APPLAUSE] - MEANWHILE, THE DEMOCRATIC
NATIONAL COMMITTEE WEIGHED IN ON THE FOXCONN LAUNCH SAYING,
QUOTE, DONALD TRUMP AND SCOTT WALKER ARE BOTH ANTI-WORKER AND
CONSISTENTLY PUT BIG CORPORATIONS AND THE 1% AHEAD OF
HARD-WORKING FAMILIES.
PRESIDENT TRUMP SPOKE JUST 4.5 MILES FROM THE NEAREST
HARLEY-DAVIDSON DEALER, A SYMBOL OF CORPORATIONS IN WISCONSIN.
FOXCONN IS COMING AS HARLEY-DAVIDSON IS GOING, TAKING
SOME OF ITS PRODUCTION OVERSEAS FOR ITS EUROPEAN BUYERS.
ACCORDING TO A FILING HARLEY-DAVIDSON MADE WITH THE
SECURITIES & EXCHANGE COMMISSION THIS WEEK, THE EU'S RETALIATORY
TARIFFS IMPOSED IN RESPONSE TO THE U.S. TARIFFS ON STEEL AND
ALUMINUM HAVE INCREASED FROM 6% TO 31%.
THESE TARIFFS WILL COST THE MOTORCYCLE MANUFACTURER
APPROXIMATELY $2200 PER MOTORCYCLE EXPORTED FROM THE
U.S. TO THE EU.
THE COMPANY ESTIMATES THE ANNUAL IMPACT DUE TO THE EU TARIFFS TO
BE APPROXIMATELY $90 TO $100 MILLION.
HOUSE SPEAKER PAUL RYAN SPOKE OUT AGAINST THE TARIFFS THIS
WEEK, EVEN AS PRESIDENT TRUMP DEFENDED THEM AND ADMONISHED
HARLEY FOR ITS OVERSEAS PLANS.
- HARLEY-DAVIDSON, PLEASE BUILD THOSE BEAUTIFUL MOTORCYCLES IN
THE USA, PLEASE, OKAY?
DON'T GET CUTE WITH US.
- I DON'T THINK TARIFFS ARE THE RIGHT WAY TO GO.
I THINK TARIFFS ARE BASICALLY TAXES.
WHAT ENDS UP HAPPENING IS YOU GET ESCALATING TARIFFS OR TAXES.
ONE OF THE REASONS WE DID TAX REFORM IS TO MAKE IT EASIER FOR
BUSINESSES TO KEEP MANUFACTURING IN AMERICA AND EXPORTING
OVERSEAS.
- FOR MORE ON TARIFFS AND TRADE WARS AND MILWAUKEE'S OWN
HARLEY-DAVIDSON, WE TURN NOW TO EDWARD ALDEN, SENIOR FELLOW WITH
THE COUNCIL ON ON FOREIGN RELATIONS, WHO JOINS US BY PHONE
FROM WASHINGTON.
- PRESIDENT TRUMP WAS IN MILWAUKEE THIS YEAR TRUMPETING
FOXCONN BREAKING GROUND AND HOSTING A
FUND-RAISER IN THE CITY THAT BUILD HARLEY-DAVIDSON AND YET
AMERICA'S FIRST TRADE POLICY IS SENDING HARLEY-DAVIDSON
OVERSEAS.
COULD HARLEY'S DECISION ON THIS HAVE BEEN PREDICTED?
- OH, I THINK IT WAS EASILY PREDICTABLE.
THE COMBINATION OF THE STEEL TARIFFS, WHICH HAVE RAISED INPUT
COSTS FOR HARLEY, AND THEN OF COURSE THE EUROPEAN RETALL RETAN
MADE IS NOT ECONOMICAL TO EXPORT FROM THE UNITED STATES TO
EUROPE.
THE PRESIDENT SEEMED SOMEWHAT SURPRISED, BUT HE SHOULDN'T HAVE
BEEN.
- SO IF THIS IS THE REALITY AND RESPONSE FROM THIS ICONIC
COMPANY, WILL OTHERS SOON FOLLOW?
- I THINK SOME OTHERS WILL HAVE TO DO THE SAME, THOUGH NOT EVERY
COMPANY HAS THE SORT OF FLEXIBILITY THAT HARLEY HAS.
HARLEY HAS SEVERAL PRODUCTION LOCATIONS OVERSEAS, SO IT'S NOT
THAT COMPLICATED FOR THE COMPANY TO SHIFT PRODUCTION.
I'M MORE WORRIED ABOUT THE SMALLER PRODUCERS.
THERE ARE A LOT OF LITTLE COMPANIES AROUND THE COUNTRY
THAT ARE COMPLAINING ABOUT RISING COST OF STEEL AND
ALUMINUM.
THE PRICE HAS DOUBLED SINCE THE TARIFFS WERE IMPOSED.
THOSE COMPANIES ARE FACING HIGHER COSTS.
THEY DO NOT HAVE THAT KIND OF OPTION.
THERE'S A SMALL NAIL PRODUCER IN THE UNITED STATES THAT HAS CUT
JOBS QUITE SIGNIFICANTLY.
AND ACTUALLY YOU'RE HEARING IN THE OIL PATCH IN TEXAS AND
ELSEWHERE, THEIR COSTS FOR DRILLING EQUIPMENT, OTHER THINGS
ARE GOING UP.
THAT'S NOT PARTICULARLY MOBILE.
SO NOT EVERY COMPANY IS GOING TO HAVE THE SORT OF OPTION THAT
HARLEY-DAVIDSON HAD HERE.
- AND WHAT ABOUT THE U.S. STEEL INDUSTRY?
IS THIS HELPING THAT INDUSTRY?
- I MEAN, I THINK IT WILL, YEAH.
YOU KNOW, YOU'RE SEEING U.S.
STEEL HAS OPENED A MILL THAT HAD BEEN IDLE BECAUSE OF LACK OF
DEMAND.
YOU'VE SEEN THE OPENING OF A NEW ALUMINUM ROLLING MILL IN
KENTUCKY.
THE PROBLEM IS THE NUMBER OF JOBS IN THOSE INDUSTRIES PALES
IN COMPARISON.
HUNDREDS OF THOUSANDS MORE IN STEEL-USING COMPANIES OF VARIOUS
SORTS LIKE HARLEY-DAVIDSON.
SO THERE WILL BE WINNERS AND LOSERS, BUT IT'S CLEAR THAT THE
LOSERS ARE GOING TO OUT NUMBER THE WINNERS HERE.
- DOES WHAT'S SHAPING UP IF IT'S NOT ALREADY A GLOBAL TRADE
WAR AFFECT THE LARGER GLOBAL ECONOMY?
- WE WILL HAVE TO SEE.
SO FAR THE NUMBERS ARE PRETTY SMALL, YOU KNOW.
YOU KNOW, $10, $20 BILLION HERE, MAYBE $50 BILLION AGAINST CHINA.
THOSE NUMBERS AREN'T BIG.
BUT IF WE GET ESCALATING RETALIATION, ABSOLUTELY IT COULD
AFFECT THE GLOBAL ECONOMY.
YOU'VE SEEN MARKETS SOFTEN A LOT.
HERE IN THE UNITED STATES THE DOW IS DOWN SORT OF 10% ON THE
YEAR AND INTERNATIONAL MARKETS HAVE TAKEN A BIGGER HIT.
THIS IS ALMOST ALL THE PRODUCT OF THIS TRADE UNCERTAINTY
BECAUSE GENERALLY U.S. ECONOMY IS PRETTY STRONG.
I THINK THAT COULD EASILY GET WORSE.
- MY OTHER QUESTION OTHER THAN THE MOORK MARKETS, WHAT'S KIND E
CHAMBER OF COMMERCE RESPONSE AND REACTION TO THIS?
- WELL, THIS HAS BEEN VERY INTERESTING.
THEY'RE UPSET ABOUT THE TRADE POLICY.
THEY DON'T LIKE THE TARIFFS.
THEY HAVE BEEN VOCAL.
BUT THE COMPANIES WERE SO HAPPY AS A RESULT OF THE BIG CORPORATE
TAX CUT THEY CUT SIGNED BY PRESIDENT TRUMP IN DECEMBER,
THEY'RE VE VERY HAPPY WITH WHATE PRESIDENT IS DOING ON
DEREGULATION.
NORMALLY YOU WOULD HAVE EXPECTED ENORMOUS CRY OVER THIS.
CERTAINLY IF IT HAD BEEN A DEMOCRATIC PRESIDENT DOING THIS,
THEY WOULD HAVE GONE CRAZY.
BUT THEY HAVE BEEN RELATIVELY MUTED SO FAR.
IF THIS ESCALATES, PARTICULARLY IF THERE ARE TARIFFS ON IMPORTED
CARS, I THINK THAT COULD CHANGE AND THE BUSINESS COMMUNITY COULD
BECOME FAR MORE VOCAL THAN IT HAS BEEN SO FAR.
- COULD PRESIDENT TRUMP'S PROTECTIONIST TRADE POLICY WORK
IN THE END TO THE UNITED STATES' ADVANTAGE?
- WELL, I MEAN, THAT'S NOT WHAT HISTORY TENDS TO SHOW, RIGHT?
IT WILL -- I MEAN, THERE'S SOME COMPANIES THAT WILL LOCATE IN
THE UNITED STATES TO TRY TO GET AROUND THE TARIFFS.
BUT WE WILL LOSE MARKETS IN ALL THE FASTEST-GROWING ECONOMIES IN
THE WORLD.
AND THE LAST TIME WE EXPERIMENTED WITH THIS SORT OF
PROTECTIONISM ON A LARGE SCALE WAS IN THE 1930s AND IT DIDN'T
WORK OUT WELL THEN.
SO NOBODY CAN REALLY READ THE FUTURE PERFECTLY, BUT BASED ON
WHAT WE KNOW FROM THE PAST, THIS IS LIKELY TO BE VERY COSTLY FOR
THE AMERICAN ECONOMY AND OTHERS AROUND THE WORLD.
- VERY BRIEFLY, WOULD FOXCONN BE AN EXAMPLE OF A COMPANY THAT
WOULD LOCATE IN THE UNITED STATES TO GET AROUND THE
TARIFFS?
- WELL, THEY'VE PLANNED THIS FOR A LONG TIME, SO THEY HAD
INTENDED TO DO IT ANYWAY, THOUGH I THINK SOME OF IT WAS BECAUSE
OF THE RISING CONCERN IN THE UNITED STATES OVER PRODUCTION
BEING LOCATED IN CHINA.
SO I THINK SOME OF THAT WAS POLITICALLY MOTIVATED TO TAKE
PRESSURE OFF OF THE COMPANY.
I CAN IMAGINE OTHER COMPANIES MAKING THE SAME DECISION.
THEY'RE ALWAYS IN THESE TRADE DISPUTES WINNERS AND LOSERS AND
THERE WILL BE PLACES IN THE COUNTRY THAT WILL SEE MORE NEW
INVESTMENT.
THAT WOULD BE OUTWEIGHED BY COMPANIES THAT MOVE PRODUCTION
ELSEWHERE.
WE'RE ABOUT TO GET A REAL TEST OF THOSE THEORIES.
- ALL RIGHT.
EDWARD ALDEN, THANKS VERY MUCH.
- GREAT TO BE WITH YOU.
THANK YOU.