Where Our Dollars Are Going

We all know our manufacturing jobs have gone overseas and we all assume our multinational corporations have plants producing all our TVs, computers, iPhones and iPads overseas.

Not so. In 1974 Terry Gau founded Hon Hai Precision Industry Company LTD. In Toucheng City, New Taipei 236, Taiwan. His company (operating as Foxconn) is now the world's largest and fastest growing multinational contract electronic manufacturer. They produce computers, consumer electronics, communication and televisions, as well as other products, cable assemblies, flat panel displays, game consoles and mother board servers. Foxconn also provides design, engineering and mechanical tooling and is recognized as a leader and innovator of technical knowledge. Foxconn has accumulated over 25,000 patents and has operations in China, Brazil, Europe, India, Taiwan, Malaysia and Mexico. Virtually everywhere except in the USA. Consequently, Foxconn has become the most trustworthy contract manufacturer in the world.

When our multinationals move out of the United States, they do not build plants. They work out a contract with Foxconn. Foxconn customers in the United States include Amazon, Apple, Dell, Hewlett-Packard, Microsoft, Motorola, Visa plus Acer Inc. in Taiwan, Samsung Electric in South Korea, and Nintendo, Sony and Toshiba in Japan. The U.S. is by far Foxconn's largest customer. That's WHERE OUR DOLLARS ARE GOING.

The Snapple Group: Apple, Dell and IBM are responsible for 90% of Foxconn sales in the United States. In 2011, Apple purchased 70 million iPhones, 30 million iPads and 59 million other products, all made overseas. In one 2010 report, Apple Inc. had revenue of $65 billion with earnings of $33 billion. In 2011, Apple revenue reportedly topped $108 billion with cash reserve of $82 billion. The first iPads in 2010 cost $276 but the new iPads cost $364.35 and sold for $729.00 in the US. Foxconn sales in May, 2011, were over $200 billion. Apple reportedly has only 20,000 employees overseas but the Apple contractors have over 700,000.

Before he died, Steve Jobs insisted that iPhones have a glass top instead of plastic. This deal made with Corning Glass resulted in 1000 Corning employees and $700 million per year sales in the US. Now the bulk of the glass is being manufactured in Japan and Taiwan.

What are our chances of getting some of this manufacturing back in the US? None. According to executives of various corporations, it is not just cheap labor. Flexibility, diligence and industrial skill outpace America. According to James B. Flaus, Vice Chairman of Corning Glass, "Asia has become what the US was for forty years."

What is the answer? We certainly cannot continue to exist going deeper and deeper in debt with no manufacturing jobs while paying out billions to a company headquartered in Taiwan. According to one report, the labor for an iPhone would cost $65 more if made in the US. If this is true, then the other reasons given (industrial skills, etc.) may be a larger hurdle than just adjusting labor costs. Foxconn is having serious labor problems in China and both Apple and Hewlett Packard are looking at increased labor costs. This may make it easier to get manufacturing back in the United States but it would be difficult for Apple to break away from Foxconn.

In any case, since Free Trade got us into this impossible mess, getting out of Free Trade and putting tariffs on all these items discussed is our only hope for bringing in revenue and balancing our budget. In addition to tariffs, we need to pass a Federal Right to Work Law to get jobs back in the United States.

Jack H. Knowlan

email: Jackknowlan@sbcglobal.net