Feb 14, 201912:28 PMMaking Madison
with Buckley Brinkman
Missing the point about Foxconn
(page 1 of 2)
Over the past two years, I’ve been driving a discussion about the need for manufacturers to up their game to a new performance level to survive and thrive. Accelerating technological change and the body gap will transform manufacturing as we now know it. The discussions over the past few weeks about Foxconn demonstrate the need for all of us to up our game because these conversations obscure Foxconn’s major impact behind talk about a factory.
Almost all of us were excited by the initial Foxconn announcement. Manufacturing is key to our future economic health, and Foxconn was bringing major electronics manufacturing back to the Western Hemisphere for the first time in decades. This move would provide an example of Industry 4.0 applying modern computing and technology to manufacturing on our own doorstep. We zeroed in on the new factory and manufacturing jobs — traditional economic development measures. Focusing on these measures blurred our view of Foxconn’s real impact for Wisconsin: front-row participation in creating a new future in manufacturing.
I love Wisconsin, but we’re truly a middling state. In my job, I see reams of economic data. If that data splits out state numbers, you can almost always find our state in the middle third. In addition, our image to outsiders is one of cheese, the Packers, and endless snow. All of this makes us a terrific “supporting” state. In other words, if a company is making a major product, chances are Wisconsin manufacturers make their critical components.
Our state’s traditional economic strength lies in mining, agriculture, and manufacturing. All three of these areas create true economic value, with technology transforming each field in new and interesting ways. Most of these improvements involve creating more output with fewer people — a necessary element to improve our overall standard of living.
Don’t cringe! This is a good thing, especially as a growing body gap limits our future growth. Experts predict our workforce growth will remain stagnant for the next two decades. This trend will transform the landscape — particularly in the state’s 35 driver industries in manufacturing. We will need everyone’s talent to maintain healthy growth, though many of us will work in entirely new ways in the future. Manufacturing will be one of the most affected areas.
The most radical changes will take place at the convergence of multiple technologies. We’re seeing the effects of Moore’s law in many different fields. We all know about the changes in computing — more power, cheaper storage, and ubiquitous access. These changes drive advances in other fields like sensors, vision technology, communication, and artificial intelligence. Advances in these areas will impact everyone.
Enter Foxconn into this environment. Let me start with a disclaimer: I have very little inside information and developed the following thoughts from the breadcrumbs Foxconn’s leaders share with the public. It’s an interesting picture.
I tried to put myself in the chair of Foxconn’s CEO, Terry Gou, to try to understand the company’s motivations in Wisconsin. Mr. Gou started by making television knobs and grew his company into one of the largest contract manufacturers in the world. The company built a tremendous portfolio of manufacturing capabilities, subject matter expertise, and broad-based data. The company runs on low margins and has low market recognition while manufacturing products for the world’s best-known companies. That business model hems the company in, with much of its success determined by others.
If I were in this position, I would want to build a new market-facing operation by taking the following steps:
- Assessing the independent value of the assets and expertise within the company;
- Finding ways to reposition the operation, making the company more visible to end-users;
- Riding technology trends and Industry 4.0 developments to grow the company and its influence;
- Physically moving closer to markets and key innovation centers; and
- Creating and leveraging new relationships to develop leading-edge solutions.
It’s a very heavy lift, but it's a strategy that transforms Foxconn into a well-known, customer-facing, high-tech solution provider to major companies around the world.
Using these thoughts as a framework, I’m finding that Foxconn’s actions in Wisconsin follow logical strategic paths. They move consistently in ways that align with key trends and opportunities. Cutting-edge manufacturing will be a byproduct of these much larger efforts. Foxconn’s strategic success provides a huge opportunity for Wisconsin to step from the shadows and lead the rest of the country into the future.
Foxconn’s move to the Western Hemisphere makes tremendous sense. That move puts the company closer to major markets and in the midst of the world’s best innovators and innovations. We have the brains, desire, and financial resources required to drive transformation. It’s the right place for Foxconn to play.
The company also set a course that aligns its key capabilities with the major marketplace trends:
- New 8K technology can provide pictures with more than twice the clarity of the human eye. Remember the jersey Tom Brady lost three Super Bowls ago? This technology tracked the thief through the stadium with a camera mounted high above the end zone. Imagine the other uses for that clarity in medicine, security, and industry.
- Artificial intelligence (AI) can make sense of massive mounds of data. This technology fights cancer right now and demonstrates that neither doctors nor computers alone perform as well as a combination of the two. How many other fields can improve by using this technology?
- Both of these technologies generate massive amounts of data. Current technology cannot effectively transfer the data between locations. Full 5G capabilities enable that exchange to happen effectively and instantly.
Foxconn will gain the most traction at the confluence of these technologies, leveraging its present capabilities to transform the company, and that’s precisely where Foxconn is repositioning itself. The company possesses deep expertise in cutting-edge video technology. Its technology captures tremendous amounts of data off its industrial equipment, and Foxconn knows how to use it. All of this data makes it easier to engage AI’s potential to transform that data into action. The company also made numerous acquisitions to accelerate its progress and create a better market position.