Missing the point about Foxconn

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.

(Continued)

 

Still, all this effort is not enough to make Foxconn a dominant force in this market. Technological change continues to accelerate beyond the capacity of any person or organization to keep pace. AI, 8K, and 5G are each broad topics by themselves. It’s impossible to simultaneously stay on top of all three. Foxconn's resources, by themselves, are not enough. Success requires effective partnerships in order to succeed.

Wisconsin is a terrific place to build those partnerships for four reasons. First, the next wave of computing will occur around big data. Manufacturing creates over 90 percent of all data and our state’s manufacturing produces a tremendous amount of that data density. Second, we value and developed focused and effective education from our K-12 systems, to the technical college system, to our other colleges and universities. Third, we’re located in the middle of terrific research being done by land-grant universities. Wisconsin, Minnesota, Michigan, and Ohio State are all in the top 20 in federal research funding. Finally, our pragmatic heritage focuses all these resources on real-world problems.

Creating effective partnerships and new collaborations is the real key to making Wisconsin successful in the future, not any new factory! Foxconn provides the opportunity for us to become a major new presence in technology, becoming legitimate Industry 4.0 and computing leaders. That leadership would improve our ability to attract new talent to Wisconsin, reversing decades of net out-migration. Our industrial base and its leadership also provide a terrific environment to leverage, pilot, and invest in this new technology. Our pragmatism makes it much easier to create collaboration on difficult problems to create effective action.

Focusing on a factory misses most of the potential Foxconn provides for future growth. There’s tremendous overlap between Wisconsin and Foxconn’s success. Those overlaps include the need for:

  • Catalyzing innovation, strong STEM education, and focused, practical research;
  • Maximizing the best talent — both through attraction and growing our own;
  • Raising the performance bar for all our organizations, busting up some of that Wisconsin complacency; and
  • Driving effective investment and improving returns for everyone involved.

Foxconn’s success is not Wisconsin’s responsibility, but there are areas where targeted investment can help both parties. Solid STEM education supports the state and Foxconn. Practical research exploring Industry 4.0’s frontier helps our manufacturing base and Foxconn make the most of new technology. We need all the talent we can find, develop, or reposition. Investments in nontraditional labor sources make us all stronger. Collaboration can make the ideas that exist throughout the state move to where they’re needed through a frictionless process. All of this makes the most of the Foxconn opportunity.

The future trends are clear and accelerating. Industry 4.0 will transform operations around the world. Partnering with Foxconn to create that future will put us on the leading edge of those advances. These opportunities provide focus and will accelerate our progress. Future healthy economic growth depends on our ability to take full advantage of these opportunities.

Hopefully, you can see how Foxconn can drive our future success much more effectively than any single factory. It’s time to think more broadly and take action. If you’re part of the public sector, identify places where interests align and make strategic, mutual investments. If you’re a manufacturer, it’s time to up your game and harness the new technology to transform your performance. If you’re a future-oriented citizen, make the most of your opportunity by identifying ways to upgrade your skills and become more relevant in the new economy.

Together, we can move Wisconsin to the top of the pack, leading the charge into the future.

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