back to article iPhone maker Foxconn to pump $1bn into new Indonesian factory

Foxconn is planning to spend up to $1bn building a new factory in Indonesia. The firm responsible for making Apple's iPhone has signed a letter of intent which will see it build a new factory in Jakarta. The facility is expected to open its gates some time in the next five years and will contain manufacturing and assembly …

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Devil

Illuminating

Spend $40M in the US; spend $1B in Indonesia.

…I'm glad that they are serious about expanding in the US.

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Anonymous Coward

Wages

China is becoming too expensive.

It's inevitable that an investment like this is to save money, I wonder when the factories will move to Africa?

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Anonymous Coward

Re: China is becoming too expensive.

China is becoming too aware of human rights, businesses must move elsewhere to find their s̶l̶a̶v̶e̶s̶ workers.

And no-one is brave enough to move into Africa as it's too politically unstable.

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"no-one is brave enough to move into Africa as it's too politically unstable"

Balderdash. Somalia is capitalism unchained. No nasty government regulation to get in the way of anything. Governments only know how to screw things up. The free market will decide optimal stability of a region, just like it find the optimal point of all things.

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Re: "no-one is brave enough to move into Africa as it's too politically unstable"

I live your sarcasm. As you imply, big business loves regulations, of the people and of small business.

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Anonymous Coward

Re: "no-one is brave enough to move into Africa as it's too politically unstable"

After reading this thread last night I re-read Adam Smith on the subject of corporations and how they distort competition and the economy, and how they love regulation, which enables them to maximise profits while keeping down the pay of the non-organised.

It's funny how many of the people who use Smith's name as some kind of evidence of the virtues of corporatism (like the Adam Smith Institute, which basically exists to demand more power for businesses) don't ever actually seem to have read Smith. But then I could say the same about many of the churches, and the recorded sayings of Jesus.

By the way, parts of Africa are expanding quite nicely economically, but usually through micro-development. The last thing they need is Foxconn. And Adam Smith explains why.

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Re: "no-one is brave enough to move into Africa as it's too politically unstable"

Bingo. Adam smith was a smart cookie. The problem with most modern "capitalists" is that they only really ever read select parts of his first book. He wrote more than just one, and he covered territory about the necessity of regulation, managing the morale of populations, etc. Marx and Smith both had a lot to say on the subject and both, as it turns out, were largely right.

They were never so dicotomic as we are generally led to believe and they would both be utterly appalled at the world we've built today.

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Cheap labour?

I'm guessing that the cost of labour is far cheaper in Indonesia than in mainland China? In this case it makes perfect sense to move operations across the water, after all why pay $5 a week for an eight year old factory worker in China when you can hire a four and a half year old Indonesian lad for a quarter of that?

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Re: Cheap labour?

Quite.

Foxconn is pivoting away from China, where it currently employs more than a million people, after concerns were raised about working conditions for its factories' staff wages grew at 7% for 10 years in a row in China.

FTFY

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And of course Foxconn ONLY make kit for Apple don't they?

And Apple ONLY contract Foxconn to make their designs. *sigh*

Can we PLEASE avoid putting Apple in the title unless they're actually involved in the deal? Or is that against the rules of hit whoring?

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Happy

Re: And of course Foxconn ONLY make kit for Apple don't they?

I hate to have to break this to you old chap but El Reg's subbies specialise in wind up sub-headings - and no, the "fruity company" is not the only victim. Any excuse to take the piss is their modus vivendi and they do not much care who they are extracting the urine from. That is their stock in trade, end of.

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Re: And of course Foxconn ONLY make kit for Apple don't they?

Apple are involved in the deal. There is a legal concept of vicarious liability. You have some responsibility for people you employ and Apple (and others) knowingly contract with Foxcon. These are not third party no influence deals as we would have as individuals buying goods or services. Apple has a lot of influence with their suppliers.

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Stop

Re: And of course Foxconn ONLY make kit for Apple don't they?

And you know Foxconn will be building Apple kit at this new plant how? Apple are only about 30% of their business, and they tend to concentrate work for customers together. Oh, and vicarious liability doesn't cover work done for other clients.

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Re: And of course Foxconn ONLY make kit for Apple don't they?

See, they just won. You viewed the article, possibly because of the title - 4 ad views. You posted a comment (and presumably also read the comments before and after) - 12 ad views. Jackpot!

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Coat

The old ones are the best

We are opening a factory in Indonesia

Jakarta?

No, it was a voluntary transfer

Thank you, be here all night

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Anonymous Coward

Foxconn is Taiwanese

I imagine that the Taiwanese are worried about the slowing of the Chinese economy, caused among other things by unsustainable growth, and the fear of a rift between Taiwan and China. Wages will be part of it, but the general principle of not putting all eggs in one basket is another. If China decides to take over Taiwan, I imagine Foxconn execs might like to be sure of having boltholes before the Peoples Revolutionary Army or the CCP decide that's a nice company you have there, we'd like to own most of it.

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FAIL

US labor is too expensive because of unions

US labor is too expensive because of unions. Break up the unions (which are really just organized extortion) and watch as a renaissance of stateside manufacturing immediately occurs.

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Anonymous Coward

Re: US labor is too expensive because of unions

And how much is IGnatius T Foobar paid, I wonder?

Or do you mean the unions that really reduce competitiveness - the lawyers' union, the Greek fraternities, the inner circle of CEOs and boards who set their own remuneration based on what everybody else is getting?

US labor isn't too expensive; what is expensive is the vast overheads of sales and marketing with their backhanders, R&D which spends more on patent avoidance than actual research, an overly expensive health system dominated by insurance companies and litigation, and enormous military expenditure.

There are excellent products made by quite small companies in the US at reasonable prices - I've bought some of them, from superb keel cooling heat exchangers made in Illinois, of all places, down to my excellent little sail repair kit- but those companies don't need corporate lawyers or huge sales and marketing teams, and a vast hierarchy of executives on ever more eye watering "compensation".

Just as the UK now exports cars from factories belonging to Japanese companies, I wonder if companies like Foxconn will be able to turn a profit from US manufacturing - by avoiding large parts of the overheads?

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404
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Generalizations

There is manufacturing going on in right-to-work states right now, where the unions have no power. Tennessee has Nissan, Toyota, and Volkswagen plants producing cars, although the unions are trying by hook and by crook to get in.

Overall, you're correct-> the unions need to be busted but it won't even begin to start until Obama & Friends are gone.

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Re: Generalizations

@404

Most of your assumptions are wrong. Or maybe they're not assumptions, it is your attempt at trolling?

I live in a right to work state with several large manufacturing concerns, e.g. John Deere. The unions are not as powerful as thirty years ago but they still have a large influence. And I know Obama ate the apple in the garden of Eden and caused the plague in the Middle Ages and, well, caused any and every great problem mankind has ever had, but I don't think he has much influence on the life expectancy of unions.

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FAIL

@IGnatious

Unions exist because of cases like the one cited below. A worker at Toyota gets Carpal Tunnel Syndrome because of the work performed. It is not technically a disability until it interferes with life outside of work. Therefore Toyota can force the worker to continue to do the job until they are permanently disabled.

Having to make a choice between your heath and your job is very common in the American Workplace.

http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=00-1089

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Not many unions in the USA compared to other countries.

Not really. Not many unions in the USA compared to other countries.

Labour regulations are pretty slack too, only 2 weeks vacation a year. Easy to avoid paying OT. And so on.

What big business wants is freedom and US employees aren't free. Chinese, Indonesian, are very close to that.

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If unions are a problem why is the German economy better than the US economy?

If unions are a problem why is the German economy better than the US economy?

The USA has less unionization than most countries.

It probably has to do with education levels, how seriously people take their work, and how efficient they are at being productive, as opposed to showing up.

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404
Bronze badge

Re: Generalizations

Trolling.

One thing I've learned here is you can say pretty much whatever you want, it's *how* you put it. I knew if I mentioned 'Obama', the downvotes were coming, had I said 'assclown in DC', none would have appeared. Funny how that works, eh?

Call it a social experiment, call it trolling, call it whatever you want, but I'll bet I could get a Fed grant for the study.

;)

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Indonesia is the new China

It makes economical sense as Indonesia is one of the most promising of the emergent markets as well as being a potential bolt hole for the Taiwanese bosses.

Taiwan should be reasonably safe from the mainland though, I think there is too much money from the States and Japan in Taiwan for anyone to allow the PRC to move in.

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"allow the PRC to move in."

You're precious.

If China decide to invade Taiwan they will do so. Full stop. Not a power in the 'verse would be able to stop them. Once they've consolidated their position - something that ought to take a matter of hours, when you have a state with China's GDP backing the play - dislodging them would be a long, miserable, bloody process that would probably chew up the navies of every major power on the planet before the deed was done.

China can mobilize a truly unholy amount of men and equipment in a shockingly short amount of time. They have a very small pond to jump across and even with operationally acceptable 20% losses during the engagement they could occupy that island utterly and completely in mere hours. It wouldn't take much planning on China's behalf to be able to arrange a blitzkrieg strike before anyone even knew what was going on, let alone had a chance to respond.

Once entrenched, how, pray tell, do you extricate them without turning the entire island into a sheet of glass? China's military commanders are no fools. They have learned the lessons of the French resistance, of the VietCong and the Taliban. They know what guerrilla tactics work and what don't. They know how a resistance movement will organize, how to root it out and how to minimize the damage they can do.

Unlike western democracies, the Chinese have no need to seek a swift conclusion to anything. They don't need to "win the hearts and minds of the populace." They will march in, subjugate the populace and breed them out of existence. Two generations later, only a handful of extremists will even remember what their ancestors fought for and the rest will be Chinese citizens.

China doesn't invade Taiwan because the costs outweigh the gains. Nothing more. Do not delude yourself for a moment into thinking there is anything else restraining them.

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Anonymous Coward

Re: "allow the PRC to move in."

Wow, I am astounded by how naive you are Mr. Potts. You really show your age and lack of understanding when speaking like this. Do you remember Germany's annexation of part of Czechoslovakia in 1938? What happened after Hitler was appeased? Read up on history and you will understand why China has not attacked Taiwan.

> If China decide to invade Taiwan they will do so. Full stop. Not a power in the 'verse would be able to stop them.

Correct, but if China took Taiwan by force then every surrounding country would be fearful that they would be next on the chopping block and would get ready for war. The world would be outraged, maybe not you, but all of the major powers in the world would not stand for it. If China did not retreat from Taiwan, war would come to the shores of China and it would devastate the country. No single country on earth can defeat the rest of the world.

> ... dislodging them would be a long, miserable, bloody process that would probably chew up the navies of every major power on the planet before the deed was done.

Correct, it would be a long bloody war but the winner is the one who builds an ungodly amount of military equipment. Just ask Japan what the seas looked like when the Americans showed up at the end of WWII. The winner(s) would end up with a bigger military than the USA and China combined.

If China and Russia teamed up, that would be a very long bloody struggle but as history has always shown, the aggressor(s) will eventually lose. To have any hope of winning, they would have to strike at every US military base, naval yard, battle group, cyber warfare, etc at the same time as taking Taiwan. Otherwise they would lose the advantage of surprise.

> Once entrenched, how, pray tell, do you extricate them without turning the entire island into a sheet of glass?

You don't. Take them out of the battle by destroying any way for them to communicate or move from the island, then you go for the homeland and leadership. China's mainland is much bigger than little Taiwan. When the leaders surrender, so do the troops on Taiwan.

>China can mobilize a truly unholy amount of men and equipment in a shockingly short amount of time.

All that means is that a single bomb kills more people or destroys more equipment.

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Re: "allow the PRC to move in."

"Read up on history and you will understand why China has not attacked Taiwan."

I know my history. That's also why I said "the costs outweigh the benefits." Do actually read the entire comment.

The rest of your comment proceeds from the assumption that I don't already know that world war three is not something China can win alone. It is a false assumption.

Mind you, I don't remotely believe in your rah-rah western imperialist patriotism, either. China is more than capable of holding its own against it's neighbors and the USA can't beat a bunch of poor people with sand and more sand. It isn't an all-powerful demigod here to protect the world. The USA's doesn't have the ability to project enough force to defend Taiwan all on it's lonesome, let alone defeat China on it's own soil. If you think for a fraction of a second they can, you're delusional.

China is tooled up for mass production. The USA is not. The USA has a bunch of high-end hardware in the field, China's military is somewhat dated. China has it's allies, so does the USA. A war would be devastating and the outcome of that war is in no way a certainty. This isn't a comic book. The allies do not always win.

If China invades Taiwan, much of the world will turn against them. Taiwan - unlike Tibet - has a globally important economy. It would mean war. Thus the price China pays for invading Taiwan would be higher than the benefit they receive from annexing it.

But nothing on this earth could stop China annexing it if they should wish to, and I have my very severe doubts that anyone currently has the ability to blockade China from keeping supply lines open after they've taken it.

The day China makes that move, the next world war begins. China knows this. Today, that isn't something China wants. Tomorrow...who knows? Fifteen years from now the political and economic landscape could have changed so dramatically that China has more and better equipped allies than the USA. They may well at that point decide to make a go of it.

...but nobody - not even 'MURICAH, FUCK YEA! - could stop them taking that scrap of land if they wanted. The best anyone could hope for is to make them pay dearly for doing so.

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Anonymous Coward

Re: "allow the PRC to move in."

> Mind you, I don't remotely believe in your rah-rah western imperialist patriotism, either. China is more than capable of holding its own against it's neighbors and the USA can't beat a bunch of poor people with sand and more sand.

Fighting rebels without trying to hurt the populace is totally different from fighting a full scale military but I suppose you would have no idea about that. Look to Iraq. One of the worlds largest military's reduced to nothing in a few days. Do I think China would be easier, hell no. Do I think the USA could win on it's own, hell no. Do I think China's neighbors, the USA, and the rest of the global powers could win, hell yes.

> Mind you, I don't remotely believe in your rah-rah western imperialist patriotism, either.

Once again, you show how you rant without actually reading the post you are responding to. I did not rah-rah anything USA. I did mention they would need to be attacked at the same time otherwise they would lead the way to remove China from Taiwan, who is a US ally. Of course if WW 3 were to happen we all know Canada will not be a part of it so you have nothing to worry about. You will be sleep like a baby knowing that the USA is protecting you.

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Re: "allow the PRC to move in."

"Do I think the USA could win on it's own, hell no. Do I think China's neighbors, the USA, and the rest of the global powers could win, hell yes."

This is the "rah-rah western imperialist patriotism" I was talking about. There is no reason to assume that the US and it's allies would emerge victorious here.

1) China wouldn't pick a fight it didn't think it could win

2) China would be the one one picking the time and the theater

3) China's production capacity outstrips anyone on earth.

Basically, if the US and it's allies could respond to the invasion of Taiwan with such ferocity and immediacy that they can obliterate China's ability to make war in a matter of days, they could win. Otherwise, China gets the chance to make the battle one of attrition. In a war of attrition, there is no reason to believe the allies would win. There isn't a reason to think they'd fail either. It's a complete unknown.

So espousing a belief in allied victory here is - to my eyes - aught but patriotism.

If and when the US gets to choose the time and the theater they can march in, shock-and-awe the enemy and wipe out the bulk of a country's military assets in a short period of time. They are very, very good at that. They aren't nearly so good at protracted wars. Haven't been since WWII...and the whole society had to sacrifice to make that industrial miracle happen.

As for what I know (or don't)...I've lived my whole life in the shadow of a military base. I may not have had the chance to serve, but my whole life friends (and their family) have done so. I've lost friends to rebels, but also to careless yanks with jets dropping bombs on Canadians. I've listened well when people who've actually been there describe the difference in "proper" warfare from urban "peacekeeping" or rooting militias out of caves.

All of that leads me to believe that in a conflict with between the allies and China during which China gets to set all the rules, a belief in the inevitable victory of the allies is nothing but wishful thinking. There are just too many unknowns to call that one.

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Better infrastructure?

"The infrastructure is known to be better in the Jakarta region than in other parts of Indonesia, which is likely to have been a key factor in Foxconn's decision."

I confess my mind boggled slightly at that statement ... admittedly Jakarta has more infrastructure than many parts of Indonesia, but as to the usability ... the road system can be jammed solid for large parts of the day, and that's when it isn't flooded. Indeed, it's almost possible to drive the 100km from Solo to Semarang in the same time it takes to get from central Jakarta to the airport.

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