Good morning. David Meyer here, filling in for Alan from Berlin.
What exactly is happening with Foxconn’s big Wisconsin display factory, which was supposed to bring 13,000 jobs to the Milwaukee area?
It’s been one heck of a confusing ride. The $10 billion campus was supposed to be a large, cutting-edge LCD factory. Then, at the start of this year, the Taiwanese company was reported to be scaling back and altering those plans, in part due to high U.S. labor costs—the factory was now going to be a smaller engineering and research hub, employing around 1,000 people. Foxconn had only spent 1% of its promised investment by the end of last year.
Now Foxconn chair and Taiwanese presidential hopeful Terry Gou has apparently “reaffirmed his commitment” to building a big factory, after meeting with President Donald Trump on Wednesday. Gou also met with Wisconsin Governor Tony Evers, whose predecessor Scott Walker partly lost re-election because of Foxconn’s $4 billion or so in state subsidies and incentives. Evers previously said the 13,000-jobs figure was “unrealistic,” but now he’s walked that back a little.
“I’m not doubting their word, I’m just saying that we want as much clarity as we can going forward and we talked about what they’re doing right now as far as building,” Evers told local papers after meeting Gou. Afterwards, Evers’s spokeswoman said he continued to maintain “healthy skepticism” of the jobs projection.
All very opaque, and there are a lot of people’s credibility on the line here—not least that of President Trump, when it comes to his quest to return tech manufacturing to the U.S.
Foxconn, of course, makes iPhones in China, the prime target of Trump’s trade offensive. Trump has repeatedly called for Apple to make its iPhones in the U.S. rather than China, but his pressure on Beijing hasn’t quite produced that effect. Instead, Foxconn is shifting a lot of its iPhone production from China to India. Wary of tariffs on imports from China, a couple hundred U.S. firms are considering doing the same thing.
Getting Foxconn to make good on its commitments in Wisconsin would bolster Trump ahead of his re-election bid. “Mr. Gou is spending a lot of money in Wisconsin and soon will announce even more investment there,” White House spokeswoman Sarah Sanders said yesterday.
But Foxconn’s recent dithering does not inspire confidence. If those promises don’t pan out, it will be a black eye for Trump—and Wisconsin taxpayers. More news below.
Facebook is reportedly talking to dozens of financial and e-commerce companies, including Visa and MasterCard, about the cryptocurrency-based payment system it is developing. The scheme carries the codename Project Libra and involves a dollar-pegged virtual currency that could be used for payments between WhatsApp users. Facebook is apparently considering giving users small amounts of the cryptocurrency for looking at ads. Wall Street Journal
Beyond Meat’s shares jumped by 163% on their first day of trading, making for the biggest IPO pop in over a decade. The IPO valued Beyond Meat at around $3.8 billion, and the cash raised should help it compete with Impossible Foods, another much-hyped meat-free-meat firm. CEO Ethan Brown: “We understand the composition of meat, we understand the architecture and year after year we collapse the gaps between our product and animal protein.” Fortune
Uber is being sued by taxi drivers again, this time in Australia. The class-action was filed Friday by lawyers representing around 6,000 cabbies across four states. Uber denies it operates illegally but, if it loses, it could face damages in the order of hundreds of millions of Australian dollars—at least, that’s what the plaintiffs are seeking. Reuters
Sinclair and Disney
Sinclair will reportedly shell out over $10 billion to buy Disney’s regional sports networks, which were acquired as part of the 21st Century Fox deal. (At the time, Disney promised to sell the networks in order to get regulatory approval for the Fox asset takeover.) The Journal reports the Sinclair deal could be announced as early as today. WSJ
Around the Water Cooler
President Trump’s Fed board picks have both dropped out now—first Herman Cain, who claimed the pay wasn’t enough, and now Stephen Moore, who can’t take the “unrelenting attacks on my character.” Said attacks have focused on Moore’s past misogynistic writings, and most recently on the revelation that he underpaid alimony to his ex-wife for years, despite having been found in contempt of court over the issue. All this was too much for several Republican senators, who said they wouldn’t vote to confirm him. Guardian
India’s east coast is being hammered by Cyclone Fani, which prompted the evacuation of over a million people. National disaster teams have been sent to the Orissa/Odisha state to help deal with the damage. So far, there are only two reported casualties, perhaps due to the government’s preparations. Al Jazeera
Investors are once again embracing “synthetic” collateralized debt obligations—the debt derivatives that helped to fuel the financial crisis. Except this time the CDOs are backed by corporate debts, rather than subprime mortgages, so they’re supposedly a lot safer now, according to some—others think the financial world is going crazy again. Financial Times
The British defense giant BAE Systems has successfully flown the first plane in history that doesn’t need wing flaps to maneuver. The Magma drone blows air from its engine through slots in its wings, and BAE says the reduction in gaps and engines makes the plane nearly invisible on radar, as well as being lighter and cheaper to operate than planes with conventional wings. Bloomberg