Foxconn's $12 Billion Plan for Brazilian iPad Production in Trouble

Discussion in 'iOS Blog Discussion' started by MacRumors, Sep 29, 2011.

  1. MacRumors macrumors bot


    Apr 12, 2001


    Reuters reports that Foxconn's previously-announced $12 billion plan to begin producing iPads in Brazil appears to be faltering as Foxconn and the Brazilian government have been unable to reach an agreement.
    Reports in the Brazilian media have indicated that the country's development bank is on the verge of withdrawing funding for the project, a move that would likely kill the plan as it currently stands.
    High import tariffs and taxes push the entry-level iPad price to approximately $900 in Brazil, nearly double the model's $499 price tag in the United States. By moving production into Brazil, Apple would be able to address the country's market of 190 million consumers at lower price points.

    Article Link: Foxconn's $12 Billion Plan for Brazilian iPad Production in Trouble
  2. wordoflife macrumors 604


    Jul 6, 2009
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    $900 for a baseline iPad? Wow that's freaking expensive
  3. Yvan256 macrumors 601

    Jul 5, 2004
    Dear Foxconn,

    Canada is also very close to the USA.

    skilled workers.
  4. dampfnudel macrumors 68020

    Aug 14, 2010
    Brooklyn, NY
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    I don't think these skilled Canadian workers would be willing to accept third world wages. Otherwise, why not open an iPad plant in the US?
  5. akohan macrumors newbie

    Feb 12, 2010
    I think the point is to produce for the Brazilian internal market, not the US market. And I think wages in Canada are probably higher than in the states right now anyway - stronger Canadian Dollar (and economy) not helping much there.
  6. fabian9 macrumors 65816


    Nov 28, 2007
    Bristol, UK
    But producing in Canada won't solve Apple's problem, which is high import taxes when importing products to Brazil. Producing in Canada would probably also triple the unit production cost because wages are way higher in Canada compared to Brazil...
  7. eghedini macrumors newbie

    Jul 13, 2011
    Macaé - Rio de Janeiro - Brazil
    You're damn right. I am Brazillian, and I'm sick with the tax policy applied here. This week a chinese car manufacurer dropped all plans to build a factory here because our "magnific" politics raised the tax over cars. 13,000 jobs trown away! I just can't get it in my mind!
  8. Mac American, Sep 29, 2011
    Last edited: Sep 29, 2011

    Mac American macrumors newbie

    Apr 12, 2011
    How about the United States, we have skilled unemployed workers, plus states are giving huge tax breaks for people willing to create jobs. Just automate the plant. Look BMW makes the x3 here for export globally. We can make products in the USA competitively, Dells were all assembled in Texas until 2006, and they were competitive.

    Designed in California. Made in USA.:apple:
  9. 50548 Guest

    Apr 17, 2005
    Currently in Switzerland
    Foxconn seems to be asking for too much, and Brazil is definitely not a Chinese sweatshop - so it's just impossible for them to have the same cost advantages in Brazil, a Western nation with usually very high employment social nets as they do in cheapo Asia.

    It will be a pity if they don't start making iPads there; but in any case interest following the new tax incentives for tablets is already considerable, with companies like LG, Samsung, Motorola, Positivo and others confirming their interest in manufacturing devices in Brazil.
  10. Mac American macrumors newbie

    Apr 12, 2011
    Foxxcon is facing problems in China, that is why the are attempting to expand to other regions. Higher wages and the Chinese government is paying more attention to pollution, so its driving cost up, making them less competitive.
  11. 50548 Guest

    Apr 17, 2005
    Currently in Switzerland
    Well, I hate the high taxes in Brazil as well...but I can understand the government's decision to prioritize local industry, especially in a market with such a HUGE domestic demand and strong evidence that China simply makes use of widespread dumping, including an undervalued currency.

    Brazil is not a country without industries (for manufactured products to be irrelevant as in the Caribbean, Switzerland or Luxembourg) such a concern may be seen as legitimate.

    Besides, over time and with competition, prices WILL go down - not to mention that EVEN without any taxes, prices are high in Brazil because many car companies, for example, are still able to mask exorbitant profits under the good ol' tax excuse (none of them will, of course, disclose profit margins in Brazil).

    Those who REALLY want to produce in Brazil and FOR Brazil will do it - the market is too big for them to ignore it.
  12. The 801 macrumors newbie

    Sep 27, 2010
    For those who want the ipad produced in US: Lets face it, the ipad is a hand built electronic product. It is not designed for automated assembly. Go look at the teardowns. Its one reason it is so well made, I am afraid to say. No American could handle the workplace necessary to assemble it. Unless you were willing to double the price.
    Good, Fast, Cheap -- Pick two.
  13. fussal macrumors newbie

    Mar 23, 2008
    true, but...

    Fosconn should see the potential and back down a bit. i guess as competitive as the industry is in china, they overlook the potential here. 190 mill people who'd buy more of those products if the import tax gets cut out. heck, they should produce the iphone here as well, imac's macbooks pro ;-) and... being in mercosul, that would open the whole south american market for them as well ;-) but i guess, greed is a sucker..... might be that lotsa people will just get those products when they travel up to the states.....


    that, as mentioned below would not solve the problem of getting around the import tax in brasil and the whole south american market ;-) and if they'd aim for that they'd be making them cheaper in some american states ;-) the reason they were and hopefully will be looking for production in brasil... 60% import tax on foreign goods, if they can cut that, it would be a runner here ;-)
    on a little different note... wages they pay for car production workers in canada.... outrageous, good for the workers ;-) but.....
  14. jimbobb24 macrumors 6502a

    Jun 6, 2005
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    The US manufacturing economy has been growing for years - recent global collapse excepted. It lts a myth from politicians that we do not make things. We do great, but our manufacturing employment has gone down with automation.

    We have a huge manufacturing sector.

    This was supposed to be in reply to some above concept.

    Cant believe the import tax in brazil. I don't think I could live in a country that economically ignorant. Wait... I live is US. Sad for me.
  15. 50548 Guest

    Apr 17, 2005
    Currently in Switzerland
    One needs to understand why import taxes are high in Brazil, and this requires a little bit of context. Industrialization in Brazil only started in a big way after the Second World War, when Vargas's government, historically fascist-leaning, obtained a number of benefits from the US including the setting up of steel-making plants here.

    Later on, during the 60s and 70s, Brazil used virtually the same mechanisms adopted by other emerging economies (such as South Korea) to foster local industries, especially via State-owned companies in the aerospace and military sectors. A bit later, from late 70s and 80s, another initiative specific to the tech sector aimed at creating local industries through the now infamous "market reserve" policy, which forbade personal computer imports and pushed for local manufacturers, even if most simply reverse engineered famous designs like the Apple // (and even the Mac, as the well-known political case of Unitron can tell).

    The setting up of local industries, as well as the big four carmakers since the 50s/60s (Ford, GM, Volkswagen and Fiat), also paved the way to increased lobbying by labor unions and the like in the industrial in a nutshell, this is what happens nowadays with computers and tablets - the government gets used to the import tax revenues, the pressure for defending local industries continues, and competition is stifled by that strong cushion in favor of incumbent makers.

    However, Brazil is now much bigger and more diverse economically: so the appeal for foreign companies is finally justifying the setting up of domestic operations, alongside a much better access to pricing information by consumers (i.e, Internet) and the need to revamp the country's infrastructure (as is the case for the US these days).

    Besides, it is the only Western powerhouse of the BRIC countries - all the others are either too corrupt (Russia), too IP-infringing and government-centered (China) or too unstable/bureaucratic (India). Interesting times, indeed. :rolleyes:
  16. biggreydog macrumors member

    Aug 23, 2010
    I say make them in the US and smuggle them into Brazil at a profit. It's better than guns or drugs.
  17. Rocketman macrumors 603


    Since the entire point of producing in Brazil was to avoid import tariffs, and we now see the cost of production is HIGHER than an imported device with tariffs, and avoids a new $12B investment, how about letting Brazilians pay more and be done with it. They are used to it already due to government regulations.

    As for making the devices elsewhere, how about Michigan, Wisconsin, and Ohio. I wonder if the USA would grant "competitive support" to Apple or Foxconn there in the form of tax subsidies, and loan rate reductions (the Chinese have this to a high art). There are certainly plenty of unemployed folks.

    Wild idea, eh?

  18. accessoriesguy macrumors 6502a

    Jul 8, 2011
    lol, they smuggle guns and drugs, we smuggle Apple products!
  19. MacGuffin macrumors regular

    Nov 13, 2006
    Not surprising

    Brazil is enjoying unprecedented growth with an economy to make the pauperized United States extremely jealous. She is wise to be reluctant to become the latest Apple sweatshop.

    The USA is another story. People are ready to kill for any work they can find...
  20. captain kaos macrumors 65816

    captain kaos

    Jan 16, 2008
    Unfortunately i don't think the US workers would like the same treatment the china workers get. Im sure there is a reason they committed suicide, and i don't think its high wages and a lovely working life that did it. See Mike Daisey's show, The Agony and the Ecstasy of Steve Jobs
  21. fredfnord macrumors regular

    Sep 9, 2007
    Just FYI

    Just to reiterate a point that has already been made a lot of times over the past couple of years: the workers at Foxconn committed suicide at a rate significantly lower than that of the general population in China. And those suicide rates are the official Chinese ones, which if anything would probably be understated with regard to suicide in the general populace, because they certainly do not want to look bad.

    (Unfortunately, we do not have numbers for China broken down by age. So it may well be that Foxconn's suicides *were* out of the ordinary, for people of that age. However, since we don't know, it seems somewhat irresponsible to assume that that is the case.)

    If a company in the US had, say, 50,000 employees, and those employees committed suicide at 2/3 the rate that other people in the US commit suicide, would we hold a Spanish inquisition?

    This is not to say that Foxconn is a great place to work, or that there aren't real problems. All I'm saying is, using this as evidence that there are real problems is either slightly ignorant or extremely disingenuous.
  22. planetawesum macrumors newbie

    Sep 29, 2011
    Sustainable business practices have to become more prevalent, for real

    The only real sustainable way to produce is locally for the local population set by the rules of that population for that population. No more blackmail, extortion, racket corporations hammering out slave relations to planet earth-ians (through violence to all).

    If only people knew how much apple makes after profit (like most global businesses). They don't share. Remember these entities don't pay taxes, cause they own all governments. Only people like you and me pay taxes, on everything all the time, exponentially. We pay for everything while everything is taken away from us at the same time. Above all that, is corporate welfare. Yes we pay for them to stay in business while they rob us blind. hmmm dark ages?

    So yes fair pay keeps the greed away. We will actually be able to afford what we make! imagine that!

    You can only exploit people/ the earth for so long before you have to grow up, or be extinguished. Almost all so-called businesses today are based off slave labor (yes this includes wage slave labor here in the usa). Sorry!

    Apple and all their minions need to get with the program. I love their products, long time user (almost 12 years now), not their labor practices. If they clean this up I'll once again be able to glorify them. It's too expensive not to. Nobody can afford it in the long run what is happening around the planet with "free trade" (exploitation) now. Earth can't take the raping(s) either. Glad this is coming up!!! :) The blood is seeping through the bandages.
  23. mrklaw macrumors 65816

    Jan 29, 2008
    what makes it expensive? Importing finished goods into Brazil have high tariffs applied?

    If you don't have the workers to build from scratch, why not part-build, and then finish assembly in Brazil? Keep it simple for the skill level of the available workforce, and by supplying 'parts' you'll avoid import tariffs.


    its quite disappointing that these large growth BRIC economies seem to be able to justify almost anything and get away with it due to the desire to trade with them. eg protectionist practices like damaging import tariffs.
  24. prestevez macrumors newbie

    Sep 30, 2011
    ...or bring it to Mexico instead.

    Dear Foxconn:

    Mexico is closer to the US, has more international free trade agreements than any other country in the world and has much cheaper wages than Brazil (or Canada).


    (cheap) skilled labor
  25. carlgo macrumors 68000

    Dec 29, 2006
    So, you are saying workers in the US can only make products that are assembled automatically? And once again, the "double the price" argument comes out. One of Foxcon's talking points obviously.

    These people come out every time there is a made in the USA discussion. They must get alerts from headquarters.

    BTW, your English gives you away. Back to English Camp and the shaming.

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