Foxconn's U.S. Labor Payroll Could Cost 3 Times As Much As Chinese Equivalent

For the last few years, investigators have kept an eye on Foxconn Technology Co Ltd (which trades on the TPE under stock symbol 2354), the allegedly poor working conditions and employee suicides of which have raised red flags among Chinese rights activists.

Based on mounting charges against the Taiwanese iPhone manufacturer, some have called for Apple Inc. AAPL to shift its manufacturing operations stateside.

It seems the request has been heard.

On Sunday, Foxconn executives announced a potential plan to bring a $7-billion display-making plant — and between 30,000 and 50,000 jobs — to the United States.

But corporate is accustomed to paying much lower wages than the United States would allow, and an American employee payroll may put a dent in the company’s budget. If Foxconn manufacturing costs rise, this may translate into higher payments for Apple consumers.

American Versus Foreign Labor Costs

As of July, the average monthly pay of Chinese factory workers was $424, according to a New York Times report.

In the United States, with a national minimum wage of $7.25, Foxconn workers would earn the monthly wage of a Chinese counterpart in just three and a half days.

The low-end promise of 30,000 jobs would cost the company about $452.4 million in American wages, while the same number of Chinese employees would cost about $152.6 million.

And that’s if Americans worked at the minimum pay rate instead of the $14 average for electronics assembly, and if Foxconn paid Chinese workers their average national rate.

But the true disparity could be more jarring. Foxconn’s foreign employee wages vary by report, with some estimates mere fractions of the average pay.

One Wall Street Journal article from August 2016 reported wages of $205 after expenses were deducted for food and housing. Forbes reported annual earnings of $6,500 for work weeks far longer than those of the standard American laborer.

Foxconn’s Transition From Human Resources

The move to create jobs would be a shift from Foxconn’s recent focus on automation.

In May, the company announced that it had replaced 60,000 workers with robots in one Chinese factory.

The cutting of laborers transferred about $305 million from payroll to the automation project, which cost an estimated $20,000 to $25,000 per robot based on 2014 reports.

It is unclear whether the potential American factory would incorporate robotic manufacturers alongside human employees.