Foxconn, which manufactures products for Apple as well as other vendors, is investing $500 million (R$1 billion) to open a new plant in the state of São Paulo, creating 10,000 new jobs. “The new facility consolidates the company’s intention to invest heavily in the Brazilian market. Brazil has an enormous potential to grow, and it has been an excellent partner of Foxconn on deploying its global investment plan and strategy,” said Henry Cheng, Foxconn’s president for Brazil.
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Cheng spoke during the signing ceremony for the memorandum of understanding between Foxconn, the state government of São Paulo and Investe São Paulo, an agency that promotes investment in the state and the competitiveness of São Paulo’s economy.
This is the sixth manufacturing plant in São Paulo and the ninth in Brazil.
The new plant is different from other facilities that Foxconn already has in the country because it will build electronic components, instead of just buying them from outside suppliers. Foxconn is an ODM, an original design manufacturer, meaning that it uses a design from another company to make products.
The Taiwanese firm did not reveal which companies the plant will serve nor which devices will be produced in the newest facility. The company’s Jundiai plant produces Apple’s iPads and iPhones.
Foxconn dominates tablet manufacturing. Nine out of ten tablets shipped this year will be made by contract laborers, according to IHS iSuppli, with China’s Hon Hai (also known as Foxconn) the biggest producer.
The new industrial park will be located in a 1.4 million-square-meter area, recently purchased in the city of Itu, an emerging manufacturing hub that lies 100 kilometers outside the capital city. Itu is also the location of a new $30 million Lenovo plant, which will be completed by the end of the year. “We expect the city of Itu to become a technological park and attract several companies to install their plants there,” said Luciano Almeida, president of Investe São Paulo.
Although the official production start date is set for the first half of 2014, during yesterday’s São Paulo press conference, executives said they expect to begin operations by the end of 2013.
In some of its locations, Foxconn has a bad reputation, with employees complaining of exhausting workloads, humiliating discipline and cramped dormitories. But when asked how the government would oversee working conditions, Almeida said that since Foxconn started its operations in the country [in 2005] there have been no complaints. “They have always complied with labor laws and our regulations. We are not worried about this because we have never had problems with Foxconn,” Almeida told RCR Wireless News.
However, last May, Foxconn employees from the Jundiaà facility threatened to strike because of poor working conditions, but they later abandoned the effort, when they determined that Foxconn was trying to fix the problems including inadequate water, cafeteria facilities and transportation.
The new industrial plant in Itu is the result of three years of planning and negotiations between the Brazilian government and Foxconn leaders. “Throughout this time, the government has been very supportive of Foxconn, and we expect to have a good partnership for many years,” said Cheng.
The plan to install the new facility was nicknamed “Big Dragon” and started last February 2010. More details may be released by October 26, when Foxconn’s global CEO is expected to visit Brazil. Foxconn PR did not confirm the upcoming visit.
However, investment in the new plant is not related to the previously announced U.S.$12 billion investment expected over the next six years for a factory producing TFT (thin film transistor) LCD displays. Almeida told media members that there are no immediate plans to pursue the possibility of a local TFT factory.
