Foxconn Electronics may not be setting up shop in Brazil after all. The purported $12 billion deal is on shaky ground due to a breakdown in tax break negotiations and a lack of knowledgeable workforce.
Reuters has reported that the Brazilian government and the Tawain-based iPad manufacturer have not been able to finalize a deal to build and manufacture iPads to meet orders from Apple.
In April, Brazilian President, Dilma Rousseff announced that Foxconn would be building a plant there, touting this collaboration as proof that the country is growing economically.
The start date for manufacturing in Brazil was supposed to be July of 2011 and was then postponed to November. Based on information that sources told Reuters recently, the partnership may never happen. Brazilian officials are reported as saying that Foxconn is making “crazy demands” for tax breaks and other special treatment.
Brazil has had a hard time making its way into the manufacturing industry. The country is known for having high taxes. Also, there currently is not a big enough workforce with proper training to manufacture iPads. From Reuters:
If the project does fall through, it could become symbolic of Brazil’s struggle to meet high — and perhaps unrealistic — growth expectations this year. After expanding 7.5 percent last year, the economy is now forecast to grow just 3.5 percent in 2011, which could put it last in the BRICS group of large emerging markets, and near the bottom of Latin America.
Brazil may have bitten off more than it can chew with the largest tablet manufacturer in the world. According to Reuters, one official said, “We’re dealing with a lot of issues, like the (Taiwanese) trying to figure out how to do business in Brazil … and Brazil figuring out how to produce these complicated products,”