Today's Top Supply Chain and Logistics News From WSJ

By Paul Page Features Dow Jones Newswires

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Electronics supply chains in the U.S. are about to get a big boost. Taiwan's Foxconn Technology Group is preparing to decide on seven states where it plans to spend some $10 billion to expand its contract manufacturing operations, the WSJ's Yoko Kubota reports, moves that will draw in Foxconn's sprawling network of suppliers and parts distribution. Foxconn's U.S. ambition comes amid a flurry of U.S. investments announced by Asian companies as President Donald Trump seeks to stimulate American manufacturing. Terry Gou, chairman of the company formally known as Hon Hai Precision Industry Co., says the company will build out supply chains, a big boost for transportation and logistics providers in an industrial economy that's lost some of its might in recent decades. Manufacturing reached a low of 11.6% of the U.S. economy in the last quarter of 2016, and the electronics industry has taken a growing share of the factory output.

Foxconn isn't the only Asian electronics giant building up in the U.S. Samsung Electronics Co. is in late-stage discussions to invest about $300 million to expand its U.S. production at a South Carolina factory, the WSJ's Timothy W. Martin reports, and would take over a site that Caterpillar Inc. is leaving. The decision is a boost for the Port of Charleston, which is about 150 miles away, and would draw in parts distribution as well as potential exports from the home appliances Samsung plans to produce. Samsung rival LG Electronics also plans to build a washing machine factory in Tennessee, its first major U.S. plant. Both companies are making a calculation that reining back logistics and shipping costs by producing appliances close to U.S. customers will more than offset potentially higher labor costs. More manufacturers may come to that conclusion if the new investments from Asia pay off.

While Asian manufacturers go west, a Silicon Valley icon is looking toward starting factory work in China. Tesla Inc. says it is exploring with government officials in Shanghai opening a facility to build electric vehicles, and the WSJ's Tim Higgins and Trefor Moss report the auto maker would make its signature cars there for the Chinese market while most of Tesla's production would remain in the U.S. Tesla Chief Executive Elon Musk has said that making its vehicles in China would help cut prices for the vehicles by a third by reducing shipping costs and avoiding import duties. China production would bring new complications for Tesla's supply chain, however, adding tough questions for a business that has struggled at times to ramp up production in line with sales. China's regulations require vehicle components be sourced locally, pushing batteries from Tesla's big Nevada "gigafactory" out of the picture.

SUPPLY CHAIN STRATEGIES

The Arab states embargo on trade with Qatar is triggering a business boom for logistics companies in Turkey. Transport demand through the Turkish capital of Ankara is already soaring, and several Saudi Arabian companies are finalizing plans with Turkish logistics companies to ship cargoes through the country to Qatar. The blossoming trade is a vivid illustration of how business and profits are moving ahead, the WSJ's Yeliz Candemir writes, even as diplomatic relations in the region remain fractured. Teksan Lojistik, one of Turkey's largest logistics companies, says its orders have jumped 110% since the political crisis erupted on June 5. The company's big problem is capacity to haul the tonnage that prospective Saudi customers want to ship. Turkey says that 105 cargo planes have delivered goods to Qatar so far, a boon for the country as it looks for new trade opportunities amid deteriorating relations with European allies.

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QUOTABLE

IN OTHER NEWS

The U.S. Department of Agriculture suspended imports of fresh beef from Brazil, citing recurring safety concerns. (WSJ)

U.S. shale crude oil output is expected to hit a record high next month. (WSJ)

The U.S. index of leading economic indicators climbed 0.3% in May. (MarketWatch)

The number of U.S. unemployment claims drawn by workers for longer than a week rose for the third straight week. (WSJ)

AM General is selling a vehicle assembly plant in Indiana that used to build Hummer H2 SUVs to SF Motors, a China-backed company aiming to make electric cars. (WSJ)

Apple Inc. supplier Imagination Technologies Group is putting itself up for sale following a patent dispute between the companies. (WSJ)

State-owned Qatar Airways is seeking an equity stake of as much as 10% in American Airlines Group Inc. (WSJ)

Boeing Co. BA far outpaced Airbus SE for jet orders at a Paris Air Show marked by high demand for passenger planes. (WSJ)

Sears Canada Inc. filed for bankruptcy protection, saying it will close a quarter of stores and lay off roughly 2,900 employees. (WSJ)

Mississippi regulators want a long-delayed Southern Co. power plant to run on natural gas rather than "clean coal" technology. (WSJ)

Argentina's economy grew 0.3% in the first quarter, far behind government expectations. (WSJ)

South Africa's antitrust regulators rejected the proposed merger of Japan's three large container lines due to take effect July 1. (Journal of Commerce)

Former third-party distributors for Kellogg Co. say they are considering legal action after the company terminated their agreements under a supply chain overhaul. (Supply Chain Dive)

Container line Hamburg Süd is upgrading its refrigerated shipping capabilities to meet growing global demand for pharmaceutical shipping. (Port Technology)

Chinese e-commerce company JD.com invested $397 million in luxury goods marketplace Farfetch. (TechCrunch)

A measure of orders to British manufacturers reached its highest level in 29 years. (The Guardian)

Trucker Averitt Express Inc. is offering shippers storage in leftover space at the carrier's freight terminals in a bid for more e-commerce business. (DC Velocity)

JD.com and Japan's Mitsubishi Chemical Holdings will work together to raise vegetables in high-tech hothouses for fresh deliveries to consumers in China. (Nikkei Asian Review)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin , @jensmithWSJ and @EEPhillips_WSJ. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

Write to Paul Page at paul.page@wsj.com

(END) Dow Jones Newswires

June 23, 2017 06:30 ET (10:30 GMT)