June 6, 2019 / 5:54 AM / 3 months ago

Exclusive: Foxconn plans management overhaul as Chairman Gou seeks Taiwan presidency - source

TAIPEI (Reuters) - Apple supplier Foxconn is planning to overhaul its management structure to get more senior executives involved in the running of its daily operations, a person with direct knowledge of the matter told Reuters.

A motorcyclist rides past the logo of Foxconn, the trading name of Hon Hai Precision Industry, in Taipei, Taiwan, March 30, 2018. REUTERS/Tyrone Siu/Files

The move to appoint a new “operations committee” comes as Chairman and Founder Terry Gou is seeking to run in Taiwan’s 2020 presidential election. He also told Reuters in April that he planned to step down from Foxconn to pave the way for younger talent to move up the ranks.

The overhaul will mark a major shift in Foxconn’s corporate leadership that has seen 68-year-old Gou hold a tight grip on the firm’s daily operations and strategic decisions.

“The good thing is it will no longer be a company ruled by one man and the decisions won’t be as dogmatic as they used to be,” the source said. “It will be a co-management model.”

Investors are keen for any insight into succession plans at the world’s largest contract manufacturer, whose business ranges from smartphone assembling to panel manufacturing, and what it means for plans laid out by Gou such as a $10 billion investment to create 13,000 jobs in Wisconsin and an $8.8 billion display factory in southern China.

Foxconn is already under the spotlight for having failed so far to meet job-creation targets in Wisconsin, a plan cited by U.S. President Donald Trump as proof he was reviving American manufacturing. Reuters reported on Wednesday that Foxconn has moved more than 150 U.S. jobs to Mexico.

Foxconn is set to reveal next week the new “operations committee” that will give senior executives from its units greater control, according to the person, who declined to be named as the news had not yet been made public.

The committee, which would be involved in running the daily operations of various Foxconn units - from Sharp Corp to Foxconn Interconnect Technology Ltd (FIH) - would include Sharp Chairman Tai Jeng-wu, Foxconn CFO Huang Chiu-lien, and FIH chairman Lu Sung-Ching, the source said.

Foxconn declined to comment until the conference on Tuesday.

A Sharp spokesman declined to comment, saying the firm does not comment on Foxconn or its management as Sharp and Foxconn are independent companies.

INVESTOR CONFERENCE

While the size of the new committee has not been finalised, an internal proposal is to include up to 10-11 senior executives from Foxconn units, the person said, adding the committee would report to Foxconn’s proposed new board.

Reuters reported in May that the firm’s chip unit boss, Liu Young, was poised to replace Gou as chairman.

The source said Gou will not sit on the committee. Foxconn has previously said Gou would be a member of the new board.

At Tuesday’s conference, Foxconn is also set to announce a plan to hold investor conferences regularly, a move the source said aims to address concerns about Gou’s approach to transparency, including a lack of precise detail on matters from investment decisions to succession plans.

“Foxconn plans to begin regular engagements with its investors, stakeholders, and the general public on areas of mutual interest,” the company said.

Foxconn Technology Group founder and chairman, Terry Gou, holds a cap with Taiwan and U.S. flags during a news conference in Taipei, Taiwan May 6, 2019. REUTERS/Tyrone Siu/Files

In the conference, to be led by Liu, Foxconn aims to address concerns about an escalating China-U.S. trade war, with plans to use its “globalised” production lines from Southeast Asia to India to cut its risks in China, the source said.

Foxconn will also pledge to use new technologies including 5G telecoms infrastructure and artificial intelligence to revamp its manufacturing capability, the person said.

Shares in Foxconn, formally known as Hon Hai Precision Industry, have dropped around 24% since Gou announced in April his plans to run for president. They closed up 0.1% on Thursday, versus a 0.5% decline in the broader market.

Reporting By Yimou Lee and Jeanny Kao, additional reporting by David Dolan in TOKYO; Editing by Anne Marie Roantree, Himani Sarkar and Stephen Coates

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