Wisconsin's Overhyped Foxconn Deal Keeps Getting Lamer By The Week
from the pray-I-don't-alter-the-deal-further dept
Last year, you probably recall that former Wisconsin Governor Scott Walker signed a “revolutionary” deal: the state promised Taiwan-based Foxconn a $3 billion state subsidy if the company invested $10 billion in a Wisconsin plant that would create 13,000 jobs. Walker hoped the deal would finally help cement job growth that he had been promising supporters for years, and the press was quick to hype the plan without really focusing too much on the math, or Foxconn’s history of not really living up to similar promises in countries like Vietnam, India, and Brazil.
Quietly buried under the blistering hype (greatly fueled by the Trump administration), groups like Wisconsin?s non-partisan Legislative Fiscal Bureau began to point out that it would take until 2043 for taxpayers to recoup the subsidy. And as the finer details of the plan began to emerge late last year, the $3 billion subsidy quickly ballooned to $4.1 billion, leading some to point out that the math no longer made sense at all and, with an unemployment rate of 3.2% and a $100,000 per job subsidy, it was technically impossible for the massive subsidy to ever be repaid (in jobs, walnuts, or anything else).
Worse, as the project moved along and subsidies ballooned, the scale of the project began to shrink. An excellent report at The Verge last October noted how the original plan for a 20 million square foot factory that would build 10-foot by 11-foot panels for 75-inch TV screens, slowly shrunk to a Generation 6 plant that only produces 5-foot by 6-foot glass panels, and with original plans for $10 billion worth of investment (Foxconn’s original promise) also shrinking to a $2.5 billion investment. Walkers response to the dubious deal was, it should be noted, that critics should “suck lemons”:
“There?s a whole lot of people out there scrambling to try and come up with a reason not to like this,? he said in July of last year. ?They can go suck lemons. The rest of us are going to cheer and figure out how we are going to get this thing going forward.? Several weeks later, he called the deal a ?once-in-a-lifetime opportunity? that will be ?transformational? for the state. ?These LCD displays will be made in America for the very first time, right here in the state of Wisconsin.”
About that. This week, a Reuters report revealed that the original plan for a massive factory bringing 13,000 jobs to the region had changed yet again. Now, Foxconn executives claim, there will be no factory or manufacturing jobs at all. While Wisconsin might get an engineering office, even that doesn’t sound all that certain according to Foxconn executives:
“Now, those plans may be scaled back or even shelved, Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters. He said the company was still evaluating options for Wisconsin, but cited the steep cost of making advanced TV screens in the United States, where labor expenses are comparatively high.
?In terms of TV, we have no place in the U.S.,? he said in an interview. ?We can?t compete.”
Rather than a focus on LCD manufacturing, Foxconn wants to create a “technology hub” in Wisconsin that would largely consist of research facilities along with packaging and assembly operations, Woo said. It would also produce specialized tech products for industrial, healthcare, and professional applications, he added.
?In Wisconsin we?re not building a factory. You can?t use a factory to view our Wisconsin investment,? Woo said.
And instead of the 5,200 new jobs that were supposed to arrive before the end of 2020, the Reuters report is now saying those numbers will be closer to 1,000. Maybe? Who knows. Given its expertise in this subject, it’s hard to believe Foxconn didn’t realize all of this from the start, since the market hasn’t magically shifted in just a year or two. Also keep in mind that while the project shrinks, taxpayer money has already been spent preparing for the factory’s construction, including the demolition of some homes previously on the target site.
Given the incredible shrinking nature of this project it’s also unclear (especially if you’ve listened to the excellent Reply All podcast on this subject) why anybody would believe anything being said now about this ever-devolving boondoggle.