Wisconsin

Foxconn Is 'Not Building a Factory' in Wisconsin Despite Billions in Taxpayer Subsidies

Foxconn is reconsidering its plans to build a manufacturing facility that was supposed to create 13,000 blue collar jobs.

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Brian Cassella/TNS/Newscom

Wisconsin promised more than $3 billion in subsidies to Foxconn, a Taiwan-based manufacturer of smart phone parts, to lure the tech giant to suburban Milwaukee. Former Republican Gov. Scott Walker promised that "working families would reap the benefits" of the giveaway, and President Donald Trump flew to Wisconsin last June to participate in a ceremonial groundbreaking for the plant. The project was an example of "reclaiming our country's proud manufacturing legacy," Trump said.

Now? There may not be a Foxconn factory built in Wisconsin at all.

"In Wisconsin we're not building a factory," Louis Woo, a high ranking assistant to Terry Gou, Foxconn's chairman, tells Reuters. Instead of a manufacturing facility that was supposed to create 13,000 blue collar jobs, Foxconn is reconsidering its plans and is likely to turn the Wisconsin facility into a "technology hub" that would include research facilities and the production of specialized tech products. The jobs created are likely to be "knowledge" positions—in other words, not blue collar jobs—Woo tells Reuters. That's something Foxconn had already acknowledged was likely in November when The Wall Street Journal reported that the company was planning to import workers from Taiwan and China to meet its hiring goals in Wisconsin.

Foxconn is already lagging well behind its job-creation promises. While the company originally promised to create 5,200 jobs by the end of 2020, Foxconn said earlier this month that the actual number would be about 1,000.

Woo says that Foxconn is shifting its strategy because the company can't make television screens in the U.S. and remain competitive in the global marketplace. But if that's true now, then it was certainly true a few years ago when the company was making promises to Walker's government—and when Walker was promising that "LCD displays will be made in America for the very first time, right here in the state of Wisconsin."

As TechCrunch explains, the problems with the Foxconn factory were not difficult to see. Building television screens with relatively expensive American labor was always a major question mark, and it was never clear how Foxconn planned to operate a huge manufacturing center "in what was essentially the middle of nowhere, without the sort of dense ecosystem of suppliers and sub-suppliers required for making a major factory hum."

There were plenty of warning signs that Foxconn would have trouble following through with those promises. Foxconn previously walked away from a plan to invest $5 billion and create 50,000 jobs in India, and similar deals in Vietnam and Brazil. Even in America, there was evidence that Foxconn should not be trusted to make good. A planned manufacturing facility in Harrisburg, Pennsylvania, was supposed to employ 500 people and come with a $30 million investment, but it never materialized.

Even if everything had worked out, the Foxconn giveaway was a bad idea. Wisconsin's Legislative Fiscal Bureau, a number-crunching agency similar to the federal Congressional Budget Office, calculated that it would take the state until 2043 to recoup the $3 billion handout, which was the largest such subsidy in Wisconsin history. Even if all 13,000 promised jobs went to Wisconsinites, the tab would be more than $230,000 per job created.

Another lousy part of the deal is the fact that eminent domain will be used to remove residents of Mt. Pleasant, Wisconsin, where the new facility is to be built. As Reason has previously reported, Foxconn will receive more than 1,000 acres of land for free, the logic being that the subsequent increase in land value will pay for itself eventually in the form of higher property taxes.

It was always pretty unlikely that the Foxconn deal with live up to the promises made by the company, Walker, and Trump. That it is failing so spectacularly, and so early, should serve as a stern warning to the next politician who considers a similar scheme.

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51 responses to “Foxconn Is 'Not Building a Factory' in Wisconsin Despite Billions in Taxpayer Subsidies

  1. I wonder how Walker feels about this since this cronyist deal may have helped cost him the last election. Was it worth it?

    1. Surely the new guy is against it and will try to kill it. Right?

      1. He won’t need to. I live in Wisconsin and everyone here with a brain in their head knew this was a boondoggle from day one. Wisconsin pledged all kinds of money for the company and infrastructure with no guarantees it would ever create a single job. Even if it did, where they are building it would have benefited Illinois more than Wisconsin. Right on the border, the company did not want to pay Illinois ridiculous taxes, but wanted her workers.

    2. Start working at home with Google! It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6474 this – 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go to tech tab for work detail.
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    3. Any Republican engaging in these schemes taxing existing businesses to subsidize another (and often a competitor) show they aren’t fiscal conservatives, and are engaging in cronyism.

      The article would have been better, had it spelled out what the government has already given Foxconn, and what it might get back, if anything, for Foxconn not following through. You’d think they’d be clawing back that money like the way the Feds do for overpayments of Social Security, but I’ll bet that isn’t happening and they money’s gone into the hands of Foxconn shareholders.

  2. Foxconn Is ‘Not Building a Factory’ in Wisconsin Despite Billions in Taxpayer Subsidies

    No information on the reason being Scott Walker got voted out and Lefties have taken over, which will inevitably lead to higher taxes in that state?

    Oh Boehm, still with the shitty writing?

    1. Further proof of why businesses shouldn’t get in bed with politicians: you never know when their opponent will get elected.

    2. “No information on the reason being Scott Walker got voted out and Lefties have taken over, which will inevitably lead to higher taxes in that state?”

      Because Foxconn assumed that Scott Walker would always be governor? I know they are from Korea and might not know all the ins and outs of our political system, but I hope they knew that the governorship isn’t a lifetime appointment.

    3. You have one governor, and a Republican senate and Assembly that can override everything and anything he wants to do. No one has taken over, at least not yet.

    4. Way to polish that turd!!

      1. Moo cow. I haven’t seen that troll in weeks.

  3. Even if everything had worked out, the Foxconn giveaway was a bad idea. Wisconsin’s Legislative Fiscal Bureau, a number-crunching agency similar to the federal Congressional Budget Office, calculated that it would take the state until 2043 to recoup the $3 billion handout, which was the largest such subsidy in Wisconsin history. Even if all 13,000 promised jobs went to Wisconsinites, the tab would be more than $230,000 per job created.

    Funny, how none of the Lefty media will actually say what the Wisconsin subsidy consists of. Is it tax breaks or cash or some amount of both?

    Tax breaks cost the state nothing, since if the company was not there, they get shit in taxes anyway. Cash is a different story as that is taken directly from the state coffers to a company.

    1. Wait, what about the ‘government services’ consumed by the company’s employees and the company itself? Surely its only fair that they pay ‘their fair share’.

      1. There were huge infrastructure outlays for water and highways.

    2. The original deal was for the state government to pay $2.58B in cash to Foxconn over 15 years if Foxconn met certain job creation targets. These were not tax rebates – manufacturing companies in Wisconsin do not pay taxes to the state. The biggest part of extra spending committed since the original deal was in the form of about $800M in tax breaks from the county.

      1. Cool info. Link?

        1. How would the Wisconsin Foxconn deal work? Here are some answers
          Wisconsin manufacturing and agriculture tax credit

          Notes:

          – The direct payments were to total $2.85B, not $2.58B,
          – There were also sales tax exemptions on construction materials projected to amount to about $150M.
          – I was wrong to claim that Wisconsin manufacturing companies pay no income taxes to the state. Instead, they pay almost none – 0.4% rather than 7.9%.

    3. “Tax breaks cost the state nothing, since if the company was not there, they get shit in taxes anyway.”

      Bingo.

      The law ties most of the tax breaks to Foxconn’s hiring and pay scale. They have not received those breaks, and they will not receive them if L. Woo is telling the truth.

      @Liberty Lover: “I live in Wisconsin and everyone here with a brain in their head knew this was a boondoggle from day one.”

      Sure, but at least the state gets to withhold the money in that case. Walker might even have returned some of it to taxpayers. Contrast that with education spending, which is never tied to concrete outcomes like employment, income or productivity growth, and often motivated by nostalgic fantasies.

      A better example of a subsidy for an uncompetitive skill is requiring STEM students at public universities to spend months or years on algorithms that are neither generalizable nor challenging, and have been simple to automate since the first formula translator was developed in 1957. Some of those algorithms aren’t even used ‘under the hood’ anymore because they were only accurate in idealized situations (like pure torsion on a cylindrical bar with isotropic mechanical properties). Now you use FEA.

      That boondoggle costs more in a single year than the Foxconn subsidy would have cost in a decade and a half.

  4. “Foxconn previously walked away from a plan to invest $5 billion and create 50,000 jobs in India, and similar deals in Vietnam and Brazil.”

    Foxconn is a contract manufacturer for consumer electronics, which puts them square in the middle of the mother of all cyclical industries. Their plans changing over a period of years is unremarkable. If their plans didn’t change after Apple guided towards disappointing iPhone sales in China (over the last few weeks), that would be amazingly stupid.

    I don’t begrudge anyone a tax cut, and if the taxpayers of Minnesota continue to support the politicians who gave all those incentives away, that’s their business.

    That being said, cyclical industry players changing plans as market conditions change shouldn’t be condemned. One of the great reasons to have industry make decisions about our economy rather than politicians is because politicians are so stupid, they’ll actually strive to keep their promises even after changing market conditions have made keeping those promises a stupid thing to do.

    Meanwhile, Foxconn is walking away from similar deals in Brazil, India, and Vietnam, too? Sounds like it’s more about the global slowdown more than anything else.

  5. “Tax breaks cost the state nothing, ”

    True that no less revenue is raised, but how about all the extra government services – roads, police, fire, schools, water, electric lines, etc – that must be supplied? Others get saddled with higher taxes or lower service levels. Not too different from immigrants who don’t pay taxes.

  6. There were plenty of warning signs that Foxconn would have trouble following through with those promises. Foxconn previously walked away from a plan to invest $5 billion and create 50,000 jobs in India, and similar deals in Vietnam and Brazil. Even in America, there was evidence that Foxconn should not be trusted to make good. A planned manufacturing facility in Harrisburg, Pennsylvania, was supposed to employ 500 people and come with a $30 million investment, but it never materialized.

    Maybe you shouldn’t trust a company with “con” right there in the company name?

    It was always pretty unlikely that the Foxconn deal with live up to the promises made by the company, Walker, and Trump. That it is failing so spectacularly, and so early, should serve as a stern warning to the next politician who considers a similar scheme.

    It should, but it won’t.

    1. Well I don’t trust CON-gress either and the “con” comes at the beginning and not the end!

      1. Indeed. Kind of like this……..

        https://tinyurl.com/yb2nvm9v

  7. That it is failing so spectacularly, and so early, should serve as a stern warning to the next politician who considers a similar scheme. /sarc

    FTFY

  8. But does Foxconn get those billions if they don’t build the plant and do the other things that got them that promise?

    1. It’s hard to say if we don’t know what kinds of subsidies they got.

      I’m betting it was a mix of cash and tax breaks. Whatever cash was paid out is gone for sure.

    2. Fake News. They’ve received no subsidies and wont receive any unless they meet established employment goals. Here’s a local journalist much more accurate story on the situation.

      https://www.racinecountyeye.com

      1. Thanks. Figures, the media skewed the facts to fit the agenda to destroy any success for Republicans.

        Boehm is a big fat liar…again. They ARE building FOXCONN facilities.

  9. the logic being that the subsequent increase in land value will pay for itself eventually in the form of higher property taxes

    , assuming, of course, the toxic clean-ups are kept to a minimum.

  10. because politicians heed stern warnings from authors now

  11. Scott Walker never really had any sense with regards to business (note he never really had a job outside government). He was always tied by money to older industries that were on the way out of existence. He resisted modern businesses because they were often associated with liberal Madison. The Foxconn deal was always iffy and put all Wisconsin’s resources into one facility. It was also located near the boarder and was as likely to create jobs in Illinois as it was to create Wisconsin jobs. The resources (tax incentives) given to Foxconn could easily have been spread over several smaller industries in other regions of the state and would likely have created as many jobs.

  12. and it was never clear how Foxconn planned to operate a huge manufacturing center “in what was essentially the middle of nowhere, without the sort of dense ecosystem of suppliers and sub-suppliers required for making a major factory hum”

    Gov. Walker and Pres. Trump — huge fans of :the middle of nowhere” — fell for it, which apparently is good enough for Foxconn.

    1. Hey faggot, how did all those ‘shovel ready jobs’ your boy Obama spent a billion dollars on work out?

  13. Wisconsin is a giant frozen block of cheese today.

    Let us consider those, myself included, caught in the polar vortex of the apocalypse.

    The ice lords have descended upon us. It is a three dog night.

    1. Agreed

    2. Are they chihuahuas?

      1. The chihuahua is a noble animal. Five pounds of pure courage.

        Chihuahua vs black bear

        https://tinyurl.com/y6ujolzb

        Labs and mutts here at casa del echo.

  14. Will Louis Woo be building the factory on the Ringworld instead?

  15. Headline should read:

    “Foxconn saves Wisconsin billions in moronic donations to Chinese mega-corporation”

    1. Amen

  16. Taiwanese company FOXCONN is building facilities. Propagandists at Reason shown to be liars….again.

  17. Wishful thinking and photo-ops are no match for comparative advantage. If Apple ever moves manufacturing back to the USA, it will be because robotics have advanced to the point where there’s essentially no human labor involved in making their products.

    -jcr

    1. If Apple doesn’t move manufacturing back to the developed world in the next few decades, it will be because East Asian and Subcontinental economies stopped growing and their wages stagnated. We’ll have a few very large wars in that case, and even people who agree with you won’t have much time for your snark.

    2. If Apple doesn’t move manufacturing back to the developed world in the next few decades, it will be because East Asian and Subcontinental economies stopped growing and their wages stagnated. We’ll have a few very large wars in that case, and even people who agree with you won’t have much time for your snark.

    3. If Apple doesn’t move manufacturing back to the developed world in the next few decades, it will be because East Asian and Subcontinental economies stopped growing and their wages stagnated. We’ll have a few very large wars in that case, and even people who agree with you won’t have much time for your snark.

      1. Can someone please delete the two duplicates? I got a gateway timeout error the first two times, and my post wasn’t visible when I navigated back to the article through Reason’s front page. It only showed up when I used the back button and refreshed the page.

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  20. Foxconn is backing off its promise to do something….color me shocked.

  21. Foxconn is backing off its promise to do something….color me shocked.

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