Economic Development

Wisconsin's Massive Foxconn Boondoggle Is Getting Worse

The Taiwan-based tech company promised to open "innovation centers" in several cities around the state. But now those are on hold, too.

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It was always highly unlikely that Wisconsin's taxpayer-subsidized deal with Taiwan-based smart phone manufacturer Foxconn was going to fulfill the promises made by Foxconn and the state government. Now, it's worth wondering if the deal will live up to any of them.

Eighteen months after Foxconn bought a building in downtown Milwaukee that was supposed to be the first of several "innovation centers" to be built around the state, the building sits abandoned and empty, Wisconsin Public Radio reports. Other "innovation centers"—partnerships with local colleges and universities, each one supposed to create 100 to 200 high-tech jobs—planned for Green Bay, Madison, Eau Claire, and elsewhere also appear to be on hold.

The innovation centers were secondary to the main Foxconn facility that was supposed to be built in a Milwaukee suburb. But the problems with those other locations seem to reflect similar issues with the major project at the center of the multi-billion-dollar development that promised to create 13,000 jobs in total.

Kevin Vonck, development director for Foxconn's Green Bay site, tells WPR that the company is now "re-evaluating their strategy throughout the state." The Green Bay location, which was originally supposed to open in 2018, could open sometime in 2020, he says.

That's about par for the course. When former Wisconsin Gov. Scott Walker (R) agreed to give more than $3 billion in subsidies to Foxconn, he promised that "working families would reap the benefits." President Donald Trump, who flew to Wisconsin last June to participate in a ceremonial groundbreaking for the plant, said the project was an example of "reclaiming our country's proud manufacturing legacy."

Instead, it's been an excellent lesson in why such crony capitalist deals are a hugely expensive mistake. Foxconn is already failing on its other promises. While the company originally pledged to create 5,200 jobs by the end of 2020, Foxconn said earlier this year that the actual number would be about 1,000.

As TechCrunch has explained in detail, the problems with the Foxconn factory were not difficult to see. Building HD television screens—the main product the company was planning to produce at the Wisconsin facilities—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."

It's also worth noting that Foxconn has made these types of promises in other locales and then bailed. The company walked away from a plan to invest $5 billion and create 50,000 jobs in India, along with similar deals in Vietnam and Brazil. A planned manufacturing facility in Harrisburg, Pennsylvania, was supposed to employ 500 people, but it never materialized either.

Even if everything had worked out this time, the Foxconn subsidies are a bad deal for Wisconsin taxpayers. The state'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.

But everything isn't working out. Which is maybe a good thing, if it means the state can claw back some of those tax breaks. Unfortunately, it's already too late for the properties that were seized using eminent domain to clear space for the Foxconn complex.

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  1. Nothing today about Congresswoman Katie Hill having an affair with a female staffer, and nude photos online?

    Reason has abandoned all journalistic standards.

    1. You would think that for a magazine once renowned for upsetting the establishment in the name of weed, mexicans, and ass sex a story upsetting the establishment featuring bongs, lesbians, and iron crosses would be right up their alley.

      1. Tax breaks collapsing!

      2. To be fair to eric.. AOC was confused about subsidy vs tax break too.

      3. There are several bits of rhetorical sophistry.

        1. Letting someone keep money they themselves earned isn’t “subsidizing” them.

        2. Deburdening business isn’t a “loss” to the people that needs justification.

        3. Lowering taxes on future earnings that won’t even be earned anywhere near that state but for the lowered taxes isn’t a loss that must be justified.

        1. 3. Lowering taxes on future earnings that won’t even be earned anywhere near that state but for the lowered taxes isn’t a loss that must be justified.

          3.a. Losing out on the business that would’ve earned the money to afford the taxbreak is not a handout that need or even can be remunerated to the taxpayer.

          Moreover, pretending that it is is pretty directly indicating that the state of WI owes these people, who may not even live in WI, jobs.

          Walker: “If you can make $1,000,000 dollars in WI in the next year, instead of charging you $1K, I’ll only charge you $900.”
          Foxconn: “You’re on.”
          Boehm/Reason: “Foxconn isn’t going to make $1M in WI and Trump/Walker owe the people of WI $100 for the $1000 that they didn’t collect.”

    2. It’s only midmorning but I predict this is the stupidest comment I will read all day with its pathetic “whataboutism.”

    3. Those in office often surrender their better judgment as they go seeking jobs and economic growth at any cost. The idea of paying later for a hamburger today is very seductive for those in this state of mind. The article below explores some of the ways this impacts society.

      https://brucewilds.blogspot.com/2019/10/the-global-pastime-of-kicking-can-down.html

  2. middle of nowhere

    WTF? I routinely drive the stretch between Milwaukee and Chicago and if it’s the middle of nowhere, then I must’ve grown up on the surface of the moon. Also, apparently the surface of the moon still has multiple multiple big-3 automobile manufacturing facilities, international construction machinery plants, Amazon distribution centers, metal refineries, snack food production centers… all within about 30 min. of each other.

    1. Have you ever been to Racine? lol

      1. Have you ever been to Racine?

        Yeah, I worked in downtown Chicago with people who commuted daily from Racine. Parts of Racine County certainly are rural. My problem isn’t so much the fact that they consider Racine to be the middle of nowhere as much as the retardedness of needing a ‘dense ecosystem to make things hum’.

        1. Obviously you haven’t read everything about the Foxconn plant. Here is a reminder. The original plant was supposed to make the largest TV screens available. That is what they claimed to the state. The glass manufacturing plants are in Tennessee (I believe). They had no way to safely transport the glass to a plant in Wisconsin. They also couldn’t get Owen’s Corning (I believe) interested in locating a plant so far from the raw materials. Tell me also if rail service would be available in Racine. The original plans also required the plant floor to withstand the weight of the machines as well as have no movement. The contractors realized that the site plan soil structure would not work for the highly sensitive manufacturing plant originally sold to the state. Thus the much smaller plant under construction. So be offended that the Racine location isn’t what was needed for the type of plant originally sold to the state. That of course doesn’t even take in to account the large quantities of water needed for production.

          1. Tell me also if rail service would be available in Racine.

            You obviously haven’t lived in the Midwest/Great Lakes region. Kenosha and Milkwaukee are ports. Light or heavy rail? Union Pacific maintains two lines between Chicago and Milwaukee, you can see one from I-94 and the other from HW 32 (which runs right through Racine). Canada National has one just outside (still in Racine County).

            My understanding of what was sold to the state was intially 3,000 employees and *eventually* up to 13,000 employees. Between the past and the next decade, or two, it looks like Amazon will have done, piecemeal, what Foxconn proposed.

            Maybe, once again, it should be put this way: Whom do I believe to be more objective or authoritative about whether such a manufacturing plant could be built in/around Racine, Eric Boehm and Reason, or Foxconn? Not saying Foxconn *should* be believed at all costs, but when Foxconn says “workable location” and Boehm says, “Middle of nowhere” I’m inclined to think that Boehm’s never actually been to the middle of nowhere.

            1. Sorry, it’s a CPRS line, not CN.

            2. It’s the middle of nowhere for high tech manufacturing. Nobody gives a fuck about ports in Kenosha or Milwaukee since you can’t ship anything there from overseas, and there’s no real international airport. You can’t source LCD panel parts from 1960’s-era manufacturers and snack food suppliers. It may have worked in Texas, but no one else was dumb enough to commit that much money.

              1. Just like cars get shipped via rail from Tennessee and other inland states to ports, the same could have been done for Wisconsin.

                It’s more an indictment that Commifornia, Washington, and New York that are so prohibitively expensive for manufacturers that the businesses are looking for low tax and low cost inland states to build things.

              2. This is getting to be retarded. There are several international airports in and around Racine and I’m fairly certain that something considerably less than 100% of Foxconn’s products arrive on US shores by air and something considerably less than 100% arrive by sea.

                What your arguments essentially boil down to is that a) Foxconn doesn’t know what they’re doing and b) if a company can’t plunk down 13,000 employee facility tomorrow then nothing even approaching those can be done. It’s utter coastal elitist/sophist garbage.

                1. Foxconn knows exactly what they’re doing. You literally can’t compare Racine’s bullshit airport to a real international airport, and that’s what these companies look for. It was a huge requirement for Amazon for HQ2. No amount of subsidies can cover for the fact that you really do need a lot of suppliers in close proximity to make it work and Wisconsin doesn’t provide that. And I don’t and have never lived on either coast

                  1. Do you honestly think components are typically transported by air freight? Foxconn may know what they’re doing, but you sure as hell don’t.

                  2. You literally can’t compare Racine’s bullshit airport to a real international airport, and that’s what these companies look for. It was a huge requirement for Amazon for HQ2.

                    Corporate headquarters =/= assembly plant.

                    And I don’t and have never lived on either coast

                    You don’t have to live on the coast to adopt the ‘cosmopolitan’ bullshit ideology. See: Chicago, Austin.

                    Between the equivocation of this site and HQ2 and air vs. sea freight, you’re around the bend on this one.

  3. So did I miss the link to the story where the state officials are on trial for malfeasance?
    Or the story about how the performance bond was forfeit and the money is building new schools?
    Or the one where the Foxconn executives that signed the deal are in jail?

  4. Trump gloried in this, and it is FAILING!?!?!?

    All of my glorious illusions are crashing down!!! WHERE is Trump the Glorious Savior when we NEED Him?!?!

    (Will re-tripling and re-quadrupling our support of Trumpian trade wars pull our fat out of the fire perhaps?)

    1. Foxconn was Gov. Scott Walkers big idea and it cost him the election. I hope this news will do as much for Trump.

      1. Walker cracked down on unions and tried to cut bureaucrat jobs.

        That cost him the election.

        1. Cracking down on unions got Scott Walker re-elected the first time (2014). His popularity declined, however, when he got lost in the weeds of crony capitalism, not only with the Foxconn deal, but also by cutting $250 million from U Wisconsin (already hurting from several years of austerity) to build a football stadium.

          1. Yeah taking money from the Lefties that indoctrinate kids to put toward business that creates jobs is CrAzY.

            “Walker, who is currently running for the Republican nomination for President, is moving to eliminate tenure for professors at the University of Wisconsin, while at the same time implementing an enormous $250 million budget cut.”

            “On Wednesday, Walker signed a bill that would spend $250 million of taxpayers’ money to build the new arena.”
            a href=”https://www.forbes.com/sites/stevensalzberg/2015/08/14/scott-walker-takes-250-million-from-u-wisconsin-gives-250m-to-billionaire-sports-team-owners/#37fef00e674e”>Scott Walker Takes $250 Million From U. Wisconsin, Gives $250M To Billionaire Sports Team Owners

            So it would appear that the $250M is a Wisconsin owned investment in the arena. I could not tell for sure because the MSM refuses to actually provide all the details and let readers decide.

            Furthermore, I pay property taxes on various government bonds that were used to fund a new county jail and school upgrades.

            While state and local governments need massive cuts, Wisconsin investing $250M in a sport franchise is not the craziest thing government has done.

            I remember Wisconsin Lefty teachers protesting with their students and blocking access to the state capitol. I would say that Walker cutting Academia’s hold on education was more the reason for hating him.

            1. That University is my alma matter and it is a gold mine for Wisconsin. It trains some of the best student and produces ideas to help businesses across the spectrum. The Republicans love to dump on Madison but it is an economic engine in the state.

      2. Random state business deal is sure to bring him down. This is the final straw.

      3. You seem to be unaware that not only was Trump at the “groundbreaking”, but on his 2020 re-election website there is a list of his “accomplishments”. Foxconn is listed on there.

  5. I, for one, see absolutely no problem with domestic American jobs relying on the whims of a foreign government-run company.

    /sarc

    1. Oh, and what does it say about Michigan that they are struggling to attract the business of a Chinese government-run company?

      And another thing, what possible advantage could Foxconn get out of having any facilities in the U.S. at all? Economically speaking, there don’t appear to be any benefits whatsoever beyond the American business rules forcing them to.

      So really it doesn’t matter who’s side you take in this situation, they’re both wrong.

      1. The advantage to Foxconn having facilities in the U.S. is to be able to sell electronic stuff to the U.S. government which must have X% of content not built/assembled in China due to our government policies. Presently, it will also allow Foxconn to avoid big Trump tariffs.

        Really, the labor cost advantages of China build are not as substantial as %of total product cost as they used to be. The reason there is still so much advantage to China manufacturing is due to the huge supply chain investments already there from years of China state subsidies and U.S. corporate outsourcing policy.

      2. Michigan? You ain’t from around here.

        Why does Subaru, BMW, Toyota manufacture in the US.

        Both wrong how.

    2. The author even makes that point, albeit in a pretty limited way.


      Building HD television screens—the main product the company was planning to produce at the Wisconsin facilities—with relatively expensive American labor was always a major question mark

      Now extrapolate that into literally any other product you can imagine. Remind me, isn’t labor one of the biggest costs in almost any endeavor? And aren’t we currently automating labor here in the United States precisely because we don’t have that labor advantage? And isn’t that a self inflicted wound?

        1. True, it’s been said for years now that they’re ‘persuing’ automated labor but it never seems to hit the point where it becomes widespread.


          Chinese factory workers are now getting paid more than ever: Average hourly wages hit $3.60 last year, spiking 64 percent from 2011, according to market research firm Euromonitor.

          Big increases and interesting trend, but still likely far too cheap to really push for automation. That hasn’t stopped the communists from forcing solutions no one needs or wants before, but in those cases I wouldn’t credit market forces for those decisions.

          I suspect they mostly give it lip service to keep people off their backs for all their other major human rights problems. Even in the article you cite, which is a good one, notes that Chinese firms are just offshoring just like the U.S. did to them as wages rise. Automation, I feel, is a last resort for them much like how it was for us.

          1. China is caught in the middle income trap. They still have hundreds of millions of people in the interior along with hundreds of millions of essentially day laborers working on the east coast precariously. The more they capitalize the worse their employment situation gets. And their labor costs, capital controls, forced tech transfers, and tricks to lock out foreign competition have finally woken up many western businesses. China isn’t cheap any more, the west, especially the US, is automating ever more so labor becomes less and less a part of the cost of production, and China can’t move up the food chain because their entire system is crony capitalism. And then there’s demographics…

  6. Is this actually a thing? CNN says it is, so probably not.

    https://www.cnn.com/2019/10/24/opinions/trump-gives-putin-gift-open-skies-andelman/index.html

    An American withdrawal from the Open Skies treaty would give Putin more leeway to make forays into areas like eastern Ukraine, where he’d love to keep his actions concealed from western scrutiny.

    I would think satellites can see all the things. I don’t know, maybe planes are necessary sometimes. Beats me.

  7. “It was always highly unlikely that Wisconsin’s taxpayer-subsidized deal…”

    That’s all you need to know why this major fuck up occurred.

  8. I wonder if Drumpf was able to keep that shovel that accidentally fell in his little hands? If he did, maybe he can use it to shovel up all that shit he’s created since he took office!

    1. This also reminds me of a little casino back east somewhere that didn’t go very far.

    2. “…Drumpf…”

      Why to lefty fucking ignoramuses spend half their lives trying to proved they are as clever as the average 1st-grade kid?
      Wearenotperfect, fuck off and die where we can’t smell your remains.

      1. “Obummer?”

        Unfortunately, it isn’t a practice restricted to leftists. I’m generally of the right, but I cringed every time I saw this or something similar. People are not helping their cause with this.

  9. The local government officials should personally be fiscally liable for all this mess. Bankrupt them and their kids, and their kids kids, for this desaster.

  10. Trump said this about Foxconn in Wisconsin. “I want to wish you good luck and congratulations on the eighth wonder of the world,” Trump said, concluding his remarks. “Can we say it’s eighth wonder of the world? I think we can say that it’s the eighth wonder of the world.”

    Donald Trump is the first wonder of the world.

    1. You people have such TDS you cheer on every economic failure yet excuse away any success. Lol.

        1. You other people don’t have nearly enough TDS so you people have to do extra syndroming to make up for the slackness in you people.

          1. “You other people don’t have nearly enough TDS so you people have to do extra syndroming to make up for the slackness in you people.”

            Congratulations! You have proven you can yet lower the bar for idiocy:
            mtrueman|8.30.17 @ 1:42PM|#
            “Spouting nonsense is an end in itself.”

            1. Looks like you are also suffering from a lack of TDS. Try toadying up to another politician for a change.

      1. I know, right?
        How dare Echospinner accurately quote Trump!
        He just must have TDS!

      2. +100 JesseAz

  11. The Green Bay location, which was originally supposed to open in 2018, could open sometime in 2020, he says.

    It *could* open as early as next week. Or it *could* never open.

  12. I think I know where the name came from for that company: the “Fox ” part is them…. they are the fox that searches out gullible hens. Then comes the conn part…. they conn those gullible hens into invigint the Fox over for supper on the promise that EVERYONIE (remaining) will have a great time.

    WHY do state (or Fed, for that matter) think they are burdened with the task of creating private enterprise? Gummit have NO BIDNISS in BIDNISS. Dat ain’ whut dey foe.

    Government are to protect the rights of individuals who, their rights being secure, will venture to invest in business.

    1. “WHY do state (or Fed, for that matter) think they are burdened with the task of creating private enterprise? ”

      It’s because most voters love this crap. The politicians are wrong as a matter of principle, but they are not irrational.

      1. Many voters think that innovation areas require massive government intervention to be created.

        Silicon Valley grew out of orchards for hundreds of reasons and most of those reasons were private investment.

  13. Walker has been NOT governor for almost a year. Lefties always need to blame others for their failures.

    1. You’re right, it’s surprising that you would call out Drumpf, the bigliest Lefty, on all his failures.

      1. “…Drumpf…”

        Why to lefty fucking ignoramuses spend half their lives trying to proved they are as clever as the average 1st-grade kid?
        Wearenotperfect, fuck off and die where we can’t smell your remains.

    2. The reason for blaming Walker is that this was a failure from the start. He promised Foxconn far too money and offered far too many concessions. He was also warned that Foxconn would likely do this sort of thing and he ignored that advice. Scott Walker lost the election but he parachuted into a job heading a youth group. If the average Joe had screwed up like this he would now be taking orders for burger at a fast food restaurant.

      1. Walker got various Wisconsin governments to offer Foxconn tax breaks based on earnings.

        I will continue to expose the cash subsidy lie as long as hacks like Eric Boehm continue to lie on print.

        Funny how Lefties never say when the economy stops belonging to former politicians. I don’t know about y’all but I love President Reagan’s booming economy in 2019.

        1. Just as I love President Obama’s booming economy of the 2019.

          1. And W. Bush’s booming economy of 2020.

    3. The cognitive dissonance in this comment is absolutely stunning. What people will say to bend over backwards (or forwards if you think about it) to absolve conservatives of this is just, again, stunning.

  14. 191025 reason.com 2019 10 24 /wisconsins-massive-foxconn-boondoggle-is-getting-worse

    all these activities should be classed as the criminal activity frauds they are; or,

    when they fail = do not produce the offset benefits at real $$$ value, the public and private employees : the principle private owners and manipulators and their businesses pay for all costs – losses with the interest at on the unpaid balance at college loan rates – like college loans such debts would be perpetual and familial until paid in full.

    using taxpayer $$$ to bribe company’s to locate / stay in your governmental area should be felony fraud by ‘Krony ‘Kapitalist theft – felony gross negligence – each of which [and all related criminal charges] being violation[s] of the oath of office.

    the pretense that such economic development frauds work is its’ self is a pretense of color of authority to act for local economic development fraud.

  15. I think its fair to characterize opening innovation centers as “going full Orwellian”

  16. it’s Tax “CREDITS” stop being taken in by a left-wing site such as Verge. no subsidies . and our new incompetent ex superintendent of Education( see how well he did that job) is now the Governor (Ever’s)who told Foxconn in April he wanted to redo the contract. duh! I’d slow down construction too, if not trim all back. they had purchased and were building significant properties thru out the state Until Ever’s opened his idiotic Business Ignorant mouth.

  17. I appreciate the comments. Without them I would have been left with a lot of inaccurate impressions from Boehm’s article.

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