Foxconn may not build $10B Wisconsin plant Trump touted

[GMDino]

Got their tax breaks and money and then (almost completely) bailed.

https://www.nbcnews.com/business/business-news/foxconn-may-not-build-10b-wisconsin-plant-trump-touted-n964411

Quote:The 20-million square foot campus was praised by President Donald Trump as proof of his ability to revive American manufacturing.


President Donald Trump, Wisconsin Gov. Scott Walker, left, and Foxconn Chairman Terry Gou participate in a groundbreaking event for the new Foxconn facility in Mt. Pleasant, Wisconsin, on June 28, 2018.Evan Vucci / AP file




Foxconn is reconsidering plans to make advanced liquid crystal display panels at a $10 billion Wisconsin campus, and said it intends to hire mostly engineers and researchers rather than the manufacturing workforce the project originally promised.


Announced at a White House ceremony in 2017, the 20-million square foot campus marked the largest greenfield investment by a foreign-based company in U.S. history and was praised by President Donald Trump as proof of his ability to revive American manufacturing.

Foxconn, which received controversial state and local incentives for the project, initially planned to manufacture advanced large screen displays for TVs and other consumer and professional products at the facility, which is under construction. It later said it would build smaller LCD screens instead.


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."


When it comes to manufacturing advanced screens for TVs, he added: “If a certain size of display has more supply, whether from China or Japan or Taiwan, we have to change, too.”


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.


Earlier this month, Foxconn, a major supplier to Apple, reiterated its intention to create 13,000 jobs in Wisconsin, but said it had slowed its pace of hiring. The company initially said it expected to employ about 5,200 people by the end of 2020; a company source said that figure now looks likely to be closer to 1,000 workers.


It is unclear when the full 13,000 workers will be hired.


But Woo, in the interview, said about three-quarters of Foxconn's eventual jobs will be in R&D and design — what he described as "knowledge" positions — rather than blue-collar manufacturing jobs. Foxconn is formally known as Hon Hai Precision Industry Co.


Rather than manufacturing LCD panels in the United States, Woo said it would be more profitable to make them in greater China and Japan, ship them to Mexico for final assembly, and import the finished product to the United States.


He said that would represent a supply chain that fits with Foxconn's current "fluid, good business model."


Heavily criticized in some quarters, the Foxconn project was championed by former Wisconsin Governor Scott Walker, a Republican who helped secure around $4 billion in tax breaks and other incentives before leaving office. Critics of the deal, including a number of Democrats, called it a corporate giveaway that would never result in the promised manufacturing jobs and posed serious environmental risks.

The company’s own growth projections and employment goals suggest the taxpayer investment would take at least 25 years to recoup, according to budget think tank the Wisconsin Budget Project.

[*michaelsean*]

Not a fan of giving tax breaks to get companies to come. Forgetting whether it’s worth it, seems quite unfair to companies already there.

[GMDino]

"con" is appropriate.

https://www.bloomberg.com/news/features/2019-02-06/inside-wisconsin-s-disastrous-4-5-billion-deal-with-foxconn

[GMDino]

https://www.theverge.com/2019/4/12/18308083/foxconn-wisconsin-innovation-center-madison-controversy-empty-buildings

Quote:Foxconn says empty buildings in Wisconsin are not empty
While announcing another empty building




Well, here we are again.


Earlier this week, The Verge published a lengthy investigation into the many “innovation centers” Foxconn has announced in Wisconsin as part of its deal with President Trump to build a (status unknown) LCD manufacturing plant in the state. After spending 10 days on the ground, we simply reported the obvious: most of the “innovation centers” are empty, some of the buildings were never actually purchased, and no one in Wisconsin really seems to know what’s going on.


Today, Foxconn responded to that piece by... announcing another innovation center in Wisconsin, this one in Madison, the state’s capital. The building, which currently houses a bank, actually sits directly across the street from the Capitol building, and it will continue to house the bank because Foxconn did not announce when it would be moving in.


Here are some other things Foxconn did not announce: how much it had paid for the building, how many floors of the building it would occupy, how many people would work there, or what those people would be doing.


It did announce that it would be rebranding the building “Foxconn Place Madison,” however.
Anyway, here’s the big quote from Foxconn’s Alan Yeung in a good piece in the Wisconsin State Journal about the deal:

Quote:Yeung assured those in attendance at Monona Terrace that the Madison building will not be empty, eliciting nervous laughter from the crowd.

The announcement comes days after a news story published by The Verge raised questions on the progress of other “innovation centers” scattered across the state, finding some centers had stalled or contracts pulled.
Yeung said the article had “a lot of inaccuracies,” the the buildings are not empty and that the company would issue a correction soon. He discouraged people, such as reporters, from “climbing trees” to determine building
occupancy.

”We do have a plan and we actually will make sure the building is adequate and well-equipped before we move people in,” he said.

And more from Yeung, as reported in the Journal Sentinel:

Quote:“I appreciate you worrying about these empty buildings... I can assure you they are not empty... We don’t actually make an effort to acquire buildings to leave them empty. We do have a plan...

”So you will see a lot more coming in the next months, the next year or so,” Yeung said. “I can assure you it will not be empty and they’re not empty right now.”

So, first things first: no one climbed any trees to report on Foxconn’s innovation centers. Our reporter, Josh Dzieza, simply looked in the window and saw this:

Photo by Joshua Dzieza / The Verge




If that photo is inaccurate and that building is not, in fact, empty, Foxconn had ample opportunities to tell us because we repeatedly asked for comment, and Foxconn declined. Foxconn also declined to offer us anyone to interview. So if Foxconn wants to tell us what these inaccuracies are, they have our contact info, and we’re willing to listen.


More importantly, Foxconn has steadfastly refused to tell anyone in the world what its promised “AI 8K+5G ecosystem” is, which would be good to know, in general, as the state of Wisconsin has already spent hundreds of millions of taxpayer dollars on infrastructure, kicked people out of their homes, and earmarked up to $4.5 billion in tax breaks against building it. So, you know, anytime.

Foxconn did not respond to a request for comment.

[Belsnickel]

(01-30-2019, 08:47 PM)michaelsean Wrote: Not a fan of giving tax breaks to get companies to come. Forgetting whether it’s worth it, seems quite unfair to companies already there.

Yeah, it's a bad practice. It's not an equitable policy decision.

[GMDino]

https://www.greenwichtime.com/opinion/article/Trump-s-Foxconn-boondoggle-could-end-up-being-a-13901528.php

Quote:Since its 2017 unveiling, the Foxconn project has been beset by negative news. By the end of last year, the company had spent only 1% of the amount it had pledged to build the factory and had hired only about 10% of the employees it anticipated hiring by the end of the project's first year. In June 2018, the company announced it was downgrading the plant from a "Generation 10.5" facility to a "Generation 6 plant," which would produce smaller LCD panels. In January, the company announced it was scrapping the LCD portion of the factory altogether, but it quickly backtracked after a call from Trump.


In February, the company boldly announced it would be moving forward with construction of a factory, which is only notable because . . . the public believed that was the plan all along. This is like getting a random call from your wireless provider telling you your phone is definitely not going to burst into flames tomorrow. At that point, it might be time to worry.


In recent weeks, Wisconsin Gov. Tony Evers, a Democrat, has said he does not believe Foxconn will live up to its promise to create 13,000 new jobs and has sought changes to the contract with the state. Foxconn responded by saying it has "never wavered from our commitment to our contract with the State of Wisconsin and the creation of 13,000 jobs as part of our broader effort to make the Badger state a global technology hub."

However, while once thought to be a big electoral winner, the project could end up sinking Trump in Wisconsin, a state that he won in 2016 by a deli-thin margin of less than 23,000 votes.


As part of the Foxconn deal, the company was awarded $4 billion in government incentives to locate its plant in the city of Mount Pleasant, well beyond any package ever offered by a state to a foreign company. Foxconn supporters, who hoped the plant would have the transformational effect on the community that medical software giant Epic Systems has had on nearby Madison, argue that virtually the entire benefit being offered to the company is in the form of tax abatements; if the company doesn't produce the promised jobs and economic development, it won't reap the tax benefits it seeks.


Yet while the lion's share of the public subsidy is in the form of tax breaks on projected economic activity, real money is already being spent on the plant. The state has received $160 million in federal money to renovate Interstate 94 near the plant. Local governments have borrowed nearly $350 million for infrastructure improvements. About 75 houses have been bulldozed to make room for the expansive plant footprint.


Further questions remain about the competence of the administrators charged with managing the massive project. A recent state audit of the Wisconsin Economic Development Corporation, the department in charge of overseeing the Foxconn project, found that it had spent hundreds of thousands of dollars' worth of taxpayer funds on companies that created jobs in other states. Further, the WEDC failed to collect $400,000 in tax credits and more than $4 million in loans it could have recouped when employers didn't live up to the terms of their agreements with the state.


The idea of providing public subsidies for private businesses in Wisconsin certainly is not new. At one point, the state's Commerce Department represented a $190 million slush fund from which governors could hand out perks and incentives to businesses looking to soak taxpayers for handouts. In 2007, the Milwaukee Journal Sentinel analyzed 25 companies that had received more than $80 million in subsidies from the state and found that about 40% of the jobs those companies had promised never materialized.


It's possible that the Foxconn project will pull itself out of its negative public relations spiral, but it all depends on whether the Taiwanese are willing to live up to the terms of their agreement. Betting on the manufacturing plant's success is a fool's errand; only Gou knows whether he intends to see the massive project through.


The dangers of subsidizing a private corporation with the allure of public money were clear throughout the process. Subsidizing big businesses simply rewards unsustainable business practices, leaving taxpayers scouring their pockets for change to bail out companies. And predicting the market for technologies consumers would be purchasing years down the road is not something a deliberative government is typically equipped to handle.



It is yet to be seen whether Trump's association with Foxconn will become a liability. What we do know is that when he watches results on election night 2020, he almost certainly won't be doing so on an American-made Foxconn TV screen.