Try 1 month for 99¢
Walker and Trump break ground for Foxconn plant

President Donald Trump, flanked by Gov. Scott Walker, left, and Foxconn Technology Group CEO Terry Gou toss dirt June 28 during a ceremonial groundbreaking for the Foxconn facility in Mount Pleasant.

The future of Foxconn Technology Group’s $10 billion high-tech manufacturing campus in southeast Wisconsin was cast into uncertainty Wednesday after the company acknowledged the project was being “adjusted” in response to changing global economics.

The world’s leading electronics manufacturer said in a statement Wednesday that it remained committed to creating 13,000 jobs in the state, which it promised in exchange for more than $4 billion in state and local taxpayer-backed incentives.

Later in the day, the company said it plans in the next 18 months to construct several facilities, including a back-end packaging plant, high-precision molding factory, a system integration assembly facility, a conceptual product testing center and research-and-development data center.

But in an interview with Reuters, a company executive said the bulk of the jobs at the facility would be for white-collar research and engineering jobs, rather than the types of blue-collar manufacturing jobs President Donald Trump touted when he and former Gov. Scott Walker broke ground on the project last June.

“In terms of TV, we have no place in the U.S.,” Foxconn executive Louis Woo told Reuters in a story published Wednesday. “We can’t compete.”

Gov. Tony Evers’ top agency head said Wednesday the administration has been in regular contact with Foxconn, “however, we were surprised to learn about this development.”

Department of Administration Secretary-designee Joel Brennan said members of the administration contacted Foxconn leadership after reviewing the Reuters report and will continue to monitor the project.

Woo said the Taiwanese company wants to create a “technology hub” largely consisting of research facilities along with packaging and assembly operations. To that end, Foxconn has established a North American headquarters in Milwaukee and plans to create technology-focused innovation centers in Racine, Green Bay and Eau Claire.

Instead of manufacturing the TVs in the U.S., Woo told Reuters it would be more profitable to make them in China and Japan, assemble them in Mexico and import them to the U.S.

“In Wisconsin we’re not building a factory,” Woo told Reuters. “You can’t use a factory to view our Wisconsin investment.”

Foxconn chairman Terry Gou has previously said the company plans to replace 80 percent of its workers with robots in the next five to 10 years.

Woo said about three-quarters of the jobs created will be in research and development and design, rather than blue-collar manufacturing jobs.

Industry experts, however, still question whether it’s possible to maintain three-quarters research and development staff with a commitment to 13,000 jobs.

Robert O’Brien, co-founder and president of Display Supply Chain Consultants, said the possibility is doubtful.

“I’m not saying it’s not possible, I’m saying it seems pretty unlikely,” O’Brien said. “You’re talking about the staff of a major research university.”

O’Brien added the manufacturing facilities Foxconn claims it will build typically employ fewer workers and require less capital investment, especially if Foxconn doesn’t manufacture TV screens.

He also suggested Foxconn most likely can’t have it both ways: it either would need to build a research-intensive facility or a manufacturing plant — not both. But with the size of the factory, anything is possible, he added.

“The story doesn’t seem to mesh into a coherent picture with this notion that they’re looking at what looks like a back end of the original complex,” O’Brien said.

Either investment, if fulfilled, could still have a significant economic impact, he said. Knowledge workers are higher paid, having an impact on the surrounding economy.

Foxconn slow to hire

The development Wednesday comes after the Taiwanese manufacturer fell short of its job creation quota in 2018 and failed to qualify for any state tax incentives. The company in 2018 created 178 direct, full-time jobs, Woo wrote in a letter to Mark Hogan, CEO of the Wisconsin Economic Development Corp., which helped craft the tax incentive deal.

The 2018 jobs figure is short of the 260 full-time jobs minimally required under the state’s contract with the company, meaning Foxconn will not receive any tax incentives it could have qualified for this year.

The contract with Foxconn set a goal of 1,040 jobs for 2018 to be eligible for up to $9.5 million in job-creation tax credits. The company is still able to claim those tax credits in future years if it exceeds the jobs target for any verification period.

Hogan, in a statement Wednesday, emphasized the agency’s contract with Foxconn protects Wisconsin’s taxpayers and provides the Taiwanese manufacturer flexibility to make business decisions.

The 2018 jobs report isn’t the first time the company has received scrutiny. National media outlets have previously reported Foxconn has considered building smaller screens and making a lesser initial investment in Wisconsin, prompting critics — especially Democrats — to argue the economic development project was a bad deal for taxpayers. Foxconn at the time denied those reports.

Foxconn has promised jobs elsewhere that it failed to deliver on. In 2013, for example, Foxconn said it would invest $30 million to hire 500 workers for a new factory in central Pennsylvania, but the factory was never built. The company has also made commitments in Indonesia, India and Brazil, but has fallen short, according to the Washington Post.

An audit in December found WEDC had intended to award tax credits for employees who did not perform work in Wisconsin. A WEDC spokesman earlier this month said the agency had not planned to change that policy.

Evers on the campaign trail had been critical of both the Foxconn project and WEDC, which he had vowed to dissolve. He backtracked on that promise, saying he would not include any changes to the agency in his upcoming budget request.

Republican lawmakers have continued to champion WEDC, and in their December lame-duck session passed legislation barring Evers from appointing the agency’s CEO for nine months.

Evers has said he hopes for transparency and success for the project. Reuters reported Gou plans to meet with Evers later this year. An Evers spokeswoman has not confirmed the meeting.

Republicans blame Evers

Foxconn is eligible for nearly $1.5 billion in job creation credits through the year 2032. That doesn’t include capital investment tax credits, which Foxconn will be eligible for at the end of 2019. The company could receive up to $1.35 billion in such credits by the end of 2025 under the contract. In total, state tax incentives for capital investment and job creation amount to about $2.85 billion.

Foxconn has previously said it would invest up to $10 billion in Wisconsin, however, the figure was absent in its statement Wednesday.

Assembly Speaker Robin Vos, R-Rochester, and Senate Majority Leader Scott Fitzgerald, R-Juneau, in a statement Wednesday lauded Foxconn for its investment so far in the state, and blamed the changes on Evers.

They specifically cited Evers’ plan to scale back a manufacturing tax credit that virtually eliminates Foxconn’s state tax liability — a benefit that was not tabulated as part of the company’s deal with the state.

“The company is reacting to the wave of economic uncertainty that the new governor has brought with his administration,” Vos and Fitzgerald said in a joint statement.

Foxconn did not mention Evers in its statement, which comes as demand for iPhones and other smartphones Foxconn manufactures has declined. Woo told Reuters the company is re-evaluating in light of the high cost of labor in the U.S.

Meanwhile, Assembly Minority Leader Gordon Hintz, D-Oshkosh, who recently appointed himself to the WEDC board, took to social media to slam their argument, writing on Twitter “there is nothing more pathetic than legislative leaders responsible for selling taxpayers a bag of coal evading even a whiff of any responsibility and accountability.”

Vos and Fitzgerald emphasized the state’s contract with Foxconn protects taxpayers by not doling out tax credits to the company until it produces jobs.

Mount Pleasant and Racine County, however, have already spent money on infrastructure improvements and land acquisition.

According to the Milwaukee Journal Sentinel, they’ve so far borrowed $355 million and spent $190 million, mostly to buy land. Foxconn has contributed $60 million for the village to use. The newspaper reports the entire project will require about $912 million in local government spending, which officials say will be covered by additional property taxes generated by the development.

Foxconn’s contract requires it to provide enough money to cover local costs even if it undertakes a smaller investment.

In a statement, Village of Mount Pleasant President David DeGroot, Racine County Executive Jonathan Delagrave and Jenny Trick, executive director of the Racine County Economic Development Corporation, brushed off the Reuters report.

“Contrary to what was reported by Reuters, Foxconn reiterated to us, today, its commitment to building an advanced manufacturing operation in Wisconsin, in addition to its commitment to create 13,000 jobs and invest $10 billion in Racine County,” they said.

Subscribe to Breaking News

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.
0
1
3
0
10

(36) comments

capedcrusader

DMoney - Ever since Gov. Scott Walker was voted out of office, some Republicans have blamed his defeat on landslide losses in the Democratic bastions of Madison and Milwaukee, suggesting the rest of Wisconsin had little to do with toppling the two-term governor.
But a close study of local election returns — how people voted in town by town and city by city — tells a different story.
Sure enough, Walker had an urban problem in this election. But it was much bigger than a Milwaukee or Madison problem.
The governor’s undoing was a serious erosion of support in the state’s most populous places.
And by “populous,” we mean not just Wisconsin’s two biggest cities — but communities of any real size at all.
Compared with his victory in 2014, Walker’s performance declined significantly in cities of all stripes, sizes and regions, according to a detailed analysis of election data from the past two races for governor.
It happened in blue cities (Eau Claire), red cities (Brookfield) and purple cities (Green Bay).
It happened in affluent cities (Mequon) and blue-collar cities (West Allis).
It happened on the south side of Milwaukee County (Oak Creek); in the Waukesha County suburbs (New Berlin); in the Fox Valley (Appleton); in southern Wisconsin (Whitewater); in central Wisconsin (Stevens Point); in eastern Wisconsin (Port Washington); and in western Wisconsin (La Crosse).
Walker did worse in 2018 than he did in 2014 in all these cities. He won some and lost others. But in every case the margin between him and his opponent worsened by at least 10 percentage points.
Journal/Sentinal 12/22/18.

johnnybragatti

Dems supposedly thought it to be a horrible deal. Economic geniuses,from all over ,thought it a horrible deal. Walker has/had little or no economics education.
It shows bigly.

Cassandra2

It was a great deal for Foxconn and the republicans. It's just the taxpayers who got screwed.

The Mouse of Death

[censored]It would behoove the WEDC to provide the Foxy Cons with even more Wisconsin tax dollars because the WEDC is a public-private corruptership-partnership. We are bemezzled indeed by the gullibility of the Foxconned Believers like the Benedict Donald and the Scooter Scott and the Russiapublican Party.

DMoney

Do any of you actually believe that Foxconn is not building because of "global economic conditions"? Yes I'm sure the entire department of highly educated, trained and experienced economists employed by this multi-billion dollar corporation totally failed in their market predictions for the next few years (yeah right). This move is completely political. They don't want to lay their foundation in a state with this new leadership, and I don't blame them. The only organizations that will thrive under Evers are public enterprises. Walker tried to add major jobs--was very close--was extremely close to sealing the deal by getting re-elected but Madison and Milwaukee ended that.

crank

Several things I believe...

Walker lost the election to Evers partly because of this Foxconn deal.

We’re hearing this news from Foxconn yoday partly because Walker lost the election.

Foxconn was never going to turn out to be anything close to what was promised. LCD screens??? Really?

DMoney

Factually, Walker lost because our two biggest cities hated him and Republicans. Rest of state disagreed.

We're hearing this news mostly because Walker lost and evers is vocally anti tax credits for business. There's no other logical explanation.

crank

As I stated, part because of Evers and part because of changes in the global market for the products made by Foxconn.

"In the U.S., a $10 billion investment in display production in the state of Wisconsin has been suspended and scaled back as a result of negotiations with new Gov. Tony Evers, a Foxconn document obtained by Nikkei shows."

https://asia.nikkei.com/Economy/Trade-War/Foxconn-s-20bn-projects-in-US-and-China-hit-by-growth-fears

In other reports, Foxconn insists they haven't halted or scaled back anything.

Yet....

The same articel reads, "In a statement dated Jan. 19, Foxconn said it has invested over $200 million to date in Wisconsin but it will not receive tax breaks from the state government for 2018 after missing hiring requirements. "While Foxconn remains committed to creating 13,000 jobs in Wisconsin, we have adjusted our recruitment and hiring timeline," the company said."

martian2

oh Dmoney get real. Foxconn didn't pull a fast one because they were in love with Walker and he is now no longer in office. Corporations do business with all kinds of political leaders. They are expert in getting what they want and persuading gullible politicians. To say the foxconn move is purely political is laughable. Walker got hood winked and you just don't want to admit it.

DMoney

There's no other way to explain a complete about face. If you think they didn't know economic conditions and that's why they are stopping then you've never worked in business or private Enterprise in your life.

Cassandra2

And, as I predicted from the start, economics change constantly. They simply have no interest in risking any of their own capital when they can put taxpayers on the hook for it instead. When the crash comes, and it will, Foxconn will beat feet out of state, only to be replaced by some other company with its hand out, begging for money and promising jobs that will never materialize.

crank

A report I cited earlier... "In the U.S., a $10 billion investment in display production in the state of Wisconsin has been suspended and scaled back as a result of negotiations with new Gov. Tony Evers, a Foxconn document obtained by Nikkei shows."

johnnybragatti

The downside of electing a Gov. with no formal education, especially in economics.
Walker was quite irate, upon losing the recent election to Tony Evers,who has a PHD.
Walker is not so irate now., and is probably laughing.

Rick Czeczok

WHAT???????

Cassandra2

Pull the plug on this scam before it costs taxpayers another penny!

takka

Can you say BOONDOGGLE?? Recall all Republicans that supported this garbage.

DMoney

Yes, and I recall all the Democrats who called it horrible who now seem very disappointed.

capedcrusader

Like who?

DMoney

Almost every single one.

capedcrusader

"Almost every single one". Baloney.

madmen60

I had no doubts that Foxconn would default on its "contract" with the state. I think that the Walker administration was horribly naive in its dealings with Foxconn.

crank

Agreed, though naive isn't the word I would use. I think all involved knew very well the deal would turn out to be 'all sizzle with no steak'.

Re: politicians
When they say, "It will only cost this much.", double it.
When they say, "It will save this much.", it won't.
When they say, "It's guaranteed.", it isn't.
When they say, "I promise.", worthless even if they put it in writing.

PhysicsIsFun

Your comment would be more to the point if you changed the pronoun "they" to the proper noun Republicans.

Rick Czeczok

Still trying to prove to everyone how much smarter you are then anyone else. I bet your students really respected you for that.

crank

No, "politicians" is the word I intended.

"Naive" is a word I would use to describe your comment, however. Alternatively, "partisan" seems to fit too.

PhysicsIsFun

And Rick Czercockle you prove everyday to every person on here with a pulse what an idiot you are. My students are doing just fine thank you. I have educated many physicians, attorneys, scientists, teachers, plumbers, electricians, nurses and on the list goes. I am proud of my accomplishments, Just what have you done besides butcher the English language and give us a daily dose of stupidity? Please answer and include your 13 years of experience as an educator.

PhysicsIsFun

and Ricky my students do respect me. I run into them all the time, and talk to them about their lives. It is a great experience to see the people that I had a hand in helping become good and successful adults.

DMoney

Ha, yeah, because Democrats are pure and honorable and deliver every time!

Rick Czeczok

You're just so much smarter then all the rest of us uneducated dumby's. What a fool....

Cassandra2

"Dumby's" !!! LOL!!!! Oh, Comrade, that is hilarious on so many levels!

PhysicsIsFun

Scott Walker is the gift that keeps on taking?

Rick Czeczok

Wow, you sure know how to hurt a feller. Tell us where you taught so we can here from some of those students. Like that will ever happen, you are the only one who brags on himself on this board. Egotistical, nutty, professor.

Rick Czeczok

Where was it that you produced all these brilliant people. Like I said, only you think your that great. Nutty professor......

martian2

oh ricky bad boy bully...you must be off your meds again. You are not impressing anyone but yourself. Typical of a right wing idiot when events aren't going your way, and you can intelligently respond, go personal, name call and keep doing it. Would hope the tribune would take note of your boorish behavior.

PhysicsIsFun

You've lost the argument when you resort to name calling and personal attacks.

capedcrusader

Czeczok - where did YOU teach?

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.

Thanks for reading. Subscribe or log in to continue.