January 30, 2019
Electronics giant Foxconn reversed course and announced Wednesday that the massive Wisconsin operation that was supposed to bring a bounty of blue-collar manufacturing jobs back to the Midwest — and was offered billions of dollars in incentives from the state — will instead be devoted mostly to research and development.
The much-ballyhooed facility was heralded by President Donald Trump and former Wisconsin Gov. Scott Walker as a once-in-a-generation opportunity . Foxconn, a major supplier to Apple, is the world’s largest contract maker of electronics and China’s largest private employer.
Foxconn reconsiders plan for Wisconsin manufacturing hub
In a statement Wednesday, Foxconn said it remains committed to the project, the creation of 13,000 jobs and “to our long-term investment in Wisconsin.” But because the global market environment that existed when the project was first announced in 2017 has shifted, “this has necessitated the adjustment of plans for all projects, including Wisconsin.”
Foxconn previously said it could invest as much as $10 billion in the project, but did not recommit to that number Wednesday. But Wisconsin leaders said Wednesday that Foxconn has reiterated its commitment to spending that much.
Louis Woo, special assistant to Foxconn CEO Terry Gou, told Reuters that it’s scaling back and possibly shelving plans to build liquid crystal display panel screens in Wisconsin.
“In terms of TV, we have no place in the U.S.,” Woo told Reuters. “We can’t compete.”
Woo said a factory would not be built in Wisconsin: “You can’t use a factory to view our Wisconsin investment.”
Instead, Woo said Foxconn wants to create a “technology hub” that would largely consist of research facilities along with packaging and assembly operations. Woo said about three-quarters of the jobs created will be in research and development and design, rather than blue-collar manufacturing jobs.
Marc Levine, senior fellow and founding director of the University of Wisconsin’s Center of Economic Development, called it “one enormous bait and switch.”
“It seems clear that, whatever Foxconn eventually develops in Wisconsin, this will look nothing like the project that Scott Walker and his cronies ... sold to the public,” Levine said in an email.
He called the idea of Foxconn as a research-and-development operation “fanciful” and said it was “highly, highly unlikely” that it would lead to 13,000 research jobs.
Foxconn said in its statement that it was broadening its investment in Wisconsin to ensure the company and workforce will be positioned for long-term success. That includes focusing on research and development in advanced industrial internet technologies and producing high-tech applications and solutions for industries such as education, medical and health care, entertainment and sports, security, and smart cities, Foxconn said.
“Every step of the way Foxconn has overpromised and under-delivered,” Democratic Wisconsin Assembly Minority Leader Gordon Hintz said in a statement. “This news is devastating for the taxpayers of Wisconsin. We were promised manufacturing jobs. We were promised state of the art LCD production. We were promised a game-changing economic opportunity for our state. And now, it appears Foxconn is living up to their failed track record in the U.S. — leaving another state and community high and dry.”
The Taiwan-based company initially billed the massive 20 million-square-foot (1.86 million-square-meter) Wisconsin campus as its first North American manufacturing site for the next generation of liquid crystal display panels to be used in a wide variety of products, including large-screen TVs, self-driving cars, notebooks and other monitors.
Wisconsin state and local governments promised roughly $4 billion to Foxconn, the largest incentive in state history and the biggest pledged by a state to a foreign corporation in U.S. history. Foxconn was required to invest $10 billion and create 13,000 jobs to get the full incentives.
It hired 178 full-time employees rather than the 260 targeted in 2018, failing to earn a state tax credit worth up to $9.5 million.
The president of Wisconsin’s Technology Council, Tom Still, said he’s not surprised that Foxconn wants to change course since televisions are becoming less expensive and iPhone sales are declining.
Still, whose group nurtures tech in Wisconsin and advises state leaders on policy, noted the company has already invested as much as $200 million in Wisconsin so he’s not worried that Foxconn might pull out. He said Foxconn can succeed if the plant becomes more research-oriented because their areas of interest match up with Wisconsin’s strengths — such as robotics, medical imaging, and industrial imaging.
Wisconsin Republican legislative leaders who pushed the Foxconn project said they blamed the state’s new Democratic governor for Foxconn’s changing plans.
Assembly Speaker Robin Vos and Senate Majority Leader Scott Fitzgerald said Foxconn was reacting to a “wave of economic uncertainty” caused by Gov. Tony Evers. Evers was critical of Foxconn in the campaign against Walker, but did not pledge to undo the deal. Republicans also cited Evers’ support for all-but eliminating a manufacturing tax credit program to pay for a middle-class income tax cut.
Evers’ top aid Joel Brennan said in a statement that the administration was “surprised” by the news and talked with Foxconn leaders about the development. He did not address the Republican accusations that Evers was to blame.
Democratic critics, including Evers, said the incentives promised to Foxconn were too rich and questioned whether the company would ever fulfil its job creation and investment promises. They also said the massive plant that was relying on water from nearby Lake Michigan posed serious environmental risks.
The White House also has yet to comment. Last summer, Trump highlighted his economic policies at a groundbreaking event for the massive Foxconn complex, which state officials initially said could house 11 football fields.
“America is open for business more than it has ever been open for business. Made in the USA: It’s all happening and it’s happening very, very quickly,” Trump said in June after visiting the Foxconn site. “Today we’re seeing the results of the pro-America agenda. America First, Make America Great Again. Greatest phrase ever used in politics, I suspect.”
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