Trump got a splash of good press in July when Apple supplier Foxconn announced a plan to bring as many as 10,000 jobs to the Wisconsin and invest $10 billion over 5 years. He’d hinted at a manufacturing deal a few weeks earlier.
However, given how states have fallen all over each other to give everything from auto plants to WalMart stores huge handouts, plus Wisconsin governor Scott Walker’s keen opposition to labor rights, there was every reason to doubt that this was much of a pro-worker development, or any kind of development other than PR. Techcrunch, in a late July story Foxconn’s long con, was dismissive:
Foxconn CEO Terry Gou and President Trump recently announced a plan to bring 3,000 jobs to Wisconsin at what appears to be a flat screen manufacturing plant.
I wouldn’t encourage either party to hold their breath.
Gou is in the habit of promising big and rarely delivering. Four years ago business journals crowed about a plan to bring a Foxconn flat screen manufacturing plant to Pennsylvania in 2013. The result? Foxconn opened an empty office in Harrisburg and nothing further has been done.
This behavior is not new. Foxconn has signed letters promising to build factories in Indonesia (2013), Vietnam (2007), and Brazil (2011). None of these were completed according to the original pie-in-the-sky spec. Reuters had this to say about the Brazil adventure:
When Taiwan’s Foxconn Technology Group agreed in April 2011 to make Apple products here, President Dilma Rousseff and her advisers promised that up to $12 billion in investments over six years would transform the Brazilian technology sector, putting it on the cutting edge of touch screen development. A new supply chain would be created, generating high-quality jobs and bringing down prices of the coveted gadgets.
Four years later, none of that has come true…
“It’s not a promise. It’s a wish,” said Gou in January when the idea of a US factory was first floated. I worry that this announcement, too, is a “wish.” Either way, Foxconn – and not the state – wins.
OpenDemocracy went through the math from the Wisconsin side:
Foxconn’s shoddy record isn’t the only red flag associated with this proposal. The electronics manufacturing giant has grown accustomed to major handouts from governments and, if their track record is any indication, they expect these freebies to keep flowing the entire time they’re in the country. In order for this plan to become a reality, the Wisconsin state legislature would need to approve $3 billion in corporate incentives to defray capital costs and workforce development costs. The math is startling: Wisconsin will pay out $230,000 in tax dollars for each one of the 13,000 jobs. This means Wisconsin taxpayers will shell out $66,000 per year to subsidize jobs that will pay less than the state average income. In a state experiencing its lowest unemployment rate in 17 years, it’s difficult to imagine there would be political will to pass this legislation…
It’s also worth asking what kind of jobs the Foxconn deal will create. Wisconsin Governor Scott Walker’s entire political career has been framed by his battle against organised labor. With funding from the Koch Brothers and other deep-pocketed out-of-state donors, he’s waged an unceasing battle against public sector unions, including teachers and other civil servants. He also helped make Wisconsin a ‘right to work’ state, which will make it much more difficult for Foxconn’s employees to join a union if they decide to. Under Walker’s watch, union membership has plummeted faster than in any other state in the country.
And an August report in the Madison State Journal said state legislators weren’t exactly wild about the scheme. Walker is pressuring the legislature to approve the Foxconn plan as part of approving the state budget, which means accepting a pig in a poke. Some lawmakers want to do more due diligence, which means voting on the Foxconn spending separately. From the article:
Republican lawmakers are split over how to move forward with a plan to send $3 billion to an electronics manufacturing giant promising to create 13,000 jobs in Wisconsin as questions surfaced about how the plan would affect the next state budget that is a month overdue.
Taiwanese technology company Foxconn wants to spend $10 billion to build LCD panels on a 20-million-square-foot, 1,000-acre campus of more than a dozen buildings in southeastern Wisconsin by 2020. Gov. Scott Walker signed an agreement to have a contract in place by the end of September.
But doing so requires approval from a Republican-controlled Legislature that still hasn’t passed a 2017-19 state budget. And despite a suggestion from Assembly Speaker Robin Vos, R-Rochester, on Tuesday that the Foxconn deal would have “almost zero” impact on the next state spending plan, questions surfaced from Democrats and Senate Republicans about whether more vetting was needed.
USA Today, using the fact that Michigan Governor Rick Snyder is also playing footsie with Foxconn as a news hook, raised doubts about the deals yesterday with its story, Analysis: Foxconn considers another plant in Midwest, but at what cost?:
Michigan Gov. Rick Snyder, on a nine-day trade trip in China, told the Associated Press there is a “strong possibility” Foxconn will come to Michigan after it chose neighboring Wisconsin for a $10 billion display panel plant with 3,000 employees that could swell to 13,000…
But the Wisconsin deal comes with a major caveat: It requires up to $3 billion in subsidies from state taxpayers — or $231,000 per job for 13,000 jobs. Put another way: state lawmakers are mulling a subsidy package nearly 50 times bigger than any previous one.
“Throwing money into incentives makes a slippery slope,” Steve Deller, a professor of agriculture and applied economics at the University of Wisconsin-Madison, told the Milwaukee Journal Sentinel. “(People) get so wrapped up in the winning game, in the headline of ‘we got it’ that they lose sight (of the) pretty steep price. Hard to say because we don’t know what the package looks like.”
Compounding skepticism, an analysis this week by the nonpartisan Legislative Fiscal Bureau concluded Wisconsin may not break even on incentives to Foxconn for at least 25 years.
The good news is the proposed giveaway to Foxconn is getting enough well deserved critical scrutiny that it may not get done. The bad news is that if this deal, which has the earmarks of being unserious from the outset, falls apart, it will be used to blame anti-business interests and deflect attention from sounder approaches for creating good jobs…like the glaringly obvious need for more infrastructure spending.