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Home / Business / Foxconn rethinks Wisconsin Factory plan

Foxconn rethinks Wisconsin Factory plan



It was announced a year and a half ago when a midwestern renaissance began: Foxconn, the Taiwanese electronics giants, would build a $ 10 billion Wisconsin facility to produce flat-panel televisions and create 13,000 jobs. President Trump later announced the project as "the eighth wonder of the world."

Now this view looks less safe.

The company pointed to "new realities" in the market and said Wednesday that the plans had been re-evaluated. highlights the difficult manufacturing economy in the United States. "The global market environment that existed at the time of the first announcement of the project has changed," Foxconn said in a statement.

Company officials had signaled for months that their focus was increasingly on R & D and not on large-scale production, which damped the dampening potential for job creation.

This turnaround contradicts Trump's vision of Trump for the project, which he described as a milestone in reversing the decline in factory jobs. The turnaround also created new friction in Wisconsin, where the initiative was politically charged from the start because of its billions in tax subsidies.

Foxconn said it has continued to commit to creating 13,000 jobs in Wisconsin and "moving plans for the construction of an advanced manufacturing facility will continue to evolve. "However, it was not about the proportion of jobs earmarked for production, and economists wondered how such a large workforce could be created if the factory focused on other areas.

A White House spokeswoman did not respond to a request for comment.

Foxconn's statement followed a Reuters report (19459006) stating that Louis Woo, a special assistant to the company's chairman, Terry Gou, had referred to the cost of making televisions and other consumer goods in the United States high.

"We have no room in the US for television," Woo told Reuters. "We can not keep up."

Mr. Trump's promise to revive American industry was seen as an important factor in the conquest of Wisconsin and other battlefields in 2016. But the cost of attracting Foxconn sparked a Wisconsin partisan battle that lasted in the Midterm elections last year, as Governor Scott Walker, a Republican, was defeated.

Mr. Walker and the state legislature had approved tax credits and other incentives of more than $ 4 billion over a 15-year period for an operation in Mount Pleasant near Racine, an unusually high figure.

The residents of Wisconsin had mixed feelings about investment surveys. Early on, economists wondered if the large-scale factory and thousands of jobs would be needed. The growing focus on research raised new doubts about the scope of the hiring. Economists said a strategy could lead to fewer high-paying jobs.

"There are not that many R & D facilities in the world with 13,000 people," said Susan Helper, economist at Case Western Reserve University, Cleveland.

During the fall campaign, Wisconsin Democrats upheld the Foxconn persecution as proof that Republicans were focused on businesses, not ordinary people – and willing to endow state funds with a single company.

When the Republicans defended their eight years in power, she disagreed that Wisconsin's strength would be restored as a manufacturing base, and residents in the southeastern part of the state closest to the factory were particularly receptive. 19659016] On Wednesday, reports on the revaluation of Foxconn triggered a new round in this political struggle. Republicans controlling the legislature of Wisconsin suggested that the arrival of Governor Tony Evers, the Democrat who ousted Mr. Walker, was partly to blame.

"The company is responding to the wave of economic uncertainty that the new governor has brought with it," said a spokeswoman for the Assembly, Robin Vos, and Senate Majority Leader, Scott Fitzgerald. "Governor Evers has an anti-job -Agenda. "

Mr. Evers, who took office this month, has announced that he will not block the Foxconn project, although he and other Democrats have described it as regrettable.

" This deal was from the start ruthless, "said Martha Laning, the country's Democratic leader." Despite multiple red flags during the negotiation process, Wisconsin Republicans are putting taxpayers in line for $ 4.5 billion and rewriting the entire rulebook for a poll in the election year. "

The plans for the facility – including and the composition of its workforce – have changed over time." Tim Sheehy, President Milwaukee Chamber of Commerce said Foxconn initially believed that 70 percent of its employees would be responsible for "factory work" and 30 percent for design and engineering. Well, he said, those proportions have changed.

Foxconn's agreement with the Wisconsin Economic Development Corporation "protects the state to some extent if Foxconn does not meet the promised job creation," said Timothy Bartik, economist at the Upjohn Institute in Kalamazoo, Mich. "But in particular, the capital investment tax credit does not seem to be fully aligned with Foxconn's ultimately building a much less labor-intensive and capital-intensive project."

At this point, the cost to taxpayers across the state is likely to be minimal. The company has stated that it will lose tax credits for the year 2018 because it misses the recruitment target to which they have referred. The company has received a VAT exemption for some material purchases, Bartik said.

The village of Mount Pleasant and Racine County have borne most of the preliminary costs. According to Michael Farren, a research fellow at the Mercatus Center of George Mason University in Virginia, Mount Pleasant had purchased 85 percent of the original 1200-hectare factory-designated factory and handed over at least 65 percent of the land to Foxconn

Local officials pointed out that Foxconn has already invested $ 200 million in Wisconsin and built a 120,000-square-foot structure.

Other companies found that the company had not made any big suggestions in the past. In 2013, it was announced that $ 30 million would be invested in a high-tech factory in Pennsylvania, creating 500 jobs. The factory never came off.

The company also set ambitious plans for 1945,000 in Brazil – for 100,000 jobs. This project remained largely on the table.

"Foxconn has not met the jobs and manufacturing commitments it has made in the past," said Megan Randall, a research associate at the Urban Institute in Washington. "These cases are the very reason why accountability in state and local tax incentives is so important."

Mr. Bartik said Foxconn's reasons for changing global conditions are confusing.

"It's hard for me to see how global conditions have dramatically changed the competitive position of US labor costs in the production of flat panel TVs when the project was announced in 2017," he said. Wage growth has accelerated as the labor market has narrowed in the last year and a half, but the increases have been moderate.

This could mean that "this project is mostly a R & D department in Madison, with a much smaller factory in southeast Wisconsin," said Bartik.


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