Foxconn announces $10 billion investment in Wisconsin and up to 13,000 jobs
Patrick Marley and Jason Stein, MilwaukeePublished 9:43 a.m. CT July 26, 2017 | Updated 4:00 p.m. CT July 26, 2017
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MADISON - Foxconn Technology Group will announce at the White House on Wednesday its plans to invest $10 billion to build a massive display panel plant in Wisconsin that would employ thousands.
“It does represent a milestone in bringing back advanced manufacturing, specifically in the electronic sector, to the United States,” a senior White House official said.
The project could reshape the economy of southeastern Wisconsin and involve not just a large factory but a virtual village, with housing, stores and service businesses — spread over as much as 2,300 acres, one source said. That acreage, an area totaling more than 3 square miles, potentially could be assembled from parcels that initially weren’t contiguous, he said.
Landing Foxconn, which manufactures iPhones and flat-screen TV panels, will come at a cost to taxpayers.
An incentive package will total $1 billion to $3 billion in local, state and federal incentives over coming years, the Milwaukee Journal Sentinel reported this week. It is expected to be many times larger than the combined total of the five previous biggest state packages awarded to companies in Wisconsin.
The deal comes as President Donald Trump seeks to fulfill a promise to bring manufacturing jobs that have been lost in recent decades back to the United States.
A contingent of Wisconsin officials headed to Washington, D.C. for the announcement, which will be held at 4 p.m. central time.
Republicans and Democrats joined together to praise the prospect of the company coming to Wisconsin, though some Democrats expressed strong reservations about the size of the potential incentive package. Skeptics also cautioned that Foxconn had not fulfilled some of its promises elsewhere.
The White House official said the Foxconn plant would make liquid crystal display panels used in computer screens, televisions and the dashboards of cars. The plant would initially employ 3,000 workers and that could eventually grow to as many as 13,000, the official said.
The White House official pointed out that Foxconn’s plant would likely bring with it a number of other jobs from suppliers.
“We saw tremendous interest among a great number of states (in the Foxconn plant) because it means an incredible amount of good wage job growth and an incredible potential of spinoff economic development,” said the official, who did not cite any specific wage figures.
The White House official insisted on anonymity, a practice that the president has criticized in other contexts such as reporting on his campaign’s contacts with Russians last year. He said that Trump’s insistence on American made products and on deregulation contributed to the deal.
Joining Trump at the event will be Wisconsin Gov. Scott Walker and U.S. House Speaker Paul Ryan, whose district in southeastern Wisconsin would be home to the facility.
Also attending are Wisconsin Assembly Speaker Robin Vos (R-Rochester), state Senate President Roger Roth (R-Appleton), Milwaukee County Executive Chris Abele and Milwaukee Bucks president Peter Feigin.
U.S. Sen. Tammy Baldwin (D-Wis.) and U.S. Sen. Ron Johnson (R-Wis.) are also likely to be there.
A follow-up event will be held Thursday at the Milwaukee Art Museum, according to sources.
Foxconn chairman and CEO Terry Gou will be in Milwaukee that day for meetings related to the company’s Wisconsin plans, but may not appear at the art museum announcement, one source said.
No site has been chosen, but areas in Racine and Kenosha counties remain in play, according to the source who described the possibility of Foxconn creating a sprawling village. The source said Foxconn could end up using multiple locations in southeastern Wisconsin, perhaps with a factory in one place and offices and research facilities in another.
Company officials have talked about a massive investment in the United States that would create thousands of jobs. They have visited Wisconsin and other states in recent weeks as they consider their options.
In the past, some Foxconn investments have failed to materialize.
In November 2013, Pennsylvania Gov. Tom Corbett announced that Foxconn planned to invest $30 million in a “high-end technology manufacturing facility” with 500 jobs. The company has a small research operation in Harrisburg, Pa., but the factory was never built.
Similarly, the Washington Post reported in March that Foxconn has spoken of making major investments in India, Vietnam and Brazil, but with results that have not matched the original announcements.
Getting the the company to come to Wisconsin would take $1 billion to $3 billion in incentives paid over up to 15 years, sources said. At least parts of the package would be tied to job creation.
If the deal cost $1 billion and the company created 10,000 jobs, the government would spend $100,000 per job. And a $3 billion deal with that many jobs would cost $300,000 per job.
The subsidies could total more than the yearly state funding used to operate the University of Wisconsin System and the state's prison system.
Until now, the largest state subsidy ever awarded to a company in Wisconsin was the $65 million offered by then Gov. Jim Doyle's administration in November 2010 to Mercury Marine, which was considering moving its factory from Fond du Lac to Oklahoma. That deal involved retaining thousands of at risk factory jobs.
Other major awards to companies in the state since 2010 include $62.5 million to Kohl's; $61.7 million to Quad Graphics; $47 million to Oshkosh Corp; and $28 million to Fincantieri Marine Group.
In total those state-only awards add up to $264.2 million — just a fraction of the amount expected to be offered to Foxconn by the state and local governments.
These large subsidy awards by the state often don't get paid out in their entirety because the tax credits offered aren't sent to the company until the business shows it has hired or trained workers, built a plant or purchased equipment. So far, the five companies have earned roughly $143 million of the total credits that they were awarded.
For instance, the $65 million promised to Mercury Marine has resulted in $46 million actually being earned by the company, about 71% of the original offer. The company has until the end of 2021 to earn the rest.
Steve Deller, a professor of agriculture and applied economics at the University of Wisconsin-Madison, said a $3 billion deal over 15 years is likely "too pricey in terms of potential economic benefit back to the state."
"Throwing money into incentives makes a slippery slope," he said. "(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."
Supporters say such an investment would be worthwhile because Foxconn would also draw numerous suppliers that would create their own jobs and energize Wisconsin's economy.
Tom Still, head of the Wisconsin Technology Council, said he believes that every job in a Foxconn plant could bring an additional one to two jobs at company suppliers that would also locate in Wisconsin to be closer to their key customer. Still said those additional jobs could help to justify massive state and local subsidies to Foxconn.
"I think the benefits (of subsidies) need to outweigh the costs and I think they would over time if you construct the deal right," Still said.
State Sen. Bob Wirch (D-Kenosha) said he wants more specifics but expects to back the plan to bring Foxconn to southeastern Wisconsin.
"I would have to look at the details, but generally I am in favor of incentives or corporate welfare when it's attached to jobs," he said.
But state Rep. Jimmy Anderson (D-Fitchburg) expressed deep skepticism about any potential deal.
"Wisconsin taxpayers should not be subsidizing private corporations at the expense of our children, schools, and roads," Anderson said in a statement.
Anderson also suggested Walker has the wrong priorities, saying he "more than bends over backwards" to give corporations a "multibillion-dollar handout."
Assembly Minority Leader Peter Barca (D-Kenosha) said Democrats may remain split on the incentive package, with those from southeastern Wisconsin more likely to support it than those from other parts of the state.
Their support will ultimately depend on the details of the package, he said.
"We have to protect both local and state taxpayers and make sure this includes long-term job opportunities for our citizens," he said.
Foxconn officials want to see bipartisan support for their plan, said Barca, who has met with them.
It was unclear how the funding for the deal would be spread among the state, federal and local governments. Incentives take many different forms and can include cash outlays, infrastructure investments, loans or tax breaks.
There are no new federal incentives being offered for the deal but Foxconn may qualify for existing federal programs for businesses, according to the White House.
Also unknown is how many jobs Foxconn would deliver with its plant and how much workers would be paid. Those will be crucial issues as lawmakers consider whether to sign off on any incentive package.
Bringing the company to Wisconsin would be a win for Walker and Ryan, as well as Trump, who was the first Republican presidential candidate since Ronald Reagan to win Wisconsin.
Craig Gilbert in Washington, Lillian Price in Madison and Rick Romell in Milwaukee of the Journal Sentinel staff contributed to this report.
http://www.jsonline.com/story/news/...res-wisconsin-foxconn-announcement/512077001/
Patrick Marley and Jason Stein, MilwaukeePublished 9:43 a.m. CT July 26, 2017 | Updated 4:00 p.m. CT July 26, 2017
TWEET 18LINKEDIN 46COMMENTEMAILMORE
MADISON - Foxconn Technology Group will announce at the White House on Wednesday its plans to invest $10 billion to build a massive display panel plant in Wisconsin that would employ thousands.
“It does represent a milestone in bringing back advanced manufacturing, specifically in the electronic sector, to the United States,” a senior White House official said.
The project could reshape the economy of southeastern Wisconsin and involve not just a large factory but a virtual village, with housing, stores and service businesses — spread over as much as 2,300 acres, one source said. That acreage, an area totaling more than 3 square miles, potentially could be assembled from parcels that initially weren’t contiguous, he said.
Landing Foxconn, which manufactures iPhones and flat-screen TV panels, will come at a cost to taxpayers.
An incentive package will total $1 billion to $3 billion in local, state and federal incentives over coming years, the Milwaukee Journal Sentinel reported this week. It is expected to be many times larger than the combined total of the five previous biggest state packages awarded to companies in Wisconsin.
The deal comes as President Donald Trump seeks to fulfill a promise to bring manufacturing jobs that have been lost in recent decades back to the United States.
A contingent of Wisconsin officials headed to Washington, D.C. for the announcement, which will be held at 4 p.m. central time.
Republicans and Democrats joined together to praise the prospect of the company coming to Wisconsin, though some Democrats expressed strong reservations about the size of the potential incentive package. Skeptics also cautioned that Foxconn had not fulfilled some of its promises elsewhere.
The White House official said the Foxconn plant would make liquid crystal display panels used in computer screens, televisions and the dashboards of cars. The plant would initially employ 3,000 workers and that could eventually grow to as many as 13,000, the official said.
The White House official pointed out that Foxconn’s plant would likely bring with it a number of other jobs from suppliers.
“We saw tremendous interest among a great number of states (in the Foxconn plant) because it means an incredible amount of good wage job growth and an incredible potential of spinoff economic development,” said the official, who did not cite any specific wage figures.
The White House official insisted on anonymity, a practice that the president has criticized in other contexts such as reporting on his campaign’s contacts with Russians last year. He said that Trump’s insistence on American made products and on deregulation contributed to the deal.
Joining Trump at the event will be Wisconsin Gov. Scott Walker and U.S. House Speaker Paul Ryan, whose district in southeastern Wisconsin would be home to the facility.
Also attending are Wisconsin Assembly Speaker Robin Vos (R-Rochester), state Senate President Roger Roth (R-Appleton), Milwaukee County Executive Chris Abele and Milwaukee Bucks president Peter Feigin.
U.S. Sen. Tammy Baldwin (D-Wis.) and U.S. Sen. Ron Johnson (R-Wis.) are also likely to be there.
A follow-up event will be held Thursday at the Milwaukee Art Museum, according to sources.
Foxconn chairman and CEO Terry Gou will be in Milwaukee that day for meetings related to the company’s Wisconsin plans, but may not appear at the art museum announcement, one source said.
No site has been chosen, but areas in Racine and Kenosha counties remain in play, according to the source who described the possibility of Foxconn creating a sprawling village. The source said Foxconn could end up using multiple locations in southeastern Wisconsin, perhaps with a factory in one place and offices and research facilities in another.
Company officials have talked about a massive investment in the United States that would create thousands of jobs. They have visited Wisconsin and other states in recent weeks as they consider their options.
In the past, some Foxconn investments have failed to materialize.
In November 2013, Pennsylvania Gov. Tom Corbett announced that Foxconn planned to invest $30 million in a “high-end technology manufacturing facility” with 500 jobs. The company has a small research operation in Harrisburg, Pa., but the factory was never built.
Similarly, the Washington Post reported in March that Foxconn has spoken of making major investments in India, Vietnam and Brazil, but with results that have not matched the original announcements.
Getting the the company to come to Wisconsin would take $1 billion to $3 billion in incentives paid over up to 15 years, sources said. At least parts of the package would be tied to job creation.
If the deal cost $1 billion and the company created 10,000 jobs, the government would spend $100,000 per job. And a $3 billion deal with that many jobs would cost $300,000 per job.
The subsidies could total more than the yearly state funding used to operate the University of Wisconsin System and the state's prison system.
Until now, the largest state subsidy ever awarded to a company in Wisconsin was the $65 million offered by then Gov. Jim Doyle's administration in November 2010 to Mercury Marine, which was considering moving its factory from Fond du Lac to Oklahoma. That deal involved retaining thousands of at risk factory jobs.
Other major awards to companies in the state since 2010 include $62.5 million to Kohl's; $61.7 million to Quad Graphics; $47 million to Oshkosh Corp; and $28 million to Fincantieri Marine Group.
In total those state-only awards add up to $264.2 million — just a fraction of the amount expected to be offered to Foxconn by the state and local governments.
These large subsidy awards by the state often don't get paid out in their entirety because the tax credits offered aren't sent to the company until the business shows it has hired or trained workers, built a plant or purchased equipment. So far, the five companies have earned roughly $143 million of the total credits that they were awarded.
For instance, the $65 million promised to Mercury Marine has resulted in $46 million actually being earned by the company, about 71% of the original offer. The company has until the end of 2021 to earn the rest.
Steve Deller, a professor of agriculture and applied economics at the University of Wisconsin-Madison, said a $3 billion deal over 15 years is likely "too pricey in terms of potential economic benefit back to the state."
"Throwing money into incentives makes a slippery slope," he said. "(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."
Supporters say such an investment would be worthwhile because Foxconn would also draw numerous suppliers that would create their own jobs and energize Wisconsin's economy.
Tom Still, head of the Wisconsin Technology Council, said he believes that every job in a Foxconn plant could bring an additional one to two jobs at company suppliers that would also locate in Wisconsin to be closer to their key customer. Still said those additional jobs could help to justify massive state and local subsidies to Foxconn.
"I think the benefits (of subsidies) need to outweigh the costs and I think they would over time if you construct the deal right," Still said.
State Sen. Bob Wirch (D-Kenosha) said he wants more specifics but expects to back the plan to bring Foxconn to southeastern Wisconsin.
"I would have to look at the details, but generally I am in favor of incentives or corporate welfare when it's attached to jobs," he said.
But state Rep. Jimmy Anderson (D-Fitchburg) expressed deep skepticism about any potential deal.
"Wisconsin taxpayers should not be subsidizing private corporations at the expense of our children, schools, and roads," Anderson said in a statement.
Anderson also suggested Walker has the wrong priorities, saying he "more than bends over backwards" to give corporations a "multibillion-dollar handout."
Assembly Minority Leader Peter Barca (D-Kenosha) said Democrats may remain split on the incentive package, with those from southeastern Wisconsin more likely to support it than those from other parts of the state.
Their support will ultimately depend on the details of the package, he said.
"We have to protect both local and state taxpayers and make sure this includes long-term job opportunities for our citizens," he said.
Foxconn officials want to see bipartisan support for their plan, said Barca, who has met with them.
It was unclear how the funding for the deal would be spread among the state, federal and local governments. Incentives take many different forms and can include cash outlays, infrastructure investments, loans or tax breaks.
There are no new federal incentives being offered for the deal but Foxconn may qualify for existing federal programs for businesses, according to the White House.
Also unknown is how many jobs Foxconn would deliver with its plant and how much workers would be paid. Those will be crucial issues as lawmakers consider whether to sign off on any incentive package.
Bringing the company to Wisconsin would be a win for Walker and Ryan, as well as Trump, who was the first Republican presidential candidate since Ronald Reagan to win Wisconsin.
Craig Gilbert in Washington, Lillian Price in Madison and Rick Romell in Milwaukee of the Journal Sentinel staff contributed to this report.
http://www.jsonline.com/story/news/...res-wisconsin-foxconn-announcement/512077001/
