Foxconn deal too expensive
A fraction of the proposed giveaways could seed companies across Wisconsin
The plan to provide $3 billion to Taiwanese electronics manufacturer Foxconn to open a plant here is hurtling through the state Legislature with the backing of the governor and the Assembly. We must improve Wisconsin’s economy, but this deal is too expensive and will waste valuable state resources that otherwise would be used for roads, schools and health care. There are better, less expensive ways for Wisconsin to help build a robust economy that creates good-paying jobs.
The proposed incentives for Foxconn are much more costly than typical state assistance packages. Nationally, state incentives average about $2,500 per job, according to the W.E. Upjohn Institute for Employment Research. Under the Foxconn deal, Wisconsin would pay the Taiwanese company roughly 100 times the national average, or at least $250,000 for every job it creates. This sets a terrible precedent for the state and current Wisconsin businesses.
The state’s package for Foxconn is among the most expensive ever in the United States and 46 times bigger than the largest ever provided to a Wisconsin company — $65 million in tax credits for Mercury Marine in 2010. There also is no guarantee that the jobs will remain here. The plant plans to build flat screen TVs, and the odds of that plant remaining open for decades seems remote given the pace of change in television technology.
Take Exact Sciences, for example. In 2009, Exact Sciences was reborn in Wisconsin with two Wisconsinites and a business plan. Wisconsin has offered incentives of up to $10 million to help Exact Sciences grow here. Since then, we have created 800 good-paying jobs in Wisconsin with 200 current openings. Exact Sciences and our employees already have paid more than $15 million in taxes to Wisconsin, even before reaching our employment targets. That seems like a fair deal all around.
The problem is that most jobs are created by young businesses, and Wisconsin ranks last among the 50 states in new company formation. Too many Wisconsin entrepreneurs lack the money to start and grow our companies. Even a fraction of the $3 billion proposed to be invested in Foxconn could help seed new companies around the state. We can do this, as other states have, by providing capital to funds that invest in innovative new companies. The state should earn a return for these investments.
Our universities spawn many great innovations, but there is little capital available to help turn those ideas into products that can be built in Wisconsin. We have industry clusters across the state that can be supported with innovation centers and capital, which can help business spinoffs start and grow quickly. Why not invest first in our own people?
Wisconsinites who start businesses and headquarter them here are more likely to invest a good share of their profits back in our communities. They will be more likely to hire employees from Wisconsin and more likely to hire local contractors and suppliers. But Foxconn, a foreign company, certainly will send its profits overseas.
Wisconsin politicians should do the right thing and renegotiate the Foxconn deal before it’s too late. There are other ways to create good-paying jobs in Wisconsin for a lot less money. We need to get back to business basics by investing in innovative ideas and products and helping support ambitious Wisconsinites with a passion to build companies based in our own state.