Editorial:
Protect taxpayers in Foxconn deal.
It’s the Legislature’s last chance to get this right.
This week, as the state Senate and later the state Assembly take up a bill to give Foxconn Technology Group up to $3 billion in incentives to build a massive factory in Wisconsin, lawmakers have one final shot to insist on more protection for Wisconsin taxpayers.
Will they do so? Or will they send Gov. Scott Walker a bill without provisions such as a minimum requirement for job creation?
Walker is pushing to close a deal that would give the Taiwanese manufacturing giant up to $1.5 billion in payments for creating as many as 13,000 jobs at the plant, now likely to be located in Racine County.
The company would not receive those payments until the jobs are created, and that’s a good thing.
The not-so-good thing: The deal also offers Foxconn $1.35 billion for building out a plant that might cost $10 billion, according to the company’s estimates. The risk: Foxconn builds the plant, collects the incentives for plant and equipment but doesn’t come close to creating 13,000 jobs.
That could happen if, as expected, Foxconn leans heavily on factory automation to keep its long-term costs down. Manufacturers have to automate to remain competitive; Foxconn cut 60,000 jobs at a single factory in 2016 by employing robotics, the BBC reports.
That Foxconn would want to keep head counts down in China — and in the U.S. — is not surprising. Its Wisconsin factory, if it’s built, may well be an experiment to see if automation can be the great equalizer that makes U.S.based factories efficient enough to compete with cheap Asian labor. If so, that experiment could come at the expense of its Wisconsin workforce.
That’s why it’s essential, in our view, that the Legislature insist that Foxconn create a minimum number of jobs to claim the plant and equipment credits. Senate Majority Leader Scott Fitzgerald (R-Juneau) proposed an amendment on the Senate floor Tuesday that would require the Walker administration to “establish job creation thresholds.” But that’s not enough; it’s punting responsibility to the governor. The Legislature should establish its own firm minimum standards for job creation that Foxconn would have to meet to take that $1.35 billion from taxpayers’ wallets.
It’s possible the state’s negotiators could tighten up loose ends that the Legislature leaves undone even after the bill passes. Possible — but not likely. The state loses most of its leverage after the bill is signed into law by Walker. Why would Foxconn agree to anything that isn’t spelled out by the people’s representatives?
If lawmakers insist on diving into the deep end to satisfy a single foreign company with a shaky track record — and it appears they do — then the least they could do is protect Wisconsin taxpayers.