Across 20,000 pages, pursuit of Foxconn unfolds

Documents show depth of full-court press

The estimated 20,000 pages of Foxconn-related documents released this week paint a vivid picture of the intense efforts by the administration of Gov. Scott Walker and a small army of economic development officials to land the high-tech giant.

The massive cache of reports, emails and text messages — at least the portion reviewed so far — doesn’t appear to change the central narrative, but it is peppered with rich detail on what has mushroomed into the largest such project in Wisconsin history.

From the briefly contemplated closing of I-94 (the idea is now off the table) to good-natured grousing about after midnight text messages, the documents offer a taste of what it took — beyond $4 billion in state and local subsidies — to bring Foxconn and its stated 13,000 jobs to Wisconsin.

State officials apparently believed Wisconsin was an early leader in that economic development sweepstakes. In an April 28 memo, Walker staffer Evan Bradtke said that while Michigan had the best potential sites for what was contemplated as a much smaller factory, Wisconsin held the lead after other factors were weighed.

Mark Hogan, CEO of the Wisconsin Economic Development Corp., the organization at the heart of the wooing of Foxconn, said “the availability of a skilled workforce” would be a “key factor” in the company’s decision, and outlined plans to tout the state’s steps in workforce development.

But while Wisconsin’s chief rival was Michigan, Foxconn also was eyeing other states, including Ohio, Pennsylvania, North Carolina and Indiana, with one

document showing that Ohio and Indiana were offering more than Wisconsin at different points last summer.

The company last summer also was contemplating construction of two different manufacturing plants — one known as 848 and the other known as 818. Wisconsin eventually was chosen for the latter.

The size and scope of 818 changed over time, records show.

For example, Foxconn now plans to invest $10 billion in a factory complex that will employ up to 13,000 workers in Mount Pleasant in Racine County. But as late as June 22-26 of last year, the company envisioned a $6.1 billion investment and 8,800 jobs.

At that time, officials in Ohio were offering tax credits and financial incentives of $2.6 billion for a site near Rickenbacker International Airport in Columbus, a Foxconn document shows. Meanwhile, North Carolina was offering $1.7 billion for a site in Greensboro.

The value of offers in Wisconsin then stood at $1.9 billion for the Mount Pleasant site and $2 billion for a site in Kenosha County, according to a Foxconn document comparing the various proposals.

Indiana’s offer at the time was labeled “pending,” but three weeks earlier that state had offered $2 billion, Foxconn said.

The unprecedented scope — for Wisconsin at least — of the incentives being dangled ultimately would prompt criticism from Walker’s Democratic opponents and others, but they stirred some concerns from within state government, as well.

In a July email, Department of Administration policy analyst Brian Quinn raised questions about the implications of the Foxconn package for the state’s economy and government budgets — as well as how it would influence what other businesses seek in subsidies.

“Existing major employers, especially in other parts of the state, such as the northeast and western portions of the state, will likely ask for significantly larger assistance than they have in the past, as will prospective new employers,” Quinn wrote to the Department of Administration’s Paul Ziegler, a budget and policy manager. “Given the scale of the resources that will be tied up in this project, at the current suggested credit amounts, providing any significant assistance to such employers may prove difficult.”

As it happens, Walker last month proposed giving Foxconn-level incentives to paper-maker Kimberly-Clark to persuade the company not to close plants near Appleton that employ 600 people.

Another thread in the documents is the political dynamic of Wisconsin, which went for Republican Donald Trump in 2016 and is the home state of House Speaker and fellow Republican Paul Ryan.

After consulting firm Deloitte lost out to Ernst & Young in a bid for a contract advising Foxconn, a dejected Darin Buelow, who heads up Deloitte’s site selection business, said he believed politics was driving Foxconn’s decision-making.

In a May 10 email to WEC Energy Group’s Gale Klappa, Milwaukee 7’s Jim Paetsch said he had talked with Buelow shortly after he learned his firm would not get the Foxconn contract after putting months into making the pitch.

“He believes Foxconn is trying to curry favor with the Trump administration (with a loose promise from Trump that he’ll send govt. business their way if they go to one of the preferred states — presumably Wisconsin or Michigan),” Paetsch told Klappa, cochair of M7.

Others initially saw politics in a more general sense as figuring in Foxconn’s decisions — though not as starkly as Buelow seemed to think they did.

On July 7, Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce, sent an email to members of the organization’s board, providing background on an upcoming dinner with Foxconn Chairman Terry Gou at the downtown Milwaukee restaurant Bacchus.

Sheehy described what by then had become the enormous project envisioned today, and wrote of Taiwan-based Foxconn, which does the great majority of its manufacturing in China:

“We believe this move to the U.S. is predicated on the optics and pressure to build product ‘in country,’ much like many of you may be experiencing in other parts of the world, and no doubt spurred by the potential policy changes from President Trump.”

Friday, Sheehy said his viewpoint has changed as he has learned more about Foxconn’s business strategy. While politics, broadly speaking, are among factors any international corporation must consider, he said, Foxconn has solid business reasons to build flat screens in the United States.

For one thing, the U.S. is an enormous market for the devices, Sheehy said. And he said Foxconn envisions a major expansion in uses of the technology in fields such as health care, security and manufacturing.

Foxconn’s view, he said, is “that the U.S. is a great place with unlimited potential to develop that technology.”

But it is also a significantly more expensive place than China. In a briefing memo last May, Paetsch wrote that while the cost of labor in China is rising, it remains “a fraction of what the company will experience here.”

Further, Paetsch wrote, Foxconn officials “claim that building in the U.S. will layer $2.8 billion of capital expenditure over what the company would spend to create a similar operation in China.”

The specter of shutting down I-94 — which is used by tens of thousands of vehicles each day — surfaced last July, when Deputy Transportation Secretary Bob Seitz said in an email that he had been told it might be necessary at times while Foxconn’s plant was constructed.

Department of Transportation spokeswoman Becky Kikkert said this week that the agency no longer anticipates any closures.

Also on display in the documents are the human side of the quest for Foxconn, and the intense demands the effort placed on the staffs of WEDC, M7 and other organizations.

Filling hundreds if not thousands of

The unprecedented scope — for Wisconsin at least — of the incentives being dangled ultimately would prompt criticism from Walker’s Democratic opponents and others, but they stirred some concerns from within state government, as well.

pages are discussions hashing out the frequently changing logistics of showing off Wisconsin to best advantage in a highstakes game.

Central to that effort was WEDC events chief Rachel Best, who rode herd on a seemingly endless string of bus tours, aircraft flights, SUV rentals and dinners, with the details often fluid.

Meanwhile, officials appeared to constantly keep an eye on their competition and took pains to instill a personal touch during negotiations.

Walker gave Gou — sometimes referred to in the documents as “the Chairman” — a gift of wild ginseng and a hand-made box from a Wisconsin artist.

“Terry is very touched by Governor Walker’s token of friendship,” Louis Woo, Gou’s chief aide, wrote in a June 26 email.

In a July 7 text message to Neitzel, Hogan jokingly expressed relief that Woo didn’t seem to have his cellphone number — perhaps because, as other records show, Woo texted Neitzel often, sometimes after 1 a.m.

“I do not have Louis’ cell # (thankfully he may not have mine),” Hogan wrote, adding a smiley face emoji to his text.

It wasn’t all smiles, of course.

At a meeting in June, U.S. Sen. Ron Johnson (R-Wis.) asked Woo “some pointed questions” that left Woo “somewhere between disappointed and frustrated,” Hogan told Neitzel in a June 19 text message.

“When we walked out, Louis was struggling for a word to describe him,” Hogan wrote, apparently referring to Johnson.

“Alan (Yeung of Foxconn) said, ‘He’s sensible!’”