Foxconn’s fruits said to be far off
The deal to lure electronic manufacturing giant Foxconn to Wisconsin, which President Donald Trump called “incredible” and Gov. Scott Walker hailed as a “once-in-a-century” opportunity, wouldn’t generate profits for the state until 2042, a state analysis projects.
The state’s Legislative Fiscal Bureau, a nonpartisan agency that analyzes proposed economic investments, looked at Walker’s bid last month to lure a new flat-screen display factory to the state in exchange for a roughly $3 billion incentive package.
Foxconn said it would break ground in southeastern Wisconsin and hire 3,000 workers over the next four years, with the “potential” to create 13,000 jobs.
If the company hit that growth target, Wisconsin would break even after 25 years, said Rob Reinhardt, a program manager who worked on the report. If fewer than 13,000 jobs materialize, it could take decades longer.
“We kind of dig a hole for ourselves,” Reinhardt said.
State officials, however, maintain that the deal would be beneficial.
“The state of Wisconsin is investing in a once-in-a-lifetime economic development opportunity that will be transformational as the state will become home to the only LCD manufacturing facility outside of Asia,” said Mark Maley, spokesman for the Wisconsin Economic Development Corp. “Bringing Foxconn to Wisconsin will have an estimated annual economic impact of $7 billion that will touch every region of the state.”
That value, he said, will come from generating an estimated 13,000 direct and 22,000 indirect jobs.
Under Walker’s terms, Wisconsin, which competed with six other states to attract the business, would provide Foxconn with up to $2.85 billion in state income tax credits, which could be made in cash payments, and up to $150 million in sales tax breaks over a 15-year period.
The state Legislature was expected to vote on the package early this month, but on Wednesday, Senate Majority Leader Scott Fitzgerald, a Republican, said that he did not yet have the votes to approve it.
“We should be cautious,” he said, according to the Milwaukee Journal Sentinel.
The Fiscal Bureau’s analysis, released Tuesday, said other factors could delay the investment’s payoff.
At 3.2 percent, Wisconsin has an unemployment rate that’s significantly lower than the country’s 4.3 percent. Employers there already complain about having trouble finding workers.
Analysts predict that if Foxconn fills jobs with workers from neighboring Illinois, where the unemployment rate is 4.7 percent, then the deal won’t start making money for Wisconsin until 2045.
Walker’s office did not respond to a request for comment. But the governor has said that community colleges and technical schools will adapt to meet Foxconn’s needs. The factory isn’t expected to open until at least 2021.
The Taiwanese business, which makes gadgets for Apple, Google, Amazon and other companies, said it would spend $10 billion to build the 20 million-square-foot plant and would pay workers an average annual wage of $53,000.
The governor has maintained that the deal will lead to more prosperity in Wisconsin.
“We are calling this development ‘Wisconn Valley,’” he said last month at the White House, unveiling the development news alongside Trump, “because we believe this will have a transformational effect on Wisconsin just as Silicon Valley transformed the San Francisco Bay area.”