Wis­con­sin won’t profit for years

The Denver Post - - BUSINESS - ByDanielle Pa­que­tte

The Wash­ing­ton Post

The deal Pres­i­dent Don­ald Trump called “in­cred­i­ble” and Gov. Scott Walker hailed as “once-in-a-cen­tury” op­por­tu­nity to bring the elec­tronic manufacturing gi­ant Fox­conn to Wis­con­sin wouldn’t gen­er­ate prof­its for the state un­til 2042, a new leg­isla­tive anal­y­sis projects.

The state’s Leg­isla­tive Fis­cal Bureau, a non­par­ti­san agency that an­a­lyzes pro­posed eco­nomic in­vest­ments, looked at Walker’s bid last month to bring a new flat-screen dis­play fac­tory to the state in ex­change for a roughly $3-bil­lion in­cen­tives pack­age.

Fox­conn said it would break ground in south­east­ern Wis­con­sin and hire 3,000 work­ers there over the next four years, with the “po­ten­tial” to cre­ate 13,000 jobs.

If the com­pany hits that growth tar­get, Wis­con­sin would break even af­ter 25 years, said Rob Rein­hardt, a pro­gram man­ager who worked on the re­port. If 13,000 jobs never ma­te­ri­al­ize, it could take decades longer.

“We kind of dig a hole for our­selves,” Rein­hardt said. State of­fi­cials, how­ever, main­tain the deal would bring more pros­per­ity.

“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, spokesper­son for the Wis­con­sin Eco­nomic De­vel­op­ment Cor­po­ra­tion. “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 added, 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 Fis­cal Bureau’s anal­y­sis said other fac­tors could de­lay the in­vest­ment’s pay­off.

Wis­con­sin has an un­usu­ally low un­em­ploy­ment rate (3.2 per­cent), which is sig­nif­i­cantly lower than the coun­try’s 4.3 per­cent. Em­ploy­ers there al­ready com­plain about hav­ing trou­ble find­ing work­ers.

If Fox­conn fills jobs with work­ers from neigh­bor­ing Illi­nois, where the un­em­ploy­ment rate is 4.7 per­cent, an­a­lysts pre­dict Wis­con­sin wouldn’t make money un­til 2045. Walker’s of­fice did not re­spond to a re­quest for com­ment.

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