Foxconn to build $10B plant in Wisconsin
Apple supplier could employ 13,000 workers
Taiwanese electronics manufacturer Foxconn Technology Group announced at the White House on Wednesday its plans to invest $10 billion to build a massive display panel plant in Wisconsin that could employ up to 13,000 workers but would require up to $3 billion in subsidies from state taxpayers.
“America does not have a single LCD plant to produce a com- plicated system. We are going to change that,” Foxconn chairman Terry Gou said at a news conference.
Foxconn is a major supplier of Apple iPhones and other Apple devices, and the announcement comes a day after President Trump told The Wall Street Jour
nal that Apple CEO Tim Cook promised him the company would build “three big plants, beautiful plants” in the U.S.
The Wisconsin-based Foxconn plant will focus on display panels used in televisions and other devices. Last year, Foxconn bought Japanese electronics maker Sharp Corp.
The deal represents a significant political victory for Gov. Scott Walker, House Speaker Paul Ryan, whose district in southeastern Wisconsin will be home to the factory, as well as President Trump, who pushed for more domestic manufacturing facilities and jobs on the campaign trail.
“If I didn’t get elected, (Gou) definitely would not be spending $10 billion,” said Trump, who promised infrastructure and tax bills in the “very near future.”
The deal was put together in
recent months as Walker, Ryan and Trump each met with Gou and other Foxconn officials.
For Wisconsin, the deal is a huge opportunity and also a big risk — one state lawmakers will have to weigh quickly as they consider whether to allow a subsidy package nearly 50 times bigger than any previous one.
The project could involve not just a large factory but a virtual village, with housing, stores and service businesses spread over at least 1,000 acres. That acreage, an area totaling more than 1.5 square miles, potentially could be assembled from parcels that initially weren’t contiguous, a person familiar with the deal said.
At 20 million square feet, the factory would be three times the size of the Pentagon, making it one of the largest manufacturing campuses in the nation. It would initially employ 3,000 workers making an average salary of $53,900 a year plus benefits and eventually could boast more than four times that.
“Today we’re announcing the single largest economic development project in the history of Wisconsin and one of the largest in the history of this country,” Walker said.
Republicans and Democrats joined together to praise the prospect of the company coming to Wisconsin, though some Democrats expressed strong reservations about the size of the potential incentive package. Skeptics also cautioned that Foxconn had not fulfilled some of its promises elsewhere.
The Foxconn plant would make liquid crystal display panels used in computer screens, televisions and the dashboards of cars. Walker’s office said the deal could result in up to 22,000 jobs that would be indirectly created by suppliers and businesses looking to locate near Foxconn and serve the company and its workers.
The construction alone would lead to 10,000 jobs over each of the next four years.
Foxconn is huge. In China, its manufacturing base, the company employs some 700,000 people. The firm’s revenue last year totaled about $135 billion. That’s roughly equivalent to Amazon.com Inc., which ranked 12th on the Fortune 500 list.
On the campaign trail, Trump took aim at Apple in particular for outsourcing production of iPhones and other consumer devices to factories in China. Most of the company’s products are assembled by Foxconn.
Independent tech analyst Jack Gold says Foxconn could benefit from lower shipping costs, political goodwill and potentially cost savings overall through automation with a U.S. plant. Labor costs in China, he says, are “higher than they used to be.”
But, Gold cautioned, “In China, Foxconn had pretty much free rein to do whatever they wanted with employees and avoid penalties for bad labor practice,” he says. “That probably won’t be the case in the U.S.”
In the past, some Foxconn investments have failed to materialize. In November 2013, Pennsylvania Gov. Tom Corbett announced that Foxconn planned to invest $30 million in a “highend technology manufacturing facility” with 500 jobs. The company has a small research operation in Harrisburg, Pa., but the factory never was built.
Similarly, The Washington Post reported in March that Foxconn has spoken of making major investments in India, Vietnam and Brazil but with results that have not matched the original announcements.
At $3 billion for 13,000 jobs, the deal would cost $231,000 per job. The subsidies would total more than the combined yearly state funding used to operate the University of Wisconsin System and the state’s prison system.
Steve Deller, a professor of agriculture and applied economics at the University of WisconsinMadison, said a $3 billion deal over 15 years is likely “too pricey in terms of potential economic benefit back to the state.”
“Throwing money into incentives makes a slippery slope,” he said. “(People) get so wrapped up in the winning game, in the headline of ‘we got it’ that they lose sight (of the) pretty steep price. Hard to say because we don’t know what the package looks like.”
Supporters say such an investment would be worthwhile because Foxconn would also draw numerous suppliers that would create their own jobs and energize Wisconsin’s economy.