Foxconn again shifts Wisconsin plan after Trump intervenes

Feb. 3, 2019

            

FILE - In this June 28, 2018 photo, President Donald Trump takes a tour of Foxconn with Foxconn chairman Terry Gou, right, and CEO of SoftBank Masayoshi Son in Mt. Pleasant, Wis. Wisconsin Gov. Tony Evers' administration and Foxconn Technology Group say that a massive project planned for the state is moving forward, while disputing Republicans who blamed the new Democratic governor for a change in direction away from manufacturing toward more white collar jobs. Foxconn said Wednesday that it was shifting the focus of the Wisconsin project away from making high-tech flat panel screens for televisions and other products in favor of a research and development hub.

MADISON — Foxconn Technology Group has shifted its stated strategy yet again on Friday for a massive Wisconsin campus, crediting a conversation with President Donald Trump for cementing plans to proceed with building a factory to make high-tech liquid display screens.

The news capped a week of confusion about Foxconn's plans in Wisconsin. The company announced in 2017, to much fanfare, that it planned to invest $10 billion in the state and hire 13,000 people to build an LCD factory that could make screens for televisions and a variety of other devices.

The company last year said it was reducing the scale of what was to be made in Wisconsin, from what is known as a Gen 10 factory to Gen 6. But this week, even that was thrown into question with Foxconn executive Louis Woo said it couldn't compete in the television screen market and would not be making LCD panels in Wisconsin.

But on Friday, in yet another twist, Foxconn said after discussions with the White House and a personal conversation between Trump and Foxconn chairman Terry Gou, it plans to proceed with the smaller manufacturing facility.

"Great news on Foxconn in Wisconsin after my conversation with Terry Gou!" Trump tweeted.

Wisconsin's new Democratic governor criticized the company Friday for its flip-flopping.

"There's no limit, frankly, to skepticism if the messaging isn't coherent," Evers told reporters. "I'm comfortable that they're still committed to the state. They're committed to this Generation 6 technology, but that doesn't mean that we (won't) encourage them to be more transparent and consistent in their messaging."

The latest Foxconn statement did not say whether the commitment to this size factory would affect the type of workers who would be employed in Wisconsin. Foxconn executive Louis Woo told Reuters earlier this week that about three-quarters of workers in Wisconsin would be in research and development-type jobs, not manufacturing. Woo said the Wisconsin project would be more of a research hub, rather than having a manufacturing focus.

A Foxconn spokeswoman had no immediate comment about what its plans to build the "Gen 6" factory would mean for the makeup of the workforce. The difference between a "Gen 10" and "Gen 6" plant rests with the size of the original glass used to make the screens. The larger plant, which had been part of Foxconn's initial plans, would have used glass more than three-times as large as what the smaller facility will use. The "Gen 6" plant can make screens ranging in size from a smart phone to a 75-inch television, while the larger plant would have allowed for devices as large as 9½ feet by 11 feet.

The "Gen 6" plant is expected to be smaller in size and less expensive than a "Gen 10" factory, but Foxconn has not specified just how large it will be.

Foxconn, the world's largest electronics company, said Friday the campus will house both an advanced manufacturing facility and a center of "technology innovation for the region."

Local Wisconsin government and economic development officials where the Foxconn campus is located praised the news, saying construction of the "Gen 6" factory will coincide with construction of other related buildings over the next 18 months.

Wisconsin promised nearly $4 billion in state and local tax incentives to Foxconn if it invested $10 billion and created 13,000 jobs for the project, which Trump heralded last year as the "eighth wonder of the world."

But Foxconn has repeatedly revised its plans for what will be made in Wisconsin and who will work there, causing confusion in the state and leading critics of the project this week to accuse Foxconn of a "bait and switch."

The original deal was struck by then-Gov. Scott Walker and Trump. Evers, Wisconsin's current governor who used Walker's support for Foxconn against him in the race, was a critic of the project during the campaign but has said this week he's working closely with Foxconn on the project.

Foxconn earlier this week cited a changing global market as requiring a move away from making LCD panels in Wisconsin. Apple is Foxconn's main manufacturing customer and it has forecast a drop in revenue from the Chinese market due to decreasing demand for iPhones.


A look at key moments in Foxconn's plan for Wisconsin plant

MADISON — Taiwanese company Foxconn Technology Group shifted its stated plans yet again on Friday for a massive Wisconsin technology campus. Here's a look at key moments in the development of the project:

July 26, 2017: President Donald Trump announces Foxconn Technology Group will build a plant in southeastern Wisconsin . The company says it will invest $10 billion in a manufacturing campus that will produce large, Generation 10.5 liquid-crystal-display flat screens for big-screen TVs, self-driving cars, notebooks and other monitors. The company says the project could employ up to 13,000 people.

Sept. 18, 2017: Republican Gov. Scott Walker signs an unprecedented $3 billion state incentives package for the plant, brushing aside critics who warn the package is too expensive.

Oct. 4, 2017: Foxconn announces the plant will be built in Mount Pleasant in Racine County, about 25 miles (40 kilometers) south of Milwaukee.

Dec. 5, 2017: The Racine County Board approves borrowing nearly $80 million to help pay for costs associated with the plant.

April 24, 2018: The Wisconsin Department of Natural Resources approves air permits for the manufacturing campus.

April 26, 2018: The DNR approves a request from the city of Racine to pull 7 million gallons of water per day from Lake Michigan to serve the plant.

May 25, 2018: Environmental law firm Midwest Environmental Advocates asks an administrative law judge to block the Lake Michigan withdrawal , arguing it violates the Great Lakes Compact. The case is still pending.

June 28, 2018: Foxconn breaks ground in Mount Pleasant. Trump attends and calls the plant "the eighth wonder of the world." That same day Foxconn announces it now plans to build much smaller Generation 6 screens and phase in production of Generation 10.5 screens later. Generation 6 production uses different machinery and is much cheaper than Generation 10.5 companies, according to industry experts.

August 29, 2018: The first walls for the campus go up in Mount Pleasant.

November 6, 2018: Democrat Tony Evers, a critic of the project, defeats Walker in the governor's race.

Jan. 18, 2019: Foxconn finished 20/78 full-time employees in Wisconsin, 82 workers short of the minimum required to claim job-creation tax credits.

Jan. 30, 2019: Louis Woo, special assistant to Foxconn's CEO, sends a shockwave through Wisconsin when he tells Reuters that the company will scale back and possibly shelve plans to build display screens in the state, saying the company can't compete. He says the Mount Pleasant facility will still perform manufacturing tasks but three-quarters of the workers will focus on research and the site would be more of a research hub.

Feb. 1, 2019: Foxconn changes its plans again after Chairman Terry Gou speaks directly with Trump, announcing the company will make Generation 6 screens at the Mount Pleasant site after all . Evers tells reporters that the company needs to improve its messaging and transparency, saying "there's no limit to skepticism if the messaging isn't coherent."


AP FACT CHECK: Taxpayers have already spent money on Foxconn

Confusion has swirled around electronic manufacturer Foxconn Technology Group's plans for a $10 billion campus in southeast Wisconsin that promised to bring 13,000 jobs — most of them blue-collar factory positions— to build high-tech display screens.

Wisconsin lawmakers offered up to $2.85 billion worth of incentives in 2017 to lure the world's largest electronics manufacturer to the state, sparking criticism that the state was giving away too much money.

But Foxconn's plans were thrown into doubt Wednesday when a company official said that the Taiwanese company was backing away from making LCD panels in favor of becoming a "technology hub" employing mostly research, development and design jobs. The company again shifted course Friday, saying it would return to earlier plans to make the LCD panels after a conversation between Foxconn's chairman and President Donald Trump.

Foxconn's contradictory statements triggered a flurry of finger-pointing among Wisconsin politicians this week.

In a joint statement, Wisconsin's Republican Assembly Speaker Robin Vos and Senate Majority Leader Scott Fitzgerald defended the Foxconn incentive package they helped create.

A look at one of the claims made in their statement:

THE CLAIM: "Not a dollar would be paid out until jobs in the Foxconn development area were created. The incentive package is based on fulfilling the contract." - Vos and Fitzgerald in a statement Wednesday.

THE FACTS: The claim is misleading.

Vos and Fitzgerald were referring to the state's 15-year deal that provides Foxconn with roughly $2.85 billion if the company meets capital investment and job creation goals. The company did not meet its job creation projection of 260 employees last year, instead hiring 178 employees, and did not take its first eligible state tax credit worth up to $9.5 million. The state has not paid out job credits to Foxconn yet.

But the Republican leaders are leaving out tens of millions that taxpayers have spent on the project in other ways.

As part of the Foxconn legislation passed in 2017, the state agreed to give a $15 million grant to the village of Mount Pleasant, where Foxconn is slated to open its three-phase project. That money was disbursed to the village between November 2017 and June 2018, according to the state's non-partisan Legislative Fiscal Bureau.

Mount Pleasant and Racine County officials agreed to spend as much as $764 million to help lure Foxconn to Wisconsin. So far, $190 million has been spent from the village fund dedicated to the project, according to public documents. (In 2017, Foxconn deposited $60 million into that account and will continue to make tax payments into the fund in future years based on its property value.)

Nearly $170 million of those funds were used to buy up land and relocate people from their homes to make way for the project, offering $50,000 per land acre and paying 140 percent of the appraised value for homes, according to village documents . Village officials have acquired roughly 82 percent of the 2,873 acres Foxconn wants to build on for its three-phase project. The remaining $20 million has been spent on financing, legal costs, as well as sewer and water infrastructure costs for Foxconn, village documents provided to the AP show .

That spending could also have repercussions for state taxpayers if the Foxconn project hits trouble.

As part of the Foxconn deal, Wisconsin legislators agreed to pay up to 40 percent of local government debt for the project, if asked to do so. Last year, the Legislative Fiscal Bureau estimated that for every $100 million local governments borrow and cannot repay for the Foxconn project, the state could be on the hook for as much as $64 million, once interest repayment is included.

The credit rating agency Moody's Investors Service noted the state's obligation on the Foxconn project in a statement Thursday, which forecasts financial risks for Mount Pleasant, Racine County and Wisconsin.

"They're offering this commitment that if the village gets into trouble, (state officials) will do everything they can to ask the Legislature to appropriate monies to pay the debt service," said Moody's lead analyst Josh Grundleger.

Other costs to taxpayers are harder to quantify, said Steven Deller, an economist at University of Wisconsin-Madison. For example, the state has put manpower into crafting the deal and consulting with outside lawyers for the project.

"In terms of people hours, putting this package together — that's incalculable — I don't think they've been keeping track of how much staff time has been put into this," Deller said.

 

Associated Press

 

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