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In 2017, President Trump announced that a Foxconn manufacturing plant would bring 13,000 manufacturing jobs to Wisconsin and be the “8th wonder of the world.” The factory became a talking point for Trump and former Wisconsin Governor Scott Walker (far left) who lost his bid for reelection in November.
President Donald Trump boasted at a White House ceremony in 2017 that a new Foxconn electronics facility in southeastern Wisconsin was another sign of the rebirth of U.S. manufacturing that he was unleashing. Foxconn, he said, “understands that America’s capabilities are limitless and that America’s workers are unmatched.”
In a similar vein, Wisconsin’s then-Governor Scott Walker glowingly hailed the company’s plans to create up to 13,000 mostly blue-collar jobs, which he secured by lining up nearly $4.5 billion in state and local public subsidies to support the construction of a plant producing liquid-crystal display panels for TVs.
The Foxconn case demonstrates the risks of investing massive subsidies in corporate deals to create jobs.
But the Foxconn deal is collapsing at remarkable speed. The Taiwan-based giant is rapidly repudiating its commitments to Wisconsin for large-scale job creation, going from its initial figure of up to 13,000 new jobs, with 75 percent composed of blue-collar production workers, to now openly admitting to Reuters that production workers will compose only 10 percent of a much smaller “technology hub.”
Most of the jobs will be in engineering and research rather than the manufacturing jobs promised. The factory concept has been explicitly abandoned, consistent with a well-established record of Foxconn breaking promises in Harrisburg, Pennsylvania, Brazil, China, India, Indonesia, and Vietnam.
Local governments have already borrowed $355 million and spent $190 million for the project, mostly to buy land.
While some of the state’s promised subsidies are contingent on Foxconn meeting increasingly unlikely job creation goals, other costs cannot be avoided or recouped. Local governments have already borrowed $355 million and spent $190 million for the project, mostly to buy land. Meanwhile, scores of homeowners in the village of Mt. Pleasant were displaced to make way for the promised $10 billion campus, and Wisconsin’s environmental and clean-water protections were weakened specifically for the project. Costly highway and utility-line improvements continue even as Foxconn cuts back on its plans.
Rather than developing a vast blue-collar workforce in severely deindustrialized southeastern Wisconsin, Foxconn is now looking to employ a familiar model used by American corporations to avoid paying family-sustaining wages by offshoring manufacturing.
“In Wisconsin, we’re not building a factory,” Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters, citing the steep cost of labor in the United States and changes in supply. “ Rather than manufacturing LCD panels in the United States, Woo said it would be more profitable for the company to assemble the LCD panels in greater China and Japan, ship them to Mexico for final assembly, and import the finished product to the United States.”
The Foxconn project has also faced a legal challenge to its plans to divert up to seven million gallons a day of Lake Michigan water on grounds that it violates the Great Lakes Compact, designed to protect the shared waters from unregulated usage. The coalition of six environmental groups is now weighing how the shrinkage of Foxconn’s projects will affect their litigation.
The Foxconn case demonstrates the risks of investing massive subsidies in corporate deals to create jobs. “The focus is on luring employers from other states with strategies that do not lead to rising incomes because they do not make the workforce more productive,” concluded a 2012 study by the Economic Policy Institute on education and economic development. “Even worse, the focus drains resources from the most important, proven, path to increasing productivity: investments in education.”
“This [Foxconn] deal was reckless from the beginning,” Wisconsin Democratic Party Chair Martha Laning told The New York Times. “Despite multiple red flags, Wisconsin Republicans put taxpayers on the line for $4.5 billion and rewrote the entire rule book for an election-year talking point.”
That “talking point” may have become a final nail in the coffin helping defeat Governor Scott Walker in November. Only two years ago, Donald Trump pronounced that Foxconn’s planned Wisconsin factory would become the “8th Wonder of the World,” a vision that now seems delusional.