Foxconn in Wisconsin

Foxconn groundbreaking with Governor Walker, President Trump, CEO Gou and House Speaker Paul Ryan

The possible construction of a $7 billion factory in the United States that would employ as many as 50,000 people was discussed with reporters by Terry Gou, Foxconn founder and CEO, on January 22, 2017. He had earlier told Masayoshi Son, head of SoftBank Group Corp., that the U.S. has no panel-making industry but it is the second-largest market for televisions.[3] By April, Gou had a meeting with Governor Scott Walker that had been arranged by the Trump administration.[4] President Donald Trump had suggested southeastern Wisconsin to Gou after seeing a vacant industrial site on a helicopter flight with his chief of staff, Reince Priebus, earlier in April.[5] Walker called a special session of the Wisconsin Legislature in July after signing a MOU with Gou.[6] In November 2017, the Scott Walker administration in Wisconsin approved an agreement with the Taiwanese manufacturer Foxconn to build a plant in Racine County.[7] Foxconn sought to locate a plant in the Great Lakes region, because it needed access to large amounts of water.[8] The other Great Lakes states were not willing to offer as generous subsidies as Wisconsin.[8] As part of the agreement, Foxconn was set to receive subsidies ranging from $3 billion to $4.8 billion (paid in increments if Foxconn met certain targets), which had it been paid out would have been by far the largest subsidy ever given to a foreign firm in U.S. history.[9][10][8] Much of this subsidy would be paid in direct cash payments from taxpayers since Wisconsin already exempts manufacturing companies from paying taxes.[5] Foxconn said in return that it would set up a $10 billion factory that initially employed 3,000 (set to increase to 13,000 by as early as 2022).[9][11][12]

Numerous economists expressed skepticism that the benefits would exceed the costs of the deal.[11][13][14][15][16][17] Wisconsin's nonpartisan Legislative Fiscal Bureau estimated that the Foxconn plant investment would not break even until 2043, and that was in the best-case scenario.[18] Others noted that Foxconn had in the past made similar claims about job creation in various localities which did not turn out to be true.[9][19][8]

Initially, the subsidies were set at $3 billion, which would have cost the state $231,000 per job created (under the assumption of 13,000 jobs).[11] The cost of the subsidies were higher than yearly state funding for the University of Wisconsin system and the state prisons.[11] Other estimates of the subsidies go as high as $4.8 billion, which meant that the cost of the subsidy per job (assuming 13,000 jobs) was more than $346,000.[9] Depending on how many jobs were created, the cost per job would have gone as high as more than a million dollars.[5] This contrasts to an average subsidy in the US of around $24,000 per job.[4]

Walker exempted the firm from Wisconsin's environmental rules regarding wetlands and streams.[20][8] Walker and the Trump administration rolled back air pollution limits in the area of the plant, overruling objections of Environmental Protection Agency staff.[5][9][21] The plant was estimated to contribute significantly to air pollution in the region.[22] Environmentalists criticized the decision to allow Foxconn to draw 7 million US gallons (26,000 m³) of water per day from Lake Michigan.[8]

At the end of 2018, Foxconn did not qualify for $10 million in subsidies, as it created only 156 of the 260 jobs required under the agreement.[23] In 2019, an audit found only employed 113 full-time workers of the 189 workers claimed met the criteria in the contract.[24] In 2020, the WEDC determined Foxconn would not receive tax credits for work done in 2019, saying it hired only 281 tax-eligible employees, did not carry out the Gen 10.5 LCD project, and only made $300 million in capital expenditures.[25] The company countered by claiming it hired more the minimum for tax credits of 520 eligible full-time workers and that it had invested $750 million.[26] Wisconsin Economic Development Corp. does not expect Foxconn to fulfill its compliance with the state agreement to qualify for tax credits for the next three years according to the budget prepared by the Wisconsin Department of Administration.[27]

The Wisconn Valley Science & Technology Park was established to provide a site for the Foxconn campus and factory. The roughly 4 square miles (10 km²) of land necessary for the site was in part made possible by forcing homeowners to sell at a fixed price under the threat of seizing the land under eminent domain.[5] Hundreds of residents were moved out of their homes.[28]

A tax-increment financing district was formed in 2017 to pay for a $764 million investment to support project at the local and regional levels. This was later increased to $911 million.[29] Mount Pleasant and Racine County have made substantial upfront investments in infrastructure and land acquisition for the project since 2017. Funding and property tax revenue from Foxconn and other businesses in the district will be used to pay back these costs over 30 years.[30] Officials from the Village of Mount Pleasant and Racine County said Foxconn Technology Group "continues to fulfill all of its financial obligations under the local development agreement and is already the largest taxpayer" in both municipalities according to a February 2021 joint statement.[29]

Major contracts for the utilities, roadways and other infrastructure were let in March 2019.[31] Substantial upgrades were made to the town water, sewage and electric systems for the project.[28] In 2018, the Walker administration shifted up to $90 million in local road funding to road work related to the Foxconn factory.[32]

The Wisconsin state legislature granted Foxconn special legal privileges within the Wisconsin judicial system.[5] In June 2018, President Trump praised the plant, describing it as "the Eighth Wonder of the World" at the groundbreaking.[33][34][35][36][37] A 120,000-square-foot storage facility (11,000 m²) was built in 2018. Construction continued in 2019 with a 1-million-square-foot building (93,000 m²) intended for manufacturing but Foxconn has permission to use it for storage also.[30]

In January 2019, Foxconn said it was reconsidering its initial plans to manufacture LCD screens at the Wisconsin plant, citing high labor costs in the United States, and that it would hire mostly engineers and researchers, rather than manufacturing workforce.[38] In February 2019, Bloomberg News reported that the plant was "unlikely to ever employ 13,000 workers."[12] In an interview in July 2019, Governor Tony Evers said that Foxconn told him the factory would open by May 2020, but would employ only 1,500 workers.[39]

In January 2020, construction work on some buildings was continuing, and Foxconn's founder Terry Gou insisted the factory would be operational within 2020.[40] The company says the globe-shaped structure under construction will house a network operations center.[30] The center is not part of the original agreement with the state.[27]

In April 2020, Foxconn announced plans to make respirators in partnership with Medtronic at the Wisconsin plant in response to the COVID-19 pandemic.[41] Around the same time, Foxconn also began assembling procedural masks in Mount Pleasant under the Sharp brand.[42][43][44]

Foxconn confirmed the development of data center infrastructure and high-performance computing capabilities in November 2020 in response to reports that key components for Google servers would be assembled here.[45]

Foxconn has also purchased buildings in various cities to establish Innovation centers.[24]