Tuesday, February 6, 2018

Fox-con - ridiculous cost for low return. And don't let their PR tell you otherwise

The Fox-con continues to look worse for Wisconsin taxpayers by the day. This time, the head-shaking article comes from Jason Stein of the Milwaukee Journal-Sentinel, and shows state taxpayers are getting a lot less bang for the buck with Foxconn than they are with other deals.
To land the massive Foxconn factory, Gov. Scott Walker has committed the state to paying more than eight times as much per job as Wisconsin will provide under similar job creation deals struck last year, a Milwaukee Journal Sentinel analysis has found.

At more than $200,000 in state taxpayer money per job, the incentive package for the Taiwanese company is easily the state's most expensive deal of 2017, totaling more than three times as much per job as the next most costly deal.

To get a fair comparison with Foxconn, the newspaper purposefully looked only at the more expensive 2017 deals in which the state offered tax credits for jobs created. That's because it tends to cost more in tax credits to spur a company to create a new job rather than to retain an existing one.
Here are some of the findings that Stein and the J-S staff got by comparing the Fox-con to 58 other deals that were struck between Wisconsin companies and WEDC.
Foxconn's $2.85 billion in tax credits accounted for 96% of the credits that the state awarded in these 2017 deals, but the deal produced only 44% of the jobs.

The other 18 companies with 2017 deals to create jobs — not retain them — are set to receive an average of $26,300 in tax credits per job from the state. The closest deal to Foxconn was with convenience store chain Kwik Trip, which is getting $63,800 per job to expand its La Crosse headquarters. (and yes, Kwik Trip’s owners are notable GOP donors)

Foxconn would earn $219,200 per job if it holds up its end of the deal with Wisconsin. That's just over eight times as much per job as the average from the 18 other job creation deals and more than three times as much per job as Kwik Trip, the second costliest deal.

When all the 58 deals — both for newly created and retained jobs — were analyzed, they cost about $7,200 per job, or far less than for Foxconn.

The Foxconn deal would also result in lower investment levels in plant and equipment compared to most of the other deals. Foxconn would put in up to $3.52 of private investment for every $1 in state tax credits. But the other 58 deals would provide about $14.45 in private investment for every $1 in state tax credits.

And don’t buy into today's PR BS and think that Foxconn buying an office building in downtown Milwaukee can start to vindicate this boondoggle. What if other businesses also wanted to buy the building, but weren’t able to pay the price that Foxconn could pay because the local business isn’t set up to receive billions in checks from the State of Wisconsin like Foxconn is?

That being said, I bet the muckety-mucks at Northwestern Mutual Life like the extra income that they got out of it. And that’s especially the case for CEO John Schlifske and his wife, both of whom were $20,000 max donors to Walker’s campaign last year, according to the Wisconsin Democracy Campaign. But I’m sure the donation part is just coincidence.

Also noteworthy is that now a scared Walker and WisGOP (including Assembly No. 2 Jim “NE WI is Thiriving” Steineke) now want to use Foxconn as the model for another corporate handout. This one would attempt to stop 600+ layoffs at Kimberly-Clark plants in NE Wisconsin, and if you figure $200,000 a job to give away to K-C, then that’s another $120 million to throw away in the future. And who'll be the next corporation that Walker and WisGOP tries to throw unaccountable mil

(Side note that others have pointed out- we have right-to-work (for less) and manufacturers paying 0.4% in taxes due to prior Walker/WisGOP laws, along with major corporate tax cuts from DC. So why didn’t that retain the jobs at K-C and other plants in the Appleton area? Hmmmmm?)

And can anyone tell me where all of this future funding will come from? We already have a notable structural deficit in the next budget, and if either this Kimberly-Clark bailout or other pre-election Walker gimmicks like his silly $100-a-kid tax writeoff go through, that deficit will go a lot higher. It becomes hard to encourage future companies to locate here if you don’t have money to fix the roads or offer a quality of life that attracts talent, and we’ve already slid enough on those fronts during the Age of Fitzwalkerstan.

But just like with the Fox-con, it’s pretty obvious that Gov Dropout and his WisGOP colleagues are more concerned with short-term headlines and stopping their downward slide in the polls than they are with any kind of sustainable economic plan for Wisconsin. And it’s a big reason why they must go before they sell off even more of our future with another pre-election stunt or corporate giveaway.


  1. This just in: all Wisconsin businesses have threatened to lay off all their workers. The GOP-led government responded by offering them $200,000/job or $600 billion to not do so until at least after the election cycle.

    In unrelated news there will be no state government services until 2053.

  2. Well played, and you're probably not far off, if the voters of this state are stupid enough to keep the GOP in power past November.

    Also throw in the $50 million a year "rural WEDC" program that Walker is trying to slip through on a few days' notice

  3. Offer $1B in tax credits. Doesn't cost me a penny.

    1. Unless you're making an Austin Powers reference and being funny, you WILL pay for it.

      Because that money has to be made up somehow, either in service cuts, higher property taxes, or higher state taxes in some other form. Aren't you glad to be "helping"?