Thursday, July 5, 2018

"Trump and Walker are grifters." So are they the suckers on Foxconn? Or do they think we are?

While Scott Walker and Donald Trump had their press event last week at the site of the Foxconn factory in the SE corner of Wisconsin, we found out that what was being made at the factory wasn't what was promised when the Fox-con was passed into law less than a year ago. In particular, the large screens that Foxconn and Wisconsin GOP claimed would be made at the facility isn't going to be so large.
While two economic-impact analyses prepared last year and the state’s contract with Foxconn say the company will build a type of factory that carves display panels out of immense sheets of wafer-thin glass, Foxconn now says it first will erect a plant that uses much smaller sheets of glass.

Such factories typically are much smaller and less-expensive than the sort of plant Foxconn originally planned, industry observers say....

Contracts Foxconn later signed with both the state and the local governments also refer to the “Generation 10.5” fabrication facility the company will operate.

But Foxconn no longer plans to initially build such a plant. Instead, the company first will build a “Generation 6” factory — Gen 6 in industry shorthand. Such plants are much smaller and much less costly than Gen 10.5 factories, use different machinery and turn out different arrays of products, industry watchers say.
The downsizing of the plant to smaller screens and less investment led Urban Milwaukee’s Bruce Murphy to openly ask “Is Foxconn Double Crossing Walker”? As Murphy points out, it wouldn’t be first time Foxconn pulled such a bait-and-switch.
The implications of this change are enormous. For starters it means Foxconn will not be building the kind of factory it first promised to the delegation lead by Gov. Walker last year and which helped sell the huge taxpayer subsidy: Walker was shown the plant run by Foxconn subsidiary Sharp in Japan, which manufactures the large screens.

It could also mean Foxconn never gets close to a $10 billion investment or 13,000 employees. Foxconn officials now say the Racine plant will be built in “phases” and it could eventually add a facility to manufacture the larger screens. But this is the same company that promised to invest $5 billion and create 50,000 jobs in India, only to cut it to a fraction of that. “Similar results were seen in Vietnam, where Foxconn committed to a $5 billion investment in 2007, and in Brazil, where Foxconn spoke of a $10 billion plan in 2011,” and the plans were never realized, the Washington Post reported. And then there is Harrisburg, Pennsylvania, where Foxconn’s promise to invest $30 million and hire 500 workers never happened.
And if Foxconn overpromises and underdelivers when it comes to the factory that is ultimately built, the biggest losers won’t be the state’s finances (even though they’ll be hurt quite a bit), but the local governments in Racine County and individuals living in Southeast Wisconsin. Those groups have already have sunk a ton of money into this project, and they aren’t going to be able to get it back.
True, the state subsidy is set up to reward the company in increments, so Foxconn would only get a portion of the promised $3 billion from the state if it falls short of the 13,000 jobs. But all the other subsidies, worth more than $1 billion, will happen regardless of how many jobs are created. That includes $764 million in local subsidies, $164 million in new state and local roads to serve Foxconn, a $120 million electric power line paid for by utility customers, and some $7 million on a state-paid ad campaign to attract workers for Foxconn. On a per-job basis, a smaller, $3 billion plant would actually cost taxpayers even more.
And then if the voters of this state are stupid enough to return Scott Walker to power after November, along with his appointed lackeys at WEDC (who are in charge of overseeing the taxpayer incentives to Foxconn), it seems likely that Foxconn will try to extort even more money out of Governor Dropout’s administration at the expense of the rest of us. Murphy notes that this would likely include another tax-funded handout for a Corning glass plant if Foxconn reverses itself again in “Phase 2” of its development, and starts manufacturing larger screens in Southeast Wisconsin.
The reality is that Foxconn has the state over a barrel. If Walker gets reelected, that gives the company four more years to squeeze him for ever more money. It can push for a subsidy for Corning (surely Foxconn knew all along Corning would want a subsidy), and for other giveaways, or refuse to go beyond the smaller plant. As the business publication Bloomberg predicted in an editorial lambasting the deal, Foxconn could “come back again and again, as blackmailers tend to, seeking yet more blandishments.”

Despite all of this taxpayer money that’s on the line, Murphy mentions the quote from WEDC spokesman Mark Maley at last week’s groundbreaking where Maley said “It’s not the state’s role to get involved in the business operations of one of the largest and most successful companies in the world.”

Murphy reflects my amazement at that comment from WEDC’s flack.
Right, the state isn’t involved in Foxconn’s operations. It has merely created a plan that if fully implemented, will charge everyone in Wisconsin $1,774 per household in taxes to subsidize the company, and even if the plan turns out much smaller will still leave taxpayers paying up to 13 percent of the cost to build and equip Foxconn’s plant and 17 percent of the wages of its employees. The plan will also waive state environmental rules for the company, allow it to skip the state appeals court and go straight to the Supreme Court on legal issues, a benefit enjoyed by no other company in Wisconsin, and will charge utility customers over a vast swath of the state for Foxconn’s electric power. One can only imagine what the Walker administration would do if it did choose to get involved in Foxconn’s operations.

Former Wisconsin State Journal writer Bill Kaplan noted the contrast between the constant promotion by Walker bad Trump of Foxconn was happening at the same time that those two "leaders" were not seeming to care about other, already-established Wisconsin manufacturers. Kaplan made the comparison in an article fittingly titled “Trump and Walker are grifters.”
No, Trump and Walker are not making our nation great again. The U.S. was already great before them. However, Trump has declared a trade war (tariffs) against Canada and Mexico, Wisconsin’s top markets for state exports. And, as if that was not enough, Trump has done the same to the European Union and China. Trump said: “trade wars are good and easy to win”. But there’s no real strategy, just chaos and confusion. Moreover, our trading partners are retaliating and raising tariffs which will hurt Wisconsin: cheese, cranberries, ginseng, Harley-Davidson, lawn mowers, toilet paper and more. Walker raised a muffled protest, while Wisconsin businesses and manufacturers howled.

Harley-Davidson said it would shift production of some motorcycles sold to Europe, to outside of the U.S., avoiding European retaliatory tariffs. Trump threatened Harley-Davidson, while Walker hoped that the Foxconn groundbreaking would change the narrative. However, reality intruded. Although Trump called the Foxconn factory the “eighth wonder of the world”, while Walker talked about “Wisconn Valley”, there was big trouble. The Milwaukee Journal Sentinel headline said: “Foxconn scales back plans for its first factory in Mount Pleasant”. What other shoes will drop? Trump and Walker are grifters.

"Trump’s angry insistence that Harley’s products should be made in the United States is at odds with his own record as a businessman. His branded products – clothing, vodka, home goods and hotel amenities – were manufactured in at least 12 countries outside the United States, including China, Mexico and Indonesia …” (Washington Post). Worse, Walker’s spending binge on Foxconn will blow a hole in Wisconsin’s future. Over $4 billion of state aid (much of it in direct cash payments) and other state-local spending will haunt Wisconsin. How will education and roads be funded after the Foxconn giveaways?
That's a good question, Mr. Kaplan, and it's a topic that Walker refuses to talk about, even with $1 billion deficits in both the General Fund and the Transportation Fund looming with the next state budget.

And since Scott Walker and the hacks at WEDC don’t seem to care about giving oversight to the multi-billion dollar Foxconn project in this time of tightening budget, and are not giving any input to Foxconn's plans while also failing to speak up about how GOP policies might affect current Wisconsin businesses, then their asses need to be booted out and replaced by people who will.

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