The more Foxconn talks it up, the smaller it looks like it'll be

Just because we haven't talked about Foxconn recently, it doesn't mean things aren't (or are) happening. Urban Milwaukee’s Bruce Murphy gave an update and connected the dots on some developments in an article summarized as “More Doubts About Foxconn Project.”

What tipped off Murphy that the Racine County project is again not what company officials claim it'll be came after the recent awarding of $34 million in (no-bid) contracts for “work on site utilities, roadways, and associated storm drainage.” While Foxconn claimed it was moving ahead on an LCD manufacturing plant, Murphy caught Foxconn’s main contractor in a slip of the tongue in his statements this week.

…. when the LCD plant is built, according to Adam Jelen, senior vice president with Gilbane Building Co., Foxconn’s construction manager, it will be built on the many acres of flat, compressed gravel at the Mt. Pleasant site, as he told the media. And you can’t build an LCD plant on such a base, as Willy Shih, Professor of Management Practice, Harvard Business School and an expert on the LCD industry, tells Urban Milwaukee.

“A compressed gravel foundation might be fine for a normal industrial building, but it’s probably not an LCD Fab, which has to have a massive steel infrastructure to support a vibration-free environment for equipment that has to do ultra-precision (manufacturing),” Shih says.

Murphy then flashed back to what Foxconn executive Louis Woo mentioned right after the November elections, when he admitted that products would not be made in Racine County, but sent in from other places.

….That “suggests they are building an assembly plant that will take LCDs manufactured in Asia and put them into plastic housings (high precision molding) for things like TVs, monitors for computers and other things that use electronics displays,” Shih says. “For that, a compressed gravel foundation will be fine.”

Of course, that sounds very much like the small experimental assembling plant Foxconn tried in Racine County, and which Bloomberg reported on, and which was a complete failure.

Which is why Murphy calls BS on Foxconn’s claims that this new construction will be a panel-manufacturing plant, and instead will be something much smaller.

These [Gen 6 manufacturing] plants are also tremendously expensive. The typical construction and equipment cost for the latest-generation LCD fabrication plant in Asia was $4 billion in U.S. dollars, the research paper noted. Shih estimates the proposed Racine plant, if it was built, would have a price tag of around $5 billion.

That’s a massive amount of capital to invest on a plant that according to experts, including Woo, would not be able to manufacture LCD products at a competitive price, and at a time when there is a glut in the market for them.

Which merely adds more reasons — to the many I’ve previously spelled out — to doubt this LCD plant will be built. More likely the company is spending $34 million for roads and utilities to an assembly plant.

As we have said from the beginning, Foxconn is going to build a television assembly plant - like they have in Indiana, like they have in Texas and like they have in California. It just didn't take billions of dollars form taxpayers in those other states...https://t.co/AVzbdFfym1

— FoxConnCon (@foxconncon) April 3, 2019

We’d better hope it’s only a small assembling plant, because if a $4 billion plant was created for just over 1,000 employees, Wisconsin taxpayers would be on the hook for $600 million in tax incentives, based on the 15% payback in the Fox-con package signed by then-Gov Walker.

But while the plans seem to continue their downsizing, roads and infrastructure for a much larger facility continue to be built at taxpayer expense. And people are questioning why, which led a Kenosha County committee to back off this week on a plan to acquire land for an expansion of Highway KR near Foxconn that might result in 3 houses being torn down in the area.

And Murphy’s article illustrates why it makes sense to pump the brakes on all of this public infrastructure to serve Foxconn. At this point, you can’t trust anything Foxconn says about the project in Racine County until there’s an actual facility up, people working, and we get to see what kind of work is being done. And we especially should back off due to so many tax dollars and homes that may be affected as a result, and unnecessarily if no products are actually being made at that plant.