Foxconn delays and double-talk mean it's time to cut the cord

I haven't spoken about the Foxconn boondoggle in a while. And after this week, it's become more apparent that whatever might end up at the Foxconn site will be far from the "eighth wonder of the world," and more like a giant warehouse project with incentives that go far beyond similar incentives to corporations.

As Bruce Murphy recently noted in Urban Milwaukee, that is not what this thing was sold as.

The planned “LCD manufacturing plant,” as Foxconn continues to call it, would have an 881,549-square-foot footprint. In addition, there are plans for some auxiliary buildings related to chemical storage and wastewater treatment. And Foxconn also built a 120,000-square-foot multi-purpose facility last year.

But all this probably won’t total much more than 1.1 million square feet — or about one-eighteenth of the 20-million-square-foot campus Foxconn originally planned to build. And yet state and local governments are spending $1.6 billion to create infrastructure and connections for a project that looks like it will create a tiny fraction of the promised $10 billion in capital investment and 13,000 jobs.

And that infrastructure is spent regardless of how many people work there. In addition, don't forget that Foxconn only needs 520 jobs created IN THE STATE (not just in Racine County) to be eligible for hundreds of millions of dollars of additional tax breaks that will come to it as checks from the state. And Foxconn will likely argue that includes anyone working at its recently purchased lobbying headquarters office building on the Capitol Square in Madison should be part of that jobs total.

Foxconn Delaying Mount Pleasant Plant?> Wisconsin Public Radio’s Corri Hess noted that the timetable for the major facility in Racine county has been pushed back again.

In March, the tech manufacturing company announced construction on the Mount Pleasant Gen 6 fabrication facility would begin in summer and would be operational by the end of 2020.

But Thursday morning, an email sent out by WEDC with the subject line: “Special Bulletin: Wisconn Valley News” updating bid opportunities said the factory was now set for completion in early 2021.

The email also stated the company had begun pouring the concrete foundations for its “first major manufacturing facility in Mount Pleasant,” which will be “the first LCD screen fabrication facility of its type in North America. It will have nearly 1 million square feet of building space.”

1 million square feet? That sure isn't the 20 million square feet that was being hyped up last year. Yet, a Foxconn statement from Thursday claimed there was nothing to worry about.

“Today marks another milestone for Foxconn in Wisconsin,” said Dr. Louis Woo. “The installation of foundations and footings comes after months of careful planning and preparation, which demonstrates Foxconn’s concrete commitment to advanced manufacturing in Wisconsin. We are incredibly proud of the significant progress that Foxconn has made in Wisconsin in just one year, and we look forward to continued progress towards Q4 2020.”

Riiight, just like how these guys were saying 1 year ago this week that things would be rolling off the line in Racine County this year…until it wasn’t.

By the way, 3 of the 4 guys in that picture aren't in those positions anymore, and the 4th may well be gone in 18 months.

The WPR article also has this interesting bit from Asian business analyst Alberto Moel, who indicates Foxconn is likely not going to grow much in the near future because of the maturing life cycle of their products.

“If you look at the example of flat panel TVs, it went from nothing because they didn’t exist to everybody having one and there’s no room for growth in flat panel TVs,” Moel said. “And that’s what is happening now with smart phones.”

I'll now throw in this report from the Verge's Josh Dzieza, who has been all over the empty promsies and lack of developments with Foxconn in recent months. Dzieza notes that the details we know about the project don't come close to matching the big talk of the company and GOP hacks.

Bob O’Brien is the president of Display Supply Chain Consultants, and he was recently brought on by Wisconsin Governor Tony Evers to advise on the LCD industry. He has been watching for orders of the photolithography equipment and other machinery an LCD fab would require. Foxconn would have to order the equipment by the end of June in order to begin operations by the end of 2020, O’Brien says, and he has yet to see any orders. Which isn’t to say that Foxconn definitely won’t build an LCD factory, O’Brien says, but he would have to give them “every possible benefit of the doubt” to see how the company would meet its schedule: maybe, for instance, Foxconn could build vibration-dampening pads around the machinery, or take the unusual move of bringing in equipment from existing factories elsewhere.

Even as Foxconn lays the foundation for its factory, it continues to expand the list of devices it might make there. First it went from televisions and monitors to “vertical solutions” for education, health care, medicine, entertainment, sports, security, and smart cities. Earlier this month, an executive said the factory might also produce servers, networking products, and automotive controls. Though the expanding product line was treated as a sign of Foxconn’s commitment, it actually creates more uncertainty around the project. Manufacturing servers is, after all, quite a different process from LCDs...

Foxconn says it will still eventually employ 13,000 people, and that this factory is only the initial phase. The company says the factory will come online in the fourth quarter of 2020, though Gou also recently told reporters that Trump would attend the start of production next May. Foxconn has said the factory will employ 1,500 people.

Yet the building plans Foxconn submitted to the village show only 570 parking spots. At the end of last year, the company employed just 156 people in the state. It’s possible Foxconn could make up the remaining thousand or so workers by filling its currently vacant innovation centers, though its current rate of hiring makes that unlikely, and it’s probably not what anyone had in mind when they envisioned the return of manufacturing jobs to Wisconsin. To put this shortfall in perspective, Foxconn’s original target was to employ 5,200 people next year.

So one year after the groundbreaking, Foxconn owns a lot of vacant office space across Wisconsin, and it’s building something, but that something has gone from the first Gen 10.5 outside of Asia, to a much smaller Gen 6, to an assembly facility, back to a Gen 6, to possibly not even that.

Lastly, we just found out that Wisconsin Economic Development Corporation (WEDC) CEO Mark Hogan is going to step down this Fall. Not coincidentally, Governor Tony Evers gets the power to appoint the CEO of WEDC on September 1, and given that WEDC oversees the Foxconn project, doesn't it seem like a good time to change course?

We already know Foxconn has changed what they claimed the project would be when it this boondoggle was passed into law 2 years ago, and they still refuse to be up-front about their plans and what they will (or won't) do in Racine County today. Meanwhile, we have thrown hundreds of millions of dollars of infrastructure down the drain, changed environmental laws for this company, and cleared many residents off of their land.

ENOUGH! There's $211 million being set aside in the 2019-21 budget for a project that won't be happening in any manner that resembles what it was claimed to be. I'd love to see Gov Evers write down that amount with his veto pen in the next week, and signal that he will cut the cord on Foxconn. Give that rent-seeking corporation a small check to have them go away, and stop the bleeding before they take a lot more from Wisconsinites in future years.