Thursday, June 28, 2018

As groundbreaks, Foxconn digs Wisconsin into a deeper hole of dollars and corruption

You may have heard that our president, our governor, and the Speaker of the House was in our state for the official groundbreaking at Foxconn today.

And as these scumbuckets in suits put their feet on the shovels, we found out that this boondoggle is even more of a fraudulent scam. This was summed up well by Assembly Dem Leader Gordon Hintz, who wrote a column on Foxconn ahead of Donald Trump's appearance, and drew attention to the shifting reasons and sketchy details behind the Fox-con.

First of all, Rep. Hintz notes that there will be nowhere near the $10 billion investment that was promised by the foreign company, with fewer “indirect” jobs than the Fox-con package was based on, and a different product than the large screen displays that Foxconn claimed it would make.
The problem is the facility Foxconn is now building only requires a $2 billion to $3 billion investment and does not require a local supply chain, according to industry experts. Smaller screens don’t just mean a different project scope, they mean fewer jobs than the number promised when the state incentive package was passed

The change in Foxconn's plans comes “as global panel makers face a glut of TV displays that likely will last for years,” according to the Nikkei Asian Review, a 140-year-old publication that covers Asian economics, industries and markets.
9 months after the Fox-con was passed into law, Hintz points out that we still don’t know much about what state taxpayers is giving away billions for. And with each bit of Foxconn news that does come out, the parameters change, and it looks like an even bigger scam on the public.
A deal of this magnitude, one involving handing billions of dollars in state taxpayer money to a privately owned company, requires transparency and accountability. Yet neither Foxconn nor the Walker administration have been straightforward about this ever-changing project.

The project that was awarded to Wisconsin, approved by the Legislature and signed into contract by WEDC has fundamentally changed in ways that impact the project cost, investment, employment and tax subsidy. Yet very little has been shared with the public about the impacts of these changes.

And despite the repeated pledges by Foxconn to create 13,000 jobs in Wisconsin, last week the chairman of Foxconn, Terry Gou, said the company plans to replace 80 percent of workers with robots in the next 5 to 10 years. What will this mean for the workforce demands at Foxconn moving forward?
Related to the last part that Rep. Hintz brings up, this little detail seemed a bit ominous.

But wait, Foxconn claims the smaller first factory is only the beginning!
The firm, however, has said “categorically” that it remains committed to investing the full $10 billion in what it has named the Wisconn Valley Science and Technology Park, and to creating 13,000 Wisconsin jobs with an average $53,875.

In a statement Thursday, Foxconn said it still plans to build the larger type of factory in a second phase of its project, along with "other next-generation manufacturing facilities."…

In its statement, Foxconn said it has always planned a phased approach of construction "to ensure that we continue to meet current and projected demand for advanced LCD panels and the other technologies and products that will be the focus of that campus."Foxconn says it could build the larger type of factory in a second phase of its project. The company has ample land available for such construction.
Riiiight. Because THIS TIME, Foxconn is telling you the straight story, and these plans won’t “change” either. Maybe if you were Governor Dropout, you’d be dumb enough to beLIEve them, but I’m not a college dropout nor am I lifetime grifter/politician, so I don’t.

Some of the lack of transparency Rep. Hintz references relates to the contracts which Foxconn has been handing out to build the facility. These no-bid deals have included a sizable number of Walker and WisGOP donors, including general contractor Gilbane’s $359,000 to Walker’s campaigns over the years, and Walker donors are also in on the latest round of $14 million in contracts that were just announced this week.

(In fairness, the many Illinoisians that end up working at Foxconn will be familiar with the pay-to-play kickbacks, and impressed by the dollars being sent to donors. Maybe that’s the “new level” Walker and WisGOP hacks keep talking about with the Fox-con).

Another concern is that taxpayers will still be on the hook for the near-full amount of the billions in expenses for the Fox-con, even if they don’t hire the 13,000 individuals at the site that they claimed they would. Let’s go back to the Legislative Fiscal Bureau’s final summary of the Foxconn bill, and note this part.
Under the Act, "state payroll" means the amount of payroll apportioned to this state, as determined under the old corporate apportionment statutes. "Zone payroll" means the amount of state payroll that is attributable to wages paid by the claimant to full-time employees for services that are performed in the zone or that are performed outside the zone, but within the state, and for the benefit of the operations within the zone, as determined by WEDC. "Zone payroll" does not include the amount of wages paid to any full-time employees that exceeds $100,000. A "fulltime employee" means an individual who is employed in a job for which the annual pay is at least $30,000 and who is offered retirement, health, and other benefits offered to an individual who is required to work at least 2,080 hours per year.
So a few thousand high-priced engineers overseeing the robots could give Foxconn as much of a taxpayer-funded handout as 13,000 line workers. But you know what won’t be scaled down even if fewer people work at a smaller Foxconn plant? The $386 million in state tax dollars earmarked to upgrade the highways around Foxconn, along with the hundreds of millions of dollars in local tax subsidies and infrastructure improvements to serve Foxconn.

And the amount of salaries paid by Foxconn “as determined by WEDC” shouldn’t make you feel confident at all, because WEDC was spending all day making tweets like this on its taxpayer-funded account.

If the people of this state are stupid enough to keep Scott Walker and his lackeys at WEDC in power after November, do you think WEDC will do any kind of follow-up to verify Foxconn’s claims of employment and wages before giving them 17% of that money back in tax dollars? HELL NO! They’d probably go public and portray the inflated total as fact before Foxconn does!

As I’ve said before, the best thing that could happen for this state’s fiscal stability and future economic competitiveness is that today’s stunt is the last thing Foxconn does in the state, and that they leave ASAP. I don’t see that happening, unfortunately, because just like Republicans in DC, Scott Walker and the rest of the Wisconsin GOP will try to hurry the Foxconn development as much as they can before the November elections.

After all, the Fox-con has already set precedent in throwing out environmental rules for a designated site, and it enables GOPs to throw out so much money on this development in Fiscal Year 2019 that it’ll hamstring the Dems who will have to clean up the mess that will be left behind. And no matter how the paid-off media and GOP hacks like Scott Walker might try to portray it, the Foxconn seems like a grift and a boondoggle that becomes a bigger albatross for Wisconsin by the day.


  1. I heard our dear governor state during a radio interview this morning that every dollar invested in FoxConn will return 18 dollars. Not sure what study he was referring to. Sounds like another big lie.

    1. It's a bunch of BS from the MMAC, who have given massive money to Walker and WISGOP, and are getting a sizable amount if these no-bid kickbacks. It's GOP Human Centipede stuff.

      You know what has an even higher payback? Investing in the UW System. And that helps a lot more people in a lot more places than just one company in the corner of the state.

    2. I don't think the point is helping a lot of people. The point is helping a few big GOP donors.

  2. I can't figure out why they'd want to come here. Fond as I am of the Wisconsin workforce (which is already tapped out according to the jobs crisis complaints I've been hearing), a 13,000 person factory here in the US is a drop in the bucket for an operation like FoxConn.

    Are they looking to dodge tariffs? Shoehorn their way into US politics? Is it the water? Why come here and deal with things like OSHA and the EPA when they already have facilities in China that dwarf the proposed development?

    Sure the tax benefits mitigate the cost, but why do it at all? Can a US factory produce the sort of margin they get in China? Will they have better access to US technology having built here?

    Assuming this happens, I think we should be pushing for the most automation possible. 13,000 mid-pay assembly jobs really won't help the work force much.

    Making Wisconsin into a hub of robotics, engineering and automated manufacturing might be a whole different opportunity. Could Wisconsin become a Midwest Silicon Valley? Get the UW system and maybe MSOE into it. At the same time, make sure our partners understand that such cooperation and enhancement will be tied to some legal and environmental concerns being addressed. Make thus a deal people can really embrace.

    If we're really stuck with FoxConn, let's make a feast out of this turkey. Maybe I'm being Pollyanna about it, but it would at least be a way for a Democrat to sound a different bell and maybe throw Walker off his stride.

    1. Your last point might be what's behind Foxconn buying distressed downtown buildings in Milwaukee and now GB and adding a few hundred high-tech and exec-level jobs there. Of course, they still get the tax write-off from those higher-priced jobs (in fact, they give them a bigger tax break, since it's % of salaries), while keeping all of the land and infrastructure that Racine County is going to give them from the now-downsized plant there.

      That GB move seems like total desperation, where Walker and WEDC likely pleaded with Foxconn to go into an area that he has to win big in if he wants to stay in office past November. But given the defunding of anything else that would attract talent (like schools, roads, environment), how are they going to get a bunch of people to pack up and move to Green Bay? Especially if Foxconn acts like a typical Wisconsin corporation, and won't pay anything near what those same jobs would get someone in Chicago, the Twin Cities, or other larger metros.

    2. The EPA has already rolled over for Foxconn, they changed the clean air compliance boundaries, Wisconsin has already exempted them from wetland rules, Trump has appointed Cathy Stepp to the EPA region 5 office which will oversee the plant, and do you really think OSHA under Trump will be a hinderance?

    3. Well said geo- "Open for Business" means you can wreck the environment and screw over the 99% as much as you want. How's that been working out for us? (HINT- not well)

      Much like with a lot of other things GOP, these were not happy coincidences. Foxconn found a state stupid enough to give it all away to them, and they'll give us a pittance of jobs out of the goodness of their heart (if you recall the words of Mr. Woo, we should be saying "Thank you, Mr. Foxconn!"), Then they'll take a lot of profit for a few years, and promptly take off as soon as they can (2032 at the latest), leaving us to clean up the wreckage.

    4. Even with the hamstrung OSHA and EPA, we're saying FoxConn can make more money in Wisconsin than they could with a factory in China? I'm an IT guy; this is not my knowledge area, but that doesn't pass the smell test.

      And unlike in China, US executive attitudes towards things like the EPA and OSHA change. Sometimes rapidly. That introduces a long term risk they simply don't have in China. Why take it on when you don't have to?

      I can't stop thinking there's more going on here than one factory. Ever play "Go"? You can bet your ass Terry Gou has. I don't think there's a lot of second order thinking going on in the Walker administration right now. They need a win, they know it, so they swallowed the deal whole.

      Looking at it from a much larger scope, the US will be handing over economic hegemony to Asia in the 21st century. That seems inevitable. I suspect the Chinese government and the US government are going to be coming closer together; it just won't be in the way most Americans would have hoped. The Chinese are not going to become more like Americans. Americans are going to be pushed to tolerate a government more like China's. I'm way off topic here. Sorry.

      Maybe the best argument against FoxConn is the simplest. Wisconsin tax dollars are now funding Chinese manufacturing. Period.

    5. I think it's all about the tax handouts and PR from Foxconn's perspective. They just found a desperate sucker willing to play their game.

      And it allows them to play off of the next desperate community and politician to give them the next boondoggle, and Trump will have another "Made in 'Merica" event. Win-win!

  3. WEDC's gushing ("amazing technology!") over that updated Driver's Ed simulator is making me feel like Foxconn is taking us (and maybe WEDC as well) for a bunch of rubes.

    I don't see where driverless cars would even fit in the picture, and have no idea where Foxconn might be (if anywhere) in the development process. Except for having a really cool simulator for us to gawk at.

    Any intel on where this fits into the gee whiz golly wow greatest thing to ever happen to Wisconsin since grated cheese?

    1. It's part of the whole GOPper-ganda machine trying to sell this garbage deal to rubes who don't think about the price tag or the numerous other chances for economic development that are being neglected to put all of our money on this bet.

      It would be nice if our media would cast a critical eye to this BS.

  4. It's about climate change and water maybe.