Sunday, July 29, 2018

The other side, how Foxconn takes away from the rest of WIsconsin

Over the last couple of weeks, the Scott Walker campaign team has continued to try to improve bad poll numbers on the Foxconn project by claiming the company's plant (and tax funding) in Wisconsin will help the rest of the state. I even see digital ads from Walker pop up on this and other sites I visit trying to spread this claim, which underscores how vulnerable they think they are on this issue.

However, a closer examination shows that the voting public has been right all along - the Fox-con and its funneling of resources to that one company and the SE corner of the state really is taking away things from the rest of Wisconsin. Bruce Murphy in Urban Milwaukee called out the photo ops Walker and Foxconn have done in the last month where Foxconn says they plan to (key word - PLAN TO) buy buildings in Green Bay and Eau Claire and hire a few hundred people in "innovation centers"
All of which left me with some questions for the company. What is the economic advantage for Foxconn of having three different innovation centers spread around the state? And what is the company paying for these buildings in Green Bay and Eau Claire and when will they be closing on the purchase? Will it be after the November election when Walker hopes to be reelected?

Foxconn responded with a long email, declining to disclose the purchase price on the buildings, their owners or whether the purchase will occur before or after the November election. Most of the email offered a description of why so many mini-Foxconns are spreading across the state, and I must note their PR writing is getting better.

“Having a presence in different parts of the state helps us recruit potential employees, strengthens our ability to collaborate with entrepreneurs and start-up companies and gives us more opportunities to find value-added suppliers who can contribute to the project’s success,” the company wrote. “Not all the knowledge, expertise, talent and suppliers that will be associated with our significant project, and that are found in Wisconsin, reside in the south-eastern part of the state.”

No doubt there are potential employees and suppliers to be found in other parts of the state, but are we living in the age of plank roads and mule teams? Or are these potential partners too shy to use computers, email and cell phones or simply drive along those highway connections to Foxconn’s massive Racine campus that we taxpayers are financing. Why must the company instead create satellite connections all over Wisconsin in order to coax these elusive workers and companies from getting aboard the gravy train of the most publicly subsidized foreign company in American history?

Given the massive subsidy Foxconn is getting, it can probably afford to throw a little money at Eau Claire and Green Bay, even if those satellite centers are completely unnecessary. And Foxconn has every incentive to ensure that Walker wins reelection, given that all eight Democratic candidates for governor have condemned the deal and one, Matt Flynn, has promised to fight the deal in court. Foxconn, moreover, has a long history of backing out of projects it announces. If it could back out of deals in India, Vietnam, Brazil and Pennsylvania, why can’t it walk away from Eau Claire and Green Bay? It can merely explain, a couple months after the November election, that economic conditions have changed, or that it is having no problem getting the suppliers and employees it needs for its Racine plant, and so it won’t need those political outposts — sorry, innovation centers — that helped reelect their generous benefactor.

Don't worry, Foxconn is thriving in this Wisconsin town

What also needs to be noted is that with Foxconn using a tax-subsidized work force (and likely using the freed up cash from that and other tax writeoffs in these transactions), it limits the ability of other established and unsubsidized businesses from getting the same opportunity to locate in those facilities in Eau Claire and Green Bay. And that looks even worse if Foxconn is making an empty promise of job growth that never appears, because that's several months wasted on this charade instead of having actual business activity being generated.

Meanwhile, the construction at the the "main plant" in Racine County is clearly detracting from opportunities in the rest of the state. Terry McGowan is the president of the construction-heavy Operating Engineers 139 union, and told TMJ-4 that his workers in other parts of the state aren’t doing as much in their home areas because so much is being sent down to the Foxconn-sin region.
“Well the impact for us as a statewide union means that all this money, all the resources from the state have been pulled down to Southeast Wisconsin, I mean if I get north of HWY 21 my members aren’t real happy,” he said. “They feel like a lot of their infrastructure is being ignored up there.”

Motorists have definitely noticed the detours, slowdowns and upgrades on I-94, it might be a headache but it’s also a boom for the economy.

The union is working with its members in Northern Wisconsin to find work in the Southeastern part of the state….

There’s no timetable on when things will pick back up on fixing the infrastructure in other parts of the state.

The union says it all depends on when the next transportation budget comes out.
This is part of the analysis of the Fox-con that keeps getting missed – the added activity in and around Racine County is taking away activity in other parts of the state.

The reduced activity can take many forms. It can mean that investments in other parts of the state go by the wayside, as McGowan’s comments indicate and as shown by as much as $90 million in road projects not being done in this biennium to pay for Foxconn work.

Related to that, there’s only so many people that live in this state, and in a time of near-full employment, having a new project in one area makes it even more likely that it takes away from projects in another area (which makes the Fox-con an even dumber move to happen when it did), unless you think that the project is going to motivate a bunch of new people to move to the area permanently. And given the de-investment that Walker and WisGOP have done for schools, other services and quality of life, many people aren’t going to go for that.

There also is the prospect of higher taxes and/or spending cuts that we will all have to take on as a result of the subsidies given to Foxconn - deficits that are likely to be higher than projected, since it's increasingly likely that there will be fewer workers at the Foxconn plant, especially in the earlier years). This will cut into the ability for more work to be done in other parts of the state in the coming years, but that’s never mentioned when GOP hacks and corporate media talk about “the impact of Foxconn”.

Lastly, having Foxconn and the Walker Administration tied at the hip reveals that the GOP's talk about "free markets" is a complete fraud. They are using tax dollars to give Foxconn an edge over current Wisconsin businesses and projects time and again, and in addition to the taxpayer costs, the decisions to funnel so many limited resources to Foxconn is coming at the expense of many other people in Wisconsin who have often played by the rules and done things without a need for special exemptions and giveaways. And once Foxconn leaves us in the lurch before the state gets back its costs for this boondoggle, there might be fewer firms and resources available to pick up the slack. Which is why it's best that the Fox-con gets short-circuited and diminished ASAP, before the rest of Wisconsin ends up missing out even more.


  1. Another question that could easily be asked that might shed light on what the innovation centers are for, would be to question why only Green Bay, and Eau Claire were considered and not La Crosse, Superior(twin ports) and Wausau areas were not chosen. At the very least, it would be a good way to suggest other areas that have affordable talent available that could also benefit from additional technology jobs. The response if there is one, might give additional clues on what the real goals are.

    1. You can bet it has little to do with the actual labor pool in those towns, and a lot more to do with which media markets Walker needs help in.

  2. Foxconn cannot be wished away.

    And Foxconn will not listen to the people or call for a show of hands.

    This need to be litigated away; repeal of enabling legislation is not sufficient.

    We need commitment to litigation, and only one candidate is on board, Matt Flynn.

    Christ, Tony Evers wants Foxconn to stay.

    1. I'm all for suing Foxconn when they break their contract, and having WEDC give HEAVY oversight to Foxconn's claims on bills and job growth, with harsh penalties and clawbacks if they try to slip anything by that didn't happen. The Walker Admin will not do this.

      Heck, Flynn could file a suit today, instead of wasting time and money with this vanity run for Governor that he can't win. Maybe he can do that on Aug. 15.

    2. Unsure if Flynn (or any others aside from Evers) can win the primary, but to my mind Flynn by far has the best Facebook page on issues. He is by far the most prepared on issues and can engage them with force and command at several levels above the others...

    3. Dude, Foxconn and Wisconsin cannot agree to perform duties under an illegal contract — illegal under the Wisconsin Constitution, statute and case law. The contract is not binding, Matt Flynn will argue. The legal strategy is outlined, but in sum Foxconns' costs (which is all they care about) will exceed the costs of doing business and pilfering Wisconsin.

  3. The litigation will have to be launched by the Gov of Wisconsin as plaintiff — questions of legal standing. Evers won't file litigation, he actually wants to throw in the towel.