Wednesday, January 30, 2019

No, we're not getting our money back from a downsized Foxconn

Now that the Internet is unfrozen, I wanted to go into today's Reuters headline of "Foxconn reconsidering plans to make LCD panels at Wisconsin plant."

First, let's remind you that Foxconn originally said this plant in Racine County was going to be making large-scale LCD screens. Then they backed off last June and said Foxconn would make smaller LCD screens, and that there wouldn't be a need for an associated glass factory. Which is not what Scott Walker and other Wisconsin officials sold to the public when this scam was announced in 2017.

Now Reuters' correspondent in Taipei says Foxconn won't even make those panels, and I'll remind you that journalists in Asia have tended to be on the money for what would actually happen later here in Wisconsin, including the earlier downsizing.
Now, those plans may be scaled back or even shelved, Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters. He said the company was still evaluating options for Wisconsin, but cited the steep cost of making advanced TV screens in the United States, where labor expenses are comparatively high.

"In terms of TV, we have no place in the U.S.," he said in an interview. "We can't compete."...

Rather than a focus on LCD manufacturing, Foxconn wants to create a “technology hub” in Wisconsin that would largely consist of research facilities along with packaging and assembly operations, Woo said. It would also produce specialized tech products for industrial, healthcare, and professional applications, he added.

“In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment,” Woo said.

Earlier this month, Foxconn, a major supplier to Apple Inc., reiterated its intention to create 13,000 jobs in Wisconsin, but said it had slowed its pace of hiring. The company initially said it expected to employ about 5,200 people by the end of 2020; a company source said that figure now looks likely to be closer to 1,000 workers.
A few things to unpack.

1. Foxconn "can't compete"? Even after getting $912 million in local subsidies and infrastructure, and after getting $400 million for I-94 upgrades in Racine County, and $130 million in upgrades of local roads into state highways? And in getting 17% of every job kicked back to you IN CASH from the State of Wisconsin? How lousy a business do you have to be to not be able to make it with all of those advantages?

2. There's also this meme being spread around by WisGOPs as they try to put lipstick on this pig.

This is wrong/dishonest in two ways. The first is that it conveniently ignores the local subsidies, highway upgrades and $150 million in sales tax exemptions that are given to construction companies as part of the work in and around the Foxconn campus. That in itself is around $1.5 billion, if I'm counting it right.

Second, Foxconn could still get a lot of money from Wisconsin taxpayers under jobs incentives, even if they only get 1,000 workers to associate with the facility in Wisconsin (jobs that could be located anywhere, by the way). Take a look at the provisions. at the Foxconn contract that was signed with the Wisconsin Economic Development Corportation (WEDC) in November 2017.

Here are the minimums for getting 17% of salaries written off for a given year.

2019 520 jobs
2020 1,820 jobs
2021 3,640 jobs

If we get to that 520 level by the end of this year, then Foxconn can get jobs writeoffs for BOTH 2018 and 2019, which would total $28.6 million.

And even if Foxconn falls short of the minimums on jobs in later years, they still could get hundreds of millions of dollars that defray the costs that go into building whatever this white elephant facility becomes. Here's an example.

So Foxconn will have gotten massive amounts of money on the front end, even if they don't max out what they could get. We can't even claw back any jobs credits until 2021, with the numbers of jobs (located anywhere, by the way) only needing to hit 4,000 by 2023 to avoid penalties for that year. And let's be real, Foxconn will tie that thing up in court for years, and it would be unlikely we would ever get ANY money back that we throw into this for a long time.

We are slated to be out billions of dollars for this Fox-con, and now it isn't even going to make the products WisGOP told us that it would, nor will the facility generate any more jobs than another large-scale development would add - except the typical development doesn't get anything close to this kind of financial help and infrastructure.

Was the future downsizing the reason why WisGOP gave itself control of the overseer of the Foxconn project as part of the Power Grab they pulled off in the lame duck session? Sure seems like it. (And One Wisconsin Now thinks so as well). And I think Assembly Dem Leader Gordon Hintz saw it as well, as Hintz appointed himself to the WEDC Board yesterday, instead of letting another Assembly Dem be a voice of opposition and oversight on this scam.

Is tar and feathers and recall of the small-time Racine County yokels that signed off on this mess too kind a punishment for this?

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