President’s Promise For 13,000 Foxconn Manufacturing Jobs In Wisconsin Is A Bust

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The groundbreaking ceremony for the new Foxconn plant. (Photo by Andy Manis/Getty Images)

The republican President Donald Trump made campaign promises to his loyal supporters that he would be working to bring back manufacturing jobs to the USA. In 2017, President Trump could be seen frequently bragging about locating a manufacturing company, Foxconn in Wisconsin that was supposed to deliver on 13,000 jobs for the local community. He even called it the 8th wonder of the world. It turns out that this promise was a bust.

As per the 7/27/ 2017 Chicago Tribune report, “Taiwan-based contract manufacturer Foxconn Technology Group says it plans to build a $10 billion plant in Wisconsin to make liquid-crystal display panels, or LCDs. Little known to consumers, the maker of iPhones and other gadgets is a giant in the electronics industry thanks to its dominant position in the global manufacturing supply chain.”

“THE COMPANY: Foxconn, also known as Hon Hai Precision Industry Co., is the world’s largest contract maker of electronics, with factories across mainland China. It’s best known for making iPhones and other Apple devices but its long list of customers includes Sony Corp., Dell Inc. and BlackBerry Ltd.”

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Here is the rest of the story…

On February 7, 2018, Charles Sykes of the Bulwark penned the following analysis, “The Foxconn Boondoggle Was Even Worse Than We Thought” (“Corporate welfare is almost always a bad idea.”)

Excerpts:

“Let’s start with a confession. Earlier this week when Andrew Egger compared the unraveling Foxconn deal to the operatically shambolic Fyre festival, I worried that the comparison was unfair. My bad.”

“Now comes an extraordinary deep dive investigation by Bloomberg BusinessWeek that paints a stunning picture of a politically driven deal that is melting down. While Foxconn’s story lacks the drama and supermodels of the Fyre festival, it more than makes up it for by the scale of its boondoggle. Touted as the “Eighth Wonder of the World,’; and the “one of the great deals ever” by President Trump, Foxconn has become a $4.5 billion cautionary tale of the dangers of corporate welfare and Trumpian industrial policy.”

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“Despite repeated promises and an avalanche of taxpayer cash and hype, no one now expects the company to create anywhere near the 13,000 jobs that were promised. In fact, those promises appear to have been hollow from the beginning.”

“As a Wisconsinite, I’ve followed the progress of Foxconn from the beginning, and thought the taxpayer subsidies were ill-advised, even as I hoped that the deal would somehow lead to the revitalization of the state’s economy and the creation of thousands of high-wage manufacturing jobs in my backyard. But it all turns out to be worse than even the critics might have thought.”

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“Austin Carr reports that “insiders describe a chaotic environment with ever-changing goals far different from what Trump and others promised.” He writes:”

“The only consistency, many of these people say, lay in how obvious it was that Wisconsin struck a weak deal. Under the terms [Governor Scott] Walker negotiated, each job at the Mount Pleasant factory is projected to cost the state at least $219,000 in tax breaks and other incentives. The good or extra-bad news, depending on your perspective, is that there probably won’t be 13,000 of them.”

“Like other cases of corporate welfare (think Amazon’s HQ2 madness), the deal was driven by a bidding war with other states who vied with one another in offering taxpayer subsidies to the massively profitable Taiwanese company. So, ultimately, the deal was shaped more by politics than market forces, and therein lay the problem.”

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“Despite railing against government “picking winners and losers,” Trump and Wisconsin Republicans embraced a version of state capitalism or corporatism where the lines between politics and the free market were erased. Dumb and reckless decisions followed.”

“As Carr’s story makes clear, the Foxconn deal was, from the start, always “nakedly political.” Fittingly enough, it all began with a call to Wisconsin’s lead jobs agency from the office of boy genius Jared Kushner, who pushed the idea.”

“Goaded by Trump, Wisconsin’s GOP found the deal irresistible, even to the point of ignoring Foxconn’s problematic track record:”

“Foxconn has a history of overpromising and underdelivering on major deals. In Brazil in 2011 and India in 2015, it pledged to invest billions of dollars and create tens of thousands of jobs after [Foxconn Chairman Terry] Gou courted each country’s leaders, but each project fell far short. In 2013, Foxconn said it would invest $30 million and employ as many as 500 people at a Pennsylvania factory that also never fully materialized. Multiple former executives say Gou makes big promises to secure favorable terms and is unsentimental about reneging on or abandoning them as costs dictate.”

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In contrast with Gou, I’m sorry to say, my fellow Wisconsinites come off looking like rubes.

“My impression of him was, what a nice person,” says Scott Neitzel, who led negotiations for the Walker administration. “An extremely genuine, down-to-earth tycoon.” When asked if the state looked at Foxconn’s history, WEDC Chief Executive Officer Mark Hogan says, “We didn’t spend a lot of time on that because, in the end, we got to know these people so well.”

“Apparently not. In late January, Gou’s right-hand man, Louis Woo, told Reuters that Foxconn was planning to downsize the planned LCD plant, shifting their plans from manufacturing to research.”

“In terms of TV, we have no place in the U.S.,” he said. “We can’t compete.”

“Foxconn walked that back after a phone call between Gou and Trump, saying that “after productive discussions,” Foxconn was “moving forward with our planned construction of a Gen 6 fab facility, which will be at the heart of the Wisconn Valley Science and Technology Park. This campus will serve both as an advanced manufacturing facility as well as a hub of high technology innovation for the region.”

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“As Egger noted here on The Bulwark, this sounded good, “except that it doesn’t address Foxconn’s central problem: the competitive disadvantage of hiring manufacturing jobs in the U.S.”

“Once again, the statement seemed driven more by a desire to kiss the president’s ring than by business realities. So what will Foxconn do? Short term, they are likely to maintain a sort of Trumpian Potemkin village in Wisconsin to keep up the appearance that the company is doing Trump’s bidding. But almost everyone Carr spoke to for his article “predicted there will never be anywhere near 13,000 workers in Wisconsin Valley.”

“Politics, as it turns out, is a poor substitute for the free market.”

7 comments

  1. Gronda, systemic change is hard work. I view much of what Trump does and says as “photo shoot” opportunities. Perception is more important to reality to this faux- reality star now President.

    Keith

    Liked by 2 people

      • Dear Nan,

        Some of those supporters who won’t be getting a job from Foxxconn or who are being forced out of various plants due to continued plant closings will lose those rose colored glasses and they’ll be the ones spreading the word. There’s nothing like a dose of reality to clear one’s foggy thinking.

        Hugs, Gronda

        Liked by 1 person

    • Dear Keith,

      But those supporters who were relying on President Trump to bring back manufacturing companies/ coal jobs/ auto plants are being disappointed bigly. Then there are the soy bean farmers who are figuring out that President Trump is out of his depth and they may be risking the viability of their farms by counting on him. Then there are lots of average Americans who are upset about their tax refunds.

      Oh snap! Those GOP Dark money donors and their GOP lackey lawmakers are going to lose backing from just about anyone outside of their base of voters,the dark money GOP donors: the anti-immigration zealots; Evangelicals as the anti-climate change science, anti-abortion and anti-LGBTQ rights crowd; the racists which includes those who are the anti-Semitics and anti-Muslim: and the NRA second amendment enthusiasts.

      No matter what, this coalition is a distinct minority. They need to be trounced in the upcoming 2020 US elections.

      Hugs, Gronda

      Liked by 1 person

      • Gronda, to your point, I wrote a post this morning that farm bankruptcies in a seven state region including and around Nebraska just through the end of October, 2018 are 45% higher than all of 2017 and the highest in ten years. Farm income is down due to trade issues (read tariffs suppressing their markets) and lower prices. Also, interest rate and property tax increases are a factor. The tariffs have pushed buyers to new suppliers, which may not be a one year change. Like the folks who were hurt by the shutdown or who were impacted by the GOP and Trump’s sabatoging of the ACA, the common person is an afterthought to winning a political argument.

        This is a key reason why the GOP knows AOC more than Dems do. She is being put up as the poster child of the Democrat party. She is the new Hillary and Nancy piñata for them to beat on. I find this amusing as she is a small part of the Dem party, but it reveals a GOP that is bereft of good ideas. A strategy of giving more money to rich people does fall apart at some point. Trump talks change to the common man, but he is just another Republican (with a larger ego than anyone) focusing on the wealthy and giving lip service to those who follow him. That is a key reason he wants to check off his bumper sticker solutions that solve very little.

        Keith

        Liked by 1 person

    • Dear August Jensen.

      This is becoming a frequent phenomenon where communities give away too much to have major companies like Amazon locate in their area because of the jobs they create. In the case of Amazon, tax breaks may be a sound investment as they tend to become part of a community while offering good paying jobs, added revenues for local communities, etc.

      But this still amounts to corporate welfare where too often companies decide to leave these communities behind with nothing but lost revenues to the state, local governments.

      It’s important to check the history of these businesses as to how they benefit the local area.

      Hugs, Gronda

      Liked by 1 person

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