Fail

With Scott Walker’s Subsidies, Foxconn is Already Changing Plans

JM Ashby
Written by JM Ashby

Under Governor Scott Walker's leadership, the state of Wisconsin agreed to subsidize the construction of a Foxconn factory to the tune of over $4 billion in tax breaks and supporting infrastructure projects.

Even under ideal conditions, the subsidy was not expected to return a profit to the state budget until sometime around the year 2042 (really), but what if those ideal conditions never materialize?

The Milwaukee Journal Sentinel reports that Foxconn is already scaling back their plans before they've even broken ground.

While two economic-impact analyses prepared last year and the state’s contract with Foxconn say the company will build a type of factory that carves display panels out of immense sheets of wafer-thin glass, Foxconn now says it first will erect a plant that uses much smaller sheets of glass.

Such factories typically are much smaller and less-expensive than the sort of plant Foxconn originally planned, industry observers say. [...]

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.

In a statement, Foxconn said they're changing their plans to meet demand for "other technologies and products that will be the focus" of their new facility.

What does that mean? It means what I've been saying for at least a year. The idea of investing this much money and resources into a liquid crystal display (LCD) factory was preposterous from the very beginning because LCDs were an obsolete technology before Foxconn's deal with Wisconsin was even conceived. LCDs will remain in demand for many years to come, but not for another 25 years; the length of time the factory would need to operate at full capacity to return a profit to the state.

The idea that this will return a profit to the state in 2042 is based on the projection that the factory will employ 13,000 people (a majority of them residents of Wisconsin) at living wages, but Foxconn is only required to employ 3,000 and a majority of them will probably commute from Illinois because the area of Wisconsin the factory is being built in literally does not have enough available labor.

I'll go out on a limb and predict this will never return a profit to the state. I don't believe their factory will even be in operation in the 2040s and, even if it is, by that time it will be fully automated with robots.

Trump is visiting the site of Foxconn's first facility today where he'll probably try to take credit for everything.

  • muselet

    Once again, an R economic super-genius got played by a company that plays a (slightly) longer game than a politician who’s desperate for positive headlines.

    Dog bites man.

    –alopecia

  • Aynwrong

    The word boondoggle has never felt mor apt. I have to wonder if this scaling back wasn’t always the plan.

    • Draxiar

      The whole thing sounds like a bait-and-switch to me. I won’t be surprised to find out that Foxconn generously contributes to Walker’s campaign.

      • Aynwrong

        I’d be surprised to find out they didn’t.

    • Badgerite

      And for this, they are slicing away at our education system and everything else.