Wisconsin lands $10 billion Foxconn project

Published Thursday, July 27, 2017
by BizTimes

Foxconn Technology Group could earn $3 billion in tax incentives by building a $10 billion manufacturing campus in Wisconsin that could create up to 13,000 jobs.

President Donald Trump, Foxconn chairman Terry Gau, Gov. Scott Walker and House Speaker Paul Ryan announced the investment during an event at the White House Thursday.

Trump called Gau “one of the great businessmen anywhere in the world” and Foxconn “one of the truly great companies of the world.” He said the investment was representative of his efforts to bring manufacturing back to America.

“If I didn’t get elected, he definitely would not be spending $10 billion,” Trump said of Gau.

Foxconn’s investment is also the result of an incentive package that will require a special session of the Wisconsin Legislature. The incentives are expected to cost the state between $200 million and $250 million a year. The company will be eligible for $1.5 billion in tax credits for job creation, $1.35 billion for capital investments and $150 million from a sales tax holiday.

The tax credits would be contingent on the job creation and capital investment being made. The Wisconsin Economic Development Corp. has awarded a total of $1.73 billion in tax credits, grants and loans since it was created in 2011.

Foxconn is going to be constructing a multi-building campus that will cover 20 million square feet on at least 1,000 acres. The company is still considering sites for the facility. Commercial real estate sources familiar with the project said the location of the Foxconn plant will likely be east of I-94 along Highway 11 in Racine County.

Gau said the facility would be used for 8K LCD screens that can be used in everything from medical fields to automotive to entertainment.

“TV was invented in America, yet America does not have a single LCD factory to produce a complete 8K system. We are going to change that,” Gau said. “It starts today with this investment in Wisconsin.”

The plant, which is expected to be operational by 2020, will initially employ 3,000 people with the potential to grow to 13,000. Gov. Scott Walker said the positions would have an average salary of more than $53,000.

A senior White House official speaking with reporters ahead of the announcement said no new programs would be created to facilitate the investment, although the company fit into some existing programs.

“Foxconn has the full expectation that this will be the first of a series of facilities,” the official said.

Whether additional plants are built in the future or not, the company chose to locate its first significant U.S. plant in Wisconsin, giving the state a win over as many as six other states that were under consideration for the plant.

Walker said the investment is the largest ever in a Wisconsin facility and among the largest nationally.

The Northwestern Mutual Tower and Commons project in downtown Milwaukee is a $450 million project, while Amazon has made $336 million worth of capital investments for its Kenosha distribution center.

“This is probably one of the most advanced manufacturing processes that Wisconsin would have,” said Stephen Williams, Milwaukee School of Engineering electrical engineering chair.

The decision is the culmination of several months of discussions between the White House’s Office of American Innovation and Foxconn, the senior official said, noting there were numerous meetings in Washington, D.C. and Trump met personally with Gau to work on the deal.

Some Democrats have already criticized that level of spending to support a corporation.

“It is entirely reasonable to be cautious of a scandal-plagued job creation agency handing over taxpayer funds to foreign investors that could potentially leave Wisconsinites with the bill decades into the future,” said Martha Laning, chair of the Democratic Party of Wisconsin.

“Despite Gov. Walker’s alleged fiscal conservatism, the truth is that he is fine with spending money so long as it doesn’t go to you, the real hard-working taxpayers of our state,” said state Rep. Jimmy Anderson (D-Fitchburg), adding Walker “more than bends over backwards” to help the multinational company.

Milwaukee Mayor Tom Barrett said he is excited about the jobs coming to the region and is “eager to get the ball rolling on connecting Milwaukeeans to those jobs.”

“I also believe it’s important for policy makers to ensure the financing package is fair to taxpayers,” Barrett said.

But supporters of the deal argue the job creation from the Foxconn plant, its suppliers and the broader economy will make up for the spending on incentives.

State Sen. Van Wanggaard (R-Racine) said lawmakers will have a responsibility to make sure the state can fund the incentive package and that there are accountability measures included to ensure jobs are created.

“I know billion is a lot of money and this will probably be several billion,” he said, adding that he has faith in those working out the deal to include proper protections for the state.

Walker said the project will support 10,000 construction jobs over the next four years, along with 22,000 indirect jobs once operational. The company is expected to make $4.26 billion in supplier purchases annually, with one-third being made in Wisconsin.

Foxconn announced in January it was considering a $7 billion investment in the United States to produce display panels. Speculation about the possible plant ramped up in June when Trump referenced negotiations during an event at Waukesha County Technical College.

“Just backstage, we were negotiating with a major, major, incredible manufacturer of phones and computers and televisions. And I think they’re going to give the governor a very happy surprise very soon,” Trump said.

The White House official said the administration viewed its role as facilitating conversations between states and didn’t try to push the company toward any state in particular.

“We were very clear that Foxconn had to select a state in which they could be successful,” the official said. “Ultimately, the decision of which state is the decision of that company.”

While Wisconsin manufacturing may be better known for products like Harley-Davidson motorcycles, large mining equipment or even beer, Williams said it’s the state’s automation background that will likely serve it well when it comes to Foxconn and company’s focus in that area stand to benefit.

Semiconductor and electrical component manufacturing, which includes LCD displays, isn’t a big industry in the U.S., accounting for just 2.9 percent of all manufacturing employment. It is even less in Wisconsin, where roughly 6,400 workers represent about 1.4 percent of the manufacturing workforce.

“One of the reasons this is such a meaningful day is that it does represent a milestone in bringing back advanced manufacturing, particularly in the electronics sector,” the senior White House official said.

Leaders at Gateway and Milwaukee Area technical colleges said their institutions are prepared to help the new facility find the number of workers it needs.

“Gateway has a strong history of working with employers of all sizes to build a skilled talent pipeline. The opportunity to support our community and Foxconn is at the core of our mission,” said Bryan Albrecht, president of Gateway, which has campuses in Elkhorn, Racine and Kenosha.

Wisconsin’s current employment situation was actually in a much better position than many of the other states in the running for the Foxconn investment.

https://www.biztimes.com/2017/ideas/educationworkforce-development/wisconsin-lands-10-billion-foxconn-project/?utm_source=BizTimes+Media+E-newsletters&utm_campaign=5dab1823e9-EMAIL_CAMPAIGN_2017_07_26&utm_medium=email&utm_term=0_fc2f0530ac-5dab1823e9-244037473

 

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