Taiwan electronics manufacturer Foxconn has all but bailed on a $10 billion factory in Wisconsin which was supposed to employ 13,000 workers – only to have been plagued with setbacks and confusion from the start.
Under a deal announced on Tuesday with the state of Wisconsin, Foxconn will slash its planned investment to $672 million, and cut the number of new jobs to just 1,454 according to Reuters.
The Foxconn-Wisconsin deal was first announced to great fanfare at the White House in July 2017, with Trump boasting of it as an example of how his “America first” agenda could revive U.S. tech manufacturing.
For Foxconn, the investment promise was an opportunity for its charismatic founder and then-chairman, Terry Gou, to build goodwill at a moment when Trump’s trade policies threatened the company’s cash cow: building Apple Inc’s iPhones in China for export to America. -Reuters
The Wisconsin manufacturing campus was originally slated to be 20 million square feet in what would have been the largest investment in US history for a foreign-based company. The location would have built flat-panel displays for TVs and other devices, however the plan had more than a few hitches.
As we noted in October, execution of Foxconn’s plan was plagued with issues from the start. There was talk about Foxconn needing to bring in its own Chinese engineers due to skilled labor shortages. But we can’t say for certain whether this, or another issue – say the souring mood between Washington and Beijing – might be to blame.
The initial deal called for Wisconsin supplying $3.3 billion in state subsidies in exchange for Foxxconn investing $10 billion into a new LCD manufacturing plant, which was projected to create 13,000 “family sustaining” manufacturing jobs; that’s a rate of roughly $230,000 per job. However, the state has already sunk money into the project. Though none of what has been spent so far can be clawed back from Foxconn.
From the beginning, the vision for Foxconn’s first factory in the US seemed almost too grandiose to be true. And as early as 2018, it appeared that the company had dramatically scaled back its plans. Since then, the company has been – as the Verge put it – “confusing the hell out of Wisconsin”, one minute saying plans for the factory had been abandoned, before turning right around and saying they were back on.
At one point, the company promised to instead fill the space with a much smaller number of “knowledge workers” working on a “mysterious” platform called “AI 8k+5G”, which sounds like some kind of inside joke.
After walking away from the record-breaking incentive deal struck by Foxconn Chairman Terry Guo and Gov Walker, the new administration in Madison has been pushing Foxconn to return to the table (since the state already spent money on preparing the site where the groundbreaking was held), and on Monday, officials utilized the last bit of leverage available to them: they denied Foxconn’s request for some of the tax subsidy “credits” (which take the form of direct payments from the state Treasury to Foxconn) to which the company claimed it was entitled.
And now, Foxconn has thrown in the towel – leaving Wisconsin with a vastly downscaled project that will employ just a fraction of the workers originally promised.