By Ciara Linnane, MarketWatch
Just days after Foxconn dismayed Wisconsinites with news it was reconsidering its plan for a plant in the state that would reduce the number of hires and involve fewer blue-collar jobs, the Taiwanese electronics company appeared to execute something of an about-face Friday.
The devil is in the details, however, and those were not immediately forthcoming.
“After productive discussions between the White House and the company, and after a personal conversation between President Donald J. Trump and Chairman Terry Gou, Foxconn is 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,” the company said in a statement.
The $10 billion campus was announced to much fanfare in 2017 by then–Wisconsin Gov. Scott Walker and President Donald Trump, with the state expected to pony up a $3 billion, 15-year package of tax incentives. The original plan had promised the hiring of 3,000 workers initially, with the intent of growing that figure to 13,000 over time.
But that plan appeared to be upended this week when Gou told Reuters he was no longer planning to make the liquid-crystal-display panels originally promised as it would not be economically viable, given the steep costs. “In terms of TV, we have no place in the U.S.,” Gou reportedly told Reuters in an interview. “We can’t compete.”
Instead, the plant would become more of a research center and the company would hire mostly engineers and researchers, instead of creating the blue-collar workers previously promised. And the plan to have 5,200 people at work by 2020 was scaled back to closer to 1,000, according to Reuters.
On Friday, the idea of expanding the plant’s mandate to include more R&D did not appear to have changed. “This campus will serve both as an advanced manufacturing facility as well as a hub of high technology innovation for the region,” said the Foxconn statement.
It did not make any mention of job numbers or what exactly would be manufactured. “We look forward to continuing to expand our investment in American talent in Wisconsin and the US,” said the statement.
Gou has a history of making and breaking promises about investments and hiring in many countries around the world, as MarketWatch has reported. A pledge to invest $30 million in a factory in central Pennsylvania in 2013, for example, was also met with much ballyhoo, as reported by the Washington Post . That plant has never materialized. Equally, a 2014 promise to invest $1 billion in Indonesia and a 2007 pledge to invest $5 billion in Vietnam came to nothing.
Critics of the Wisconsin project have held that it makes little economic sense, given the huge subsidies and tax breaks on offer. Michael J. Hicks, George and Frances Ball distinguished professor of economics and the director of the Center for Business and Economic Research at Ball State University in Muncie, Ind., has made that case in a commentary for MarketWatch.
“No matter what job and incentive numbers you believe, this deal shocks the senses,” Hicks wrote in November. “At the low end, the Wisconsin Budget Project, a budget think tank, estimated the cost per job at just under $220,000. At the high end, it’s $587,000 per job. These are for jobs that will pay an average of a little more than $53,000 per year. To be clear, this means Wisconsin taxpayers are paying between a third and all the wage bill for Foxconn for more than the next decade.”
The proposed plat has also been criticized on environmental grounds, as it would gain access to Lake Michigan water only via a loophole.
Republican Walker lost a re-election bid in November to Democrat Tony Evers, with Republicans in the state assembly then seeking to rein in gubernatorial powers before Evers’s inauguration as governor.
Foxconn trades as Hon Hai Precision Industry Co. /zigman2/quotes/204111604/delayed TW:2354 +0.54% . Its stock has fallen 38% in the last 12 months, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +2.93% and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +3.68% have fallen about 4%.