Foxconn Loves Wisconsin, Walker
Gou says governor is top reason Foxconn coming. Abele has county site in play.
“We are ready for something like this like we’ve never been ready before.”
Those were the words of Governor Scott Walker shortly before he welcomed Foxconn chairman and founder Terry Gou to the podium at a contract signing ceremony held at the Milwaukee Art Museum this evening. Walker had just finished ticking off a stump speech-style list of changes his administration has helped push through, which according to the governor includes lowering the tax burden, reducing the regulatory burden, eliminating frivolous lawsuits and making it easier to train members of the workforce.
Walker, fresh off an event at the White House on Wednesday evening with President Donald Trump, Vice President Mike Pence, Speaker of the House Paul Ryan, Senator Ron Johnson and Gou, spoke at length touting the deal his administration has struck with Foxconn. If all goes according to plan, the deal, for which the final language still hasn’t been released, is expected to bring 13,000 direct jobs, 10,000 construction jobs and 22,000 indirect and induced jobs to the state in exchange for up-to $3 billion in tax credits according to the governor. Foxconn will invest $10 billion in a massive factory that will manufacture high resolution LCD screens.
The governor introduced Gou as “one of the most remarkable business leaders in the world.” A large compliment, but not near the one Gou was about to drop on the room packed with Milwaukee and Wisconsin movers and shakers.
Gou, who founded Foxconn in 1974 and now employs over 1 million people primarily in Asia, explained why his firm is choosing Wisconsin to open their first North American factory. One might have expected him to lead with tax breaks, available workforce or a massive supply of fresh water, but that wasn’t the case. Gou exclaimed “I’ve never seen this type of governor or leader yet in this world.”
Gou praised Walker for flying to Japan to tour a Foxconn facility even though it was on a weekend. He also told a story involving Walker not eating dessert at a meal in early July when Foxconn executives were in the state. Gou noted that he was told by Wisconsin Economic Development Corporation CEO Mark Hogan that Walker heads home to his wife Tonnette every night, where she prepares his favorite dessert. The first lady then made an appearance on stage to embrace her husband and wave to the crowd. Hard working and a family man.
The Foxconn chairman declared “this is our home, my home, Wisconsin” before explaining that the east coast is the financial hub of the country and the west coast is the software hub of the country. Gou noted that these are like wings, and the project — named “flying eagle”– and America both need muscle to help them fly. He views Wisconsin as that muscle.
Walker and Gou weren’t the only individuals speaking at the podium at the ceremony. We Energies CEO Gale Klappa, who chairs the M7 initiative, emceed the event. Mayor Tom Barrett welcomed Foxconn to Wisconsin and “the fresh coast.”
Following the speeches, Walker and Gou signed a memorandum-of-understanding outlining the deal between Wisconsin and Foxconn. The legislature still must approve the deal.
Foxconn also signed memorandums-of-understanding with Rockwell Automation (signed by CEO Blake Moret) and the Ginseng Board of Wisconsin.
Ginseng, popularly consumed in China, is grown en masse in Wisconsin. Walker joked earlier in his speech that Gou was excited at the notion of doubling Wisconsin’s ginseng production, and Gou noted he has high-tech ideas to do so in his speech. The board gave Gou a 70-year-old ginseng root regarded as one of the rarest they have ever seen.
Milwaukee County Assembly Site
Milwaukee, along with being a great place to throw the welcoming party, may also be part of the deal, it seems. Milwaukee County Executive Chris Abele told Urban Milwaukee that the electronics giant is looking for a second site that comes with easy access to General Mitchell International Airport. While the massive factory they’re expected to build would require a far larger site, Foxconn is reportedly looking for an approximately 250-acre site for assembly work. When asked for available sites, Abele notes he showed Foxconn a site with direct airport access, the former 440th National Air Wing site. Some land acquisition is likely required to make that site work, but Milwaukee County has an outside chance of landing at least a portion of the company’s Wisconsin investment.
A single source close to the project also notes that Corning Inc., a manufacturer of glass, ceramics and related materials, is looking for space in Wisconsin for a factory that could measure up to 1 million square-feet. Corning is a major supplier to the electronics industry.
What Do We Know About The Project?
Despite intense media coverage over the past couple of weeks, specific details regarding the deal are still hard to come by. According to a memorandum of understanding signed at the ceremony, the company will invest $10 billion to develop a 20 million square-foot factory to manufacture 8K LCD screens. Those screens will be used not only for televisions, but for healthcare equipment, automotive displays and aviation equipment.
Governor Walker has compared the size of the factory to 11 Lambeau Fields, but Milwaukeeans might be more comfortable with a reference to 20 US Bank Center or Northwestern Mutual towers. Either way it’s big.
Where that massive factory will be built is still unclear, but there is a substantial amount of chatter regarding a roughly 1,000-acre site just northeast of the intersection of Highway 11 and Interstate 94 in Racine County. For those wondering why Milwaukee can’t land Foxconn’s main factory, the entire Menomonee Valley is approximately 1,200 acres. It just won’t fit in Milwaukee.
In exchange for making that massive investment Wisconsin will award Foxconn up to $3 billion in state income tax credits and waive sales tax requirements on building materials. According to statements made by the governor, Wisconsin will only award the credits for hiring and investment that Foxconn actually executes. No jobs, no tax credits. The state also would be able to reportedly clawback tax credits should the firm violate terms of the deal; however, the WEDC under Governor Walker has had a checkered history of doing so.
The agreement stipulates that the company would initially employ 3,000 workers making an average of $53,900-a-year plus benefits. The average figure will be an important one to watch, as a document given to Urban Milwaukee by a top academic notes that the company is expected to have 20 percent of their workforce in engineering positions. Those positions would certainly drive up the average salary substantially.
The legislature is expected to convene into a special session to approve the deal. Today’s event featured attendees from both sides of the aisle including Speaker Robin Vos (R-Rochester), Minority Leader Peter Barca (D-Kenosha), Rep. Cory Mason (D-Racine), Rep. Leah Vukmir (R-Brookfield), Rep. Samantha Kerkman (R-Salem), Sen. Van Wanggaard (R-Racine), Sen. Duey Stroebel (R-Saukville) and others. With the deal being negotiated by only Walker, Hogan and Department of Administration Secretary Scott Neitzel, the legislature is likely as interested as the public in getting their hands on the actual legislation.
Not discussed publicly yet is the substantial amount of other subsidies the company is likely to receive. While a final location will drive those costs, local municipalities and the state education system are going to need to do heavy lifting around transportation funding, infrastructure investment and workforce training.
Not lost in all of the hype around Foxconn coming to Wisconsin are the litany of players involved in Washington D.C. that have Wisconsin ties. Wisconsin native Reince Priebus serves as chief of staff to the president and has been credited with suggesting Wisconsin as a potential site for Foxconn. Walker also credited Wisconsin Congressman and Janesville resident Paul Ryan for lobbying for the deal.
The federal government is not providing any incentives to complete the deal. President Trump, in a meandering speech Wednesday night that included thanking casino magnate Steve Wynn for raising money for the Republican party, gave himself credit for the deal. Trump noted “In other words, if I didn’t get elected, he definitely would not be spending $10 billion.”
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