Mark R. Hogan
Op Ed

Foxconn Deal Already Paying Dividends

Construction of North America’s first LCD manufacturing facility having economic impact.

By - Jun 26th, 2018 01:22 pm
Foxconn signing. Photo by Graham Kilmer.

Foxconn signing. Photo by Graham Kilmer.

As Foxconn plans its formal groundbreaking in Racine County this week, it is appropriate to review the basics of this historic opportunity for Wisconsin. As one of the largest greenfield investments by a foreign-based company in U.S. history, Foxconn’s investment will create the first liquid crystal display (LCD) manufacturing facility in North America, and the only one outside of Asia.

The magnitude of Foxconn’s investment is best summarized in the numbers, which have not changed since the Wisconsin Economic Development’s (WEDC) contract was signed in early November. Foxconn’s $10 billion investment will create a 20-million-square-foot campus on 1,200 acres in Mount Pleasant. The four-year construction phase will create an estimated 10,000 jobs and 6,000 direct and indirect jobs.

We are already seeing the statewide benefits of Foxconn’s historic investment. Contractors in Dodge, Jackson, Marathon, Outagamie, Walworth and Wood counties are among those who received contracts for the first $100 million related to site preparation. The Wisconsin companies receiving these contracts are expected to directly or indirectly employ 800 workers from 60 of the state’s 72 counties.

Once fully operational, there will be 13,000 good-paying, family-supporting jobs created with an average salary of approximately $54,000, and an additional 20,000 to 25,000 indirect and induced jobs needed to support the operation. Consistent with its “Wisconsin First” commitment, Foxconn will spend about $1.4 billion in annual supply chain purchases from Wisconsin-based companies. A recent study indicated Foxconn will add $51 billion to Wisconsin’s gross domestic product over the next 15 years, an economic impact of $18 for every $1 spent by the state on incentives.

Wisconsin won Foxconn despite the fact other states offered more in incentives. WEDC’s contract provides Foxconn incentives of up to $2.85 billion – $1.5 billion for the creation of 13,000 jobs and $1.35 for its capital investment. The tax credits are earned on a “pay as you grow” basis and the company’s reporting information will be verified by an independent third party. The contract includes minimum annual job-creation levels that must be met before Foxconn receives any tax credits. It also includes clawback provisions, supported by the guaranties of both Hon Hai Precision and Foxconn Chairman Terry Gou, should the company not comply with the contract.

The transformational impact Foxconn will have in Wisconsin will go well beyond its manufacturing facility. Foxconn’s presence will result in an ecosystem that will provide significant opportunities for existing Wisconsin businesses and our academic partners, and also attract venture capital to our ever-expanding and vibrant entrepreneurial community. Foxconn’s recent announcements regarding its North American headquarters in Milwaukee, its commitment to hire 3,000 veterans as well as its $1 million investment in the “Smart City,

Smart Future” partnership with our tech colleges and public and private colleges and universities are just the first signs of what this ecosystem might entail.

Over the past 44 years, Foxconn’s success has been based on the company’s ability to be at the leading edge of new technology. The state’s decision to partner with Foxconn is based on our confidence the company will continue to be at the forefront of demand-based technology changes, and on the opportunity to have the research and development efforts driving those changes happen here in Wisconsin.

Chairman Gou has said that a primary reason for his decision to invest in Wisconsin was our strong manufacturing legacy and the outstanding workforce that has supported it for generations. Foxconn’s transformational effect on Wisconsin will undoubtedly build on this legacy by creating tremendous opportunities for future generations of Wisconsinites.

Mark R. Hogan is the secretary and CEO of the Wisconsin Economic Development Corporation, and played a key role in negotiating the state’s contract with Foxconn.

4 thoughts on “Op Ed: Foxconn Deal Already Paying Dividends”

  1. Donna says:

    Flat screen TV’s, how long will this technology endure? I suspect not long. And 13,000 employed. Who, where, how, for how long, and how much for non-management jobs? And there is this from “Trump Takes a Victory Lap…”

    “Foxconn said it would build a $30 million factory in Pennsylvania back in 2013, but no plant was ever built. In 2014, the company said it would invest $5 billion in India, but has so far not done so. Similar commitments in Indonesia, Vietnam, and Brazil have fallen far short of promises.

    The truth is, Gou has a habit of using splashy announcements like the one today as a way of putting pressure on the host state to offer up ever sweeter deal terms to make sure the factory is actually built, the jobs created. If the state fails to offer generous enough terms, Foxconn simply walks away.”

  2. Eric J. says:

    Walker gave Gou an offer he couldn’t turn down. Wisconsin certainly paid too much per job.
    -Where was ” and only I can do it ” ???

  3. David Ciepluch says:

    Over $4 Billion in corporate welfare. Essentially state tax payers funding wages of a foreign owned company for decades to come, stealing right out of our pockets, from worst roads in the nation, to 15% pay cuts for public workers, and billions from K-university education.

    Insane and corrupt.

  4. Aggie says:

    Its amazing how few people are talking about the bait and switch that occurred only days before the groundbreaking. Instead of a large scale Gen10.5 plant “which Walker took a tour of) that can make large scale displays (TV’s), the new plan is to build a Gen6 plant that will make smaller flat panel screens (tablet, phone).

    This is like promising to build an automotive plant and then deciding to build a bicycle shop instead. Not only is the scale different by a factor of 10, the required support components are small enough that they can be shipped to this plant from other factories (or other states or countries) and won’t require the ancillary support facilities to be located close by. Corning already said no thanks. There goes the promise of new businesses locating in the FoxConned valley.

    I guess this might explain how they were able to “save” all of that Lake Michigan water. The story line was they invested in technology to benefit the environment, when in reality they just decided to build a bike shop instead.

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