Foxconn’s Story Changes. Yet Again.

Another day, another story from Foxconn. 

On Tuesday, Foxconn executive Louis Woo told the Racine Journal Times that the company really isn’t interested in manufacturing televisions and most of its assembly jobs will actually be done by robots. It’s an entirely different picture of what might happen at the Foxconn plant, which could have huge ramifications for the state’s taxpayers, who are on the hook to pay $1,774 per household to subsidize the operation.

The original story was that Foxconn would be building flat-panel liquid crystal display (LCD) screens with huge dimensions in a plant that would cost $10 billion and employ 13,000 workers, in return for a $3 billion state subsidy. 

But the $3 billion has grown to $4.1 billion when all state and local subsidies are included, even as the state legislation dropped the required investment to $9 billion. Yet Foxconn and the the media continue to refer to a $10 billion plant though that’s not required by state law.

Next we learned that Foxconn would not be building a Gen 10.5 plant that produces 10-foot-by-11-foot LCD panels, but a much smaller Gen 6 plant that makes smaller (5 feet by 6 feet) panels. But a Gen 6 plant would be much smaller and require only a $2 billion to $3 billion investment. After emphatically denying reports of this change, Foxconn’s leaders eventually admitted it was true, but then offered a new story: that the Racine plant would be built in “phases” and would eventually add a facility to manufacture the larger screens.

Except that glassware needed for the larger screens is too large to transport and must be made on site, and the Corning glass company declared it wouldn’t co-locate on the Foxconn campus without a subsidy from the state for at least two-thirds the cost of the facility, which the administration of Gov. Scott Walker has refused to provide. 

Now we learn from Woo that the plant, if it does do large screen LCD televisions, won’t do it for long. “We are not really interested in television,” he told the Racine Journal Times.”We are interested in vertical solutions”  in medical, manufacturing, office automation or other areas, so the company could be building 8K or ultra-high-resolution displays and 5G technology for the next generation of cellphones, Woo says. 

And this in turn will mean a huge change in the kind of workers Foxconn will need. “If, six months ago, you asked me: What would be the mix of labor? I would pull out the experience that we have in China and say, ‘Well, 75 percent assembly line workers, 25 percent engineers and managers,’ ” Woo said. But “now it looks like about 10 percent assembly line workers, 90 percent knowledge workers.”

That’s a massive change. 

For those imagining that unemployed central city workers from Milwaukee or Racine might get hired in manufacturing, forget it. Woo predicts nearly all that work will be done by robots and a lot of automation. Which also means the much discussed issue of creating a transit line from Milwaukee to Foxconn is quite irrelevant. 

Instead the plant will be all about knowledge workers “who will devise new ways to use the 8K, 5G and artificial-intelligence technologies that Foxconn will build,” as the story noted. So say goodbye to the Gen 10.5 plant and the need for a company like Corning and say hello to TFT. 

Foxconn, you see, wants to build America’s first thin-film transistor fabrication, or “TFT fab” operation. “We’d like to work with academics, or R&D entities, around the country to see what they want to do with it,” Woo said.  

This, too, is a different story. Recall that Foxconn previously said it was creating satellite “innovation centers” in cities like La Crosse and Green Bay, in order to connect to universities and students in those cities. Other than as a ploy to help reelect its patron, Gov. Walker, by proving Foxconn would help the entire state, this made no sense. If the goal was to connect to innovation in Wisconsin why not do a satellite near UW-Madison, one of the top American research universities, with the fastest growth in high tech workers of any city in the state? And if the idea was to hire top college grads, why not target the state’s flagship university, rather than UW-Green Bay or the Chippewa Valley Technical College in Eau Claire? Probably because that wouldn’t get Walker any votes, since heavily Democratic Madison would never support him. 

But now Woo is admitting the obvious, that if you want to connect to academics and R&D entities, you don’t need to move your company next door to them, but can connect remotely or simply hire smart people to work at the Racine plant. 

So now that Foxconn has completely changed the plan it so easily sold to Walker, how many jobs will it create? Woo predicted the Racine County plant would start with just 2,000 jobs but still expects to get to 13,000 jobs by 2023. 

That kind of rapid scaling up made sense for the kind of manufacturing plants Foxconn has done in China, which relied on low-paid workers grinding out products invented by high-tech companies like Apple. But for Foxconn to transform its approach to create new technology by top-flight “knowledge” workers and somehow scale that up to 13,000 workers in a few years? That sounds like a fantasy.  

And there is no reason for Foxconn to rush to create so many jobs or spend $9 billion on its plant. Yes, the full subsidy it is promised comes in increments, as the capital investments are made and jobs created. But all the other subsidies, worth more than $1 billion, will happen regardless of money invested or jobs created. That includes $764 million in local subsidies, $164 million in new state and local roads to serve Foxconn, a $120 million electric power line paid for by utility customers, and some $7 million on a state-paid ad campaign to attract workers for Foxconn. On a per-job basis, a smaller plant with less workers would actually cost taxpayers even more.

Which leaves Foxconn sitting pretty, and able to try whatever kind of product line it wants at much lower costs, courtesy of the biggest private company subsidy in state history.

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