Foxconn Plays Politics for Trump?

Now that Foxconn CEO Terry Gou has announced his run for the presidency of Taiwan, Wisconsin has become embroiled in global politics. As Josh Dzieza of international tech publication, The Verge, has written: “Now there are two presidential campaigns tied to whatever Foxconn is doing in Wisconsin.”

That would of course include the American presidential race: Donald Trump needs Foxconn to buttress his claim that his policies are delivering more manufacturing jobs for the Midwest, especially the key states of Wisconsin, Michigan and Pennsylvania, which gave Trump his electoral margin in 2016. And Gou needs to keep Trump happy about Foxconn because Gou is selling himself to Taiwanese voters as someone who has a unique relationship with the U.S. president; America’s support has been crucial to Taiwan preventing a takeover by China, which has long claimed the island nation is Chinese territory. 

If it seems slightly surreal to see a manufacturing plant in tiny Mount Pleasant as a key prize in both national and international politics, the reality is that Foxconn has from the very beginning been all about politics, and only secondarily about economic development. Which might be why it ultimately will deliver only political results, with few actual manufacturing jobs created.

Back in June 2017, when Gou first announced his interest in building a plant in Wisconsin, there were experts suggesting this was a politically strategic move by Gou to create a way to work around tariffs that President Trump was threatening to levy on China. Given that most of Gou’s manufacturing plants were in China, he was looking to reposition himself as a friend to the United States. As for the promises made to spend $10 billion and create 13,000 jobs in Wisconsin, Gou and Foxconn had a long history of making extravagant pledges to governments and then walking away from the deal. 

Gou’s proposal made an instant friend of Trump. At the June 2018 groundbreaking in Mount Pleasant, Trump called Gou ”one of the great men of the world, one of the great business leaders of the world, it’s really an honor to have have you Terry. You’re going to love Wisconsin.” 

And Trump loved the message a new plant would send to American voters. “As Foxconn has discovered, there is no better place to build, hire and grow than right here in the United States. America is open for business,” Trump declared. 

The timing for the ground breaking was politically strategic. It came just two months after Foxconn had conceded that it would no longer be building the promised Gen 10.5 plant and would instead build a Gen 6 plant, which experts said would require an investment of only a $3 billion or less, and would provide far fewer jobs.  And not long after the groundbreaking, Foxconn spokesperson Louis Woo predicted that nearly all the manufacturing jobs at the plant would be handled by robots.

Yet the message at the ground breaking was that this would bring manufacturing jobs — on a huge scale — back to the Midwest. This was just a few months before the 2018 midterm election, and Foxconn was a key symbol for Trump, a way to help deliver victory for Wisconsin’s Republican Gov. Scott Walker and help embattled Republicans throughout the Midwest.  

And Gou and Foxconn did all they could do help assure Walker’s victory. In response to polls showing most Wisconsin voters didn’t believe the Mount Pleasant plant would have benefits for other parts of the state, Fox began to announce it would open “innovation centers” in Milwaukee, Eau Claire and Green Bay. The economic rationale for these centers was never really explained, and I predicted that once the election was over they were unlikely to be developed.

Four months after the election, Dzieza traveled to all three cities to see how those innovation centers were doing, and found empty buildings, few if any Foxconn workers, little development, and in Eau Claire one building that Foxconn promised to purchase but never followed through on. “There was no sign of Foxconn” in Milwaukee, Eau Claire and Green Bay, Dzieza wrote.

Foxconn denied The Verge story was accurate, while announcing it would be developing yet another satellite center, this one in Madison. Except that the building it was to buy “currently houses a bank” and  “will continue to house the bank because Foxconn did not announce when it would be moving in,” The Verge reported. “Here are some other things Foxconn did not announce: how much it had paid for the building, how many floors of the building it would occupy, how many people would work there, or what those people would be doing.”

Foxconn’s Alan Yeung “assured those in attendance at Monona Terrace that the Madison building will not be empty, eliciting nervous laughter from the crowd,” as the Wisconsin State Journal reported.  “I appreciate you worrying about these empty buildings… I can assure you they are not empty,” Yeung added, as the Journal Sentinel reported. Yeung also promised the company would issue a statement correcting the story by The Verge. 

So four weeks later Dzieza went back to Wisconsin to reinvestigate and found… nothing. “One month after Yeung’s comments and promise of a correction, every innovation center in Wisconsin is still empty, according to public documents and sources involved with the innovation center process,” and “Foxconn has yet to purchase the Madison building” it had promised to buy, “according to Madison property records.”

By then Gou had announced his run for office. According to media reports, Trump’s run for president as a billionaire businessman inspired the Foxconn chairman (whom Forbes says is worth $6.4 billion) to think “that he too could be a head of state.”

Gou made his announcement in April, but surely was considering this decision two months earlier when he met with Trump and assured the president the Foxconn plant in Wisconsin would happen as planned, shortly after his top subordinate Woo told Reuters the company couldn’t manufacture TVs competitively in Wisconsin.

Gou needs Trump’s support for at least two reasons. His meeting with Trump “establishes Gou as a global player, able to meet the most powerful leader on earth,” as Sean King, affiliated scholar at the University of Notre Dame’s Liu Institute for Asia and Asian Studies, told the Nikkei Asian Review. “It’s nine months until election day and he’s now already achieved something that [Taiwan] President Tsai Ing-wen hasn’t.”

The connection to Trump also helps Gou with another problem: his long-time connection to China “could turn off ordinary voters” in Taiwan, as Reuters reports. “With so much of his business enterprise in China, it may prove a liability for him with the voters, as they may not be sure where his priorities lie,” as John Brebeck, a senior adviser at Quantum International, a capital markets advisory firm, told the publication. But the friendship with Trump, who is at war with China, makes Gou look far less cozy with China.

Which means Gou can’t afford to anger Trump by not delivering the promised investment and jobs in Wisconsin. And so, after his May 1 meeting with Trump, the president’s spokesperson Sarah Huckabee Sanders told the media that “Mr. Gou is spending a lot of money in Wisconsin and soon will announce even more investment there.”

To date, there’s has been no such announcement, but Gou did offer an explanation why there was no construction in Mount Pleasant for eight months after the groundbreaking last August.  “It is not right to say our investment in Wisconsin has changed,” Gou said in a video broadcast as reported by Nikkei Asian Review. “We suspended the work around October, November last year because the weather there was snowy and icy cold.”

Actually it didn’t snow in October in Racine County, as the Chicago Tribune noted, while Politifact labeled Gou’s statement “false” on several grounds

Gou also said that he has invited the president to visit Wisconsin when the production line opens in May 2020. Except that the company has repeatedly said the Mount Pleasant plant won’t open till the fourth quarter of 2020. 

Moreover, if the company is really building a Gen 6 plant in Mount Pleasant as it claims, this would likely push the completion date for the factory to Summer 2021, as Willy Shih, Professor of Management Practice, Harvard Business School and an expert on the LCD industry, told Urban Milwaukee.   

Shih, however, noted that the foundation for the plant of compressed gravel would not provide the precision needed for a Gen 6 plant, which requires a a “massive steel infrastructure” up to two-floors deep “to support a vibration-free environment for equipment.” The compressed gravel base, he added, was more in line with an earlier plan Foxconn had announced, to build an assembly plant in Mount Pleasant that will take LCDs manufactured in Asia and put them into plastic housings for things like TVs, monitors for computers and other products that use electronics displays.  

After Urban Milwaukee raised these questions, Foxconn announced that “the plans for the footings and foundations… are confidential trade secrets,” and will not revealed, as the Journal Sentinel reported.

Beyond the constantly changing claims made by Foxconn, the only facts we know is that the company had “spent only $99 million, 1 percent of its promised investment, by the end of last year,” missed the required number of new jobs created to gain a state subsidy in 2018 and is at this point far short of the 520 people it needs to hire by the end of 2019 to start receiving money from the state. Meanwhile the project is getting $1.6 billion in state and local subsidies that are not tied to jobs created or money invested by Foxconn, and will be paid for by taxpayers.

Assembly Democratic Leader Gordon Hintz (D-Oshkosh) points to the company’s plan to finish the plant around the time of Trump’s reelection, as part of a suspicious pattern: “Since the announcement at the White House in July 2017, the motivations behind this project have always been more about tariffs and global political forces than the people of Wisconsin. By Foxconn’s own admission, any U.S. operations cannot be market competitive due to labor costs. So the question that should be asked is why is the project still moving forward in its current form, and why is Foxconn’s projected start date getting closer and closer to the 2020 presidential election?”

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