Foxconn’s 1 Million Square Feet; Of What?
Despite media claims, new facility unlikely to be a Gen 6 manufacturer. So what will it be?
This week Foxconn’s founder and retired CEO Terry Gou made a speech in Taiwan predicting that the Foxconn factory in Racine County will be up and running this year, and employees working there “will help America boost manufacturing and build a supply chain.”
This came just a couple weeks after the company issued a press release touting it’s “nearly one-million-square-foot advanced manufacturing facility at the Wisconsin Valley Science and Technology Park” in Mount Pleasant. The early January release let us know that Foxconn “is able to celebrate this significant milestone” of the “Building enclosure being substantially complete for weather protection.”
“Nearly 8,000 tons of American steel was fabricated and installed,” the release went on,” and more than 500 truckloads transporting supplies were used for the roof construction. Full and complete enclosure of the advanced manufacturing facility will continue through the beginning months of 2020.”
Okay, so the building is, gosh, nearly enclosed and will have a very fine roof. But what exactly will be manufactured in it? The media continues to describe this as a Gen 6 LCD manufacturing plant, since Foxconn has generally called it this. So is that what will be building America’s supply chain in Mount Pleasant?
“I don’t think so,” says Harvard Professor Willy Shih, one of the few U.S. experts on LCD fabrication in answer to a query from Urban Milwaukee. “Not for making LCD panels. Assembling products that incorporate LCD panels, maybe.”
The reasons why it couldn’t be a Gen 6 manufacturing plant are many, as I’ve previously reported.
Second, this plant is just one story tall, and as Shih wrote for Forbes: “LCD fabs (fabrication plants) are multi-story affairs. The main equipment floor is sandwiched between a ground floor that is filled with chemical pipelines, power distribution, and air handling equipment, and a third floor that also has a lot of air handling and other mechanical equipment…. When they bring the manufacturing equipment in, they load it onto a platform and hoist it with a crane on the outside of the building. That’s one way to recognize an LCD fab from the outside – loading docks on high floors that just open to the outdoors.”
Third, LCD plants are expensive, multi-billion structures. Shih estimated that a real Gen 6 plant, if it was built in Mount Pleasant, would have a price tag of around $5 billion. The spending on this is nowhere near this: the plant is expected to be valued at $400 million.
Meanwhile, company officials have given themselves all kinds of wiggle room, having pushed back the date for Gen 6 manufacturing to 2022. So whatever is going to happen in that nearly weatherized facility, assuming anything does this year, it won’t be Gen 6 fabrication, according to the company.
Pushing back the date to 2022 will give Foxconn plenty of wiggle room as to what it manufactures. And as it happens, 2022 is when Wisconsin’s race for governor will be held. Are company leaders waiting to see if a candidate more sympathetic to them might be elected?
Back in December I wrote a story suggesting the state deal with Foxconn deal looked dead. It still does. So long as state officials insist that Foxconn live up to its contractual promise to build a $9 billion, Gen 10.5 plant employing 13,000 workers, Foxconn can’t get any state subsidies. And while the Evers administration has made clear they will renegotiate the contract based on what Foxconn is actually going to manufacture (assuming that ever becomes clear), the original contract was so lucrative for the company it has no incentive to agree to any changes. Waiting another couple years to see if Tony Evers retires or gets defeated is no big deal for a company that specializes in delaying and backing out of projects it promises.
But my story was wrong in suggesting Foxconn can simply walk away from Wisconsin. And that’s because it has a local deal, which is far from dead. The village of Mount Pleasant and Racine County jointly approved spending at least $764 million (a figure 50 times higher than the village’s budget) for land acquisition, road construction and new sewer and water lines, all for the Foxconn project. In return Foxconn has agreed to pay local property taxes based on an assessed total of at least $1.4 billion in taxable improvements to the land it owns by January 1, 2023, whether or not that amount of improvements has been created.
It’s this contract — and a concern that breaking the much ballyhooed agreement with Wisconsin might leave any other state in America leery of doing a deal with Foxconn — that’s the only thing keeping the company here. The contract created by former Gov. Scott Walker, by contrast, has no way to stop the company — despite all the state and local spending on the project already undertaken — from abandoning the deal.
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