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Apr 23, 201912:54 PMInside Wisconsin

with Tom Still

Foxconn won’t hire 13,000 people ­— but it may help to lift state’s economy

When Gov. Tony Evers said recently it is “difficult for me to imagine” 13,000 people working for the Foxconn Technology Group in Wisconsin, he was almost certainly correct.

It’s also hard to imagine Foxconn won’t elevate the Wisconsin economy in many other ways in the coming years.

Somewhere between the 13,000 upper-end jobs estimate offered during the state’s courtship of the world’s largest electronics manufacturer and predictions that Foxconn would quickly cut and run with taxpayer dollars is a much more likely scenario.

It is a storyline that involves Foxconn building a smaller Racine County plant for manufacture of liquid-crystal display panels and reaching across Wisconsin with “innovation centers” that are more in line with how the company views the future of technology and manufacturing in the United States.

Instead of the Gen 10.5 plant envisioned when Foxconn landed in Wisconsin, the company has said in recent months it will construct a Gen 6 LCD facility in the Town of Mount Pleasant, where construction is underway. Such a plant will not come close to the size of a Gen 10.5 plant because the screens produced will be much smaller, a concession to changing market conditions.

The problem with the smaller plant scenario is not a danger the state will pay tax credits for jobs not created and capital not invested. Foxconn’s contract with the state has always set tiered goals in both categories. It is a “pay-as-you-grow” contract with the distinct possibility of years in which no state tax credits are offered at all.

The difficulty lies much more with local government investment and expectations, which were tied to visions of a larger plant — as were Racine County land acquisitions.

Protecting local interests may be the core reason why Evers suggested “downsizing” the state’s contract with Foxconn, not because he was afraid the state would be on the hook for tax credits that were always based on performance and specified in year-by-year metrics.

There are risks to reopening the contract, however, not the least of which is that Foxconn may want to renegotiate provisions the company never liked but accepted. There is also a perception factor. If corporations around the world suspect Wisconsin is simply angling to back out of the deal, it could be a decade before another big company comes knocking at the border door.

Given that Evers and his team have been meeting routinely with Foxconn, the latter risk is small. Plus, the company shows few signs of wanting to back out of its overall presence. Some examples:

  • Foxconn has invested about $200 million in Wisconsin so far, acquiring several thousand acres of land. Can that land be sold? Sure, but at a major loss.
  • It has forged relationships with many, if not most, academic institutions in the state. That includes a $100 million grant to UW–Madison, training programs, and a $1 million “Smart Cities, Smart Future” contest aimed at college faculty, staff, and students.
  • Work scheduled over the next 18 months in Racine County may include the liquid crystal module packaging plant; a high-precision molding factory; a system integration assembly facility; a rapid prototyping center; a research-and-development center; a high-performance data center; and a town center to support employees in Mount Pleasant.
  • Innovation centers have been announced in Milwaukee, Eau Claire, Green Bay, and Madison, even if details have been slow coming.

Foxconn’s footprint in Wisconsin may eventually be that of a diversified company with interests in research and development, engineering, advanced screens for industries such as aviation and autonomous vehicles, medical imaging, high-throughput computing, robotics, sustainable systems, and other technologies consistent with what Wisconsin does well.

In an economy where everyone who can work already has a job, the real potential of Foxconn in Wisconsin is not another 13,000 jobs. It’s the chance to stand out as a state where innovation, manufacturing, and tech collide on a global stage.

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About This Blog

Tom Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal.

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