Why Foxconn decided to make Wisconsin its American home
With Lake Michigan shimmering in the background as they stood inside the Milwaukee Art Museum, Gov. Scott Walker and Foxconn founder Terry Gou sealed a historic deal for Wisconsin’s economy this past Thursday.
The reasons why a mid-sized, Midwest state won the competition to land North America’s first liquid crystal display plant — and the 13,000 projected direct jobs that will come with it — have much less to do with Wisconsin’s offer of financial incentives than with its other tangible and intangible assets.
Since the Foxconn talks began to surface in public talks in June, speculation centered on how Wisconsin might attract the Taiwanese electronics giant if it came down to a bidding war with much larger states such as Michigan, Ohio, Pennsylvania, and Texas.
It may turn out that one or more of those states bid far above the $3 billion in staged financial incentives put on the table by Wisconsin. That means Wisconsin emerged on top for other reasons:
- Location, location, location. The old real-estate axiom applies in layers, with Foxconn wanting to open at least one U.S. factory for market and geopolitical reasons; preferring the Midwest to the East and West coasts for its first high-tech facility; and centering on Wisconsin’s southeast corridor due to its proximity to Milwaukee and Chicago. Ample land is available. Transportation options include the interstate system, major airports, and rail lines.
- Energy and water. The southeast corner of Wisconsin is a hub for interstate electric transmission lines and Wisconsin utilities are part of a Midwest consortium to ensure reliability, as well as renewable sources. Water is used in the production of glass LCD panels, which are built under “clean room” conditions, and the Lake Michigan watershed provides an ample supply that can be used and recycled.
- Higher education. There are 75,000 graduates produced each year by the University of Wisconsin System, the Wisconsin Technical College System, and the state’s private colleges and universities. That’s a likely source for some of the workers who will eventually fill Foxconn’s Wisconsin labor force. Wisconsin colleges and universities are also home to a research and development structure that rivals what can be found in most states — although it’s time to reinvest in that asset before quality wanes.
- A manufacturing tradition. Wisconsin has a history of making things that extends to the late 19th century. Its manufacturers are, by and large, innovators who have embraced technology and new ways of producing goods and services. Electrical equipment and medical equipment are already two staples of the tech-based manufacturing landscape in Wisconsin. As Foxconn builds out a supply chain that may include hundreds of companies, it will find that Wisconsin is among the nation’s leaders in original equipment manufacturers.
- A vibrant technology foundation. While many people think first of Wisconsin for its agriculture, tourism, and manufacturing, its tech sectors have grown steadily over time and provide support for the “big three” in a variety of ways. According to the latest Cyberstates report by CompTIA, the nation’s largest technology association, there are at least 101,000 tech workers in Wisconsin, largely in information technology, tech products, and engineering fields. Another 25,000 or so people work in life science fields. Collectively, that’s about 6% of the Wisconsin workforce and growing. For emerging tech companies in Wisconsin, Foxconn’s interests in electronics, artificial intelligence, robotics, virtual reality, medical imaging, regenerative medicine, virtual reality, and more provide potential opportunities for growth.
- Teamwork. While it’s not always apparent in the day-to-day debates in the state Capitol, the Walker administration and legislative leaders from both parties pulled together when it counted. Gou praised Walker’s leadership and the governor relied on two cabinet leaders, Administration Secretary Scott Neitzel and Mark Hogan of the Wisconsin Economic Development Corp., to drive home the deal. In southeast Wisconsin, officials in Racine and Kenosha counties were integral, and a mix of business groups weighed in to help.
The $3 billion, “pay-as-you-grow” incentive package must still be approved by the Legislature, most likely in a special session this month. It’s a vital part of the deal, of course, but Wisconsin lured Foxconn for a mix of reasons that far exceeded dollars alone. Those same assets can help draw others.
Click here to sign up for the free IB ezine — your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.