Coming to Wisconsin?

The Milwaukee Journal Sentinel rereports:

The Wall Street Journal said Monday that Foxconn Technology Group could announce its U.S. investment plans this week, and implied the company will build a display-panel factory in Wisconsin.

Citing three people briefed on Foxconn’s plans, the newspaper said Foxconn is looking at producing display panels for large-screen televisions in Wisconsin.

Strictly speaking, that isn’t new. Other media, including the Milwaukee Journal Sentinel, have reported for weeks that Wisconsin is a leading candidate for factories employing thousands that Foxconn is considering building in the United States.

The Wall Street Journal report, however, suggests that the Taiwanese electronics manufacturer has chosen Wisconsin. The newspaper also said Foxconn is looking at the Detroit area for an additional plant, but the report named none of the other states, including Ohio and Pennsylvania, that have previously been said to be in the running for the billions in investment the firm has said it is contemplating.

Foxconn officials have visited Wisconsin and other states in recent weeks to meet with top elected leaders as they mull their options.

Last week, Wisconsin Senate Majority Leader Scott Fitzgerald (R-Juneau) said Gov. Scott Walker’s administration is working on a memorandum of understanding with the company.

Fitzgerald said he discussed the possibility of the firm coming here with Walker and Assembly Speaker Robin Vos (R-Rochester) last Wednesday as part of budget negotiations over rebuilding I-94 in Racine County.

The Journal Sentinel reported/opined last week that Foxconn’s interest in a U.S. facility might be as much politically driven as driven by business. Donald Trump has huffed and puffed and threatened tariffs on foreign-made products. One way to circumvent that is to make them here, as Volkswagen, Mercedes–Benz, Toyota, Nissan, Honda, Subaru and other manufacturers figured out by building U.S. plants. Beyond a certain cost point, building near your product’s target market can make more sense than building in CheapLaborLand and shipping.

I said on Wisconsin Public Radio Friday that I was a bit skeptical a deal would be made. (And technically I’m not incorrect yet.) That’s because Wisconsin is known for not having very many tax incentive tools, such as tax abatements that Illinois has and we don’t. Wisconsin has Tax Incremental Financing districts, which can get building projects done on blighted or undeveloped land, but that doesn’t reduce a company’s property taxes. (Although the Manufacturing & Equipment property tax exemption would.) The aforementioned Journal Sentinel piece noted that Foxconn demands huge incentives to locate somewhere (though to this point only in other countries), so one wonders what is prompting them to choose Wisconsin.

This comes at an interesting time because Gov. Scott Walker is presumably running for reelection next year. Walker has been hammered by Democrats (though apparently not voters) for failing to meet his 250,000-jobs-created pledge, despite the fact that Wisconsin’s unemployment remains lower than the national average, for which Democrats of course give Walker zero credit. Predictably Democrats will compare the Foxconn jobs, if they materialize, to Third World sweatshop labor because wages won’t be what Democrats think are appropriate. (Whatever that number is.)

One likely Democratic candidate, Mike McCabe, proclaims that Walker’s economic development policies are a failure, and that the state should be targeting companies like Epic Systems. This ignores the facts that (1) everybody wants companies like Epic, (2) Epic moved from Madison to Verona because of the capital city’s failure to provide enough tax incentives, and (3) hitching your wagon to the bazillion-job horse means that if the horse suddenly stops, you might fall off. (Large-screen televisions are not exactly a necessity, so what happens to Foxconn Wisconsin employment in the next economic downturn?) I could have sworn liberals weren’t in favor of company towns either, although now that I think about it they are perfectly fine with company towns as long as the company is one or more units of government.

McCabe’s stated position is rather limousine-liberalish as well in wanting to wash our hands of those icky, dirty manufacturers, despite the historical fact that manufacturing is something Wisconsin has done and continues to do well, and remains Wisconsin’s leading employer. (Read for yourself and decide.) It’s kind of ironic to have Democrats decry jobs for not supporting working families, and yet simultaneously shunning blue-collar jobs, as if every job should involve working in a business-casual office where no one needs to stay after 5 p.m.

Then there’s the premier of the People’s Republic of Madison, Paul Soglin, who thinks he can translate Madison’s economic growth to the entire state, ignoring the fact that a blind monkey as mayor of Madison would have exactly the same economic growth if said blind monkey mayor had both a state capital and world-class university within its borders. There’s also “entrepreneur” Andy Gronik, whose biggest policy pronouncement so far is that public employees should have to pay absolutely nothing for their Rolls–Royce benefits.

The conundrum about job creation is that it requires job creators, which we have too few of in this state, and have had too few of for a long, long time. One reason, I think, is that, perhaps unlike our neighbors in Minnesota, Wisconsin society doesn’t respect those who start new businesses and then fail at them. All of Wisconsin’s anti-Trump types pointed to his four business bankruptcies and not his employment of 23,000 people. That may be because they didn’t like Trump and/or found him unsuitable to be president, but a lot of people in this state seem to believe that people like Diane Hendricks, John Menard, Herb Kohler and others with several digits of wealth stole from or cheated someone to get that wealth, instead of creating products and services to serve customers. And as long as that attitude persists in this state, the state will continue to lag in job and business creation, through no fault of state government.

Even if you don’t make Kohler-level money, the fact is that no one ever gets rich (defined monetarily) working for someone else. There is always risk involved in potential reward. Businesses fail daily, more often than not because of problems running the business, not with the business’ product or service. But business does far, far, far more for this state than government ever has or ever will, something none of the likely Democrats running for governor, including Gronik, will ever acknowledge.

Nonetheless, be skeptical about Foxconn until the jobs show up.  (And preferably somewhere other than the southeastern part of the state, though that appears to be a done deal. Other parts of the state need the jobs more than southeastern Wisconsin.)

 

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One thought on “Coming to Wisconsin?

  1. I suspect the real value of a “FoxConn” type industry looking at Wisconsin is more political than economic and wherever the company locates, the “winning” state, will be the biggest loser. I have to question whether the long term benefits of an electrical assembly plant will outweigh the week long headlines of “new jobs brought in by the Governor”. Of course the “win” will be well played in the media come the next election season. Only time will tell if Wisconsin is a valid contender or if the Badger State is merely leverage to get a better deal elsewhere.

    The details of negotiations with the company of course are not in public view and I can see good reason for. and support, confidentiality at this stage. I do not have much confidence however in the abilities of the Wisconsin Economic Development Corporation (WEDC) to broker a deal that is good for the future employees of the company or the state. I would like to be wrong. I wish I could rely on a history of success or possibly WEDC’s ability to follow Wisconsin law and federal program requirements, but recent audits’ most positive comments can be boiled down to “they didn’t screw up this year as bad as last year”.

    Experience with the agency tells me that political expediency trumps sound development decisions which beg a number of questions:

    Will the WEDC standards currently required of Wisconsin industries seeking WEDC assistance (full-time job creation, wage levels, and benefits such as health care) be required of this prospect or put aside for “extenuating circumstances”?

    Will the prospect pick up a fair share of workforce development expenses required for new employees, and be provided by the existing Department of Workforce Development, or will there be a substantial state investment in “workforce training” funds paid directly to the company to mask tax abatement which is unconstitutional in Wisconsin?

    Will the prospect pay a fair share for transportation infrastructure required by the company?

    Will any of the incentives require reductions in service to any other area in Wisconsin?

    Will the company be required to make substantial investments in Wisconsin Universities and Technical Colleges on par with other Wisconsin industries such as paper, engines and motors, plastics, and agriculture?

    Will there be provisions to require outsourcing of components and pre-assembly by primarily Wisconsin firms?

    Frankly I would rather have the Governor stand on the Capitol steps and tell the taxpayers that Wisconsin took a pass because it didn’t offer family sustaining wages, or meet our existing laws and development requirements. That won’t make up for WEDC and regional development agencies that WEDC underwrites chasing call centers that offer low wages and no benefits for a largely part-time workforce but it is a start.

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