When Taiwan-based Foxconn Technology Group, the world’s largest computer electronics manufacturer and a major supplier for Apple Inc. AAPL, +0.80% breaks ground Thursday in Racine County, just south of Milwaukee and about 90 miles north of Chicago, it’s on its way to becoming the largest private-sector employer in Wisconsin — adding a projected 13,000 positions at full capacity.
As the project has gained traction over the past year, detractors have besmirched their own state as “Foxconnsin,” given the heavily sweetened deal for the private concern. Yet proponents of Foxconn 2354, -0.28% living and working in the industrial and agricultural region can’t wait to watch the economic boost roll in for a state already sitting on a record-low unemployment rate near 3%.
Both sides concede that even with a potential payoff, there’s a cost, to the taxpayers of Wisconsin and perhaps politically for two of Foxconn’s biggest supporters, Gov. Scott Walker and President Donald Trump, whose narrow Wisconsin win helped seal a long-shot run for the White House.
Taking stock of Foxconn’s winners and losers offers a lesson for the pursuit of public-private partnerships in Wisconsin and beyond.
—A hog of a project? Groundbreaking for the $10 billion Foxconn complex is supported by $4.7 billion in taxpayer subsidies when the state’s $3 billion is added to the amount kicked in by municipalities around the 20-million-square-foot plant — a price tag that has gone up by $1 billion since the deal was announced last year. Some observers say it’s the best evidence to date of the manufacturing revival fueled by President Donald Trump’s “America First” policy. Yet, 30 miles away sits a Wisconsin, and arguably American, icon in Harley-Davidson HOG, +0.47% which just this week has said it’s moving some production of motorcycles overseas to avoid tariffs.
The state is on the hook for 40% of the public bonds that finance the local expenses, including roads and more, if the project falls short, The Wall Street Journal reports. The Wisconsin Economic Development Corporation, which negotiated the contract, told the Journal that the state had a personal financial guarantee from Foxconn Chairman Terry Gou to pay back part of the costs to the state if the company doesn’t fulfill its promises.
An independent report from the Milwaukee Metropolitan Association of Commerce shows that the project will provide an $18 dollar return for every $1 worth of incentives from the state.
— Scott Walker (@ScottWalker) June 28, 2018
