Workers are seen as construction continues on the Foxconn manufacturing complex in Mt. Pleasant, Wisconsin, August 19, 2020.
Brian Snyder | Reuters
Taiwanese electronics maker Foxconn drastically cuts a planned $ 10 billion plant in Wisconsin, confirming its withdrawal from a project former US President Donald Trump once called “the eighth wonder of the world.”
Under an agreement with the state of Wisconsin announced Tuesday, Foxconn will reduce its planned investment to $ 672 million from $ 10 billion and reduce the number of new jobs to 1,454 from 13,000.
The Foxconn-Wisconsin deal was first announced with great fanfare in the White House in July 2017, with Trump touting it as an example of how his “America First” program could revive American tech manufacturing.
For Foxconn, the investment pledge was an opportunity for its charismatic founder and then president Terry Gou to create goodwill at a time when Trump’s trade policies threatened the company’s cash cow. : construction Apples iPhones in China for export to America.
Foxconn, the world’s largest contract manufacturer of electronics, has proposed a 20 million square foot manufacturing campus in Wisconsin, which would have been the largest investment in U.S. history for a new location by a company based abroad.
It was supposed to build cutting-edge flat panel displays for televisions and other devices and instantly establish Wisconsin as a destination for technology companies.
But industry executives, including some at Foxconn, were very skeptical of the plan from the start, noting that none of the crucial suppliers needed to produce flat screens were located near Wisconsin. .
The plan also faced local opposition, with critics denouncing a gift from the taxpayer to a foreign company and the terms of the agreement that granted extensive water rights and allowed the acquisition and demolition of homes through an eminent domain.
In 2019, the village where the plant is located paid just over $ 152 million for 132 properties to make way for Foxconn, plus $ 7.9 million in relocation costs, according to village records obtained by Wisconsin. Public Radio and analyzed by Wisconsin Watch.
Foxconn, officially called Hon Hai Precision, said the new agreement gives it “the flexibility to seize business opportunities in response to changing global market conditions.” The company said: “The original projections used in trading in 2017 have currently changed due to unforeseen market fluctuations.”
After scrapping his advanced display projects, Foxconn later said he would build smaller and older-generation displays in Wisconsin, but that plan never materialized either.
Ahead of Tuesday’s announcement, Foxconn chairman Liu Young-way told reporters in Taipei that the company currently manufactures servers, communications technology products and medical devices in Wisconsin, adding that electric vehicles (VE) had a “bright future” there. He didn’t elaborate.
Liu had previously said the infrastructure was there in Wisconsin to make electric vehicles due to its proximity to the traditional core of American auto manufacturing, but the company could also choose Mexico.
Hon Hai shares fell as much as 1.6% on Wednesday morning, underperforming the overall Taiwan market which was down 0.7%.
Wisconsin Gov. Tony Evers said the new deal will save Wisconsin taxpayers “a total of $ 2.77 billion from the previous contract, to maintain accountability measures requiring job creation. to receive incentives and protect hundreds of millions of dollars of local and state infrastructure investments made in support of the project. “
Evers said that under the deal negotiated between the Wisconsin Economic Development Corporation and Foxconn, the Taiwanese company is eligible to receive up to $ 80 million in performance-based tax credits over six years if it reaches employment and capital investment objectives. He stressed that the incentives were in line with those offered to any business.
The state will reduce the tax credits allowed for the project to $ 80 million, from $ 2.85 billion.
Wisconsin’s original package also included local tax incentives and highway and highway investments by state and local governments, bringing the total of taxpayer-funded grants to more than $ 4 billion.
Foxconn noted that since 2017, it has invested $ 900 million in Wisconsin, including several different facilities in the state.
The state has already spent more than $ 200 million on road improvements, tax exemptions and grants to local governments for worker training and employment, according to records obtained by Wisconsin Public Radio.