Under a deal with the state of Wisconsin announced on
Tuesday, Foxconn will reduce its planned investment to $672 million from $10
billion and cut the number of new jobs to 1,454 from 13,000.
The Foxconn-Wisconsin deal was first announced to great
fanfare at the White House in July 2017, with Trump boasting of it as an
example of how his "America first" agenda could revive U.S. tech
manufacturing.
For Foxconn, the investment promise was an opportunity for
its charismatic founder and then-chairman, Terry Gou, to build goodwill at a
moment when Trump's trade policies threatened the company's cash cow: building
Apple Inc's iPhones in China for export to America.
Foxconn, the world's largest contract manufacturer of
electronic devices, proposed a 20-million-square-foot manufacturing campus in
Wisconsin that would have been the largest investment in U.S. history for a new
location by a foreign-based company.
It was supposed to build cutting-edge flat-panel display
screens for TVs and other devices and instantly establish Wisconsin as a
destination for tech firms.
But industry executives, including some at Foxconn, were
highly skeptical of the plan from the start, pointing out that none of the
crucial suppliers needed for flat-panel display production were located
anywhere near Wisconsin.
The plan faced local opposition too, with critics denouncing
a taxpayer giveaway to a foreign company and provisions of the deal that
granted extensive water rights and allowed for the acquisition and demolition
of houses through eminent domain.
As of 2019, the village where the plant is located had 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, formally called Hon Hai Precision Industry Co Ltd,
said the new agreement gives it "flexibility to pursue business
opportunities in response to changing global market conditions." The
company said "original projections used during negotiations in 2017 have
at this time changed due to unanticipated market fluctuations."
After abandoning its plans for advanced displays, Foxconn
later said it would build smaller, earlier-generation displays in Wisconsin,
but that plan never came to fruition either.
(https://www.reuters.com/article/us-foxconn-wisconsin-exclusive/exclusive-foxconn-reconsidering-plans-to-make-lcd-panels-at-wisconsin-plant-idUSKCN1PO0FV)
Prior to Tuesday's announcement, Foxconn Chairman Liu
Young-way told reporters in Taipei that the company currently makes servers,
communications technology products and medical devices in Wisconsin, adding
that electric vehicles (EVs) have a "promising future" there. He did
not elaborate.
Liu had previously said the infrastructure was there in
Wisconsin to make EVs because of its proximity to the traditional heartland of
U.S. automaking, but the company could also could decide on Mexico.
Hon Hai shares fell as much as 1.6% on Wednesday morning,
underperforming the broader Taiwan market which was down 0.7%.
INCENTIVES
Wisconsin Governor Tony Evers said the new agreement will
save Wisconsin taxpayers "a total of $2.77 billion compared to the
previous contract, maintain accountability measures requiring job creation to
receive incentives, and protect hundreds of millions of dollars in local and
state infrastructure investments made in support of the project."
Evers said under the deal negotiated between the Wisconsin
Economic Development Corporation and Foxconn, the Taiwan company is eligible to
receive up to $80 million in performance-based tax credits over six years if it
meets employment and capital investment targets. He stressed that the
incentives were in line with those available to any company.
The state will reduce the tax credits authorized for the
project to $80 million from $2.85 billion.
The original Wisconsin package also included local tax
incentives and road and highway investments by state and local governments,
which brought total taxpayer-funded subsidies 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 the records obtained by Wisconsin Public
Radio.
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