Taiwanese electronics manufacturer Foxconn is reconsidering its plan to make advanced liquid-crystal-display panels at a plant in Wisconsin, according to media reports Wednesday that the company will likely hire far fewer workers than promised.
The $10 billion campus was announced to much fanfare in 2017 by Wisconsin Gov. Scott Walker and President Donald Trump, with the state expected to pony up a $3 billion, 15-year package of tax incentives. The original plan promised the hiring of 3,000 workers initially, with the intent of growing that figure to 13,000 over time.
Now Foxconn Chief Executive Terry Gou says the steep cost of making the advanced TVs in the U.S. is a nonstarter.
“In terms of TV, we have no place in the U.S.,” Gou reportedly told Reuters in an interview. “We can’t compete.”
Foxconn, which is the main manufacturer of Apple Inc.’s
iPhone at factories in China, is now planning to make smaller LCD screens at the Wisconsin plant, and will employ mostly engineers and researchers, instead of the blue-collar manufacturing jobs originally planned. And though it reiterated earlier this month the plan to hire 13,000 workers in Wisconsin, it is scaling back that part of the plan. The 5,200 people who were expected to be in place by the end of 2020 is now more likely to be about 1,000 workers, according to Reuters.
The news is a blow for the state, but comes as no surprise to Gou’s critics, who’ve taken note of his history of making and breaking promises in numerous countries and regions over the years, as MarketWatch has reported. A pledge to invest $30 million in a factory in central Pennsylvania in 2013, for example, was also met with much ballyhoo, as reported by the Washington Post. That plant has never materialized. Equally, a 2014 promise to invest $1 billion in Indonesia and a 2007 pledge to invest $5 billion in Vietnam came to nothing.
Others criticized the Wisconsin project as making little economic sense as the state would effectively be paying more than 100% of workers’ pay for years. Michael J. Hicks, George and Frances Ball distinguished professor of economics and the director of the Center for Business and Economic Research at Ball State University in Muncie, Ind., outlined that argument in a commentary piece for MarketWatch in November.
Hicks was an early critic of the proposed Foxconn plan in Wisconsin and a skeptic that the promised jobs and benefits to the local economy would ever come to fruition.
“No matter what job and incentive numbers you believe, this deal shocks the senses,” Hicks wrote in his MarketWatch piece. “At the low end, the Wisconsin Budget Project, a budget think tank, estimated the cost per job at just under $220,000. At the high end, it’s $587,000 per job. These are for jobs that will pay an average of a little more than $53,000 per year. To be clear, this means Wisconsin taxpayers are paying between a third and all the wage bill for Foxconn for more than the next decade.”
Republican Walker lost a re-election bid in November to Democrat Tony Evers, with Republicans in the state assembly seeking to rein in gubernatorial powers before Evers’s inauguration as governor.
Foxconn, which trades as Hon Hai Precision Industry Co.
, has come under fire for other issues, too, not least for the working conditions at some of its plants that have been subject to protests over high suicide rates over the years.
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Foxconn shares have fallen 38% in the last 12 months, while the S&P 500
has fallen 6% and the Dow Jones Industrial Average
has fallen 5%.
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