What’s wrong with Foxconn in Wisconsin?

Apple escapes mention in a scathing editorial.

From Wisconsin’s Fire Sale for Big Business in Monday’s New York Times:

Gov. Scott Walker had already reached desperate levels of generosity to entice a big electronics company to locate in Wisconsin. Last summer, the governor agreed to an eye-popping $3 billion in state subsidies to secure the arrival of Foxconn, a global manufacturer of flat-panel display screens [! see below]. That amounts to an annual state subsidy (that is, taxpayer money) of $15,000 to $19,000 per promised job — more than five times the typical subsidy, according to job development specialists.

But wait, there’s more, as TV hucksters say: To make it easier for this Taiwanese company to build what is promised as one of the largest economic development projects in United States history — a $10 billion operation supposedly three times as large as the Pentagon — the company will be exempt from the state environmental requirements that other companies have to follow. This means Foxconn can fill in wetlands as it pleases and reroute streams or even create new ones with impunity. The business, which uses potentially polluting chemicals in its manufacturing, will not be required to submit an environmental impact statement to the state, according to The Milwaukee Journal Sentinel.

Note: Foxconn is not just a manufacturer of flat-panel screens, as the Times editorial board cluelessly puts it. It is the world’s largest electronics contract manufacturer and it assembles most of Apple’s iPhones, iPads, MacBooks, etc. If Foxconn’s Wisconsin plant turns out to be both an iPhone factory and a major polluter, you can bet it’s Apple that will get slimed.

4 Comments

  1. Richard Wanderman said:

    Scott Walker is a horror who has a history of destroying Wisconsin jobs. He is backed by the Koch brothers, need I say more? Akin to what then governor Mike Pence did in Indiana which just added to the tax burden of Hoosiers and carrier moved to Mexico anyway. Sad.

    The Foxconn plant is supposedly for flat panel production, even though Foxconn obviously does many other things. They do build more specialized plants and the (insane) incentives to build this one have them licking their chops.

    I doubt seriously whether Foxconn would ever assemble iPhones in Wisconsin given what Tim Cook has said about how the iPhone supply chain works.

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    December 11, 2017
  2. Ken Cheng said:

    Having 50 states competing for a manufacturer has a long history of being problematic. All the leverage is with the manufacturer. Can you blame the manufacturer for the offers they accept? We, the public, elect these officials who make these decisions.

    I remember Dell getting $234M in subsidies from Winston-Salem, NC for building a factory with just 2000 Jobs. That’s $100,000+ per potential job. Unfortunately, those jobs didn’t materialize as the PC boom had peaked and it wasn’t long before Dell shuttered the very new plant. I’m not sure how much they were able to clawback, but I have a feeling the clawback provisions are just as generous as the original subsidies. I wonder what Wisconsin’s per job created subsidy amount is? How do the Gigafactory subsidies compare? How about the recent battle over Amazon’s 2nd HQ that’s supposed to cost $5B. How much are those “winning” communities giving away? How much did they pay consultants for rosy economic feasibility studies?

    You wish some smart economist would come up with a way that communities can compete without giving up the farm.

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    December 11, 2017
    • John Frantz said:

      The question in my mind is whether these kinds of subsidies should be at all legal. Isn’t it just a form of corruption? If one company gets a deal and another doesn’t, they aren’t competing on a level playing field. In practice I think larger corporations end up getting an advantage over smaller ones (again).
      Wasn’t the EU rule on Apple’s Irish tax breaks based on this principle?

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      December 11, 2017
      • Ken Cheng said:

        Exactly. And this issue has come up whenever a large company gets a tax break subsidy, existing businesses all complain why they don’t get a tax break.

        It’s tricky, because subsidy aside, not all locales are equal. Some have better locations, better infrastructure, better schools for employees, better quality of life, lower residential prop taxes, etc., etc., etc. so if you eliminate subsidies, then all the companies would gravitate to the same locales. Locales, presumably use subsidies, in an attempt to level-the-playing-field.

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        December 11, 2017

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