The new Foxconn factory could raise Wisconsin’s profile in advanced manufacturing. It could also bring significant political benefits — for the company and for the White House.
Foxconn, the Taiwanese electronics supplier for Apple and other tech giants, said Wednesday it would open its first major U.S. factory in Wisconsin, a boost both for the battleground state’s economy and the Trump administration’s efforts to bolster domestic manufacturing.
White House officials highlighted President Donald Trump’s direct negotiations with the company for the project, which they said would create 3,000 jobs and represent a $10 billion investment.
Trump joined Foxconn’s chairman, Terry Gou, in Washington, D.C., for a formal announcement on Wednesday, with two prominent Wisconsin Republicans, Gov. Scott Walker and Paul Ryan, the House speaker, also in attendance. The plant is to be built somewhere in Ryan’s district in southeastern Wisconsin, Foxconn said.
Gou said in January that Foxconn, the world’s largest contract-electronics manufacturer, was considering investing more than $7 billion in the United States, and potentially adding 30,000 to 50,000 jobs.
Most Read Business Stories
- 'Hundreds of millions of dollars' lost in Washington to unemployment fraud amid coronavirus joblessness surge
- 'A dream come true': Original players rescue hipster chain Rudy's Barbershop from bankruptcy
- Even if you want to buy a home, it's harder now to get a loan. Or tap home equity.
- Mitsubishi cuts hundreds of jobs, shuts Washington operations as it slashes SpaceJet budget
- With $100 million, Magic Johnson pays it forward to businesses in need
The new factory, which would produce flat-panel display screens for televisions and other consumer electronics, could raise Wisconsin’s profile in advanced manufacturing. Older industrial firms in the state, like Harley-Davidson in Milwaukee, have struggled recently, with the motorcycle maker disclosing plans to lay off 180 workers last week.
Foxconn’s announcement could also bring significant political benefits — for the company and for the White House. Although based in Taiwan, much of Foxconn’s production is done in China, and Trump has singled out Beijing’s trade practices for criticism, especially its yawning trade deficit with the United States.
Wisconsin was among the states in the industrial Midwest that helped tip the election to Trump in November. At 3.1 percent, its unemployment rate is well below the national average of 4.4 percent, but the loss of relatively high-paying, blue-collar jobs has taken a toll in many parts of the state.
Both Ryan and Walker are also influential national figures in the Republican Party, adding to Wisconsin’s appeal for Foxconn.
Foxconn, formally known as Hon Hai Precision Industry, has made promises to invest in the U.S. before, including in Pennsylvania, with little to show for it.
That history left some experts skeptical of the company’s latest commitment, and of the White House’s eagerness to claim credit for a major economic victory.
“I’ll be excited about the Foxconn announcement when workers are getting paychecks in Wisconsin,” said Scott Paul, president of the Alliance for American Manufacturing, a nonprofit partnership of domestic manufacturers and the United Steelworkers union. “Foxconn has a history of talking big and not necessarily delivering on their commitments.”
Still, Paul said, “I do hope this is built and there are tons of jobs.” He noted that the production of televisions and similar devices moved long ago from the United States to Asia, even as factories producing heavier goods like cars, jet engines and steel have managed to hang on in this country.
“Over and over, we’ve heard the excuse that consumer electronics can’t be brought back,” Paul said. “I do hope this succeeds because it shows these sourcing decisions are more about choices than capabilities. There’s very little electronic- display production in the United States now.”
Andy Tsay, a business professor at Santa Clara University who has studied where companies build their factories, said that a new Foxconn factory could make sense given the products it will be making.
“A flat-panel display is not a small thing, with today’s TVs; it’s certainly not inexpensive to ship,” he said. “Building close to where the customers are makes sense for a product like that.”
Factories that make flat-panel screens, like plants that produce computer chips, are highly automated, offsetting the labor cost advantage that China enjoys with other goods it produces, like iPhones, that require a great deal of painstaking human effort to assemble.
Gou has been opportunistic about opening factories to meet the broader aims of his business.
Tsay said that when Foxconn won its first order to make desktop computer chassis for Dell, the computer maker insisted that production occur in the U.S. So Gou bought a company in Kansas City to do it.
Apple idea doubted
Although the right combination of factors can make manufacturing feasible anywhere, Tsay said he doubted that Apple planned to build factories in the United States, as Trump suggested this week, unless it decided to build a large product such as a car.
The decision to build the plant in Wisconsin also stemmed from $3 billion in proposed state economic incentives over 15 years if Foxconn invests $10 billion in the state and ultimately adds 13,000 jobs, The Associated Press reported. The incentives would only be awarded if Foxconn creates the jobs and pays an average salary of nearly $54,000.
State Sen. Alberta Darling, co-chair of the Wisconsin Legislature’s budget committee, said any deal would be examined with a “fine-toothed comb” and need to win approval by the Republican-controlled Legislature.
Gov. Walker said he planned to call a special legislative session to consider the incentives. They include up to $1.5 billion in income tax credits for job creation, $1.35 billion in income tax credits for capital investment and up to $150 million in a sales tax exemption for the purchase of construction materials.
The Foxconn news sent a jolt of excitement across Wisconsin, even among longtime Democratic critics of Walker. “It’s an exciting opportunity,” said Democratic state Assembly Minority Leader Peter Barca.
But Barca, like many Democrats, voiced concern about how much taxpayers may have to contribute in tax breaks and other incentives. “We want to make sure it’s a fair deal for everybody,” he said. “We want a win-win-win.”