The state of Wisconsin has struck a dramatically reduced deal with Taiwanese contract manufacturer Foxconn. The move, announced Tuesday by Democratic Governor Tony Evers, is a rejection of a deal negotiated four years earlier by Evers’ Republican predecessor Scott Walker.
Under the original deal, Foxconn would spend a whopping $ 10 billion to manufacture a state-of-the-art facility to manufacture large-scale LCD displays. The deal was announced in 2017, and then President Donald Trump traveled to Wisconsin for the groundbreaking 2018, describing the new plant as “the eighth wonder of the world.” Foxconn would receive $ 2.85 billion in national and local incentives under that original deal.
The deal may have been a smart policy for Foxconn in 2017. The company uses factories in other countries to assemble consumer electronics products for Apple and other US companies – products that are often then returned to the United States for sale. So Trump’s protectionist tendencies seemed like a serious threat. The announcement of plans to create thousands of jobs in a major battleground gave Trump something to brag about, and that may have helped Foxconn gain favor with the new administration.
But it soon became clear that Foxconn would not keep his end of the bargain. The company had to build a factory based on the new Generation 10.5 standard of the LCD panel industry, which uses huge sheets of “mother glass” that are about 3 meters square. Each glass plate is typically cut into different displays for use in large televisions. To make panels this big, it takes a big factory – the original deal was that Foxconn would hire as many as 13,000 workers in Wisconsin by 2032.
The new deal recognizes that Foxconn’s presence in Wisconsin will be much smaller. The agreement asks Foxconn to spend just $ 672 million on a factory that will employ just 1,454 people by 2025. And the state will only offer Foxconn $ 80 million in incentives – a thirty-fold discount from the original incentive package.
Evers described the new package as “a better deal for our state”. According to Reuters, Evers also stressed “that the incentives were in line with each company’s.”
According to The Wall Street Journal, “the old contract required Foxconn to build a specific type of fencing factory in Mount Pleasant, 25 miles south of Milwaukee.”
Now Foxconn will be better able to adapt its plans to changing market conditions. Last month, Foxconn chairman Young Liu suggested the company start manufacturing electric cars in Wisconsin, although no specific plans have been announced.