Patrick Marley and Jason Stein

Milwaukee Journal Sentinel

MADISON, Wis. — Taiwanese electronics manufacturer Foxconn Technology Group announced at the White House Wednesday its plans to invest $10 billion to build a massive display panel plant in Wisconsin that could employ up to 13,000 workers but would require up to $3 billion in subsidies from state taxpayers.

“America does not have a single LCD plant to produce a complicated system. We are going to change that," Foxconn chairman Terry Gou said at a news conference. "It starts today with this investment in Wisconsin."

Foxconn is a major supplier of Apple iPhones and other Apple devices and comes a day after President Donald Trump told the Wall Street Journal that Apple CEO Tim Cook promised him the company would build “three big plants, beautiful plants” in the U.S.

The Wisconsin-based Foxconn plant will focus on display panels used in televisions and other devices. Last year, Foxconn bought Japanese electronics maker Sharp Corp.

The deal represents a significant political victory for Wisconsin Gov. Scott Walker, House Speaker Paul Ryan, whose district in southeastern Wisconsin will be home to the factory, as well as President Donald Trump, who pushed for more domestic manufacturing facilities and jobs on the campaign trail.

“That’s where we want our jobs,” said Trump, referring to the U.S.

“If I didn’t get elected, (Gou) definitely would not be spending $10 billion,” said Trump, who promised infrastructure and tax bills in the “very near future.”

The deal was put together in recent months as Walker, Ryan and Trump each met with Gou and other Foxconn officials.

For the state of Wisconsin, the deal is a huge opportunity and also a big risk — one that state lawmakers will have to weigh quickly as they consider whether to allow a subsidy package nearly 50 times bigger than any previous one.

The project could involve not just a large factory but a virtual village, with housing, stores and service businesses spread over at least 1,000 acres. That acreage, an area totaling more than 1.5 square miles, could potentially could be assembled from parcels that initially weren’t contiguous, a person familiar with the deal said.

$53,900 a year

At 20 million square feet, the factory would be three times the size of the Pentagon, making it one of the largest manufacturing campuses in the nation. It would initially employ 3,000 workers making an average of $53,900 a year plus benefits and could eventually boast more than four times that.

"Today we’re announcing the single largest economic development project in the history of Wisconsin and one of the largest in the history of this country," said Walker, who called it the largest job creation project in the nation in an undeveloped greenfield and dubbed the corridor "Wisconn Valley."

Republicans and Democrats joined together to praise the prospect of the company coming to Wisconsin, though some Democrats expressed strong reservations about the size of the potential incentive package. Skeptics also cautioned that Foxconn had not fulfilled some of its promises elsewhere.

The Foxconn plant would make liquid crystal display panels used in computer screens, televisions and the dashboards of cars. Walker's office said the deal could result in up to 22,000 jobs that would be indirectly created by suppliers and businesses looking to locate near Foxconn and serve the company and its workers.

The construction alone would lead to 10,000 jobs over each of the next four years.

Foxconn is huge. In China, its manufacturing base, the company employs some 700,000 people. The firm's revenue last year totaled about $135 billion. That's roughly equivalent to Amazon.com Inc., which ranked 12th on the Fortune 500 list.

On the campaign trail, Trump took aim at Apple in particular for outsourcing production of iPhones and other consumer devices to factories in China. Most of the company's products are assembled by Foxconn.

Independent tech analyst Jack Gold says Foxconn could benefit from lower shipping costs, political goodwill and potentially cost savings overall through automation with a U.S. plant. Labor costs in China, he says, are “higher than they used to be.”

There is a downside, Gold cautioned. “In China, Foxconn had pretty much free reign to do whatever they wanted with employees and avoid penalties for bad labor practice,” he says. “That probably won't be the case in the U.S.”

Foxconn's vapor factories

In the past, some Foxconn investments have failed to materialize.

In November 2013, Pennsylvania Gov. Tom Corbett announced that Foxconn planned to invest $30 million in a “high-end technology manufacturing facility” with 500 jobs. The company has a small research operation in Harrisburg, Pa., but the factory was never built.

Similarly, the Washington Post reported in March that Foxconn has spoken of making major investments in India, Vietnam and Brazil, but with results that have not matched the original announcements.

At $3 billion for 13,000 jobs, the deal would cost $231,000 per job. The subsidies would total more than the combined yearly state funding used to operate the University of Wisconsin System and the state's prison system.

Mammoth subsidy

Until now, the largest state subsidy ever awarded to a company in Wisconsin was the $65 million offered by then Gov. Jim Doyle's administration in November 2010 to Mercury Marine, which was considering moving its factory from Fond du Lac to Oklahoma. That deal involved retaining thousands of at risk factory jobs.

Steve Deller, a professor of agriculture and applied economics at the University of Wisconsin-Madison, said a $3 billion deal over 15 years is likely "too pricey in terms of potential economic benefit back to the state."

"Throwing money into incentives makes a slippery slope," he said. "(People) get so wrapped up in the winning game, in the headline of 'we got it' that they lose sight (of the) pretty steep price. Hard to say because we don't know what the package looks like."

Supporters say such an investment would be worthwhile because Foxconn would also draw numerous suppliers that would create their own jobs and energize Wisconsin's economy.

Tom Still, head of the Wisconsin Technology Council, said he believes that every job in a Foxconn plant could bring an additional one to two jobs at company suppliers that would also locate in Wisconsin to be closer to their key customer. Still said those additional jobs could help to justify massive state and local subsidies to Foxconn.

"I think the benefits (of subsidies) need to outweigh the costs and I think they would over time if you construct the deal right," Still said.

Jon Swartz contributed from USA TODAY in San Francisco, while Craig Gilbert in Washington and Lillian Price in Madison and Rick Romell in Milwaukee of the Journal Sentinel staff contributed to this report.