The company doesn’t have a great track record of keeping its job-creation promises, for one. Then there’s the issue of worker conditions in China

Foxconn's $10bn move to the US is not a reason to celebrate

The announcement by the Taiwanese giant Foxconn that it will build an LCD-manufacturing facility in Wisconsin worth an estimated $10bn was met with considerable fanfare.

But the state has a troubled history in matters of economic development, and the company, a supplier to Apple, Google, Amazon and other tech giants, has a lackluster record when it comes to fulfilling its promises. The news should raise red flags.

The deal, backers say, will create 13,000 jobs in six years – in return for a reported $3bn in state subsidies. Only 3,000 of those jobs will come immediately. Furthermore, the Washington Post has reported that Foxconn has a track record of breaking such job-creation promises. In 2013, the company announced plans to hire 500 people and invest $30m in Pennsylvania. The plan fizzled out.

Wisconsin’s Republican governor, Scott Walker, was elected in 2010 on a campaign pledge to bring 250,000 jobs to the state. So far he has fallen short. A successful Foxconn project would be a major step towards repairing his damaged credibility.

On Friday, he had a rejoinder for doubters of the project. At a stop in Eau Claire as he toured the state to promote the deal, the governor said: “There’s a whole lot of people out there scrambling to try and come up with a reason not to like this. I can tell you, that’s fine but I think they can go suck lemons.”

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The plan has been touted as a big win not just for Walker, but also for House speaker Paul Ryan – whose district is likely to host the proposed plant – and Donald Trump. In a press briefing, a senior administration official said the announcement was “meaningful”, because “it [represents] a milestone in bringing back advanced manufacturing, specifically in the electronics sector, to the United States”.

Trump appealed to workers affected by the decline in US manufacturing during his campaign, with his signature promise to “make America great again”. He has pointed to bad trade deals as a significant reason for the country’s economic problems, saying he could do better.

At the White House on Wednesday, the president said: “If I didn’t get elected, [Foxconn] definitely would not be spending $10bn.”

Ryan said the announcement demonstrated the president’s commitment “to driving American manufacturing and bringing new jobs home”.

Big claims have been made. Earlier this week, Trump told the Wall Street Journal that Apple has plans to build three factories in the US. Apple has not confirmed the claim. Walker has dubbed the area of his state where the Foxconn plant will be located “Wisconsin Valley”.

Yahoo Finance, however, has pointed out that Foxconn has a track record of using robots. Wisconsinites may see fewer job opportunities than they hoped for. Worker conditions at Foxconn’s huge plants in China, meanwhile, have proved controversial. The famous Longhua plant has experienced a rash of worker suicides.

Jennifer Shilling, a Democratic Wisconsin state senator, criticised the deal.

“The bottom line is this company has a concerning track record of big announcements with little follow through,” she said. “Given the lack of details, I’m skeptical about this announcement and we will have to see if there is a legislative appetite for a $1bn-to-$3bn corporate welfare package.”

The Wisconsin legislature is controlled by Republicans. They will not need bipartisan support to pass such subsidies, most likely outside the budget process.

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Cautionary tales

Foxconn investment agreements in Indonesia, India, Vietnam and Brazil failed to deliver completely. In India, for example, the company promised made in 2014 to invest $5bn over five years, creating 50,000 jobs. According to the Washington Post, reality has fallen far short. Workplace safety concerns will also dog the Wisconsin project; recent “right to work” legislation will affect worker-company relations.

Press kit materials said the Wisconsin plant, which would cover an area three times the size of the Pentagon in Virginia, would be one of the largest foreign investments in US history, in terms of job creation.



The touted average salary, plus benefits, was $53,000. The offices of the majority leader of the Wisconsin state senate and Walker did not respond to questions about what kinds of jobs these would be or what kind of training would be required. Foxconn, which produces screens and assembles cellphones and computers, is particularly known for its work with iPhones.

The Wisconsin Economic Development Corporation (WEDC) is a participant in the Foxconn deal. During Walker’s brief presidential run, it was dogged by questions over failed loans. Businessman and Republican donor Ron Van Den Heuvel was indicted for fraudulently borrowing $700,000 from a local bank. Months after WEDC was created in 2011 the agency, then led by Walker, lent him more than $1.2m, without performing a background check.

Likewise, the state’s manufacturing and agriculture tax credit has been widely criticized as a simple refund for millionaires, according to the Wisconsin Budget Project (WBP) nearly “wiping out income taxes for manufacturers and agricultural producers”.

Six states were reportedly negotiating with Foxconn. Pointing to property tax breaks and job-training costs, Joe Peacock of the Wisconsin Budget Project warned that the total cost of winning the race could exceed $3bn. Similar deals, he said, often end up as a “zero-sum game” for states.

Speaking on conservative talk shows the day following the announcement of the deal, Walker said “clawbacks” and “safeguards” were in place.

“It certainly is my fiduciary role to protect taxpayers in the state,” he said.

Molly Stentz contributed research