Report: Foxconn could return nearly $4 for every $1 in state subsidy

A massive manufacturing complex planned by Foxconn Technology Group could generate broad gains for Wisconsin “that go far beyond the direct job estimates and tax revenue costs which have dominated the recent discussion,” according to a report by a UW-Madison economist released Monday.

If the Taiwan-based electronics manufacturer employs 13,000 people in the state, the ripple effect could spawn an additional 19,000 to 26,000 jobs through growth from the company's suppliers and other businesses in the region, said Noah Williams, director of the Center for Research on the Wisconsin Economy.

That could mean a return of $3.90 for every $1 in state subsidy costs spent to lure Foxconn and its planned investment of up to $10 billion, Williams said in his report, which was commissioned by the Wisconsin Technology Council.

The liberal group One Wisconsin Now Tuesday pointed to open records that they had received from Gov. Scott Walker's office showing that in 2015 Williams had sought to advise Walker on his unsuccessful presidential campaign. That year, Williams also contributed $500 to Walker's campaign, federal records show.

The news comes as the Legislature's budget committee is scheduled to take testimony Tuesday on a state incentives package for Foxconn that includes environmental exemptions and up to $2.85 billion in cash to the company. The hearing in Sturtevant will be the first that will be held in the area that could benefit from the siting of the plant in southeastern Wisconsin.

Meanwhile, the Mount Pleasant Village Board voted Monday evening to hire a project director to help the community prepare for Foxconn should the company choose to locate in the village.

The action doesn't mean the electronics manufacturer definitely plans to build its immense LCD panel factory in Mount Pleasant. But the Racine County village clearly is a potential site. Many landowners south of Highway 11 and east of I-94 have been asked to grant option rights to their properties for possible use by Foxconn. Property owners in the Town of Paris, in Kenosha County, also have been approached, but it has been Mount Pleasant and Racine County that appear to have acted the most aggressively to woo the company.

In the study released Monday, Williams also said it is “highly implausible” Foxconn would spend $10 billion on a factory that employs only 3,000 people — a possible scenario voiced by some who have questioned the state’s proposal to grant the company billions of dollars in incentives.

At the same time, however, Williams cautioned the large potential employment gains “are by no means certain.”

The UW economics professor did say he doubts large numbers of Foxconn workers will come from Illinois and thus benefit from spending by Wisconsin taxpayers.

The cross-border employment would be particularly low if Foxconn ends up in Racine County rather than Kenosha County, Williams says in his report.

The two counties in southeastern Wisconsin are thought to be frontrunners for the main Foxconn plant, which would include 20 million square feet of buildings on some 1,000 acres. Foxconn would produce liquid crystal display panels at the factory.

Williams estimates that a $9 billion investment by Foxconn here could generate $956 million in annual payroll, benefits and overtime.

The abstract of Williams’ report and the Technology Council news release announcing it mistakenly say that if Foxconn employs 13,000 people, it could generate an additional 32,000 to 39,000 jobs.

RELATED: Foxconn in Wisconsin

RELATED: Democrat ‘incredibly frustrated’ with leader Barca over Foxconn

RELATED: Foxconn deal raises wide array of environmental questions

RELATED: How would the Wisconsin Foxconn deal work? Here are some answers

RELATED: Work on state budget resuming as Foxconn hearing comes to Sturtevant Tuesday

During an interview Monday, Williams acknowledged the error. The 32,000 to 39,000 range would be the total employment, including the 13,000 direct jobs at Foxconn, he said.

An earlier report by accounting firm EY and paid for by Foxconn estimated total employment from the plant and its ripple effect at 35,000. Another report, commissioned by the Wisconsin Economic Development Corp. and produced by accounting firm Baker Tilly, estimated total employment at roughly 25,000 to 31,000.

The legislative hearing scheduled for Tuesday doesn't appear to include executives from Foxconn, who were also absent from a hearing on Aug. 3 in the Assembly jobs committee. A spokesman for Joint Finance Committee co-chairwoman Sen. Alberta Darling (R-River Hills) said he didn't know if Foxconn executives would speak.

In a letter Monday to Gov. Scott Walker's administration, Democratic Sens. Jon Erpenbach of Middleton and Lena Taylor of Milwaukee said that the company should send a representative to the hearing. They also said that lawmakers should require an additional sign off on the Foxconn deal once the state signs a final contract with the company.

"We are actually considering approving the release of $3 billion with no final contract to examine," they wrote.

Also Monday, a Foxconn executive said the company could start work on its Wisconsin campus as early as next year with three factory lines.

Louis Woo, special assistant to Foxconn Chairman Terry Gou, told Reuters the company could initially set up a packaging line, molding line and assembly line at a cost of under $1 billion.

Woo told Reuters that the Wisconsin campus may start out by importing glass for the displays from Taiwan, China and Japan. He said that Foxconn would immediately begin land survey work in Wisconsin if the Legislature passes the incentives bill.

Hired by Mount Pleasant as "project director" for Foxconn-related matters is Claude Lois, former mayor of Burlington, and recently resigned as administrator of the Division of State and Local Finance in the state Revenue Department. He will be paid $20,000 a month, and be employed on a month-to-month basis through August 2018. His contract can be ended on 30 days' notice. He will start immediately.

The vote to hire Lois was 4-2, with trustees Gary Feest and Jon Hansen dissenting. Feest said it was premature to hire a specialist to work on Foxconn matters without knowing whether the company will choose Mount Pleasant.

But Alan Marcuvitz, a Milwaukee attorney who has been advising the village, said hiring Lois would clearly signal to Foxconn that Mount Pleasant wants the firm.

"This village is competing to get the Foxconn project in the Village of Mount Pleasant," Marcuvitz said. "A negative vote tonight is a message to Foxconn that this village is not that committed to bringing Foxconn here. We need the services of this person to help us close the loop and put us in the best position to get this project."