Walters: To Foxconn chairman, please address these doubts about your project

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Steven Walters
Monday, September 18, 2017

To: Terry T.M.Gou, Foxconn chairman

Jiwndmng. [Translation: I have heard much about you.]

Starting with $7,500 and a few workers in 1974, you built one of the largest electronics design and high-tech manufacturing companies in the world. Its 2015 revenues were $136 billion. You control your companies from Taiwan, where your parents moved from China in 1949.

You are poised to become Gov. Scott Walker’s partner in either turning southeast Wisconsin into a Midwest Silicon Valley, or Wisconsin’s version of mythical con man Harold Hill, who had residents of an Iowa hamlet donate money for a town band. It was a Broadway play and movie, “Music Man.”

On July 26-27, you joined President Donald Trump and Walker in White House and Wisconsin announcements of Foxconn’s plans for a huge LCD manufacturing campus in Wisconsin.

Now, Wisconsin’s Legislature and governor have taken the first giant step to live up their end of the deal.

The Legislature passed, and the governor will soon sign into law, the largest financial incentive package any state government has ever offered a private company, let alone a foreign-owned company:

Up to $2.85 billion in tax credits over the next 15 years if—and it’s a big if—Foxconn invests $10 billion in the state and hires up to 13,000 workers in Wisconsin. State officials say your new plant would require 1,000 acres, have a floor space of 29 million square feet (“11 Lambeau Fields,” “three times the size of the Pentagon”), require 10,000 construction workers and create 6,000 indirect jobs.

Those numbers are so big Wisconsin residents have trouble grasping them.

One example: The state Department of Revenue says all Wisconsin manufacturing property is valued at $14.3 billion. A $10 billion plant would—with just one investment—boost the value of manufacturing property statewide by 69 percent.

Champions of the deal say it requires an exciting vision of Wisconsin’s manufacturing’s future.

“Foxconn is committing to create an entirely new industry here—an industry that simply does not exist in the U.S. today,” said Tim Sheehy, president of the Metropolitan Milwaukee Chamber of Commerce. “Wisconsin would stand at the epicenter of the evolving digital world.”

But, Mr. Gou, one statewide poll suggested that more than one-third of Wisconsin residents either don’t trust you to live up to your end of the deal, or think you are being offered too much of their tax money.

There are several reasons for their doubts.

First, no company executive has stepped forward to be the Wisconsin face of Foxconn. That person would take questions from legislators, offer follow-up assurances and construction and hiring timetables, and explain why some past Foxconn development promises—in Pennsylvania and in foreign countries— have been broken.

Second, Wisconsinites don’t know where the Foxconn campus exactly would be located. Although signs increasingly point to Racine County, having a definite site would be one more sign that Foxconn is serious about its end of the deal.

Third, there are no fine-print details of the final development pact for Wisconsin taxpayers, and reporters, to review. Mark Hogan, CEO of the state’s economic development agency, the Wisconsin Economic Development Corporation, said his agency is negotiating that contract. But it won’t be available before Walker signs the bill authorizing the incentives.

Opponents say just two documents—a handwritten agreement signed by you and Walker and a three-page memorandum of understanding—shouldn’t be the basis of a development package of this size.

Fourth, there is a fear that the Foxconn deal was rushed through the Capitol. The biggest incentives—a “subsidy” and “giveaway,” according to Democrats who voted against the deal—for a private company in U.S. history was announced on July 26, and cleared the Legislature seven weeks later.

It took more than seven months—between Feb. 8 and mid-September—for Republicans to work out a state budget, which will spend $76 billion through mid-2019.

Democrats said they didn’t have enough details to mortgage state government’s future with $2.85 billion in tax breaks.

“Do you buy a house by shaking someone’s hand? Do you go to car dealership and say, ‘I’d like to buy a car,’ and shake hands?” said Democratic Sen. Tim Carpenter, of Milwaukee. “That’s what we’re doing here.”

Thank you for your time, Mr. Gou.

Zi huai. [Goodbye.]

Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. Contact him at stevenscwalters@gmail.com

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