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Report: Foxconn may be drastically rethinking project

Foxconn Technology Group is radically rethinking its Racine County project, scaling back or dropping completely the advanced liquid crystal display panels it planned to manufacture, Reuters reported Wednesday.

The Taiwan-based company, one of the world’s largest electronics manufacturers, last year walked back its plans to build an LCD factory that would produce huge screens, opting instead for a less-costly plant that would make small panels for devices such as phones and tablets.

Now, Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, said in a Reuters interview that even those plans are in jeopardy.

Woo’s remarks marked the latest—and for Wisconsin, the most ominous—in a string of modifications by Foxconn to its original plans for a massive electronics facility in Racine County. Over the last 10 months, the company not only has radically altered its planned employment mix and the nature of its operation, it failed to create enough jobs in 2018 to qualify for state tax credits.

In the wake of the Reuters report, Foxconn on Wednesday pledged again—as it has repeatedly in the past—to create 13,000 jobs in Wisconsin. The latest statement did not say anything about investing up to $10 billion in the Racine County manufacturing and research complex, another element in the state’s contract with the company.

“We remain committed to the Wisconn Valley Science and Technology Park project, the creation of 13,000 jobs, and to our long-term investment in Wisconsin,” Foxconn said in a statement. “As we have previously noted, the global market environment that existed when the project was first announced has changed.”

Evers administration surprised

The latest change in direction was unexpected, an incoming member of Gov. Tony Evers’ cabinet said Wednesday.

“The administration is in regular, weekly communication with senior leadership at Foxconn,” Joel Brennan, secretary-designee of the Department of Administration, said in a statement. “However, we were surprised to learn about this development.”

The “details about the continuing evolution of this project will require further review and evaluation by our team,” Brennan said. “Our team has been in contact with Foxconn since learning this news and will continue to monitor the project to ensure the company delivers on its promises to the people of Wisconsin.”

Woo said, according to the Reuters story, “that the company was still evaluating options for Wisconsin, but cited the steep cost of making advanced TV screens in the United States, where labor expenses are comparatively high.”

“In terms of TV, we have no place in the U.S.,” Woo said. “We can’t compete.”

Rather than a focus on LCD manufacturing, Foxconn wants to create a “technology hub” in Wisconsin that would largely consist of research facilities along with packaging and assembly operations, Woo said.

Mark Hogan, CEO of the Wisconsin Economic Development Corporation, said in a statement the agency’s contract with Foxconn “provides the company the flexibility to make these business decisions, and at the same time, protects Wisconsin’s taxpayers.”

In return for Foxconn’s promises in 2017 to spend up to $10 billion on the facility in Mount Pleasant and hire 13,000 workers in Wisconsin, state and local governments promised public subsidies totaling $4 billion.

Lawmakers also created a new “electronics and information technology manufacturing” tax incentive program for the company to receive the tax credits.

“As has been reported, Foxconn will not qualify for tax credits until, at the earliest, 2020, and then only if the company meets its annual job creation and capital investment requirements,” Hogan said. “Our ongoing discussions with company officials reflect Foxconn’s continued commitment to the State of Wisconsin.”

Foxconn wants

‘technology hub’

The dramatic change of plans comes less than a year after President Donald Trump and Gov. Scott Walker broke ground on the Foxconn campus in Racine County—saying the project would be transformational for Wisconsin.

Trump heralded the development at the groundbreaking for the facility last year as the “eighth wonder of the world.”

“This is one of the largest plants in the world. And when you think in terms of 20 million feet—if you build in Manhattan a million-foot building, that’s a very big building. They don’t get much bigger. And here you’re talking about more,” Trump told an audience in Mount Pleasant on June 28. “Think of it: more than 20 million feet. And that’s probably going to be a minimal number.”

Walker championed the project, promising the campus would span 11 Lambeau Fields.

Lawmakers, meanwhile, passed an incentive package in 2017 that provides Foxconn up to $2.85 billion in cash from state taxpayers—the largest incentive package for a foreign company in U.S. history.

But public opinion on the project has remained mixed, and Walker in campaign ads for his unsuccessful bid for a third term assured voters Foxconn wouldn’t receive credits without creating jobs. He reiterated his promise Wednesday.

Evers and Attorney General Josh Kaul said on the campaign trail they would seek to hold Foxconn accountable for the terms in the state’s contract with the company.

A spokeswoman for Evers did not respond when asked if he would seek or recommend that WEDC renegotiate the contract in light of the company’s changing plans. A spokeswoman for Kaul said “the Department of Justice is committed to working to ensure Wisconsin taxpayers are protected.”

WEDC board member Sen. Dan Feyen, R-Fond du Lac, said Wednesday the state’s contract with Foxconn will protect taxpayers if the company’s plans change.

“When the legislature and WEDC crafted the Foxconn incentive package it was carefully constructed to ensure that Wisconsin’s taxpayers would be protected if Foxconn’s plans did not come to fruition,” Feyen said in a statement. “We saw the contract’s effectiveness earlier this month when Foxconn failed to reach its minimum job count and received no credits accordingly.”

Rep. Gordon Hintz, D-Oshkosh, also sits on the WEDC board and has been critical of the deal struck with Foxconn by mostly Republican lawmakers. He said the changes are “the consequence of rushed policy making and politically driven legislation.”

“This news is devastating for the taxpayers of Wisconsin,” Hintz said. “We were promised manufacturing jobs. We were promised state-of-the-art LCD production. We were promised a game-changing economic opportunity for our state.”

Neither Feyen nor Hintz said whether they would seek to renegotiate the contract.

Local officials reassured

Local officials in Racine County issued a statement saying that some elements of the Reuters story did not track with what executives have told them.

“Contrary to what was reported by Reuters, Foxconn reiterated to us, today, its commitment to building an advanced manufacturing operation in Wisconsin, in addition to its commitment to create 13,000 jobs and invest $10 billion in Racine County,” said the statement, issued by Village of Mount Pleasant President David DeGroot, Racine County Executive Jonathan Delagrave and Jenny Trick, executive director of the Racine County Economic Development Corporation.

“We understand that Foxconn must be nimble in responding to market changes to ensure the long-term success of their Wisconsin operations,” the statement said. “We fully expect that Foxconn will meet its obligations to the State, County and Village.

“Both the local and state development agreements are legally binding and include strong protections for taxpayers. The state agreement, which was largely based on job creation, ensures that Foxconn only receives state tax credits if it meets or exceeds its targeted hiring amounts in any given year.”

While Foxconn must hit job and investment goals to receive the state subsidies, Mount Pleasant and Racine County are spending money up front on infrastructure improvements and land acquisition.

They have been borrowing—$355 million so far—to cover those ongoing costs. Actual spending to date totals about $190 million, most of which has gone to buy land. Foxconn has contributed $60 million for the village to use in land acquisition.

The entire project is expected to require $912 million in local government spending, up from $764 million initially. Officials say the additional property taxes generated by the Foxconn development will cover the local costs, and the contract with the company obligates it to provide enough money to do just that even if its investment is less than expected.

Foxconn last year said it would scale back its original plans for the liquid crystal display panel factory at the heart of the project, opting to first build a smaller, less costly plant than the “Generation 10.5” facility specified in its contracts with state and local government.

After disclosing the change in plans last June, Foxconn initially said it still planned to build a Generation 10.5 factory, or “fab”—the largest and most expensive type of plant in the display industry—in a subsequent phase.

Two months later, however, the company, when asked, declined to offer assurances that it ultimately would build such a plant.

Foxconn also has dramatically changed its hiring plans.

In July 2017, a report by a Foxconn consultant using company data projected that about 75 percent of the 13,000 Wisconsin jobs would be held by “hourly operators and techs.” About 18 percent of the employees would be engineers, the report said.

But by late March 2018, Woo said in an interview with the Milwaukee Journal Sentinel that plans had shifted and he expected that only about a third of employees “would be more like assembly line workers, but two-thirds would be the knowledge workers.”

Five months later, the workforce ratio shifted still further toward the high-skill end. Speaking to The Racine Journal Times in late August, Woo said that “now it looks like about 10 percent assembly line workers, 90 percent knowledge workers.” That same day, Woo told the Milwaukee Business Journal that “at least 80 percent would be engineers or R&D scientists.”

On Wednesday, Milwaukee Mayor Tom Barrett lamented that shift.

“I’m very concerned about it,” he said. “Obviously our major labor pool that needs jobs are the unskilled and underemployed right now. As the project—whatever the project changes to—transforms into something that’s more research-oriented, that doesn’t bode well for those that are underserved in Milwaukee.”

A spokesman for Walker did not answer questions about whether Foxconn officials ever expressed concerns to Walker about labor costs as the company and state officials negotiated the tax incentives.

‘Am I worried? ... No’

Timothy Sheehy, president of the Metropolitan Milwaukee Association of Commerce, expressed confidence Wednesday that Foxconn will continue to invest in Wisconsin even as the nature of the investment changes.

“I’ve talked to Louis (Woo) as recently as this morning, and his comments are that they’re committed to the Wisconsin project,” Sheehy said. “So am I worried that they’re going to pull out? No. Absolutely not.”

Sheehy said he spent 20 to 30 minutes on the phone with Woo, who is in Asia, following the Reuters report.

“We’re dealing with a company and an industry that is disruptive, dynamic and global,” Sheehy said. “Maybe it was a bit naive to think there were not going to be changes in how Foxconn invested in Wisconsin.”

Sheehy said Woo told him the company’s plans for the next 18 months include construction of an assembly factory, a packaging plant and a high-precision molding facility, along with prototyping and research centers and a “town center” for people who will work at the Mount Pleasant site.


Local
Essential services across area try to adjust to bone-chilling weather

JANESVILLE

Record-setting subzero weather Wednesday taxed plenty of essential workers and services across the Janesville area.

The overnight low at Janesville’s wastewater treatment facility dropped to 26 degrees below zero, a record for Jan. 29. But it was still a few degrees shy of the city’s lowest temperature ever—31 below zero on Feb. 2, 1996, according to Gazette weather records.

The city experienced two power outages overnight that affected more than 2,000 customers. Both were caused by equipment malfunctions at different substations, Alliant Energy spokeswoman Annemarie Newman said.

The first outage began around 1:40 a.m. Wednesday and lasted until 4 a.m. As that one was getting fixed, a second outage occurred around 3:25 a.m. Power was restored around 5 a.m., she said.

Newman did not know the exact locations affected. The first outage left about 800 customers in the dark, and the second affected about 1,400, she said.

The extreme cold can cause equipment to become brittle and break. Alliant’s infrastructure was “holding up pretty well” overall, Newman said.

While homeowners can’t do much to decrease the likelihood of a power outage, she recommended people take time to clear snow and ice from their external furnace vents. If those are blocked, the backed-up air can cause carbon monoxide poisoning, she said.

Fire fought

An overnight fire in the Fourth Ward neighborhood displaced six people and left a duplex in shambles. No injuries were reported, but the family fled into the night while still in their pajamas, they told a Gazette reporter.

Capt. John McManus of the Janesville Fire Department said the weather affected equipment and responders’ ability to breathe and see.

Firefighters took warming breaks inside a Janesville Transit System bus, McManus said.

Janesville Water Utility Director Dave Botts said the city had not experienced any water main breaks as of Wednesday afternoon, despite a few occurring earlier this week.

Court hearings canceled

The Rock County Courthouse canceled hearings for Thursday, the third day this week of cancellations. The courts also were closed Monday for snow and Wednesday for cold weather.

Meanwhile, some places opened their doors for those without shelter.

Shelter offered

Both Janesville hospitals have offered their waiting rooms as warming centers this week with hours extending through the night.

  • Mercyhealth Hospital and Trauma Center, 1000 Mineral Point Ave., 7 a.m.-8 p.m. Monday-Sunday; emergency department waiting room, 8 p.m.-7 a.m.; 608-756-6000.
  • SSM Health St. Mary’s Hospital-Janesville, 3400 E. Racine St., 7 a.m.-8 p.m. Monday-Sunday; waiting room, 8 p.m.-7 a.m.; 608-373-8000.

As temperatures hovered around minus 21 degrees Wednesday morning, few people had used SSM Health St. Mary’s Hospital-Janesville’s warming center, said Kathryn Scott, a hospital spokeswoman.

St. Mary’s emergency department treated a patient for frostbite around noon Wednesday. That patient’s injuries were not life-threatening, said Jude Perez, emergency medicine specialist.

As of 3 p.m. Wednesday, St. Mary’s had not seen any other patients for weather-related injuries, Scott said.

For the most part, people seemed to be listening to warnings to stay inside, Perez said.

A handful of people visited Mercyhealth Hospital and Trauma Center in Janesville to stay warm this week, said Trish Reed, a Mercyhealth spokeswoman.

“We are incredibly fortunate to report our emergency rooms and urgent care locations in Janesville have not seen any weather-related illnesses in the last few days,” Reed said. “We attribute a lot of that to people taking the warnings and closings very seriously.”

Perez stressed the importance of staying inside on days as cold as Wednesday and paying attention to what your body tells you.

Signs of frostbite include pain, numbness, tingling and discoloration of the affected area. Frostbite can take 24 to 72 hours to set in, Perez said.

Those who might have frostbite should immediately warm the affected areas. If symptoms continue, they should see a doctor, Perez said.

Emergency room staffers have seen several patients who have suffered slips, trips and falls, which are more likely now as roads and walkways freeze, Perez said.

Wisconsinites often downplay cold weather, but it is important to take record low temperatures seriously, he said.

GIFTS Men’s Shelter in Janesville has lifted its cap on the number of people allowed to stay overnight at its North Washington Street facility.

The nonprofit shelter recently expanded the number of men it serves with overnight shelter and daytime services from 25 to 30.

Over the last few days, as daytime temperatures have fallen well below zero, the shelter has begun to run over capacity, said GIFTS Executive Director Stephanie Burton.

Burton wasn’t sure how many guests the shelter might draw Wednesday night.

Tuesday night, as the overnight low sank to minus 26 degrees, the shelter housed 33 men.

Burton said GIFTS normally has a capacity rule to ensure that each man has ample support from volunteer staff. What’s more important now, Burton said, is that no man who shows up at GIFTS is turned away.

“Never in GIFTS’s history have we seen weather like this. It’s truly dangerous to be outside. We’re not turning anyone away in this cold,” she said Wednesday.

GIFTS typically does not serve lunch, but it has over the last few days, Burton said. The goal is to prevent the men from having to walk five minutes in the icy air to a nearby soup kitchen. Volunteers have brought over soup, milk and other food.

“It feels like it’s back in school when we had snow days,” Burton said. “We’re hunkered down watching movies. We even got out the coloring sheets. Why not?”

Hundreds ticketed

Janesville police don’t always ticket cars for parking on the streets in violation of the snow-emergency statute, but the recent snows and cold have sparked action.

Police have issued more than 600 tickets since Jan. 18, and they’re working to get abandoned vehicles towed, they announced Wednesday.

Fines for violating the snow-parking ordinance are $50.

Illegally parked vehicles hinder plowing efforts and make streets less safe, they say.

In addition to the 600-plus tickets, police have started 145 abandoned-vehicle investigations to remove vehicles from streets.

An abandoned vehicle process may begin after a vehicle has been parked on the street for more than 24 hours without moving, according to a news release.

Police recommend parking in driveways or specially designated snow emergency parking stalls in these downtown municipal parking lots:

  • Wall Street at Parker Drive.
  • City Hall lot at Wall and Jackson streets.
  • Court and High streets.
  • Senior center lot at St. Lawrence Avenue and Water Street.
  • Hedberg Public Library lot on Water Street.
  • River and Union streets.
  • Parking ramp at Parker Drive and Wall Street.

To report an illegally parked vehicle, call the Rock County 911 dispatch nonemergency number at 608-757-2244.

For snow emergency information, see the city’s Snow & Ice Removal web page or call 608-755-SNOW/7669.

Gazette reporters Jim Dayton, Ashley McCallum, Neil Johnson and Frank Schultz contributed to this story.


Crime
Rock County committee must locate housing for violent sex offender

JANESVILLE

Greg Winkler isn’t sure where to start.

He’s part of a Rock County committee assigned to find a home for a sex offender soon to be released from a treatment facility.

It can’t be within 1,500 feet of schools, churches, child-care centers, parks, places of worship and youth centers. Additionally, it cannot be adjacent to a home with children.

“How am I going to connect with a potential landlord? There’s not an obvious, efficient way to approach that,” Winkler said.

Winkler said some landlords likely are willing to house Mark Taber and other convicted offenders. But the county has not developed a housing network, which makes kick-starting the process challenging, he said.

The committee has until March 27.

After a change in state law, people convicted of sexually violent crimes must be released under supervision in their counties of residence. Before the law, offenders could be released anywhere in the state.

Now, each county is required to form a committee and locate landlords willing to house people found by courts under Wisconsin Statute 980 to be sexually violent offenders, meaning they suffer from a mental disorder and are highly likely to reoffend.

Rock County’s committee—called the 980 Temporary Committee—held its first meeting Wednesday in anticipation of Taber‘s release. Taber is a Rock County resident who was convicted of first-degree sexual assault of a child in 1991, which is why he cannot live adjacent to a home with children.

Taber is the first sexually violent offender Rock County is responsible for housing since the law changed last year. He is a patient at Sand Ridge Secure Treatment Center in Mauston, and it’s unknown when he will be released, Winkler said.

Winkler is a committee member and behavioral health division manager with Rock County Department of Human Services.

The county was notified of Taber’s release Dec. 10, Winkler said. The committee must file its report to the state by March 27. County staff have assembled a map showing where convicted violent sex offenders cannot live.

Scott Timm, a state Department of Health Services representative and member of Rock County’s committee, said Wednesday the state department ideally would sign a lease with a landlord and pay the security deposit by March 27. Local law enforcement will determine if children live adjacent to potential properties, Timm said.

Since the statute’s roll-out last year, some Wisconsin counties have expressed frustration with the law. In December, officials in Winnebago County housed a released offender in a county-owned trailer plopped next to a landfill to avoid a state fine of $1,000 a day for not identifying housing options, the Milwaukee Journal Sentinel reported.

An attorney helping Winnebago County told the Journal Sentinel “there will come a time when a county will be unable to find a suitable housing option and when that occurs, any effort to sanction a county should be met with an aggressive challenge to the constitutionality of this law.”

In November, the Walworth County board appointed members to a housing committee. Michael Cotter, the corporation counsel designee on the committee, said the county would undoubtedly face some hurdles.

Among them could be housing offenders outside the 1,500-foot exclusion zones. Some Walworth County municipalities have extended the exclusion zones to 2,000 feet, Cotter said, but state statutes supersede local ordinances.

“That’s going to be frustrating for folks,” Cotter told The Gazette in October. “These are always difficult issues when people like this are released. It’s always fine until it’s my neighbor or the guy that’s 2 miles down the county road.”

There have been no releases in Walworth County since the law debuted, Cotter said, and there aren’t any upcoming releases to Cotter’s knowledge.

Rock County committee members agreed Wednesday to meet again in a month.


Obituaries and death notices for Jan. 31, 2019

Doris E. Mishler

Darlene Oldenburg

Harold “Skip” Schuren

Randall J. Swatek

Michael Ray Whitney


Local
Subzero science: Frigid weather offers opportunity for experiments

JANESVILLE

When it gets cold in the upper Midwest, many residents’ thoughts turn to science.

OK, maybe not. They mostly turn to Florida, but never mind.

A tiny percentage of residents’ thoughts turn to science—or more accurately, to finding out everything we always wanted to know about winter.

How slow is molasses in January? Is it possible to make maple syrup candy, a la Laura Ingalls Wilder? Can a frozen banana be used as a hammer? Will a balloon that is inflated inside shrink in the cold air outside? How long will it take for a brat and beer to freeze outside, and will a reporter still eat and drink them?

In the spirit of winter, some Gazette staffers went out in the cold to discover the truth. Or as close to the truth as we could get without freezing. The temperature without wind chill was about 15 below zero during the testing period.

Slow molasses: We let a bottle of Brer Rabbit full-flavored, unsulphured, non-GMO-verified molasses sit in a snowbank for about 40 minutes. It had been in my cupboard for 12 months, so this was a nice change of scenery for it.

The first pour came out of the bottle lickety-split. The second pour didn’t seem like it was going to happen at all. Finally, a drop appeared at the lip of the bottle and then just hung there.

Based on this completely unscientific test, I’m going to say that the old saying should be altered to “as slow as the second pour of molasses in January.”

Also, I lost the cap to the molasses bottle somewhere near the corner of East Milwaukee Street and Parker Place in Janesville. If you find it, please return it to The Gazette’s front desk.

Maple syrup candy: We poured syrup on the snow, waited for it to freeze and then ate it. It tasted like maple syrup and car exhaust.

Shrinking balloons: Theoretically, balloons inflated inside should magically shrink outside. It’s the same reason that car tires appear to be flat in winter. The cold air takes up less space. Our balloons might have shrunk a tiny bit, but it was hard to tell. It’s possible the air wasn’t cold enough or I wasn’t willing to stand outside long enough.

Banana as a hammer: Again, theoretically, a banana can be used as a hammer if it is frozen long enough. Ours was frozen solid after more than an hour outside. Yet when I tried to hammer a nail into a piece of wood, the result was little, round, nail-head-sized holes in the banana. I let the banana thaw and ate it later.

Egg on the sidewalk: Traditionally, journalists try to fry eggs on the sidewalk when it’s hot. This time, we broke an egg on the sidewalk when it was cold. After steaming gently, it froze. Not breaking news.

Beer and bratwurst: After about 20 minutes in a snowbank, the brat, bun, sauerkraut and yellow mustard were frozen solid—Popsicle solid.

The Miller High Life took slightly longer. The part of the bottle not covered by snow turned to a beer “slushie” in about 20 minutes. The part in the snowbank took about 45 minutes to get more solid.

How many of us have been at Lambeau Field with a beer and brat wondering how long it would be before they froze?

OK, not me, but possibly somebody has.

After the brat and beer had been outside for about an hour, fellow reporter Neil Johnson bundled up, joined me outside and successfully took a bite of the brat. Johnson then attempted to drink the frozen beer. Nothing came out of the bottle.

Johnson thawed the brat and ate it. He also finished the beer, but not until after it had spewed part of its contents on the floor while thawing.

Here’s what we learned: Thawed beer is flat beer.