When Donald Trump and then-Wisconsin Governor Scott Walker announced a plan to give billions of dollars to the notorious Taiwanese sweatshop operator Foxconn to build a super-factory in Wisconsin, knowledgeable people were alarmed.
That's because Foxconn has a long history of defrauding governments by promising to build big ambitious factories in their territories, absorbing massive subsidies, then abandoning the project, leaving behind a modest facility, or nothing at all.
Despite these misgivings, Walker and his GOP state legislators set about bulldozing Wisconsinites' family homes to make way for the Foxconn factory, guaranteeing ever-larger subsidies even as Foxconn quietly began to scale back its plans and the number of jobs it would create. The total bill rose to $4.1b, even as Foxconn canceled the factory altogether and proposed replacing it with a modest R&D facility primarily staffed by out-of-state researchers, rather than the locals who were footing the bill for Foxconn's massive subsidies.
The company went back and forth on its plans for months, putting on a bizarre show to keep alive a plausible claim that Wisconsin would get something in exchange for its generosity. But as the deal attracted more and more scrutiny, it became increasingly obvious that Wisconsin had been foxconned.
Now, Foxconn and Tony Evers (the new, Democratic governor of Wisconsin) are renegotiating the deal. Foxconn asked the state to release it from its obligations, without removing the (now $4.5b -- that's $172k/job, assuming Foxconn builds the factory it originally proposed!) guarantee of subsidies, including cash payouts if the company never does enough business in Wisconsin to use the tax-credits it's been promised.
The Verge has obtained internal communications between state officials and Foxconn that paint a picture of a company that simply refuses to give any straight answers about what its plans for the state are, and of officials who are increasingly alarmed and desperate about that situation. And now, Foxconn has abandoned the idea of amending the contract, despite the fact that they have catastrophically failed to uphold the obligations it spells out.
Incredibly, the company is still applying for new subsidies -- $50m worth in 2020 alone. Meanwhile the facility they're desultorily building doesn't even have the right foundations to be used as a factory of the sort they promised.
OnOn July 8th, Evers wrote a letter to Hogan reiterating his position that the incentive package was tied to a far larger factory and would need to be revisited. Hogan, a Walker appointee, was one of the architects of the original Foxconn deal and had frequently asserted that the contract was sufficiently flexible to cover Foxconn’s changing plans.
“The unprecedented incentive package offered to Foxconn under the original contract was justified by the project’s promise of new manufacturing jobs in Racine County and the massive scale of a Generation 10.5 Facility. Because the project has evolved substantially from what was originally proposed, evaluated, and contracted for, it is necessary to review the revised aspects of the project and evaluate how changes can most fairly benefit both the company and our state,” Evers wrote. “Proposed modifications to the Foxconn agreement or terms for a new agreement should be thoroughly and thoughtfully reviewed and assessed by the WEDC and my Administration.”
Yet the summer went on, and Foxconn’s proposed changes never arrived. Instead, on July 25th, Woo wrote a three-paragraph message to Hogan touting the “incredible progress” Foxconn had made, detailing the large number of cement trucks used in pouring the foundation of the facility, and noting that Foxconn intended to include the work it was doing on the Gen 6 when it applied for tax credits at the end of the year. “With this letter, we are seeking the Wisconsin Economic Development Corporation’s affirmation that such Significant Capital Expenditures made for our Gen6 facility located in the EITM Zone will count towards the calculation of Capital Investment Tax Credits,” Woo wrote.
Showdown in Wisconn Valley [Josh Dzieza/The Verge]