Wisconsin leaders see $10 billion Foxconn deal as ‘transformational’

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Posted: Jul 27, 2017 11:33 PM

Foxconn’s decision to build a $10 billion high-tech manufacturing plant in Wisconsin set off a wave of optimism among business leaders in the state, even with a taxpayer price tag that could reach $3 billion.

“We are calling this development ‘Wiscon Valley,’ because we believe this will have a transformational effect on Wisconsin, just as Silicon Valley transformed the San Francisco Bay Area,” Gov. Scott Walker said in a prepared statement.

The Taiwan company’s campus, which the Wisconsin Economic Development Corp. (WEDC) says will occupy 1,000 acres on a site in southeast Wisconsin, is projected to create 13,000 new jobs with an average annual salary of nearly $54,000. A total of 22,000 indirect jobs, including positions in supplier networks, will also open up as the factory begins churning out liquid crystal display screens for consumer electronics, according to the WEDC.

Kurt Bauer, the president and CEO of Wisconsin Manufacturers & Commerce, compared the Foxconn project to the economic riches that resulted from oil shale development in North Dakota’s Bakken formation.  

“Foxconn is to Wisconsin what the Bakken is to North Dakota,” Bauer told Watchdog.org.

In manufacturing, for every factory job that’s created, another 2.5 support jobs will come into existence, he said, and that will bolster the economy throughout the state.

“In 10 years, this area is not going to resemble what it looks like today,” Bauer said.

And the effects of the project – it will be the only LCD manufacturing facility in North America – go beyond economic growth, he said.

“This is not just an economic gain for Wisconsin,” Bauer said, adding that it would help Wisconsin shake its rust belt image. “This is an image and reputation gain.”

The tax incentives Foxconn will be eligible for are projected to reach between $200 million and $250 million annually, according to the WEDC. Over the next 15 years, the company could gain a maximum of $1.5 billion in state income tax credits as a result of its employee hiring; $1.35 billion in income tax benefits from land, building and equipment investments; and $150 million in sales tax exemptions.

Despite those costs, Bauer described the overall costs as very reasonable, especially since other states were ready to put additional economic incentives on the table to attract Foxconn.

“I ultimately think it’s going to be a bargain for the state’s economy,” he said.

Tom Still, president of the Wisconsin Technology Council, agreed that the scale of the likely economic incentives fits the Foxconn package and its long-term impact on the state.

“They are in line with other state incentive packages for similar projects, although the Foxconn plant in Wisconsin will eventually be much larger than those projects, which have taken place in states such as South Carolina, Nevada and New York,” Still told Watchdog.org in an email.

The incentive package will require the company to make capital investments and create jobs as a condition of receiving the tax credits, according to Still.

“It’s a ‘pay-as-you-grow’ approach that should lend accountability to the process,” he said.

Asked if Wisconsin would be able to supply the thousands of skilled workers needed to get the factory up and running by 2018, Still replied, “Yes, with help from our friends and neighbors, such as Illinois.”

As a result of Foxconn’s investments, more of the 75,000 people who graduate each year from the state’s higher education system will stay in Wisconsin rather than searching for positions elsewhere, he said. In addition, the 300,000 Badger state natives now living elsewhere may look to return if the right opportunities present themselves, according to Still

“There is a skilled labor pool close by in northern Illinois, some of whom may welcome an opportunity to work just a few miles over the border,” he said.

The Foxconn project will also better allow the state to show off the varied expertise that now exists in Wisconsin, including the ability to produce electrical equipment and medical devices and a workforce skilled in technical areas such as software, virtual reality, robotics and artificial intelligence, Still said.

“Wisconsin, like much of the Upper Midwest, has technology sector strengths that are often overlooked by those who believe such expertise and talent is clustered only on the coasts,” he said.

How the state legislature will go about putting in place the incentives remains to be seen. Although lawmakers will be in session until the passage of a state budget, a special session might be scheduled to pass the needed legislation, according to Myranda Tanck, spokeswoman for Senate Majority Leader Scott Fitzgerald, R-Juneau.

Fitzgerald has not been directly involved in the negotiation process with Foxconn, Tanck said.

“Negotiations with the company have largely been with the Governor’s Office,” she said.

One of the colleges in southeast Wisconsin that will be involved in responding to workforce needs such as the Foxconn deal is Waukesha County Technical College, where the dean of the School of Applied Technologies, Michael Shiels, looks forward to the challenge of working with Wisconsin’s newest manufacturer.

“It’s a great opportunity for the technical college system to work with the new employer and help them with their needs,” Shiels told Watchdog.org. Currently, he said about 3,400 full-time students are enrolled in tech programs at the college.

Based on the size of the Foxconn operation, a large variety of skilled workers will be needed in the years ahead, including those trained in information technology, manufacturing, human resources and engineering, he said. And even though the jobless rate is low in the state – about 3.1 percent – the company will draw future employees from a large area, probably within a 60-mile radius of the corporate campus, according to Shiels.

The college’s programs in robotics and automation as well as electrical engineering and electronics technology should parallel many of the company’s future needs, he said, adding that the development will provide challenges and opportunities for technical colleges in the region.

“I’ve lived in Wisconsin my entire life, and I can’t think of a bigger deal than this announcement,” Shiels said.