Jeff Smith - Foxconn: Breaking Up is Hard to Do

Over time, relationships can go sour. When it happens in one’s private life, the breakup can be agonizing; so much of two people’s lives can be intertwined in a short time. When it’s a public or business relationship, the breakup can be painful and even more complicated. Most likely, there are legal contracts or properties linking the two parties.

Take the relationship between Wisconsin and Foxconn, for example.

It started in 2017 with so much promise, glamour and, of course, a captivating courtship. Terry Gou, CEO of Foxconn, and then Governor Walker had to get to know each other and discover what one could do for the other. Foxconn promised to invest $10 billion into a massive 20 million square foot factory built in Southeastern Wisconsin and to create 13,000 jobs. Republican leaders, at the time, courted Foxconn with billions of dollars’ worth of tax credits. With dollar signs in their eyes, Foxconn was in love.

Scott Walker saw the plan as politically advantageous: he could take credit for finally making a dent in his campaign promise made 8 years earlier of bringing in 250,000 jobs to Wisconsin. The shiny object was a potential win for a third term if the citizens of Wisconsin fell in love with Foxconn, like he did.

Foxconn even topped the promise off by announcing they would open smaller, regional offices around the state, giving the impression they’d create jobs in places like the Fox Valley and the Chippewa Valley. Even President Trump jumped on this opportunity for a photo-op and to take credit for drawing a Taiwanese tech giant to the Midwest. It seemed like such a beautiful marriage. The arrangement was sweet, but so naive.

There certainly was a honeymoon period when Republican legislators bragged continuously that this deal was the greatest thing since sliced bread. We even heard that it’d be the “8th wonder of the world” and the greatest thing to ever happen in the western hemisphere.

At first, it appeared they had reason to be optimistic. Developers razed land quickly, clearing the way for the thousands of jobs and high-tech manufacturing space Foxconn promised. Republican leaders diverted transportation funds to expand the interstate so Illinois residents could have a nice drive to their new workplace. Over $400 million spent on land and infrastructure surely gave the impression this agreement really would be fulfilled. The new offices rented in Milwaukee, Green Bay and Eau Claire made a lasting relationship seem even more certain.

Sadly, reality quickly came to roost. Investigations show Foxconn left a confusing mess for many of the stakeholders involved. Initially, Wisconsin business owners, the University of Wisconsin-Madison, local government officials and even prospective employees had high hopes for what was to come. These hopeful expectations were squandered after stakeholders were left with no direction or explanation from Foxconn.

The Foxconn fall-out got worse, showing Foxconn fell far short of the hiring goals needed to be eligible for additional state tax credits. Once again, Wisconsin taxpayers were burdened by this disastrous deal. To make matters worse, we’re now learning the anticipated “eighth wonder of the world” may become a storage warehouse.

Over the last three years, it’s become all too clear the romance has been lost. Loyal defenders of this project have continued to remind us that payments would only be made based on performance. Unfortunately, it’s unclear when this will happen.

Most recently, on December 2nd, the Wisconsin Economic Development Corporation (WEDC) reported they didn’t expect Foxconn to reach the requirements to make them eligible to receive tax credits during the next three fiscal years. Hopefully, like a prenuptial agreement, we’re protected from further loss caused by this terrible match made in their imaginations.

With a new session on the horizon, we have an opportunity to right a wrong. It’s time to negotiate a new deal that saves our state from the initial one-sided $4.5 billion dollar deal. Let’s make the investment Wisconsin needs rather than falling for another flashy romance.