Foxconn unlikely to create blue-collar jobs

Joseph Schulz, Managing Editor

When Scott Walker ran for Governor of Wisconsin in 2010, he ran on a fiscal responsibility platform, railing against government spending.

He even went so far as to refer to a proposed high-speed train that would run from Milwaukee to Green Bay as a “boondoggle.”

Walker’s lasting legacy as governor, however, may very well be creating a real boondoggle in the form of Foxconn Technology Group’s Mount Pleasant development.

The development is described in an Oct. 7 memo from the state Department of Administration (DOA) as “unlikely” to create a “net benefit” for Wisconsin taxpayers, who have already “made large investments by providing job training, applying sales tax exemptions and building new roads and other infrastructure crafted.”

The memo says the site will likely never employ the 13,000 blue-collar Wisconsinites that Walker promised because it likely won’t be a manufacturing facility at all.

Rather, the DOA says the facility “may be better suited for demonstration” than as a factory, meaning it’s likely to employ mostly white-collar professionals from Illinois, who “would pay their state personal income taxes in Illinois, not Wisconsin.”

For months, the Wisconsin Economic Development Corp. (WEDC) and Foxconn have been at odds because the company’s Mount Pleasant facility more closely resembles a Gen 6 facility than it does a Gen 10.5 facility, agreed upon in Foxconn’s contract with the state.

This month, Wisconsin denied state tax credits until the company renegotiates its contract with the state. Friday, Foxconn challenged the state’s refusal to pay those tax credits.

Meanwhile, Foxconn Founder Terry Gou continues to argue the company “will remain committed to the completion and continued expansion of our project and investment in Wisconsin” and claims that the company will deliver on its promises.

And while right-wing politicians such as Assembly Speaker Robin Vos echo Gou’s sentiments and try to paint the state’s refusal to pay tax credits as an “effort to hurt the president,” there are concrete reasons for withholding taxpayer money.

The decision to change the type of plant built in Wisconsin is significant. Foxconn agreed to create a specific type of facility that would help a particular kind of Wisconsinite.

For example, the DOA says Mount Pleasant was chosen to house the Gen 10.5 facility because it had “unemployed or underemployed local residents” who would benefit from new manufacturing jobs.

Because the Gen 6 plant is a “small highly automated facility employing mostly engineers and other white-collar professionals,” the DOA says it’s unlikely to hire unemployed or underemployed Wisconsin residents.

This means the type of facility built directly impacts the kind of workers hired, which directly impacts who benefits from this development. If Foxconn continues with its proposed Gen 6 facility, the DOA made it clear that it would help Illinois’ tax base more than Wisconsin’s.

Additionally, developer’s agreements between a private entity and a municipality — of any size — are particular about the type of facility built for a good reason.

This summer, for example, I had the opportunity to cover the historic Heidel House resort’s redevelopment in Green Lake.

For that project, the city of Green Lake signed a developer’s agreement with two private entities, with the express purpose of building a new hotel and resort.

If developers were to build a casino and strip club, they would not receive public funds because the development would not execute its designed goal.

By creating a demonstration facility instead of a manufacturing facility, Foxconn is essentially building a hypothetical strip club and casino rather than a family-friendly hotel and resort.

That’s because “the goal of targeted economic-development subsidies is that they are crafted to advance specific state objectives such as building up a particular industry sector,” according to the DOA.

In fact, the DOA says Walker and the Republican-controlled legislature approved only a Gen 10.5 facility and never discussed proposals for a Gen 6 plant or a demonstration facility of any kind.

Beyond blatantly disregarding the contract, the DOA says Foxconn has had multiple opportunities to renegotiate its contract with WEDC, but it has failed to do so.

At the end of the day, if the Foxconn project doesn’t produce the blue-collar manufacturing jobs that are so desperately needed in Wisconsin, then it shouldn’t receive its coveted tax credits.

And suppose the company finds a way to rework its contract with WEDC to support its Gen 6 facility. In that case, the tax credits it receives should be greatly reduced to account for it.

The DOA said it best in its Oct. 7 memo, which stated: “When the state decides to provide direct subsidies for any large project, it is in pursuit of furthering specific economic and policy objectives. It is not enough that an applicant offers to build some buildings and create some jobs.”