Follow Slashdot blog updates by subscribing to our blog RSS feed

 



Forgot your password?
typodupeerror
×
Government Businesses China The Almighty Buck United States Technology

Wisconsin's $4.1 Billion Foxconn Boondoggle (theverge.com) 183

"A story from The Verge reports on Foxconn's substantially scaled-back plans for the heavily subsidized Wisconsin "Gigafactory," writes Slashdot reader kimanaw. Here's an excerpt from the report: The details of the deal were famously written on the back of a napkin when [Foxconn chairman Terry Gou] and the Republican governor first met: a $3 billion state subsidy in return for Foxconn's $10 billion investment in a Generation 10.5 LCD manufacturing plant that would create 13,000 jobs. [...] But what seemed so simple on a napkin has turned out to be far more complicated and messy in real life. As the size of the subsidy has steadily increased to a jaw-dropping $4.1 billion, Foxconn has repeatedly changed what it plans to do, raising doubts about the number of jobs it will create. Instead of the promised Generation 10.5 plant, Foxconn now says it will build a much smaller Gen 6 plant, which would require one-third of the promised investment, although the company insists it will eventually hit the $10 billion investment target. And instead of a factory of workers building panels for 75-inch TVs, Foxconn executives now say the goal is to build "ecosystem" of buzzwords called "AI 8K+5G" with most of the manufacturing done by robots.

Shortly after the Wisconsin deal was signed, Walker was touting the Foxconn deal in campaign-style speeches across the state. But by October 2017, just a month after the legislature passed the Foxconn deal, a poll showed only 38 percent of the people in southeastern Wisconsin, where the plant would be located, thought the plant would be a net positive for the state. This was followed by March 2018 poll, which showed that 66 percent of people in the state believed their local businesses wouldn't benefit from the Foxconn deal, and only 25 percent thought it would be beneficial. This was dreadful news for Walker, who suddenly stopped talking about Foxconn. He didn't even mention the deal in a November 2017 speech announcing his run for re-election. It was also bad news for Foxconn, as every Democrat running for governor proceeded to condemn the deal. Both Walker and Foxconn now needed to sell this deal to the voters.

This discussion has been archived. No new comments can be posted.

Wisconsin's $4.1 Billion Foxconn Boondoggle

Comments Filter:
  • Uh huh ... (Score:5, Insightful)

    by fahrbot-bot ( 874524 ) on Monday October 29, 2018 @05:10PM (#57558199)

    ... company insists it will eventually hit the $10 billion investment target ...

    ... and Duke Nukem Forever was eventually released too... Just sayin'.

    • by guruevi ( 827432 )

      The whole op-ed seems contradictory in what Foxconn is saying it is doing and what the writer speculates is happening (without hard proof or facts to back it up).

      Foxconn promised this factory but then a supplier company wanted subsidies too so they decided to go with another model - what a failure
      Foxconn promised 13,000 blue collar factory jobs but now is saying that they will hire 90% higher paid knowledge jobs and 10% blue collar - what a failure
      Foxconn is buying land all across the state close to Univers

  • by Waffle Iron ( 339739 ) on Monday October 29, 2018 @05:20PM (#57558257)

    They completely lost sight of what made the USA an economic powerhouse in the first place: In the past, corporate welfare was always doled out to American companies.

    • Re: (Score:1, Insightful)

      by Anonymous Coward

      True but now this type of welfare is less about creating jobs than bleeding the budget so the perpetrators can say:
      "Oh we have no money for your liberal spending programs and there's a deficit now so we need to Cut Cut Cut".
      It's all part of the wealth transfer operation against the middle class perpetrated by the republicans.

    • by rsilvergun ( 571051 ) on Monday October 29, 2018 @07:40PM (#57559091)
      we were the only country with a functioning manufacturing base after WWII and the cold war meant companies were scared that if they invested overseas their assets would get seized by the big bad communists. Nixon showed everyone that was bullshit, the middle east gave us a way to keep our endless war machine going and that meant it was open season on offshoring and outsourcing.

      You need manufacturing to have a strong economy because you need lots of workers all working together in the same place with the same interests. In other words, Unions. What made the US middle class grow was Unions fought (and died) to pry money out of the hands of the working class. You can't do that at a WalMart, there's just not enough of a concentration. Also, the ruling class got this Union busting down pat.

      The one thing that did _not_ make the US a powerhouse is corporate welfare. We had all that during the Robber Baron era and Gilded Age in spades. There was money, but it all belonged to our aristocracy.
      • Re: (Score:2, Funny)

        The unions targeted the rich, not the middle class (you rob banks because that's where the money is). The second war caused the worlds rich people to move their money to the USA (for safety) and they promptly took over. That is why the offshoring happened, because "Foreign" rich don't care about America. Corporate Wealfare is Socialism, but most Americans have no idea what socialism means. The Republican party has been moving steadily Left since Ronald Reagan, leaving the Democrats as America's only maj
        • Huh? (Score:4, Funny)

          by rsilvergun ( 571051 ) on Monday October 29, 2018 @08:14PM (#57559253)
          Seriously, what are you on about? The Unions "targeted" the factory owners demanding higher wages for the workers.

          The rich didn't move money anywhere. There was no money, we blew it the fuck up. It took the world decades to recover. In the meantime if anything was getting built it was getting built in America. By American workers.

          And that last comment? Now you're just trolling. I mean, couldn't you just end your post with "Freedom is Slavery" or something?
          • by capedgirardeau ( 531367 ) on Tuesday October 30, 2018 @07:13AM (#57560809)

            I think you have a mistyped statement in your OP and this other commentor was discussing it without realizing it was probably just a mistyped statement.

            You wrote unions take money from the middle class, but they clearly do not, they build the middle class.

            I assumed you meant, unions take money from the capitalist class or factory owners, etc.

      • by sjbe ( 173966 ) on Tuesday October 30, 2018 @08:40AM (#57561177)

        You need manufacturing to have a strong economy because you need lots of workers all working together in the same place with the same interests. In other words, Unions. What made the US middle class grow was Unions fought (and died) to pry money out of the hands of the working class. You can't do that at a WalMart, there's just not enough of a concentration. Also, the ruling class got this Union busting down pat.

        You have the story wrong. The US HAS manufacturing. It never left despite what you might hear from the uninformed. The US manufacturing sector is over $3 TRILLION annually which puts us neck and neck with China for the largest manufacturing sector in the world. By itself the US manufacturing sector would be one the fifth largest economy in the world - larger than the UK and just behind Germany.

        What has changed since WWII is our cost of labor and the rest of the world rebuilt. US labor today is among the most expensive in the world. As a result US manufacturing HAS to focus on capital intensive [wikipedia.org] products instead of labor intensive [wikipedia.org] ones. It is literally impossible for US companies to compete on labor prices. 70 years ago US labor costs were a lot closer to the global mean AND the rest of the world was recovering from WWII. Now China has a LOT of labor and simple supply and demand means that having a lot of something means it will cost less and so their labor costs less than ours because they have an abundance of it. QED products that are sensitive to manufacturing cost of labor will inevitably migrate to locations with lower labor costs. Products not so sensitive to labor costs will go to places with low capital costs. The US has the lowest cost of capital in the world currently so we get the capital intensive products instead of the labor intensive ones. In plain english we make cars and airplanes and don't make Happy Meal toys and the cheap crap you buy in Walmart.

        As for unions, basically unions were TOO successful. They priced themselves out of the market for labor intensive manufacturing in a global market. And for capital intensive manufacturing there isn't as much need for unions because the pay rates are much higher and there is a lot of automation. As a result when politicians promise to bring back manufacturing jobs they are literally promising the impossible. The only way the US will get back labor intensive manufacturing on a large scale is for the cost of US labor to fall back towards the global mean. This means paying US workers MUCH less then they currently demand. Otherwise the only alternative is to automate the work which is what capital intensive manufacturing does. So pick your poison - much lower paying jobs OR automation.

        Ironically when people argue against immigration in our country, they are arguing against the only thing that will allow our demographics to compete with China and India. China has 4 people for every 1 in the US and a lot of those people are very smart and hard working. Without immigrants (both skilled and unskilled), the US will eventually lose that fight just from sheer numbers. China has more labor that costs less AND a lot of very smart high end labor too. Doesn't mean the US will become some backwater but without welcoming the best and brightest into our country with open arms we don't have a prayer of keeping up in the long run.

        • The only way the US will get back labor intensive manufacturing on a large scale is for the cost of US labor to fall back towards the global mean.

          At this point, it's probably too late anyway. Automation is destroying those jobs. Manufacturing still happens in the US, but we'll lose most of the last manufacturing jobs anyway since automation is currently improving rapidly. It's already taken most of the manufacturing jobs, it will take most of the rest in short order.

          without welcoming the best and brightest into our country with open arms we don't have a prayer of keeping up in the long run.

          Sure, but we only need the best and the brightest. We don't need the masses of asses. We have enough asses here already. Consequently, these immigration policies won't much affect America

          • Automation is destroying those jobs. Manufacturing still happens in the US, but we'll lose most of the last manufacturing jobs anyway since automation is currently improving rapidly. It's already taken most of the manufacturing jobs, it will take most of the rest in short order.

            In some cases that it true. In some cases it is not. People here tend to hugely misunderstand what automation can and cannot do and the costs involved. Manufacturing in the US is going to be a lot like farming in the sense that productivity is going to continue to increase but head counts will be an increasingly smaller percentage of the total workforce. This is NOT a bad thing. It just means that economic value will come from other sectors of the economy. A lot of manufacturing jobs are boring assemb

            • I may not have any mod points, but damn sir, you're making some very good points. I was never in favor of closing immigration, but you've certainly given me a new perspective on this issue regardless. Thank you very much.
            • (spoilers: we lose without those "masses of asses")

              You could not be more wrong. We don't need more mediocre people. We have more than enough of them already due to the failings of our education system. What we need is more highly educated people. We could make more of those without any immigration. In fact, without immigration, we would have to.

              You could not be more wrong. Our immigration policies will have a HUGE impact on America's performance in the future.

              They won't, because we have always created exceptions when necessary. Like, say, for German war criminals who we felt were most useful developing space vehicles.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Every time. Every. Fucking. Time.

      This happens in other countries as well, and it's infuriating how the taxpayers get the shaft on shit like this, from roadworks projects, to stadiums, to pie-in-the-sky promises of new buildings and factories that "just can't seem to get built" without massive amounts of taxpayer money which then gets used to line the pockets of the private interests and with almost no benefit to the people who actually paid for the thing to get built.

      These fucking thieves and their puppet p

  • by crow ( 16139 ) on Monday October 29, 2018 @05:20PM (#57558259) Homepage Journal

    There are two issues with subsidies like this. One is that most companies will look for loopholes and try to take advantage of the deal, doing only the bare minimum to get everything they can. The other is that the government usually doesn't structure the deal such that the payouts are tied to meeting promises.

    I'm under the impression that Nevada's deal with Tesla is a case where both issues were handled correctly, because Tesla really wanted to do everything they promised, so they had no reason to try to wiggle out, and because the deal was well-structured and tied to jobs.

    I expect in most cases the people writing the deal for the government just don't have enough experience to put all the right teeth in them. I know from my experience in my town's government, we have sometimes failed to correctly specify details in agreements that have come back to bite us.

    • by aberglas ( 991072 ) on Monday October 29, 2018 @06:48PM (#57558795)

      Worse, neither politicians, journalists nor many public servants can do arithmetic. That is about $200,000 subsidy per job! There are not many small businesses that could not create jobs for a fraction of that!

      • That can be fine. If I offer you $10B in tax write offs if you spend $100B in the state on businesses but only hire one person to oversee that $100B in spending you aren't paying "$10B per job" since theoretically the $100B in other spending is going into local businesses and they will hire people to handle that.

        Also you can offer a $10B subsidy and get 0 jobs if you are a tax shelter and stole the $100B in investment from another locality.

        That's the problem with subsidies. It's a prisoner's dilemma where

        • by Actually, I do RTFA ( 1058596 ) on Tuesday October 30, 2018 @05:12AM (#57560485)

          since theoretically the $100B in other spending is going into local businesses

          Where did you get that Foxvcon's 10Billion investment is spent in Wisconsin? What if they but 100 MM in land and ship 9.9Billion in parts from China?

      • depending on the subsidies that can still be a fantastic deal for the state. e.g. if those subsidies are for taxation then that is $3 billion they didn't have to start with and certainly will never have if they don't manufacture there. even if they never make a cent in tax from them in the next 20 years they still get the jobs and flow on services.
      • Well what you are looking at is a five year pay off at an average of a little over $46k/year for 13,000 jobs. With such a large initial investment tied up in the factory it's likely to continue providing jobs for at least 10 additional years.
           

    • Re: (Score:1, Flamebait)

      I live in Reno, so the Tesla project is front and center on the radar out here. Tesla did build a factory and continues to expand it. I haven't seen the latest numbers on employment but it is well into the thousands and growing from both continued construction jobs and existing and expanding production jobs. The big beef that is talked about is the wages being much lower than promised - Tesla said average wages would be $26/hr not including benefits, but the actual wage has been more like $15/hr, more af
    • by rsilvergun ( 571051 ) on Monday October 29, 2018 @07:42PM (#57559107)
      and everyone knew it. There were klaxons going off day one. It was painfully obvious that Wisconsin was chosen because their gov't is bought off and hopelessly corrupt. It as a $4 billion dollar give away on a few hundred million in jobs. The other cities saw that and said "Hell No". Under Scott Walker though companies can get away with damn near anything.
      • by Dr_Terminus ( 1222504 ) on Tuesday October 30, 2018 @01:05AM (#57559991)

        And what really pisses me off about this whole thing is Walker turned down government money to build a high-speed rail between Chicago/Milwaukee/Madison/Minneapolis, which would have provided many tourism and rail jobs in Wisconsin. He felt it was 'government waste' in that case, only because the money would have been from the Obama administration...

        To add insult to injury, the Spanish train company Talgo had planned to build trainsets for the rail line at their plant in Milwaukee - further adding jobs. But since the rail deal never went through, they've since significantly downsized their operation in Wisconsin...

        • Multiple Republicans were caught on film saying they would obstruct everything Obama did just to hurt him, even if it hurt the economy. A few got caught saying they would intentionally hurt America because it would hurt Obama and the Dems more. That's literally terrorism (causing fear and suffering for political gain). But nobody outside of the extreme left press ever called them out on it.
    • by gtall ( 79522 )

      I doubt the "deal" was ever about creating jobs and such for Wisconsin from Wisconsin's point of view. It was merely Walker and fellow travelers (Paul Ryan) figuring that they'd get a short term pop to get through the next election without looking like knobs. Now that its failing to produce, they figured if they don't talk about it, it doesn't exist.

    • The other thing is incentives are complex.
      There's direct incentives. Like here Company, we give you 1 billion dollars and you build a plant and employ X workers...

      There's also incentives which really don't cost the state much.

      For example, if a state says Company we exempt you from paying property taxes for 10 years as a value of 1 billion dollars. That might not cost the state much. At worst you can think of in a big city like New York, where property is expensive, sure you can definitely get a more tangibl

  • by Anonymous Coward

    Corporate welfare like this has to stop. (Also, see Amazon for another example.)

  • Repeat after Me (Score:4, Insightful)

    by CohibaVancouver ( 864662 ) on Monday October 29, 2018 @05:26PM (#57558313)

    and the Republican governor first met: a $3 billion state subsidy in return

    If you're a Republican, be sure to chant the mantra:

    Corporate welfare: GOOD

    Individual welfare: BAD

    • by Anonymous Coward

      And if you have a brain, and don't vote Democrat or Republican, then you know all welfare is bad.

      Fuck the left and the right.. They are bankrupting us. You deserve each other for what you've done.

    • We don't actually have a conservative party anymore. We have two crony capitalist parties with opposing views on a few social issues, to keep the masses from realizing they're really just fangirling over which set of rich people get richer.

      • Re:Repeat after Me (Score:5, Informative)

        by blahplusplus ( 757119 ) on Monday October 29, 2018 @09:03PM (#57559401)

        We don't actually have a conservative party anymore. We have two crony capitalist parties with opposing views on a few social issues, to keep the masses from realizing they're really just fangirling over which set of rich people get richer.

        Except there is no such thing as a non crony capitalist society, you guys are fed so much pro corproate propaganda you never check to see whether your society works as advertise. There has never been a time your government has worked for you, there was a brief moment after the great depression but after that, the rich got mad and went to claw back all working peoples gains and you all fell for it.

        US distribution of wealth

        https://imgur.com/a/FShfb [imgur.com]

        http://www2.ucsc.edu/whorulesa... [ucsc.edu]

        Princeton study

        https://scholar.princeton.edu/... [princeton.edu]

        Here are billions of dollars in energy subsidies, aka when politicians are saying social services need to be cut, they are speaking out both sides of their mouths because they know most people don't look at what companies are getting free handouts from subsidies.

        https://www.imf.org/external/p... [imf.org]

        Protectionism for the rich and big business by state intervention, radical market interference.

        https://www.youtube.com/watch?... [youtube.com]

        Our brains are much worse at reality and thinking than thought. Science on reasoning:

        https://www.youtube.com/watch?... [youtube.com]

        Manufacturing consent:

        https://www.youtube.com/watch?... [youtube.com]

        https://vimeo.com/39566117 [vimeo.com]

      • by dryeo ( 100693 )

        Did you ever have an actual conservative party? History seems to be full of corporate welfare of some type or other with the rich buying politicians for as long as there has been politicians.

  • Bottom (Score:5, Insightful)

    by fluffernutter ( 1411889 ) on Monday October 29, 2018 @05:34PM (#57558383)
    These bug tech companies only GO to a place that is willing to give up so much that it eats up any benefit for the citizen. That particular race to the bottom is already pretty much at the bottom.
  • by Radical Moderate ( 563286 ) on Monday October 29, 2018 @05:41PM (#57558429)
    ...22% of those are under 18, so that leaves about 4.5 million. Figure at least half a million of those are too old or disabled to pay taxes, so that's about 4 million taxpayers. A $4.1 billion subsidy means Walker took over $1000 from each taxpayer and handed it to Foxconn. No wonder he doesn't want to talk about it.
  • by Harold Halloway ( 1047486 ) on Monday October 29, 2018 @05:59PM (#57558527)

    I guess the sun ain't gonna shine any more for him.

  • ...from the 38 Studios debacle. All you have to do is dangle the promise of providing theoretical jobs to a politician for their reelection efforts, and you'll get state budget dollars hanging off your hook in no time at all.

    • by dk20 ( 914954 ) on Monday October 29, 2018 @06:12PM (#57558607)

      Plus if you do it amazon style with their "HQ2" proposal you can turn things around. Instead of you (amazon) shopping around, the states and cities will come to you with the varoius forms of coporate welfare.. you just get to select who wil give you the most.

      If states really want to compete for jobs like this, we need federal laws to prevent one state from undermining its own people to "win" a "major HQ" which almost always employ far fewer people vs. the primise and the "investment" will also be a lot less.

  • I am altering the deal, pray I don't alter it any further.

    Foxconn knows, once they have promised jobs, that the governor will try to salvage the deal to avoid being accused of chasing jobs out of Wisconsin.

    Meanwhile, the governor screams: Look, over there, a unicorn...

    Facts no longer matter...

    2+2=5

    • I'm sorry, Registered Coward v2, you misheard the governor. He said, "Look, over there, a union..."

      And then taxed you to pay for the torches and pitchforks.

  • Base tax cuts on the number of jobs created (and of course the pay)

    13K jobs would create additional state tax revenue from the newly employed.

  • 3 billion USD for 13,000 jobs means taxpayers give 230,000 USD per created job. Let us hope the factory will remain active for a few few years .
    • and just give it away. The rest could just go into the general fund. I mean, if we're gonna waste money let's do it the most efficient way. Of course if we did that then 10% of that $3 billion wouldn't have made it into Scott Walker's reelection fund.
      • Give what away? These are tax credit subsidies. Money the state never had and won't have because it won't be collected from Foxconn.

        • Did you RTFA? It claims that much of the subsidy is in CASH. Other [jsonline.com] sources [prospect.org] seem to support that assertion as well:

          Wisconsin taxpayers will end up sending some $3 billion to the company. While state-level support is touted as tax relief, in fact Wisconsin has already waived almost all of the pertinent taxes for businesses. The taxpayer-funded $3 billion in incentives (the largest ever to a foreign company) will be paid largely in cash.

          On top of that, the state will waive $150 million in sales taxes for Fox

  • I just love people who expect responsibility and good-faith from a mega-corporation that thinks putting up suicide nets is a good response to non-existent worker morale. Hey... I might just have a bridge I can sell you...
  • So, how is this a boondoggle? Maybe if you've never worked in architecture, engineering or business you expect plans to remain like government projects and not evolve in concept or execution but otherwise you are just misrepresenting a normal process. Tech moves quickly, the legislature structured a deal that gives Foxconn very little unless they follow through. The potential economic multipliers are massive in this project. Think about a smart device maker. Right now you base yourself in California an
  • (forgoing mod points to make this post)

    I seem to recall this sort of deal making news many times over the last ten years or so. Not all are at the national level importance that a $10 Billion dollar plant would be. Some, perhaps even most are along the lines of call centre chooses to establish in %Smalltown because that municipality offered a better tax break or subsidy than %otherSmallTown.

    What's always bothered me about these deals is that the numbers always seem to be bigger than the actual taxes would

  • Pass a federal law that taxes all corporate subsidies at 150% of the subsidy, to account for Hollywood Accounting. With the important exception being: companies can avoid the tax if the state or local entity giving the subsidy gets an ownership stake equivalent to the value of the subsidy.

    Example: the Dallas Cowboys are valued at about $4 billion dollars. [star-telegram.com] If Jerry Jones wants a billion-dollar stadium constructed for his team and doesn't want to pay for himself, he can choose between paying half that again

    • Separation of powers here. If federal governments could regulate this type of intrastate commerce then it would end this shopping around, but it would erode some fundamental aspects of our government.

      • by Uberbah ( 647458 )

        Outright banning it would be a hard sell. Taxing corporate welfare might get some grudging support from libertarians, a la the Stop BEZOS Act. Sure, they don't like regulation much, but do they really want to be paying more in taxes to go straight into quarterly profits?

  • The "deal" was dumb from the start even with all of its dubious promises. Now it promises to be much worse than even that. Wisconsin itself is pretty stupid compared to its neighbor Minnesota. Similar stories save for their political leadership. Just look at the differences that has made.
  • Ah, so they’ll be building 8k LCD panels with built in artificial intelligence and 5G wireless connections. What a load of shit.
  • The details of the deal were famously written on the back of a napkin when [Foxconn chairman Terry Gou] and the Republican governor first met

    Whew! Thank goodness no Democrat governor has ever been involved in state spending boondoggles.

    We can prevent this from ever happening again just by voting!

  • This is the same state whose refused to pay for the Talgo trains they agreed to have built for Amtrak lines in their state. Depending on whom you ask it was either for purely political reasons, financial reasons, both, or neither.

    The completed trains were never paid for per prior agreement with the State of Wisconsin. They have been sitting, ready-to-use, waiting for a buyer for years now.

    Wisconsin thinks they can reneg without negative consequences to them because Talgo is not an American company.

  • by mark_reh ( 2015546 ) on Tuesday October 30, 2018 @11:27AM (#57562375) Journal

    There's all sorts of prep work going on. They're condemning people's homes and land. They're tearing up all the roads and traffic is hell. Oh yeah, my property tax bill jumped up this year.

    At about the same time Walker was making his deal, Foxconn was laying off workers in Taiwan at an LCD plant because they were being replaced by robots. Taiwanese people earn far less than US people. Why would they hire expensive US workers when they're replacing cheaper Taiwanese workers with robots?

    Walker is running for reelection but doesn't talk about Foxconn. Hmmmm.

Avoid strange women and temporary variables.

Working...