The Foxconn-in-Wisconsin drama took a new but not all that surprising twist after President Donald Trump personally jawboned CEO Terry Gou into affirming the company’s wavering pledge to create thousands of manufacturing jobs in the Badger State.
Trump called on Gou on Friday because the president had bet substantial political capital on Foxconn’s original commitment two years ago to build a complex in Wisconsin to manufacture flat-glass display panels and create a total of 13,000 jobs over several years, in exchange for about $4 billion in state financial incentives.
Gou and then-Governor Scott Walker had struck one of the biggest state economic-development deals in U.S. history, and Trump helped break ground for the manufacturing plant in southeastern Wisconsin in 2017.
Last week, a Foxconn executive jolted Wisconsin and the economic-development community by indicating in a Reuters interview that building a liquid-crystal display plant in the state would be economically infeasible and that the company was planning instead to create the vast majority of jobs there in research and development, not fabrication.
But on Friday, after discussions with the White House, the Taiwan-based company said it would move ahead with a facility in Wisconsin that would make small LCD screens. The discussions included “a personal conversation between President Donald Trump and Chairman Terry Gou.”
“Our decision is also based on a recent comprehensive and systematic evaluation to help determine the best fit for our Wisconsin project,” the company said.
On Twitter, President Trump highlighted his personal role: “Great news on Foxconn in Wisconsin after my conversation with Terry Gou.”
What this seems to amount to is Foxconn trying to take advantage of wiggle room in its deal with Wisconsin in the face of changing economics in its business and softening political support in the Badger State, and Trump trying to reduce their leeway.
Formally known as Hon Hai Precision Industry Co., Foxconn announced 18 months ago that it would invest $10 billion in Wisconsin, build a 22-million-square-foot LCD panel plant and hire 13,000 workers, mainly factory workers. Foxconn’s investments would include establishing technical centers in a handful of Wisconsin cities and partnering with the University of Wisconsin on a research institute.
Walker even established a “Wisconn Valley” umbrella for the enterprise as he hoped that Foxconn’s presence would help create a new-technology ecosystem in the southern part of the state that would also draw technology workers from the Chicago area.
But Walker gave Foxconn some latitude in their deal, and he paid for it politically last fall: Democrat Tony Evers defeated Walker’s re-election bid in part by criticizing the incumbent has having been too generous with the state’s money and too lenient with Foxconn on issues such as environmental compliance.
For its part, Foxconn has been backing away in various ways ever since the deal was struck. It fell short of its minimum 250-job hiring requirement last year to get the initial part of the state financial incentives. There was speculation – which Foxconn slapped down – that it would have to import technical workers from China.
All along, many critics have said there would be no way for Foxconn to build the kind of manufacturing complex it indicated in Wisconsin because of the lack of an associated infrastructure like that which is found at a few spots in Asia. Foxconn’s comments have tended to confirm that fundamental problem.
And more recently, Foxconn’s huge business of making iPhones for Apple in southern mainland China has been a drag on the company overall, and Trump’s own trade war has created more uncertainty for the company.