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Saturday, May 08, 2021
Photo of a Foxconn building.

Gov. Tony Evers is announcing a new deal with technology giant Foxconn. How did the deal fall through, and what’s next?

The Foxconn controversy, explained

Trump and Foxconn: From tax breaks to breaking promises

In 2017, Mount Pleasant, Wis., residents were forced out of their homes for a large high-tech plant promising a surge of new jobs. More than three years later, the Foxconn project was never built and the village is in debt.

The most vocal supporter of the supposedly abandoned 20-million-square-foot project — former President Donald Trump. He once said the plant would be the “eighth wonder of the world” and credited Foxconn’s interest in Mount Pleasant to his presidency.

“I hate to say it, if I didn’t get elected, they wouldn’t be in this country,” Trump said. “They would not have done this in this country. I think you know that very well.”

Foxconn, the largest electronic device contract manufacturer in the world, builds iPhones in China and exports them to America. The Mount Pleasant deal was an opportunity for the company to create a partnership with Trump while his administration’s trade policies jeopardized their business overseas. 

But despite Trump’s claims, tax cuts were the real deal-breaker for Foxconn. The agreement, struck by former Gov. Scott Walker, provided Foxconn with nearly $4 billion in state and local tax incentives. 

Mount Pleasant officials were on board. They leveraged a promise of 13,000 jobs by 2023 to rationalize uprooting hundreds of residents in order to provide Foxconn with construction property. But even Foxconn was publicly hesitant about guaranteeing 13,000 jobs. In a press release, the tech giant claimed it would create 3,000 jobs with “potential” to expand to 13,000 jobs.

But there was a catch: Even if 13,000 jobs rose from the Foxconn project, Wisconsin would be paying $346,153 per job at a subsidy of $4.5 billion. And that was a best case scenario projection. If the plant created just 3,000 jobs as predicted, the state would pay $1.5 million per job.

There was even some pushback among Foxconn insiders concerning the location. The plant was supposed to become a site for building flat-panel display screens for electronics, but there were not any flat-panel display production suppliers in Wisconsin.

While Republicans across the country praised the deal, Wisconsinites were skeptical from the beginning. A 2018 Marquette University Law School poll showed 49% of Wisconsin voters believed the state is paying more in incentives than the Foxconn plant is worth, while 38% thought the plant would provide at least as much value as the state’s investment. A 57% majority believed that the Foxconn plant would substantially improve the economy of the greater Milwaukee area, but 66% believed their local businesses would not benefit.

As the years passed, voters’ skepticism became reality. Former residents returned to Mount Pleasant to find their homes destroyed, but saw little progress on the development. 

In an attempt to continue to pay for construction, the village has accumulated nearly $1 billion in debt. Mount Pleasant paid more than $152 million for 132 properties and $7.9 million in relocation costs, according to a 2019 Wisconsin Watch report.

Foxconn has also failed to fulfill commitments to UW-Madison. As of August 2020, UW-Madison has received less than 1% of the company’s proposed $100 million into engineering and innovation research, according to the Wisconsin State Journal. In April, the UW-Madison Office of Business Engagement hired a former Foxconn official

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During his 2018 election campaign, Gov. Tony Evers criticized Walker’s original Foxconn deal for lacking transparency, exempting the project from statewide environmental protections and not requiring that the project’s new employees be Wisconsinites.

“With Foxconn, it’s been asterisk after asterisk and their end of the bargain seems to change by the day,” Evers said. “It’s a lousy deal, and we’re going to have to hold Foxconn’s feet to the fire going forward.”

A new deal with Foxconn, Evers says, will save taxpayers $2.77 billion, but promises only 1,450 jobs. The deal also requires Foxconn to contribute $672 million in investments, less than 7% of the original $10 billion projection, and a target the Wisconsin Economic Development Corporation says the company has already met.

Still, the WEDC Board of Directors approved a contract amendment last week making Foxconn eligible for up to $80 million in performance-based tax credits over a six year timeline, granted it meets their employment targets by 2026. 

According to WEDC CEO Missy Hughes, Foxconn’s Mount Pleasant plant jobs in 2020 qualify the company for the new deal’s first round of tax credits despite its toll on Mount Pleasant’s community and economy.

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