With Foxconn, Americans Get Snookered Again
Reprinted with permission from Creators.
At the White House celebration of a planned new factory in Wisconsin — “the size of three Pentagons” — the Great Negotiator was all smiles. That would be Terry Gou, CEO of the Taiwanese electronics giant Foxconn.
The guy standing next to him was Donald Trump. The president said that Foxconn would invest $10 billion and create up to 13,000 well-paying manufacturing jobs. He later called the project “the eighth wonder of the world.” That was 18 months ago.
The ninth wonder of the world is that anyone took Foxconn’s word seriously. Foxconn has a history of making flashy job announcements and then not providing the jobs. The American side got a foretaste of disappointment last month when Gou’s special assistant, Louis Woo, told Reuters, “In terms of TV, we have no place in the U.S.” Only then did Foxconn publicly announce a change in plans. The Wisconsin plant would be more focused on research and development.
An uproar followed, and Foxconn changed its wording. Yes, there would be R & D but also some screen manufacturing. Even with that revision, this means there won’t be anywhere near 13,000 choice blue-collar jobs. And that assumes you believe a word the company says, which you shouldn’t.
Six years ago, Foxconn announced it would invest $30 million in a plant in Pennsylvania. It didn’t. Later, it said it would spend $5 billion in India and create 50,000 jobs. So far, nothing. It said it would invest up to $10 billion on an electronics plant in Indonesia and then lowered the figure to $1 billion. And its follow-through on plans to invest $12 billion in Brazil, with 100,000 jobs to follow, is a fraction of what was promised.
The one Foxconn project that remains on course is a $9 billion factory in Guangzhou, China, expected to create 10,000 jobs. It will be making flat-panel display screens similar to those allegedly planned for the factory outside Racine.
Even with the taxpayer incentives, the economics of making flat panels in the U.S. have never added up. Foxconn workers in China make about $8,000 a year. Gou was promising Wisconsinites an average $53,875 a year.
In hammering out the deal for an “advanced manufacturing facility,” Americans got rolled. Wisconsin’s Republican governor and Republican Legislature put state taxpayers on the hook for more than $4 billion in various incentives. This would have amounted to a subsidy of $15,000 to $19,000 per job per year. That is at least six times the typical subsidy for such jobs, according to the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan.
I note that this screwy attempt to buy jobs was the handiwork of Republicans not because Democrats don’t do stupid deals — they do — but because handing out taxpayer subsidies goes against what conservatives say they believe in. Rather than improve the business climate for all the state’s employers, Wisconsin Republicans chose a “winner” on whom to shower the taxpayers’ money.
These are the same state leaders who claimed they had run out of funds for the University of Wisconsin. An educated workforce is economic development, too, you know. Rather, politicians are buying bragging rights about creating jobs. The hope, of course, is that the public doesn’t quite understand how much it’s spending for those jobs — or what jobs are lost as other companies have to cover the taxes the “winner” isn’t paying.
The only rationale for building in Wisconsin was as protection in the event of a trade war with China. Gou probably now figures that Trump’s trade war isn’t going to go far.
Trump tweeted last week, “Great news on Foxconn in Wisconsin after my conversation with Terry Gou!” Boy, does Gou have him pegged.
Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at email@example.com. To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators webpage at www.creators.com.