Wisconsin lawmakers vote to pay Foxconn $3 billion to get new factory

[Independent voter]

Foxconn is the Chinese company that makes a lot of phones.

This seems to be a thing where local communities give out huge tax breaks, give land or other gifts to companies willing to set up shop there. The idea is to get jobs and money flowing into the community.

Some have said the $3 billion will be break even over 20 years. Others have said that high tech Foxconn will bring other tech companies to the region.

What do you think about communities luring companies with tax breaks and other benefits?






https://arstechnica.com/tech-policy/...t-new-factory/

The Wisconsin Assembly voted 59-30 on Thursday to approve a bill to give incentives worth $3 billion to Taiwan-based Foxconn so that the company would open its first US plant in the state.

Foxconn, best known for supplying parts of Apple's iPhones, will open the $10 billion liquid-crystal display plant in 2020, according to Reuters. The bill still has to be approved by a joint finance committee and the state Senate.

Both houses of Wisconsin's legislature are controlled by Republicans, and the deal is supported by Wisconsin Governor Scott Walker, a Republican who negotiated the deal.

The vote was largely, but not entirely, along party lines. Three Democrats joined 56 Republicans in supporting the deal. Two Republicans and 28 Democrats voted against it.
Opponents said the deal wasn't a good use of taxpayer funds. The $3 billion incentives package includes about $2.85 billion in cash payments from taxpayers and tax breaks valued at about $150 million. The state is also waiving certain environmental rules.

Supporters, including Walker, say that the deal will be transformational for Wisconsin, pushing its economy toward high-tech manufacturing. Foxconn will spend $10 billion to build the plant. The facility has been planned to employ 3,000 workers, and supporters say that number could grow to 13,000 workers in the future.

The deal was announced last month at a White House event, although it was contingent on Wisconsin approving the massive incentives bill. President Donald Trump praised the deal, saying it was a win for anyone who "believes in the label 'Made in the USA.'"

The LCD display panels will be produced under the Sharp brand, which Foxconn purchased last year.

Democratic opponents of the deal have pointed out that paying $3 billion to get 3,000 jobs means the state subsidy amounts to around $1 million per job.
That's $66,600 per employee for each of the next 15 years, according to an analysis by Prof. Michael Hicks, an economics professor at Ball State University who opposes the deal. Foxconn will pay the workers an average of just over $53,000 per year. (Those numbers are based on the initial count of 3,000 workers.)

"Voters might wish to ask just why each Wisconsin household is stuck with a nearly $1,200 bill to subsidize a company that is half as productive as Wal-Mart, and one-tenth as productive as Harley-Davidson," writes Hicks in an op-ed for MarketWatch. "It is an over-the-top bad deal for Wisconsin."

However, the full $3 billion in incentives only becomes available if Foxconn ends up creating 13,000 jobs. But there's no ironclad guarantee in the deal that Foxconn even meets its 3,000 job promise, so the opponents' "$1 million per job" argument could be true if the factory only ends up employing 1,500 people or fewer.

Even if the plant never expands beyond 3,000 jobs, though, Foxconn will get $1.35 billion for building the plant. Assuming even the beginning stages of the deal come together, Wisconsin will be paying $500,000 worth of incentives per job.

Either way you slice it, the Wisconsin proposal will be the largest-ever subsidy provided by a state to a foreign company, according to Politifact.

[Deleted]

That seems like an insane amount of money to give a company.

[ShimmerSwirl]

The real question is why invest 3b in a plant that is producing last gen display tech. LED displays in their various forms are the future. This plant could be closed in 5 years.

[Rennadrel]

As to why any government would give corporations money in order for them to create jobs so that said corporation can make more profits and underpay people is beyond me. Besides, it's not like Foxconn is going to be using a massive amount of labor, as automation comprises primarily of their line of work.

[Eliandal]

Well...Foxconn will be the winner there, and if not Wisconsin, then another state would have done it. Companies know they can shop around. It may be an expensive deal, but it may not be all bad either. Big caveat though, how are WI's budgets? If they're relatively stable, then it could be a win. If they're rolling in red, this will not really do anything to get them out of it :/

[jediknight12]

u need to spend money to make money and don't forget the millions they will pay to have this factory built and if u don't like it.Also if the people of the state don't like the deal vote them out of office.

[yurano]

That seems like an insane amount of money to give a company.

Well, Foxconn is 1) dropping $10B to build the factory, and 2) hiring up to 13,000 (to receive the full amount). It breaks down to $15K/yr per worker for 15 yrs.

However, "waiving certain environmental rules" is probably a bad idea. And you guessed it, its a Republican decision.

"Voters might wish to ask just why each Wisconsin household is stuck with a nearly $1,200 bill to subsidize a company that is half as productive as Wal-Mart, and one-tenth as productive as Harley-Davidson," writes Hicks in an op-ed for MarketWatch. "It is an over-the-top bad deal for Wisconsin."

The previous statement is a misrepresentation of facts. Walmart doesn't contribute anything to the economy (eg. does not increase exports, but increases imports). Foxconn, like most manufacturing companies, is in the export business, which is good for the economy (imports external capital).

Honestly, with how expensive labor is in the US, there's no way around these types of deals to bring manufacturing jobs back into the US.

[Masark]

Well, Foxconn is 1) dropping $10B to build the factory, and 2) hiring up to 13,000 (to receive the full amount). It breaks down to $15K/yr per worker for 15 yrs.

If you think they're going to employ anywhere near that amount of people for anywhere near that amount of time, you need a reality check.

Foxconn is one of the leaders in factory automation. Even in China, the land of cheap labour, they're automating like crazy, so if you don't think they're going to automate to the nines in the USA, you're out of your mind.

I would be surprised if this plant ends up employing even 1300 people when they get it fully spun up.

[GennGreymane]

This is the worst trade deal in the history of trade deals

[Nellise]

This was discussed in the politics forum a bit already too: http://www.mmo-champion.com/threads/...n-for-25-years!

[Gemini Soul]

Some have said the $3 billion will be break even over 20 years. Others have said that high tech Foxconn will bring other tech companies to the region.

Yeah like that factory will still be there in 20 years lol

[Aggrophobic]

So the US is paying China to set up their sweatshops on US soild now?
Sounds... Great.

[Azadina]

Trickle down, trickle down! Welfare for people bad, the work of satan. Corporate handouts good, the best kind of good!

Yeah, what else can be said about the deal, other than it's moronic.

[Zan15]

and the people of that state will continue to blame illegals for not paying taxes and the budget being in the red because of them.....just like they do my state.