Economy Education Reform Scott Walker

Wisconsin: FoxCon Job

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Robert Kuttner of the American Prospect reports about the con job in Wisconsin:

 

Fox Con Job. Remember Foxconn? Then-governor Scott Walker of Wisconsin lured the Chinese company to create “up to” 13,000 jobs in his state, with tax subsidies paid by Wisconsin taxpayers that could to as high as $3 billion. Foxconn was going to build a $10 billion factory complex to produce liquid crystal displays and other tech equipment that it now makes in Asia.

As the Prospect reported in an investigative piece last September, the taxpayer cost per new employee was estimated at $230,000, or five or six times the normal figure in such deals.

Though the 13,000 jobs were an estimate, not a formal commitment, President Trump touted that number at a ground-breaking ceremony last year with Walker, then-House Speaker Paul Ryan, and Foxconn CEO Terry Gou.

Well, that was then.

It now turns out that Foxconn will hire a maximum of 1,000 Wisconsinites, and is not building a factory at all. The company now describes its Wisconsin facility as an R&D center, combined with the possibility of some low-skill final assembly jobs.

There are several morals of this story. One, which we already knew, is never to trust Scott Walker or Donald Trump, either separately or together. Moral two is to keep your hand on your wallet whenever corporate execs hold you up for tax subsidies.

But the more important moral is that if the U.S. is to have a real industrial policy to reclaim U.S. manufacturing jobs, it is utter folly to rely on white knights on the form of Chinese companies. Making American manufacturing great again is not at the top of their national agenda.

Better to spend the money directly, on industrial strategies that benefit companies that are committed to producing in the U.S. It remains to be seen how much of the tax breaks were already squandered and what might be recouped. ~ ROBERT KUTTNER

The New York Times describes the same hoax in polite terms.

It was heralded a year and a half ago as the start of a Midwestern manufacturing renaissance: Foxconn, the Taiwanese electronics behemoth, would build a $10 billion Wisconsin plant to make flat-screen televisions, creating 13,000 jobs. President Trump later called the project “the eighth wonder of the world.”

Now that prospect looks less certain.

Pointing to “new realities” in the market, the company said Wednesday that it was reassessing the plans, underscoring the difficult economics of manufacturing in the United States. “The global market environment that existed when the project was first announced has changed,” Foxconn said in a statement.

Company officials had signaled for months that their emphasis was increasingly on research and development rather than large-scale production, dampening the potential for blue-collar job creation.

That turn runs counter to Mr. Trump’s vision for the project, which he had cited as a milestone in reversing the decline in factory jobs. The twist also brought new friction in Wisconsin, where the initiative has been politically fraught from the start because of its billions of dollars in tax subsidies.

Foxconn said that it remained committed to creating 13,000 jobs in Wisconsin and that it was “moving forward with plans to build an advanced manufacturing facility.” But it did not address the share of jobs to be devoted to production, and economists questioned how such a large work force could be created if the plant’s focus was on other areas.

A White House spokeswoman did not respond to a request for comment.

The Foxconn statement followed a Reuters report that Louis Woo, a special assistant to the company’s chairman, Terry Gou, had said the costs of manufacturing screens for televisions and other consumer products were too high in the United States.

“In terms of TV, we have no place in the U.S.,” Mr. Woo told Reuters. “We can’t compete.”

Mr. Trump’s campaign promise to revitalize American manufacturing was considered an important factor in his capturing Wisconsin and other battleground states in 2016. Yet the cost of luring Foxconn set off a partisan battle in Wisconsin that extended into the midterm elections last year, when Gov. Scott Walker, a Republican, was defeated.

Mr. Walker and state lawmakers had agreed to more than $4 billion in tax credits and other inducements over a 15-year period, an unusually high figure, for a plant in Mount Pleasant, near Racine.

Wisconsin residents have had mixed feelings about the investment, polls show. And early on, economists questioned whether the large-scale manufacturing plant and the thousands of jobs would come to fruition. The increasing focus on research raised new doubts about the scale of hiring — economists said that strategy could produce a smaller number of higher-paying jobs.

“There aren’t that many R&D facilities in the world with 13,000 people,” said Susan Helper, an economist at Case Western Reserve University in Cleveland

 

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