Taiwanese electronics maker Foxconn (2317.TW) has drastically reduced a planned $ 10 billion plant in Wisconsin, confirming its withdrawal from a project that former U.S. President Donald Trump once described as “the eighth wonder of the world ”.
Under an agreement with the State of Wisconsin announced Tuesday, Foxconn will reduce its planned investment to $ 672 million, from $ 10 billion and reduce the number of new jobs to $ 1,454 from $ 13,000.
The Foxconn-Wisconsin deal was first announced in the White House in July 2017, with Trump boasting about it as an example of how his “America’s first” agenda could revive technology manufacturing. American.
For Foxconn, the investment pledge was an opportunity for its charismatic founder and then-president, Terry Gou, to build goodwill at a time when Trump’s trade policies threatened the company’s cash cow: build Apple Inc. iPhones (AAPL.O) in China for export to America.
Foxconn, the world’s largest contract electronics maker, proposed a 20-million-square-foot manufacturing campus in Wisconsin that would have been the largest investment in U.S. history for a new location for a company. based abroad.
It was supposed to build cutting-edge flat-screen displays for televisions and other devices and instantly establish Wisconsin as a destination for tech companies.
But industry executives, including some from Foxconn, were highly skeptical about the plan from the start, noting that none of the crucial vendors needed to produce flat-screen displays were near Wisconsin.
The plan also faced local opposition, with critics denouncing the delivery of a taxpayer to a foreign company and the provisions of the agreement granting broad water rights and allowing the acquisition and demolition of houses through an eminent domain.
As of 2019, the village where the plant is located had paid just over $ 152 million for 132 properties to make way for Foxconn, plus $ 7.9 million in relocation expenses, according to village records obtained by Wisconsin Public Radio and analyzed by Wisconsin Watch.
Foxconn, formally named Hon Hai Precision Industry Co. Ltd., said the new agreement gives it “flexibility to seek business opportunities in response to changing global market conditions.” The company said that “the original projections used during the negotiations in 2017 have changed at this time due to unforeseen market fluctuations.”
After abandoning its plans for advanced screens, Foxconn later said it would build smaller-generation screens in Wisconsin, but it never came to fruition either. (https://www.reuters.com/article/us-foxconn-wisconsin-exclusive/exclusive-foxconn-reconsidering-plans-to-make-lcd-panels-at-wisconsin-plant-idUSKCN1PO0FV)
Prior to Tuesday’s announcement, Foxconn President Liu Young-way told reporters in Taipei that the company currently manufactures servers, communications technology products and medical devices in Wisconsin, and added that electric vehicles ( EV) have a “promising future” there. He did not elaborate.
Liu had previously said that the infrastructure was in Wisconsin to manufacture electric vehicles due to its proximity to the traditional center of American automobile manufacturing, but the company could also decide on Mexico. Read more
Shares in Hon Hai fell as much as 1.6% on Wednesday morning, with a yield lower than Taiwan’s broader market (.TWII), which fell 0.7%.
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Wisconsin Gov. Tony Evers said the new deal will save Wisconsin taxpayers “a total of $ 2.777 billion compared to the previous contract, will maintain accountability measures that require job creation to receive incentives.” and protect hundreds of millions of dollars in local and state infrastructure investments made in support of the project. “
Evers said that under the agreement negotiated between the Wisconsin Economic Development Corporation and Foxconn, the Taiwanese company is eligible to receive up to $ 80 million in performance-based tax credits for six years if it meets the employment targets. and capital investment. He stressed that the incentives were in line with those available to any company.
The state will reduce the tax credits authorized for the project to $ 80 million, from $ 2.85 million.
The original Wisconsin package also included local tax incentives and road and highway investments by state and local governments, bringing total taxpayer-funded subsidies to more than $ 4 billion.
Foxconn noted that since 2017 it has invested $ 900 million in Wisconsin, including several different facilities in the state.
According to records obtained by Wisconsin Public Radio, the state has already spent more than $ 200 million on road improvements, tax exemptions and subsidies to local governments for the training and employment of workers.
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