Taiwanese electronics maker Foxconn (2317.TW) has drastically scaled down a planned $ 10 billion plant in Wisconsin, confirming that it is withdrawing from a project that former US President Donald Trump once called “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 agreement was first announced with great excitement in the White House in July 2017, with Trump boasting about it as an example of how its “America first” agenda can revive American technological manufacturing.
For Foxconn, the investment pledge was an opportunity for its charismatic founder and then-chairman, Terry Gou, to build goodwill at a time when Trump’s trade policies threatened the company’s cash cow: building Apple Inc’s (AAPL.O)’s iPhones in China for export to America.
Foxconn, the world’s largest contractor of electronic devices, has proposed a 20 million-square-foot manufacturing campus in Wisconsin that would be the largest investment in U.S. history for a new establishment by a foreign company.
It was supposed to build leading-edge flat screens for TVs and other devices and immediately establish Wisconsin as a destination for tech companies.
But industry executives, including some at Foxconn, have been very skeptical about the plan from the outset, pointing out that none of the major suppliers needed for flat-panel production are located near Wisconsin.
The plan also faced local opposition, while critics rejected the taxpayers to a foreign company and allowed the terms of the agreement granting extensive water rights and the acquisition and demolition of homes in a leading domain.
As of 2019, the town where the plant is located paid just over $ 152 million for 132 properties to make way for Foxconn, plus $ 7.9 million in relocation costs, according to town records obtained by Wisconsin Public Radio and by Wisconsin Watch was analyzed.
Foxconn, formally called Hon Hai Precision Industry Co. Ltd., said the new agreement gives it a “flexibility to pursue business opportunities in response to changing global market conditions.” The company said ‘original forecasts used during negotiations in 2017 have changed at the moment due to unexpected market fluctuations.’
After Foxconn abandoned its plans for advanced exhibits, he later said he would build smaller, earlier-generation exhibits in Wisconsin, but even that plan never materialized. (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 chairman Liu Young-way told reporters in Taipei that the company currently manufactures servers, communications technology products and medical devices in Wisconsin, adding that electric vehicles have a “promising future” there. He did not expand.
Liu earlier said the infrastructure is in Wisconsin to make motor vehicles because of its proximity to the traditional heartland of American manufacturing, but the company could also decide on Mexico. read more
Hon Hai shares fell as much as 1.6% on Wednesday morning, which was no better than the broader market in Taiwan (.TWII) which was 0.7% lower.
ENCOURAGEMENTS
Wisconsin Gov. Tony Evers said the new agreement would save Wisconsin taxpayers “a total of $ 2.77 billion compared to the previous contract, maintain accountability measures that require job creation to receive incentives, and protect hundreds of millions of dollars in local and state infrastructure investments in support of the project. “
According to Evers, under the agreement between the Wisconsin Economic Development Corporation and Foxconn, the Taiwanese company is eligible to receive up to $ 80 million in performance-based tax credits over six years if it reaches employment and capital investment targets. He stressed that the incentives are similar to those available to any company.
The state will reduce the tax credits authorized for the project to $ 80 million from $ 2.85 billion.
The original Wisconsin package also included local tax incentives and road and highway investments by state and local governments, bringing total taxpayer subsidies to more than $ 4 billion.
Foxconn said it has invested $ 900 million in Wisconsin since 2017, including several state-owned facilities.
According to records obtained by Wisconsin Public Radio, the state has already spent more than $ 200 million on road improvements, tax exemptions and grants to local governments for training and employment of workers.
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