The state of Wisconsin has negotiated a drastically reduced agreement with Taiwanese contract maker Foxconn. The move, announced Tuesday by Democratic Gov. Tony Evers, is a rejection of an agreement negotiated four years earlier by Evers’ Republican predecessor Scott Walker.
Under the original agreement, Foxconn would spend as much as $ 10 billion on the construction of a modern factory for the production of large liquid crystal display panels. The deal was announced in 2017, and then-president Donald Trump traveled to Wisconsin for the pioneer in 2018, describing the new factory as “the eighth wonder of the world.” Foxconn was to receive $ 2.85 billion in state and local incentives under the original agreement.
The deal may have been smart politics for Foxconn in 2017. The company uses factories in other countries to put together consumer electronics products for Apple and other U.S. companies – products that are then often returned to the United States for sale. Trump’s protectionist tendencies, therefore, seemed like a serious threat. The announcement of plans to create thousands of jobs in a major battlefield state has given Trump something to boast about, and it may have helped Foxconn gain the favor of the new government.
But before long, it became clear that Foxconn was not going to hold the end of the bargain. The company was supposed to build a factory based on the LCD panel industry’s new Generation 10.5 standard, which uses enormous sheets of “mother glass” that is about 3 meters square. Each glass plate is usually cut into different displays for use in large televisions. To make such large panels requires a large factory – in the original agreement, Foxconn would hire up to 13,000 employees in Wisconsin by 2032.
The new agreement recognizes that Foxconn’s presence in Wisconsin will be much smaller. The deal calls for Foxconn to spend only $ 672 million on a factory that will employ only 1,454 people by 2025. And the state will offer Foxconn only $ 80 million in incentives – a thirty-fold reduction from the original incentive package.
Evers described the new package as a ‘better case for our state’. According to Reuters, Evers also “emphasized that the incentives are in line with those available to any company.”
According to The Wall Street Journal, “according to the old contract, Foxconn had to build a specific type of screen facility in Mount Pleasant, 25 miles south of Milwaukee.”
Now Foxconn will have the ability to adapt its plans to changing market conditions. Last month, Young Liu, chairman of Foxconn, suggested that the company could manufacture electric cars in Wisconsin, although no specific plans have been announced.