Foxconn offers a $10 billion reality check

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Good afternoon,

The economic development community will be keeping a close eye on the Foxconn situation in Wisconsin.

Reuters reports the Chinese company is considering dropping or scaling back plans for a manufacturing site near Racine and mayshift the emphasis toward research and engineering.

Construction at the site is already underway amid speculation that the supplier to Apple and other companies will not invest $10 billion at the location. The company continues to insist it will employ 13,000 when all is said and done.

President Trump, and Wisconsin Gov. Scott Walker (no relation to the Delaware congressional candidate) were on hand for last summer ’s groundbreaking and praised the project as evidence of a return to manufacturing in the U.S.

Foxconn has been revising its plans and Reuters this week. Commentsfrom a company official who cited high labor costs as a factor in a decision to pivot from manufacturing LED screens for TVs and other uses.

Wisconsin, like Delaware, has a jobless rate of less than 4 percent

Legislative Republicans in the Badger State areblaming the new Democrat governor (and critic of the incentives) for the cutbacks. Most of the pushback against the incentives has come from the left, although llibertarians have also attacked the incentive package.

Foxconn ’s change of heart follows the defeat of Walker in his bid for another term. Legislative leaders in Wisconsin say the fuss over an estimated $3 billion to $4 billion in tax and other subsidies is overblown. They say the incentives will be reduced if job estimates don’t pan out.

The Foxconn deal had made many economic development officials and governmental units inside and outside Wisconsin more than a little nervous. The incentives were massive, even if the jobs and investment numbers are true.

By contrast, Delaware’s incentives to businesses expanding or relocating in the state are far more modest, even when the state’s tiny size is considered.

Delaware has become even more cautious, in losing upwards of $20 million in the ill-fated Fisker hybrid car project and after seeing Bloom Energy’s Newark site fall short onjob targets.

For the most part, Delaware’s incentives run a few million dollars at most and have been recouped fairly quickly through income tax revenues from new jobs.

Be careful out there and bundle up while dealing with this Wisconsin-like weather. Our newsletter returns on Friday. – Doug Rainey, chief content officer.

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