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Foxconn mostly abandons $10 billion Wisconsin project touted by Trump

Stock MarketsApr 20, 2021 11:55PM ET
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2/2 © Reuters. FILE PHOTO: Construction continues on the Foxconn manufacturing complex in Mt. Pleasant 2/2

By David Shepardson and Karen Pierog

WASHINGTON (Reuters) -Taiwan electronics manufacturer Foxconn is drastically scaling back a planned $10 billion factory in Wisconsin, confirming its retreat from a project that former U.S. President Donald Trump once called "the eighth wonder of the world."

Under a deal with the state of Wisconsin announced on Tuesday, Foxconn will reduce its planned investment to $672 million from $10 billion and cut the number of new jobs to 1,454 from 13,000.

The Foxconn-Wisconsin deal was first announced to great fanfare at the White House in July 2017, with Trump boasting of it as an example of how his "America first" agenda could revive U.S. tech manufacturing.

For Foxconn, the investment promise was an opportunity for its charismatic founder and then-chairman, Terry Gou, to build goodwill at a moment when Trump's trade policies threatened the company's cash cow: building Apple Inc (NASDAQ:AAPL)'s iPhones in China for export to America.

Foxconn, the world's largest contract manufacturer of electronic devices, 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 by a foreign-based company.

It was supposed to build cutting-edge flat-panel display screens for TVs and other devices and instantly establish Wisconsin as a destination for tech firms.

But industry executives, including some at Foxconn, were highly skeptical of the plan from the start, pointing out that none of the crucial suppliers needed for flat-panel display production were located anywhere near Wisconsin.

The plan faced local opposition too, with critics denouncing a taxpayer giveaway to a foreign company and provisions of the deal that granted extensive water rights and allowed for the acquisition and demolition of houses through 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 costs, according to village records obtained by Wisconsin Public Radio and analyzed by Wisconsin Watch.

Foxconn, formally called Hon Hai Precision Industry Co Ltd, said the new agreement gives it "flexibility to pursue business opportunities in response to changing global market conditions." The company said "original projections used during negotiations in 2017 have at this time changed due to unanticipated market fluctuations."

After abandoning its plans for advanced displays, Foxconn later said it would build smaller, earlier-generation displays in Wisconsin, but that plan 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 Chairman Liu Young-way told reporters in Taipei that the company currently makes servers, communications technology products and medical devices in Wisconsin, adding that electric vehicles (EVs) have a "promising future" there. He did not elaborate.

Liu had previously said the infrastructure was there in Wisconsin to make EVs because of its proximity to the traditional heartland of U.S. automaking, but the company could also could decide on Mexico.

Hon Hai shares fell as much as 1.6% on Wednesday morning, underperforming the broader Taiwan market which was down 0.7%.

INCENTIVES

Wisconsin Governor Tony Evers said the new agreement will save Wisconsin taxpayers "a total of $2.77 billion compared to the previous contract, maintain accountability measures requiring 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 under the deal negotiated between the Wisconsin Economic Development Corporation and Foxconn, the Taiwan company is eligible to receive up to $80 million in performance-based tax credits over six years if it meets employment and capital investment targets. 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 billion.

The original Wisconsin package also included local tax incentives and road and highway investments by state and local governments, which brought 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.

The state has already spent more than $200 million on road improvements, tax exemptions and grants to local governments for worker training and employment, according to the records obtained by Wisconsin Public Radio.

Foxconn mostly abandons $10 billion Wisconsin project touted by Trump
 

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Comments (9)
Brian Poland
Brian Poland Apr 21, 2021 2:47AM ET
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Yea your article is missing the facts and trys to shift blame on trump. What a joke
David David
David9 Apr 21, 2021 2:47AM ET
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What facts are missing... you need to give us reason and why, otherwise this is clearly Trump's fault...
Benjamin McIntire
Benjamin McIntire Apr 21, 2021 2:47AM ET
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Trump is a big ugly bag of hot air
divad mocihc
9divaD Apr 21, 2021 12:58AM ET
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Go anywhere but ComChi
David David
David9 Apr 21, 2021 12:58AM ET
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They tried to go out but will have to look back at China... China has by far the best infrastructure, the best low costs supply chain, the army of highly skilled workers... all candy eye for any capitalist company...
David David
David9 Apr 21, 2021 12:06AM ET
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I told you guys... it is not feasible to manufacture here.... we lack the supply chain, low tech skills and high wage costs... no way manufacturing is coming back here.... it is all about capitalism... companies need to produce at the lowest costs and sale worldwide at fast pace....
Hunt Richardson
Hunt Richardson Apr 21, 2021 12:06AM ET
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I'm afraid you're right, especially about the poor supply chain
Man Up
Man Up Apr 21, 2021 12:06AM ET
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dont u live in china david wong? u shouldnt be saying "here"
Red Riley
Red Riley Apr 20, 2021 11:15PM ET
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trump was correct and biden screwed it. thank you reuters for pointing it out.
David David
David9 Apr 20, 2021 11:15PM ET
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Trump was bad and he really really messed us up bad...
Jake Olivarez
Jake Olivarez Apr 20, 2021 11:11PM ET
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Thanks to joe biden
Darren Caris
Darren Caris Apr 20, 2021 11:05PM ET
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dirty title by the media arm of the Democratic party
David David
David9 Apr 20, 2021 11:05PM ET
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why is it dirty...I do not see any dirt in the title...
Mike Nawrocki
Mike Nawrocki Apr 20, 2021 11:04PM ET
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lockdowns will do that to you.......
Red Riley
Red Riley Apr 20, 2021 11:04PM ET
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thanks biden. and reuters for pointing it out
John Hat
John Hat Apr 20, 2021 11:02PM ET
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With Beijing Biden in office, I would have cut back on the investment too.
Benjamin McIntire
Benjamin McIntire Apr 20, 2021 11:02PM ET
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Oh wow u got him good!!! Like first grade playground all over again for you.
 
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