Foxconn Update

[jesmu84]

No, most Dems are Neoliberal capitalist hawks.  They're centrists at best. Globally, they're right wing.

SocDems are left of center.  Socialists are further, and then Communists are far left.

Yep. It's why the centrist Joe Biden is in discussions with GOP members to be in his cabinet.

Someone please again tell me the Democratic party is "far-left extremists"

[dgies9156]

But this is a dated view of Wisconsin really.  AMC and Allis-Chalmers left 30 years ago.  Briggs has been downsizing for years.  In fact, the stories pre-Covid were more about not finding enough skilled labor to fill the needs of the area.  The persistence of poverty, and low skilled labor, isn't going to be helped by putting a LCD factory in Mount Pleasant.

That being said, there is obviously room for subsidies no doubt.  But subsidies of that size aren't going to pay off.  That was the biggest issue - the size of the subsidy, not the subsidy itself.

Back to Foxconn.

Brother Fluff:

I hear you. I know that during the past few years, there has been such a need for employees (before the Pandemic) that some companies have taken to advertising on billboards for employees. But the fact remains that most Midwestern states have either been shrinking or growing at a pace well below national average. The lack of population growth in Illinois, for example, will mean surrendering at least one and maybe two Congressional seats. Economic growth will create opportunity to train folks in technical skills necessary for today's manufacturing. That, in turn, sets goals and hopefully will reduce poverty and increase population and economic growth in Southeast Wisconsin and Northeastern Illinois.

As to the size of the subsidy, Wisconsin wasn't competing in a vacuum. It was a binary decision between offering the most or not getting the deal. You can argue in hindsight that Wisconsin's contribution was way too much. But, something of this nature is worth taking a calculated risk.

I'd also note that the same comments were made in the early 1980s when Tennessee aggressively went after Nissan. The size of the support horrified the beleaguered Tennessee taxpayer. But the outcome was worth the investment. Not only did Nissan come, but so did suppliers who adapted to Nissan's kai ban, or just in time approach to managing inventory. Davidson and Rutherford Counties saw huge booms in supplier investment in light manufacturing, warehousing and support. The hope was and may still be in Wisconsin that the suppplier network follows Foxconn in.

Perhaps the real difference was that Nissan's investment and development happened under the administration of Gov. Lamar Alexander, who was a generally popular governor. By the time Mr. Alexander left office, the Nissan investment was up and running. By contrast, Wisconsin's deal was cut by a divided government led by an increasingly unpopular Gov. Scott Walker. When a state has major changes in an unstable and wildly conflicting government where transactions get called into question, you get Foxconn style results.

[The Hippie Satan of Hyperbole]

Wisconsin's offer was worth $4.1 billion.  Michigan's, widely reported as the next best, was $2.3 billion.

Tennessee's cumulative investment into Nissan, which is actually up and running and not a complete farce by the way, is about $600 million.

Foxconn was a dumb idea at the time and looks dumber in retrospect. 

[Pakuni]

dgies9156,

It's not just a matter of arguing it was a bad dead "in hindsight." Many, including many right-leaning, pro-business types, said this was a bad deal in foresight. Wisconsin plowed ahead with it anyhow.
The subsequent divided nature of state government has nothing to do with the failure here. The failure always was the likely result of this deal.  I admit, the speed and scale of the failure probably surprises even the harshest of critics, but this was a loser for Wisconsin from the get go.

[Uncle Rico]

Wisconsin's offer was worth $4.1 billion.  Michigan's, widely reported as the next best, was $2.3 billion.

Tennessee's cumulative investment into Nissan, which is actually up and running and not a complete farce by the way, is about $600 million.

Foxconn was a dumb idea at the time and looks dumber in retrospect.

This is it in a nutshell.  Couple that with Foxconn’s history of pulling similar stunts elsewhere and it was a foolish endeavor. 

[Hards Alumni]

Wisconsin's offer was worth $4.1 billion.  Michigan's, widely reported as the next best, was $2.3 billion.

Tennessee's cumulative investment into Nissan, which is actually up and running and not a complete farce by the way, is about $600 million.

Foxconn was a dumb idea at the time and looks dumber in retrospect.

$600 million in 1980 is about $1.9 billion in 2020 if we're being totally honest here. 

[The Hippie Satan of Hyperbole]

The $600 million is since 2000.  Most in the last decade.

[MU82]

dgies9156,

It's not just a matter of arguing it was a bad dead "in hindsight." Many, including many right-leaning, pro-business types, said this was a bad deal in foresight. Wisconsin plowed ahead with it anyhow.
The subsequent divided nature of state government has nothing to do with the failure here. The failure always was the likely result of this deal.  I admit, the speed and scale of the failure probably surprises even the harshest of critics, but this was a loser for Wisconsin from the get go.

You beat me to this, Pak.

Many people familiar with how Foxconn operates and with the terms of this deal were calling it a boondoggle from Day 1.

Add in the fact that the politicians at the top of the national and state tickets hyped it as the Deal of the Century, and were stumbling over each other to take credit -- I mean, just LOOK at that Trump transcript that was provided earlier -- and you have the scam it turned out to be.

[Uncle Rico]

You beat me to this, Pak.

Many people familiar with how Foxconn operates and with the terms of this deal were calling it a boondoggle from Day 1.

Add in the fact that the politicians at the top of the national and state tickets hyped it as the Deal of the Century, and were stumbling over each other to take credit -- I mean, just LOOK at that Trump transcript that was provided earlier -- and you have the scam it turned out to be.

You fell victim to one of the classic blunders — the most famous of which is, “Never get involved in a land war in Asia” — but only slightly less well-known is this: “Never go against a Sicilian when death is on the line“

Add “don’t do business deals with Donald J. Trump”

[jesmu84]

I don't know, so I'm asking the question sincerely...

Are state/local subsidies a good idea to encourage businesses to move to an area? Are there studies that show this is beneficial in the long term? Or is it merely a short term political stunt?

I ask because these often feel similar to asking citizens to pay for a football stadium.

[The Hippie Satan of Hyperbole]

I don't know, so I'm asking the question sincerely...

Are state/local subsidies a good idea to encourage businesses to move to an area? Are there studies that show this is beneficial in the long term? Or is it merely a short term political stunt?

I ask because these often feel similar to asking citizens to pay for a football stadium.

I think they can be good if they create quality jobs.  Football stadiums don't often do that.

[MU82]

Is it a proven company with a history of creating good-paying American jobs? Have they been good, long-term financial stewards of cities/states that have worked with them in the past or have they just been in short-term Cash Grab mode?

I think incentives can be useful but I would look at any from foreign and/or unproven companies very skeptically.

[Pakuni]

I don't know, so I'm asking the question sincerely...

Are state/local subsidies a good idea to encourage businesses to move to an area? Are there studies that show this is beneficial in the long term? Or is it merely a short term political stunt?

I ask because these often feel similar to asking citizens to pay for a football stadium.

There have been a ton of studies on the benefits of economic incentives and subsidies and I believe the findings have been a mixed bag. Some big successes, some huge flops. I think the more successful examples involve the incentives being highly targeted, linked directly to job creation and that bring the right kind of business to the right location (i.e. high-tech to an area that already has a high-tech base).

[dgies9156]

dgies9156,

It's not just a matter of arguing it was a bad dead "in hindsight." Many, including many right-leaning, pro-business types, said this was a bad deal in foresight. Wisconsin plowed ahead with it anyhow.
The subsequent divided nature of state government has nothing to do with the failure here. The failure always was the likely result of this deal.  I admit, the speed and scale of the failure probably surprises even the harshest of critics, but this was a loser for Wisconsin from the get go.

Brother Fluff:

1) I get it that many opposed, including conservative pundits. It was a lot of money and a high-risk strategy.

2) The bigger question is if Wisconsin passed on the Foxconn opportunity, what next? Something has to be done to create investment in a state that should have it. The old Wisconsin approach of, "of course, they're coming here. Why wouldn't they?" doesn't work anymore. Same for Illinois's naïve belief that, "oh we're Illinois. nobody is gong to leave..." We need a strategy with a defined outcome.

3) I never said Foxconn was the reason for divided government. What I said was that in Tennessee's case, during the formative nature of the Nissan investment, which was between 1979 and 1982, the government was stable and strongly in support of the investment the state made in Nissan. Governor Alexander was governor through the entire incubation and even the state's Democrats supported Nissan. By contrast, as Foxconn was in incubation, the administration in Wisconsin changed. Support for Foxconn was a flashpoint in the debate between the two parties. It didn't cause the fissure -- that occurred long ago -- but, as I note, it was a flashpoint.

4) On the question of state and local investment, unless the Congress approves and the President signs legislation banning it, which is extremely unlikely, state and local investment will be a fact of life in attracting business and industry. Look at what Illinois spent to attract Boeing and keep the soon to be failed Sears in state. I'd rather compete on the merits, but the world doesn't work that way.

It's easy to criticize, but what do we do to improve Wisconsin's and the Midwest's economic competitiveness. Apart, of course, from screwing labor.

[dgies9156]

This is Tennessee's argument for why they did. I'm sure it weighed heavily in Wisconsin too.

https://tnecd.com/wp-content/uploads/2019/05/Automotive-Research-Paper_01-2019-1.pdf

[MU Fan in Connecticut]

I don't know, so I'm asking the question sincerely...

Are state/local subsidies a good idea to encourage businesses to move to an area? Are there studies that show this is beneficial in the long term? Or is it merely a short term political stunt?

I ask because these often feel similar to asking citizens to pay for a football stadium.

Connecticut's previous Governor was a fan.  He said it was a necessary reality because other states did it.
ESPN, Pratt & Whitney, Sikorsky, Electric Boat, NBC Sports & WWE among others were beneficiaries of his First Five program.   Some smaller companies lesser known moved to Connecticut as a result.  They grants / no interest loans come with "guaranteed employment levels" or else there is a penalty. 

GE was offered one before they moved HQ to Boston (in hindsight they probably should have taken it).

[Pakuni]

Brother Fluff:

1) I get it that many opposed, including conservative pundits. It was a lot of money and a high-risk strategy.

2) The bigger question is if Wisconsin passed on the Foxconn opportunity, what next? Something has to be done to create investment in a state that should have it. The old Wisconsin approach of, "of course, they're coming here. Why wouldn't they?" doesn't work anymore. Same for Illinois's naïve belief that, "oh we're Illinois. nobody is gong to leave..." We need a strategy with a defined outcome.

3) I never said Foxconn was the reason for divided government. What I said was that in Tennessee's case, during the formative nature of the Nissan investment, which was between 1979 and 1982, the government was stable and strongly in support of the investment the state made in Nissan. Governor Alexander was governor through the entire incubation and even the state's Democrats supported Nissan. By contrast, as Foxconn was in incubation, the administration in Wisconsin changed. Support for Foxconn was a flashpoint in the debate between the two parties. It didn't cause the fissure -- that occurred long ago -- but, as I note, it was a flashpoint.

1. This seems to suggest that this could have paid off big-time for Wisconsin. I believe the evidence is otherwise. Even under the most favorable projections, this deal was going to cost taxpayers almost $175K per job ... and as much as $290K per job under more conservative estimates. That's eight times as much as other incentive deals the state had handed out in preceding years. And, again, under favorable projections, the state was projected to break even on the deal until 2043. This wasn't "Big risk, big reward." It was a giveaway.

2. Nobody is suggesting that states shouldn't use economic incentives to lure significant business investments. That's a bit of a straw man. We're just suggesting that the deal ought to be one that benefits both sides equally. The Foxconn deal does not, and was never going to even under the rosiest of outcomes.
As for Illinois, Boeing, Motorola, Sears, Caterpillar, Deere, Mitsubishi, Molson Coors, ConAgra and many other corporations would disagree with your suggestion that the state doesn't fork over economic incentives.

3. I believe you misinterpreted what I wrote, or I worded it poorly. I didn't suggest you blamed Foxconn for divided government, I critiqued your suggestion that Foxconn's failures are a result of divided government. I believe Foxconn would fail with a divided government or one-party rule. The post-deal politics aren't the problem. The deal is the problem.

[MU82]

Interesting related Washington Post article that includes Foxconn:

https://www.washingtonpost.com/business/2020/10/26/trump-carrier-manufacturing-jobs/?utm_campaign=wp_post_most&utm_medium=email&utm_source=newsletter&wpisrc=nl_most&carta-url=https%3A%2F%2Fs2.washingtonpost.com%2Fcar-ln-tr%2F2c57acf%2F5f96f8ca9d2fda0efb54a9fc%2F5f8d147cae7e8a56e5b732a4%2F40%2F71%2Fb3563592a6e9cbfdd26e210ad7669201

INDIANAPOLIS and MONTERREY, Mexico — The Carrier plant in Indianapolis is where outsourcing was supposed to have stopped.

Within days of winning the 2016 election, President-elect Donald Trump persuaded the company — in return for $7 million in Indiana state incentives and some presidential goodwill — to keep in the United States most of the 1,100 jobs it had planned to ship to Mexico.

“Companies are not going to leave the United States anymore without consequences. It’s not going to happen,” Trump told cheering Carrier employees when he visited the plant. “We’re not going to have it anymore.”

Trump advertised Carrier’s Dec. 1, 2016, announcement that it would preserve about 800 jobs in Indianapolis as a decisive break from decades of U.S. executives capitalizing on lower labor costs overseas at the expense of blue-collar workers at home.

Four years later, it has proved to be nothing of the sort.

This year alone, Indiana employers have sent more jobs to Mexico, China, India and other foreign countries than were saved at Carrier. Without headlines or presidential notice, at least 17 companies — names like Vibracoustic, Molnlycke Health Care, Allura, Altex, Stanley Black & Decker, Dometic, Johnson Controls and Horizon Terra — have closed plants or otherwise reduced employment in Indiana and moved jobs abroad, according to U.S. Department of Labor filings.

Throughout his presidency, Trump has had little success with his highly personalized attempts to bend corporate decision-making to his will and reverse a generation-long decline in U.S. factory jobs. He has publicly assailed companies such as General Motors and Harley-Davidson for moving manufacturing abroad without causing them to unwind their plans.

And he has claimed credit for investments that failed to live up to advance billing, including Foxconn’s $10 billion plan to create 13,000 jobs at a new electronics factory in Wisconsin. Just this month, state officials denied the Taiwanese company special tax credits, saying it had abandoned its original commitment, employed fewer than 520 people and spent just $300 million.

[Plaque Lives Matter!]

Interesting related Washington Post article that includes Foxconn:

https://www.washingtonpost.com/business/2020/10/26/trump-carrier-manufacturing-jobs/?utm_campaign=wp_post_most&utm_medium=email&utm_source=newsletter&wpisrc=nl_most&carta-url=https%3A%2F%2Fs2.washingtonpost.com%2Fcar-ln-tr%2F2c57acf%2F5f96f8ca9d2fda0efb54a9fc%2F5f8d147cae7e8a56e5b732a4%2F40%2F71%2Fb3563592a6e9cbfdd26e210ad7669201

INDIANAPOLIS and MONTERREY, Mexico — The Carrier plant in Indianapolis is where outsourcing was supposed to have stopped.

Within days of winning the 2016 election, President-elect Donald Trump persuaded the company — in return for $7 million in Indiana state incentives and some presidential goodwill — to keep in the United States most of the 1,100 jobs it had planned to ship to Mexico.

“Companies are not going to leave the United States anymore without consequences. It’s not going to happen,” Trump told cheering Carrier employees when he visited the plant. “We’re not going to have it anymore.”

Trump advertised Carrier’s Dec. 1, 2016, announcement that it would preserve about 800 jobs in Indianapolis as a decisive break from decades of U.S. executives capitalizing on lower labor costs overseas at the expense of blue-collar workers at home.

Four years later, it has proved to be nothing of the sort.

This year alone, Indiana employers have sent more jobs to Mexico, China, India and other foreign countries than were saved at Carrier. Without headlines or presidential notice, at least 17 companies — names like Vibracoustic, Molnlycke Health Care, Allura, Altex, Stanley Black & Decker, Dometic, Johnson Controls and Horizon Terra — have closed plants or otherwise reduced employment in Indiana and moved jobs abroad, according to U.S. Department of Labor filings.

Throughout his presidency, Trump has had little success with his highly personalized attempts to bend corporate decision-making to his will and reverse a generation-long decline in U.S. factory jobs. He has publicly assailed companies such as General Motors and Harley-Davidson for moving manufacturing abroad without causing them to unwind their plans.

And he has claimed credit for investments that failed to live up to advance billing, including Foxconn’s $10 billion plan to create 13,000 jobs at a new electronics factory in Wisconsin. Just this month, state officials denied the Taiwanese company special tax credits, saying it had abandoned its original commitment, employed fewer than 520 people and spent just $300 million.

Bringing these jobs back to America is just accelerating the move to automation. The capital requirements are high to do so but if they are being strong armed into repatrioting the production, those capital requirements and their long term ROI will be very attractive. Slapping a bandaid on a gaping wound.

[pbiflyer]

Yah capitalism!

Foxconn mostly abandons $10 billion Wisconsin project

https://www.google.com/amp/s/www.cnbc.com/amp/2021/04/21/foxconn-mostly-abandons-10-billion-wisconsin-project-touted-by-trump.html

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.



Who could have predicted????

[Uncle Rico]

Yah capitalism!

Foxconn mostly abandons $10 billion Wisconsin project

https://www.google.com/amp/s/www.cnbc.com/amp/2021/04/21/foxconn-mostly-abandons-10-billion-wisconsin-project-touted-by-trump.html

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.



Who could have predicted????

It’s a truly stunning development that the author of the “Art of the Deal” and a college dropout got duped in this deal.  I mean, utterly shocking. 

[mu_hilltopper]

Not sure which is more shocking .. that, or the likelihood that the GOP will pay zero political price for this gigantic failure.

Oh, it didn't work at all and was a spectacular mistake?  Ho hum.  Where's my Arby's.

[The Hippie Satan of Hyperbole]

Eh, I would argue that Walker lost the last election in part due to this failure. 

[JWags85]

Pretty sure a FoxConn exec just bought an expensive house in Elm Grove.   Wonder what that was about

[The Hippie Satan of Hyperbole]

Also reminds me of when Foxconn execs came to Madness, where they were recognized and donated a TV, AN ENTIRE TELEVISION!!!! ...and people were excited about it.