Kathleen Gallagher: Foxconn, Microsoft developments encouraging, but remain shrouded in secrecy. Here are challenges facing Mount Pleasant village leaders.
Five years after President Donald Trump, Gov. Scott Walker and Foxconn CEO Terry Gou dug their golden shovels into Village of Mount Pleasant dirt, the $1.4 billion Foxconn-controlled, industrial park finally may have a second tenant.
Pending local approvals, Microsoft Corp. has agreed to buy 315 acres in the park to build a $1 billion data center campus.
I’m not quibbling with the good news: A major tech company chose Wisconsin as a site in its data center network that powers everything from industrial processes and office communications to online gaming and social media posts.
But it’s been five long years of a smaller-than-promised Foxconn and no other tenants. Microsoft’s data center would occupy just 10% of the park and probably won’t create even 200 jobs.
And the timing here is suspect. Mount Pleasant announced the not-yet-finalized Microsoft news a week before David DeGroot -- the village president who has failed to stand up to Foxconn and operated under a veil of secrecy -- faces his first-ever challenger.
Foxconn developments rolled out before heated election
It was -- unbeknownst to Microsoft (more on that later) -- one of three magical revelations delivered ahead of this contentious April 4 village president election. The others are: A Foxconn/WE Energies partnership to install solar panels in the park; and Chairman Young Lui’s suggestion during a March 15 conference call that Foxconn plans to test and verify electric vehicle battery cells in Wisconsin.
DeGroot’s challenger is Kelly Gallaher, a long-time Mount Pleasant resident and spokesperson for A Better Mt. Pleasant. Gallaher was involved in the successful petition drive in 2022 to stop DeGroot and his fellow trustees from lengthening their terms to three years from two.
When Gallaher and three affiliated trustee candidates decided to run against him, DeGroot’s campaign manager filed more than 150 complaints and challenges to their paperwork. And in late February, DeGroot accused Gallaher of tax evasion related to a business she says she doesn’t own. Gallaher’s lawyer sent DeGroot a cease and desist notice, which she says his campaign has ignored.
Those kinds of tactics go with the territory, I suppose. But here’s the thing about DeGroot: He operates cloaked in secrecy.
Mount Pleasant has had no referenda about Foxconn and few public meetings. Claude Lois -- the outside consultant and Foxconn project manager with strong connections to Wisconsin State Assembly Speaker Robin Vos -- has been flagged for failing to produce any summaries or documentation of his work. The village pays $32,000 a month for Lois’ services.
Perhaps most bizarre, when DeGroot announced a candidate “meet and greet,” he refused to make the location public. Potential attendees were instructed to message his campaign’s Facebook page for details.
Gallaher -- who agreed to a public forum with Racine County Eye -- says she’ll bring more transparency and accountability. She promises to terminate Lois’ job within 30 days of being elected, develop a Foxconn contingency plan, and revisit its contract with the village and county. “You will know what Foxconn is doing, and what we are doing about it!” her campaign’s Facebook page says.
Microsoft move helps We Energies, won't produce many jobs
Microsoft’s timing decision wasn’t influenced by elections, but by customer demand, a need for more data capacity and a desire to move quickly to deliver on that need, a high-level Microsoft executive told me. As plans proceed, the company will work with whomever is elected, the executive said.
Nice to have the politics taken out of the equation, isn’t it?
Microsoft’s decision to locate one of its more than 200 global data centers in the park certainly helps WE Energies, which sunk $140 million into a substation and other infrastructure there that’s been extremely under-used. But in terms of jobs, consider that the $1 billion, 5-building DeKalb Data Center Meta (formerly named Facebook) is building on 505 acres west of Chicago. It will create just 200 jobs, according to the Chicago Tribune.
Wisconsin in 2021 re-negotiated its tax incentive contract with Foxconn. But Mount Pleasant and Racine County still have their development agreement with the Taiwanese electronics manufacturer.
Their only protection against past and future broken promises, the agreement is a formidable, well-drafted document that looms over the situation at the park. And DeGroot has spent the last five years ignoring it.
The locals and the state have fulfilled their promises -- to the tune of about $1.4 billion. But Foxconn didn’t build a $10 billion LCD plant or hire 13,000 workers. It employs about 1,000 in Wisconsin, some of whom in February filed a class action lawsuit alleging Foxconn regularly shaved time off their weekly timesheets and hasn’t paid them earned overtime.
And DeGroot’s campaign is bragging about making Foxconn the biggest taxpayer in Racine County?
Mount Pleasant’s village president is going to have to make many difficult decisions, including whether to:
Ask Foxconn (which has never paid more than $10 million in taxes) for assurances it can make its stepped-up 2023 payment of $28 to $30 million that’s due in January 2024 and necessary to cover the locals’ Foxconn-inspired debt. With so little activity in the park, where will Foxconn get the money?
Pay Foxconn a conditional grant of $10 million starting in 2024 and for the next nine years, per the village and Racine County’s agreement with Foxconn
Sue Foxconn for breach of contract. By not claiming breach of contract when it’s apparent, DeGroot is weakening the village’s legal position in the event Foxconn fails to make its payments.
DeGroot has been a vassal to the establishment group that secretly concocted the Foxconn deal and remains committed to the illusion that it’s good for the region. We all know the truth is quite different. What are DeGroot and his co-conspirators protecting: The interests of the people or their own political skin?
It’s difficult to believe the Foxconn hanger-oners have the skills, imagination, and honesty to fix the mess they created. But that's a matter for Mount Pleasant voters to decide.
Kathleen Gallagher was a business reporter at the Milwaukee Journal Sentinel and the Milwaukee Sentinel for 23 years. She was one of two reporters on the team that won a 2011 Pulitzer Prize for the One in a Billion series. Gallagher is now executive director of 5 Lakes Institute, a nonprofit working to grow the Great Lakes region's high technology entrepreneurial economy and culture. She can be reached at Kathleen@5lakesinstitute.org.
This article originally appeared on Milwaukee Journal Sentinel: Kathleen Gallagher: Mount Pleasant politics cloud Foxconn announcements
