Kathleen Gallagher: Intel chose Ohio for chip plant over Wisconsin's Foxconn site for good reasons - that state made a far better pitch.

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The big question: Why did Intel choose to locate its $20 billion chip-making hub in Ohio rather than the Foxconn site in southeastern Wisconsin?

This much is clear: Ohio presented Intel with a great location, available land, and a high-level political willingness to build out the ecosystem with incentives.

Intel's new plant -- labeled as key to strengthening America's role in the global market and protecting the country from supply disruptions -- was celebrated Tuesday's night by President Joe Biden in the State of the Union address.

Ohio made a strong, well-organized and polished effort to land the factory.

The New Albany International Business Park’s website spells out many advantages: An advanced multiple-path fiber optics network; dual feed electric capacity; robust water and sewer capacity; and leisure trails, green initiatives and other live-work-play amenities in a community with excellent schools, a median age of 33.3, and college graduates comprising nearly 80% of its population.

The park had 1,000 acres readily available for Intel and room for expansion. And Ohio very quickly during its state budgeting process expanded its jobs tax credits from 15 to 30 years to help build a $2 billion incentive package for the chip maker.

How was Wisconsin pitch?

After the announcement that Ohio had landed the plant, Wisconsin officials said they made a strong pitch, and that the effort would pay off in the future.

So how did Wisconsin and regional officials' pitch for the mostly empty and unused Foxconn site - hundreds of acres, $1.4 billion spent by state, local and federal governments and utilities for infrastructure - stack up?

In terms of location, the Foxconn site -- its Wisconn Valley name appears to finally be disappearing -- is close to international airports and large tech work forces in Milwaukee and Chicago. Surrounding communities in southeastern Wisconsin and northern Illinois offer affordable and upscale neighborhoods with access to many desirable shopping and entertainment venues.

But Racine County’s K-12 education system ranks poorly, the park is in an EPA non-attainment zone, and political unrest associated with the Kyle Rittenhouse shooting and acquittal probably influenced Intel’s decision.

In terms of land, Intel was very clear about its site criteria: At least 1,000 contiguous acres, with potential for at least 1,000 more for expansion.

Local economic development officials have said they offered Intel 871 acres -- 400 owned privately, and 471 owned by the Village of Mount Pleasant.

Pumpkin farm owners hold out

Intel put earnest money down in fall to purchase the 400 acres, home to the Creuziger family’s Land of the Giants pumpkin farm. The Creuzigers held out against Mount Pleasant’s attempts to buy their farm through eminent domain, and have sued the village.

The only way for Intel to get land contiguous to the pumpkin farm was to buy from the village, a transaction subject to Foxconn’s development agreement with the village and Racine County.

The Foxconn site is divided into three sections: Area 1, which Foxconn occupies; and Areas 2 and 3. Under the agreement, Foxconn has a ten-year right of first refusal on the land in Areas 2 and 3.

The bottom line: All Intel or any other potential buyer of the “available” acreage can get free and clear is the 400 acres. Everything else needs Foxconn’s approval. At what price?

In terms of building out an ecosystem with incentives, the state’s proposal appears to have been competitive.

In a perfect world where the Governor, legislature and local officials were cooperating, Wisconsin would have offered Intel, a leading maker of high-demand computer chips, at least the $2.85 billion it offered Foxconn, a low margin contract manufacturer that needs a large customer to fulfill its commitments to the park.

Incentive package: truth or politics?

BizTimes Milwaukee editor Andrew Weiland’s recent well-thought-out calculation suggests Wisconsin offered Intel a respectable package worth about $2.2 billion.

Yet Jenny Trick, executive director of the Racine County Economic Development Corp. and Claude Lois, Mount Pleasant project manager for the tax incremental financing district told the Racine Journal Times “there was no discussion of multi-billion-dollar incentive packages specific to Intel.”

But is that truth or politics?

It’s difficult to distinguish what’s politics. Trick told the Journal Times this all started when a “private site selector contacted Wisconsin business leaders in April.” Nope. Two Wisconsin business executives met with Intel in early April and learned that site selectors recommended staying away because of political bickering — which organizations like Empower Wisconsin are unhelpfully keeping going. The executives convinced Intel to reconsider.

Unfortunately, it was for naught. Or maybe to help create a stalking horse for Ohio.

Celebration of second place

Oddly, officials from the Governor’s office and the Wisconsin Economic Development Corp. have been remarkably quiet, while southeastern Wisconsin officials have been publicly celebrating being Intel’s second choice.

There’s second by an inch and second by a mile.

“I think once the word gets out that we were an also-ran, we’re going to get other people to say, ‘What did Intel see there that we’re not seeing?’” Tim Sheehy, president of the Milwaukee Metropolitan Association of Commerce, said in Weiland’s BizTimes story.

What Sheehy and others aren’t seeing is that Racine County and the Village of Mount Pleasant are left between a rock and a hard place.

Foxconn lacks the financial ability to develop the park to its full potential and the county and village are restrained by Foxconn from moving forward aggressively to develop it on their own.

The truth is attracting another chip maker will require a very high level of collaboration between government, business and academia. Something that clearly hasn’t been happening. Next time — if there is a next time — why not pull in UW-Madison’s computer science researchers who have deep and extensive ties with Intel rather than letting them learn about the effort from post-mortems in the news?

The Foxconn site isn’t going to attract other tech companies because it’s Intel’s also-ran. In the end, high-tech companies are more about people than real estate — good real estate is everywhere in the U.S.

The lesson to be learned here is that high-tech companies want high-tech communities that are young and multi-cultural like the one Ohio sold to Intel. Wisconsin boasts it ranks 8th in the country for manufacturing activity, but it’s 35th for manufacturing payroll. Translation: Wisconsin is a low-tech manufacturing state.

It’s time to put the political bickering behind us. Government officials must collaborate with each other and seek insight from the state’s tech-oriented businesspeople and well-connected tech researchers to move forward.

We can’t push what we have onto customers like Intel; we need to put ourselves in their shoes and ask what they want.

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.

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This article originally appeared on Milwaukee Journal Sentinel: Kathleen Gallagher: Why Intel chose Ohio over Wisconsin for chip plant

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