Two years after Trump put a shovel in the ground, Wisconsin is still waiting on Foxconn to come through

Ricardo Torres, Milwaukee Journal Sentinel
·9 min read
President Donald Trump (second from left) is joined by Gov. Scott Walker (left), Foxconn Chairman Terry Gou and House Speaker Paul Ryan (right) June 28, 2018, during the ceremonial groundbreaking for Foxconn's factory in Mount Pleasant.
President Donald Trump (second from left) is joined by Gov. Scott Walker (left), Foxconn Chairman Terry Gou and House Speaker Paul Ryan (right) June 28, 2018, during the ceremonial groundbreaking for Foxconn's factory in Mount Pleasant.

The Foxconn Technology Group project in Mount Pleasant was billed as an economic game changer for Wisconsin.

In 2018, President Donald Trump came to the village and, alongside then-Gov. Scott Walker and Foxconn founder Terry Gou, literally put a golden shovel in the ground and declared the development would become “the eighth wonder of the world.”

Two years later, the project has been dramatically scaled back and has failed to hire enough people to win even the first promised job-creation payments from the state.

Related video: Foxconn changing Wisconsin plans

And, one week from the Nov. 3 election, one of Trump's signature promises in Wisconsin – part of a pledge to create a boon of manufacturing jobs in the state – is a long way from being fulfilled.

As originally described in 2017, Foxconn was to build a Generation 10.5 facility that would manufacture large LCD screens. The project was to be an investment of up to $10 billion that would deliver up to 13,000 jobs.

In return, the GOP-controlled Legislature approved up to $2.85 billion in subsidies if Foxconn met various benchmarks for hiring and capital investment. The company also received a $150 million break in sales taxes, bringing the total state package to $3 billion.

And with incentives from local governments, Foxconn could receive as much as $4 billion in all.

Since the groundbreaking, the project has been downscaled to a Generation 6 factory, which involves smaller, less-advanced screens for smart phones, tablets and TVs.

And though construction work has continued, Joel Brennan, secretary of the state Department of Administration, said the state does not have a clear understanding of what is planned for the Mount Pleasant site.

“The ongoing challenge, I think, has been for the state to understand and for Foxconn to be able to articulate exactly what they’re going to be doing in terms of their project,” Brennan said. “There have been challenges to them from a business standpoint, that’s ever evolving, and the marketplace is changing, and the last seven months have certainly have had a material impact on the economy in southeastern Wisconsin. ... So all of those things have been part of the conversation.

"But the bottom line of the conversation is that the project that was outlined and was applied for (and) on which the legislation was based three years ago, is no longer the project that they’re engaged in.”

Project tied to Trump

From the start, the Foxconn project has been tied to the White House.

According to the lore, Trump focused on the Kenosha area after seeing the vacant Chrysler plant while flying over the area by helicopter when he visited Snap-On Tools in Kenosha in 2017, soon after taking office. He encouraged Foxconn to look at the area for a planned massive project in the United States.

The project, which other states including Michigan sought, was billed as bringing cutting-edge manufacturing jobs to Wisconsin — the sort that would lead to spin-off businesses and transform the state's economy.

Trump's then-Chief of Staff Reince Priebus, who went to high school in Kenosha, suggested Racine County could be home to the project.

At various points since the announcement, Trump has personally intervened.

In February 2019, during concerns about the future of the project and at a time when Foxconn announced it would scale back to a Gen 6 facility, Trump said he had talked to Gou and was assured the project would move forward.

In December 2019, after Gou visited the White House for a holiday reception, Trump said he had told Gou to “bring more jobs to Wisconsin.”

This month, the Wisconsin Economic Development Corp. found not enough jobs had been created – a position Foxconn disputes – so, for the second year, no state payments would be issued.

The Trump administration remains optimistic about the development, the president's top trade adviser, Peter Navarro, told the Milwaukee Journal Sentinel.

“They quietly are building out their facility and that looks like it has shown up in some of the construction employment data for the state of Wisconsin,” Navarro said. “More importantly, they continue to expand their vision for the site, and strategically that's going to mean a stronger, more resilient business model once they get built out.”

Yet when Trump and Vice President Mike Pence have made campaign stops this year in Wisconsin, a state they won in 2016 by less than 23,000 votes, until Saturday's visit by Trump to Janesville, there had been no mention of Foxconn.

Renegotiating the contract

The state and Foxconn have been meeting to renegotiate the terms of the original agreement to reflect the project is now a Gen 6 plant and fewer jobs will be involved.

WEDC Secretary and CEO Missy Hughes said that is frequently done with companies around the state to reflect changes in projects.

To qualify for job creation subsidies under the original deal, Foxconn needed to have hired 520 full-time employees by the end of 2019. WEDC said the company only hired 281 people into that would qualify.

Foxconn said it was surprised by the announcement and maintained it has hired more than 520 employees and invested more than $750 million in the campus.

"Foxconn came to the table with WEDC officials in good faith to discuss new terms of agreement which have consequential impacts to Racine County and the Village of Mount Pleasant, third party partners in this development project," the company said in a statement. "WEDC’s determination of ineligibility during ongoing discussion is a disappointment and a surprise that threatens good faith negotiations.”

Hughes told the Journal Sentinel she is confident there is a path forward toward a new agreement, but said there had not been "a clear articulation of what Foxconn’s project is and how many jobs they will be employing and how much capital expenditures they will be investing in.”

“And without that information," she said, "it’s hard for WEDC to use our tools to be able to support (Foxconn).”

On November 10, 2017, Gov. Scott Walker and Foxconn Chairman Terry Gou signed the contract between the State of Wisconsin and Foxconn at SC Johnson in Racine.  Among other state, local and national government and Foxconn officials there, were Fisk Johnson, Chairman and CEO of SC Johnson who hosted the event, Speaker of the House, congressman Paul Ryan, Gov. Scott Walker, and Chairman of Foxconn Terry Gou. Terry Gou, Chairman of Foxconn (left) gets a custom Wisconsin auto license plate presented to him by Gov. Scott Walker.
On November 10, 2017, Gov. Scott Walker and Foxconn Chairman Terry Gou signed the contract between the State of Wisconsin and Foxconn at SC Johnson in Racine. Among other state, local and national government and Foxconn officials there, were Fisk Johnson, Chairman and CEO of SC Johnson who hosted the event, Speaker of the House, congressman Paul Ryan, Gov. Scott Walker, and Chairman of Foxconn Terry Gou. Terry Gou, Chairman of Foxconn (left) gets a custom Wisconsin auto license plate presented to him by Gov. Scott Walker.

Work still goes on

For the most part, what has been constructed at Foxconn over the past two years has been the campus itself – several buildings, including one the size of five Walmart stores; a network of roads; a power plant and an eye-catching 100-foot tall glass-domed structure.

According to local officials, Foxconn has become the largest property taxpayer in Mount Pleasant, with its facility far surpassing the tax valuation of the homeowners that occupied the property before the company's arrival.

After the news of the WEDC decision not to award job-creation subsidies to Foxconn, Racine County Executive Jonathan Delagrave, Mount Pleasant Village President Dave DeGroot and Racine County Economic Development issued a joint statement saying Foxconn has invested more than $500 million “in our community.”

“(Foxconn) made $8.4 million in tax payments at the end of 2019 and we expect those payments to be even greater in 2020,” according to the statement.

Work continues on the High-Performance Computing Data Center (HPCDC) Globe at the Foxconn Technology facility in Mount Pleasant on Tuesday, Oct. 6, 2020. The globe will house the Network Operations Center where Foxconn employees can “control the computing power” of the company’s technologies such as the industrial 5G network, cloud computing and industrial artificial intelligence. According to Foxconn, the company has invested about $750 million in Wisconsin that includes salaries, capital expenditures and other expenses.  - Mike De Sisti / Milwaukee Journal Sentinel
Work continues on the High-Performance Computing Data Center (HPCDC) Globe at the Foxconn Technology facility in Mount Pleasant on Tuesday, Oct. 6, 2020. The globe will house the Network Operations Center where Foxconn employees can “control the computing power” of the company’s technologies such as the industrial 5G network, cloud computing and industrial artificial intelligence. According to Foxconn, the company has invested about $750 million in Wisconsin that includes salaries, capital expenditures and other expenses. - Mike De Sisti / Milwaukee Journal Sentinel

Foxconn has continued to work on what it has termed its “High-Performance Computing Data Center” – the giant dome. The building is to house operations of Foxconn Industrial Internet, or Fii, a subsidiary.

Brennan acknowledged the work being done by Fii, but noted it is not included in the 2017 subsidy agreement.

“The work that is going on with servers, the other work that they’re doing through Fii, I think there’s a lot of excitement, lots of opportunity there," Brennan said. "But it’s materially different from where we started three years ago.”

That's a "concern" that's been raised with Foxconn, according to Hughes.

“As we continue conversations with Foxconn, we want to be sure that any entities that are investing in the campus are part of a future of some kind of agreement, if we’re able to develop one with Foxconn,” she said.

Production of screens has not begun, but during the coronavirus pandemic, the Foxconn facility has produced millions of masks and donated them to the state.

State and Foxconn officials have also confirmed the production of ventilators, through a partnership with Medtronic, and the company is also producing computer servers that plan to be housed in its modular data center, dubbed FoxMOD.

The entrance to Foxconn's advanced manufacturing facility with a Japanese garden in front. The photo was part of a presentation given to the Mount Pleasant Village Board.
The entrance to Foxconn's advanced manufacturing facility with a Japanese garden in front. The photo was part of a presentation given to the Mount Pleasant Village Board.

Deal with UW and 'innovation centers'

From the beginning, Foxconn has worked to create a presence in other parts of Wisconsin.

It signed an $100 million agreement with the University of Wisconsin-Madison and several local agreements to build "innovation centers" in Racine, Green Bay and Eau Claire.

However outside of signing the agreements, not much else has been done.

The $100 million agreement with UW-Madison is to create the Foxconn Institute for Research in Science and Technology and a new interdisciplinary program in the College of Engineering.

The company has given $700,000 to UW-Madison for a “sponsored research project in the College of Engineering.”

It's unclear if this is connected to the $100 million. It may simply be sponsored research of the sort UW-Madison often does with companies.

UW spokesman John Lucas said the university "continues to maintain open lines of communication with Foxconn representatives."

Foxconn Technology Group announced Monday it will invest $100 million in the University of Wisconsin-Madison. Foxconn Chairman and founder Terry Gou was on campus to make the announcement at the Wisconsin Institute for Discovery alongside UW-Madison Chancellor Rebecca Blank, who committed to raising another $100 million in private donations.
Foxconn Technology Group announced Monday it will invest $100 million in the University of Wisconsin-Madison. Foxconn Chairman and founder Terry Gou was on campus to make the announcement at the Wisconsin Institute for Discovery alongside UW-Madison Chancellor Rebecca Blank, who committed to raising another $100 million in private donations.

Likewise, there has been little sign of activity at the various "innovation centers."

In downtown Racine, where Foxconn has purchased two buildings, officials are counseling patience.

Racine Mayor Cory Mason said Foxconn officials more than a year ago told him the company was going to focus more on the campus in Mount Pleasant.

“They have done physical work on the buildings that they own in our downtown to build out the space to make it available for work,” Mason said. “But there’s not been much activity when it comes to smart city work in either of those buildings, but that’s consistent with what they told us a year ago.”

The coronavirus pandemic has impacted businesses across the world and Foxconn is not immune to the economic damage, said Delagrave, the county executive.

“As we all adjust to new realities and confront a long recovery from COVID-19, Foxconn will be a big part of Racine County’s future and we remain focused on positioning our businesses and residents for success,” he said.

Patrick Marley and Molly Beck of the Milwaukee Journal Sentinel staff contributed to this report.

This article originally appeared on Milwaukee Journal Sentinel: Foxconn construction continues, but the company is silent about hiring