When former Wisconsin Gov. Scott Walker (R) pitched his state on a massive tax incentive prize to lure the Chinese firm Foxconn to the state, both company and governor pledged the state would reap thousands and thousands of permanent manufacturing jobs from the giveaway.
Standing next to President Donald Trump at the White House in July 2017 to announce the deal, Walker put the number at “up to 13,000” jobs – even though the deal only guaranteed about a quarter of that figure.
The firm has struggled to deliver on its hiring commitments in Wisconsin ever since. But now, Foxconn execs are admitting that they won’t even build a factory at all. However many jobs the giant corporate campus ultimately creates will now be in research and development or low-skill production assembly of parts manufactured abroad.
“In Wisconsin we’re not building a factory,” Foxconn’s Louis Woo told NBC News. “You can’t use a factory to view our Wisconsin investment.”
Instead of a factory, Woo urged people to think of this as a “technology hub.” The phrase conjures an image of people with multiple post-secondary degrees brainstorming apps over the break room Foosball table – a stark change from the upwardly-mobile factory floor workers who were supposed to be hired in droves to build LCD panel displays there.
Manufacturing is a magic word in U.S. politics, hearkening back to the same simpler times Trump’s campaign slogan invokes, before globalization of trade had permanently undercut the U.S. labor market and made the combination of healthy pay and workplace dignity long associated with the sector an impossibility for most workers here. That political magic makes Foxconn’s latter-day announcement that their factory isn’t really a factory – that you never should have viewed it that way, even – potentially poisonous for the deal’s elected boosters.
Even the white-collar tech jobs that Foxconn now says are coming to Wisconsin are far scantier in number than promised. Though it had previously told Wisconsinites it planned to hire more than 5,000 locals by the end of 2020, NBC’s report has a company source slashing that figure to just 1,000 new hires over the next 23 months.
The Foxconn deal had already gone sour prior to this last shoe dropping. Whatever initial excitement the 2017 announcement might have generated had curdled so thoroughly a year later that the governor who’d pulled the strings got chased out of office by voters.
Though Walker may be gone, his state will be stuck with the Foxconn deal for at least another quarter-century. State fiscal analysts initially projected that Wisconsin would recoup the $3 billion initial cost of the incentives sometime in the 2042-2043 fiscal year. The local municipalities that showered another three-quarters of a billion on Foxconn make similar projections for their own books.
But even that generation-long timeline for digging out of Walker’s giveaways might now be too optimistic. In truth, it always was – as both academic economists and industry experts on the products Foxconn was promising to build in Wisconsin had been warning Walker and Trump from the get-go.
The most glaring flaw in Foxconn’s promises is the very thing that made its factory project seem like such a valuable chestnut to Walker, Trump, and other supportive politicians. The high-paying manufacturing gigs that would be so good for Midwesterners would be a disaster for Foxconn. Economists had long warned that the firm’s reliance on cheap labor in its business model meant it would struggle to fulfill even the lower jobs figure it actually promised, let alone the 13,000 number Walker offered at the White House. The leading experts on the kind of manufacturing Foxconn was promising to bring could have told Walker the deal was a sham for more industry-specific reasons, too, had he bothered to ask them. Instead, according to Belt Magazine’s post-mortem on his negotiating approach, he simply accepted the figures Foxconn provided based on studies they’d commissioned.
Perhaps rust belt politicians can be forgiven for buying into such too-good-to-be-true promises from foreign manufacturers. And, hey, tax incentives can always be plucked back if the other side doesn’t do what it promised, right?
Not necessarily. First, roughly half the Wisconsin taxpayer money is guaranteed whether or not Foxconn ever hires anyone. And second, even if the company’s dramatic re-imagining of the project does shrink the total that taxpayers will pay, it will likely prolong rather than shrink the 25-year optimistic timeline for recouping the state’s expenses here, as the Milwaukee Independent explained on the one-year anniversary of the deal’s formal passage through the state legislature.
The highest-paying jobs at Foxconn’s ritzy not-factory will go to people with multiple degrees. The only people doing anything remotely akin to the sweaty shop-floor work Walker and Trump promised will be on an assembly line, screwing together parts someone else made several international borders away.
The manufacturing dream will probably never die, potent as its cultural cache and microeconomic potential are for U.S. workers and voters. But if it’s ever going to truly live again – as a widespread opportunity to make things for good pay, rather than the narrowly-targeted publicly-subsidized assembling of somebody else’s makings so the corporate parent can call it an American product – states and politicians will have to abandon the competitive race-to-the-bottom mentality toward corporate subsidies and start collectively demanding better terms from the corporate titans they entertain.