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Wisconsin State Legislature Signs Off On $3 Billion Foxconn Incentive Package (venturebeat.com)
On Thursday, legislators in the state of Wisconsin approved a nearly $3 billion incentive package for the Taiwanese electronics manufacturer, Foxconn, in exchange for it investing approximately $10 billion in the state and building a factory that could employ up to 13,000 workers. The legislation is now headed to Republican Governor Scott Walker's desk, where he is expected to give it his seal of approval. VentureBeat reports: The bill passed the Wisconsin State Assembly on a 64-31 vote, after previously passing the state senate on a 20-13 vote. The move signals the start of what will likely be an important experiment in just how much generous incentive packages can do to help create new tech hubs. Governor Walker has said that the Foxconn factory â" the company's first in the United States -- will help transform Wisconsin into "Wisconn Valley." While on a trade mission this week to Japan and South Korea, Governor Walker told reporters that many of the companies he met with on the trip were already "every interested in how they could come to Wisconsin and partner for that new ecosystem." However, there are still a few details that need to be finalized before Foxconn can start breaking ground -- most notably, where the company will build the factory. The factory was set to be built in either Kenosha or Racine County, Wisconsin, before Kenosha dropped out of the running earlier this week.
...now it's 13K. the trend is not your friend.
Foxconn is a really great place to work, so I hear.
Weaselmancer
rediculous.
Scott Walker doesn't want pay teachers a living wage vs. subsidizing a company that "may" create 13,000 jobs. Each job better pay about $250K for this to even remotely make sense. Who voted for this dick?
Wisconsin has a worse debt-to-GDP ratio than California.
I get the Walker Trump non-union nature of the deal means we have to discuss politics... but is this a trend or will it become a trend? If all the major suppliers of electrical components and manufacturing equipment/maintenance of that equipment have a "working" location in the central US does that mean that a lot of other factories like this become viable in the US? I wonder about how this is related to robotics and advanced manufacturing and if the third world cheap labor advantage is rapidly being plowed under by the first world precision and automation and support functions? I don't see a reason to doubt Foxconns word on this, they've seen this trend if needing higher skilled manufacturers and locations with stable power grids, advanced support functions (robotics experts and engineers), and possibly distribution advantages for awhile and Some deals didn't work out. As far as "this is the tax hating sellout turning the state over to Foxconn". Those jobs are needed. A lot of secondary effects, like a huge number of landowners who just became wealthy, are occurring and will continue to occur.
This is for building a factory, and much like pipeline deals, after it's built the number of jobs will be much less. You can't manufacture and assemble in the USA without it being automated, these are mostly robot jobs. I doubt they will reach thier full subsidy long term, it's more likely they will employ management, a handful of engineers and some machine/assembly robot techs and that's it. The manufacturing jobs aren't coming back.
many of the companies he met with on the trip were already "every interested in how they could come to Wisconsin and partner for that new ecosystem."
many of the companies he met with on the trip were already "very interested in how they could come to Wisconsin and be given free money."
FTFHim
Wisconsin lawmakers sue, claiming Foxconn did not hold up incentive package deal from 3 yeas ago...
...investing approximately $10 billion in the state and building a factory that could employ up to 13,000 workers. ...
What is the timeline for the $10 billion to be invested? Surely, a sum that large has some planning behind it. How soon will it be before the entire $10 billion is invested? Also, what is the timeline for the ramp-up to 13,000 new employees?
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https://www.bloomberg.com/view...
...Let's clarify this: Foxconn promised to invest $10 billion and create 3,000 jobs initially, but those numbers are squishy. As Bloomberg Businessweek observed:
Just this past year, Foxconn is reported to have pledged investments of $5 billion in India; $3.65 billion in Kunshan, China; and $8.8 billion in Guangzhou. It's too early to know if those sums will ever be spent, but including Wisconsin, the tally now stands at $27.5 billion of commitments. That's more than Hon Hai (the company's publicly traded flagship) has spent in the last 23 years.
Those promises are mostly that and little more. At best, this is a wildly optimistic hope for new jobs in an era when U.S. manufacturing employment been in long-term decline. At worse, it is a giant grift, a taxpayer-funded photo op that will yield little in terms of job gains, other than a few hundred heavily subsidized positions....
Let's assume, for the moment, that the politicians' estimators are correct, and that:
- 13,000 workers employed for 1 year to build the factory
- 3,000 workers employed for 15 years working at the factory
- 22,000 additional workers spawned by the need for suppliers etc, over those 15 years
That gives 388,000 worker-years supported by doing this deal, for which was paid $2.85 billion in tax credits over the 15 years.
Doing the math, that is $7,345 in subsidies paid by the government, per job per year.
If these figures are believable, then it possibly is not a horrible deal. *But* as with everything, the biggest pitfall is not in the decimal place of how many workers exactly, but in the assumptions about whether those additional workers materialize, whether Foxconn sources its stuff from local / surrounding vendors vs. Mexico, and most of all, whether in 8-10 years the market for LCD screens changes and Foxconn picks up and leaves.
Does the LCD screen market now look like it did 8-10 years ago? Should we expect that it will 8-10 years from *now* and that the deal will still be something Foxconn wants to stick to?
I have a feeling that Republican lawmakers are not quite as sharp as the economists that Foxconn, a $135B company, has on its staff to figure out whether they're getting the better end of the deal...
US labor laws are often first-line enforced by state-level boards of labor, and there are large gaps in federal law that not all states make up. A friend of mine was having issues with an employer not allowing breaks, but it turns out that breaks are not federally mandated, nor are they mandated by this particular state either. We ended up having to take a different tack (turns out the boss had two businesses would avoid paying employees time-and-a-half overtime by switching which company they worked for during the week, this got them slammed with a requirement to pay all that OT plus some heavy fines from the state) but there's no guarantee that states will do their job to enforce workplace protections or to mandate them in the first place. Given what Wisconsin has been up to lately I would be surprised if they did enforce them adequately.
Do not look into laser with remaining eye.
Nope, the incentives are cash, but you're right that WI won't pay if they're not hitting the job targets.
Job targets probably don't need to be long term, can probably cover construction jobs while building the factory and very likely can include low paid jobs as well.
Foxconn will go from using cheap labor in China to people working like "Sure you can have a job, the government is actually paying your salary and a bonus to us for hiring you.
My guess will be that if Foxconn does it properly, they should be able to enter the state, and run operations for three years, eliminate sea shipping costs, establish an American trucking industry... preferably with cheap labor or self-driving trucks, run their factories with little regard to environmental issues (was in the deal) and then downsize operations and start moving out.
If they do it right, then they can play states off of each other and start negotiating a similar deal with another state and probably go 9-10 years being paid to operate in America and kill off as many jobs as possible in other sectors by gaining a strong foothold on American soil.
The difference is how many they'll directly hire vs indirect effects.
A fast food place might serve 300 people at lunch. If 13,000 Foxconn employees eat burgers, they'll need 43 new fast food places to serve them. If a dozen people are working at each fast food place, that's 520 jobs making lunch for Foxconn employees. Obviously they don't all go to a fast food place every day, but that's the concept. Not just fast food either, of course, some will go to Olive Garden for lunch. On most days, there will be several non-Foxconn employees working at Foxconn's building - electricians, security guards, HVAC people, fire alarm people, somebody checking the fire extinguishers ...
If they each stop at an area gas station once a week, that's 1,800 paying customers a day at gas stations. Which will require 20 new gas stations employing 100 people or whatever. Go through that for all the different things 13,000 people buy in a week.
Then realize that the gas station employees need lunch, and the fast food employees need gas. The employees of the new bank branch need lunch, as do the tradesmen who don't work for Foxconn, but handle Foxconn's needs for air conditioning, electrical work, etc. So there are more restaurants and gas stations needed, etc.
We're seeing these effects in the area where I live. Toyota moved here and the local businesses hired more people - the Toyota employees need to have their oil changed, so the quick line place hired more people. 13,000 Toyota employees buy 3,000 pairs of glasses every year, or so there's another job or two providing eyeglasses to Toyota employees. Nearly every company in the vicinity is hiring more people, and new businesses are opening around the Toyota campus. The three to one ratio implied by the two stories is about right. STEM jobs typically generate about 4.2 other jobs indirectly. So three "created" (spurred) for each Foxconn job is a reasonable number.
Assuming the $3bn is a one-off incentive (i.e. not spread out over multiple years)
Population of Wisconsin: 5,778,708 (2016 est.) - Wikipedia
Cost per resident: $519
Median household income: $42,041 (2009-2013) - Wikipedia
So it's roughly a 1.2% one-off tax on the median earner.
I don't know how this offsets against the projected benefits.
Can we have universal healthcare in this country? Nope, because the Repug scream "SOCIALISM!!!!".... But $3 billions to court a company, and a foreign one on top of that, somehow that's not socialism and that's okay....
That seems to suggest people are being pulled from nowhere to fill these needs. Just say the factory does employ 13,000 people (it won't but anyway), the majority of them are going to live in the area anyway, they'll need a bit more gas if they drive but not 20 new stations just for them. Same with lunch, 13,000 people aren't going to pile out at once to eat in 43 eateries that ring the factory I guess. That also seems to suggest all 13k people will be there everyday and will all have the same needs. A guy who walks to work with a packed lunch and already has a bank account is going to need none of that. A guy who gets a lift and eats in the factory canteen also isn't. I also don't think foxconn will be paying enough to create 13,000 people with loads of disposable income either.
Yeah taking a bunch of people who are unemployed originally and giving them jobs is going to increase business in an area but nearly to the degree you suggest, bus companies would probably be a winner though. Not to mention anyone changing jobs or moving in from another area is just moving their needs from one place to another.
Wanna buy a shirt?
https://www.redbubble.com/people/stealthfinger/shop?asc=u
What happened to "Government Shouldn't Pick Winners and Losers"? Worse yet, it's not even an American company!
There seems to be serious hypocrisy going on within the Republican party.
Anons need not reply. Questions end with a question mark.
Ultimately I predict this will be a loser of a deal. They'll build this plant, it'll be massively automated and employ few people and be massively productive.
Let's be frank here... 3 Billion dollars is A LOT of money in Wisconsin terms. This will be a major hit to the states tax revenues.
Yes Francis, the world has gone crazy.
Scott Walker doesn't want pay teachers a living wage
The average teacher salary in Wisconsin is $53k. That is above the average salary/wage for Wisconsin, and certainly enough to live on.
Without knowing more about the statistical distribution, this is a somewhat misleading statement due to the way averages work. Is the starting salary for new teachers $20k, but there's enough teachers with seniority making $80k to shift the average? Is that average calculated only with teachers in classrooms, or does that include principals and other administrators?
My understanding is that many states currently facing a budget crisis are attacking our new teachers. Basically, they can't cut pensions of current retirees or near-retirees, partly due to contractual reasons and partly due to not wanting to anger older voters. So they're instead negotiating contracts for new teachers at low pay, low benefits, drastically reduced (if existent at all) pensions. It is completely logical to say that Walker and GOP don't want to pay a living wage (to new teachers) while still maintaining contractually-obligated good pay and benefits to senior teaching staff, there is no contradiction. You have to know the details and the distribution.