Wisconsin's $4.1 Billion Foxconn Boondoggle (theverge.com)

"A story from The Verge reports on Foxconn's substantially scaled-back plans for the heavily subsidized Wisconsin "Gigafactory," writes Slashdot reader kimanaw. Here's an excerpt from the report: The details of the deal were famously written on the back of a napkin when [Foxconn chairman Terry Gou] and the Republican governor first met: a $3 billion state subsidy in return for Foxconn's $10 billion investment in a Generation 10.5 LCD manufacturing plant that would create 13,000 jobs. [...] But what seemed so simple on a napkin has turned out to be far more complicated and messy in real life. As the size of the subsidy has steadily increased to a jaw-dropping $4.1 billion, Foxconn has repeatedly changed what it plans to do, raising doubts about the number of jobs it will create. Instead of the promised Generation 10.5 plant, Foxconn now says it will build a much smaller Gen 6 plant, which would require one-third of the promised investment, although the company insists it will eventually hit the $10 billion investment target. And instead of a factory of workers building panels for 75-inch TVs, Foxconn executives now say the goal is to build "ecosystem" of buzzwords called "AI 8K+5G" with most of the manufacturing done by robots.

Shortly after the Wisconsin deal was signed, Walker was touting the Foxconn deal in campaign-style speeches across the state. But by October 2017, just a month after the legislature passed the Foxconn deal, a poll showed only 38 percent of the people in southeastern Wisconsin, where the plant would be located, thought the plant would be a net positive for the state. This was followed by March 2018 poll, which showed that 66 percent of people in the state believed their local businesses wouldn't benefit from the Foxconn deal, and only 25 percent thought it would be beneficial. This was dreadful news for Walker, who suddenly stopped talking about Foxconn. He didn't even mention the deal in a November 2017 speech announcing his run for re-election. It was also bad news for Foxconn, as every Democrat running for governor proceeded to condemn the deal. Both Walker and Foxconn now needed to sell this deal to the voters.

Comments

Um... that's not what makde American a powerhouse

[rsilvergun]

we were the only country with a functioning manufacturing base after WWII and the cold war meant companies were scared that if they invested overseas their assets would get seized by the big bad communists. Nixon showed everyone that was bullshit, the middle east gave us a way to keep our endless war machine going and that meant it was open season on offshoring and outsourcing.

You need manufacturing to have a strong economy because you need lots of workers all working together in the same place with the same interests. In other words, Unions. What made the US middle class grow was Unions fought (and died) to pry money out of the hands of the working class. You can't do that at a WalMart, there's just not enough of a concentration. Also, the ruling class got this Union busting down pat.

The one thing that did _not_ make the US a powerhouse is corporate welfare. We had all that during the Robber Baron era and Gilded Age in spades. There was money, but it all belonged to our aristocracy.

Re:This deal was never going to work

[Dr_Terminus]

And what really pisses me off about this whole thing is Walker turned down government money to build a high-speed rail between Chicago/Milwaukee/Madison/Minneapolis, which would have provided many tourism and rail jobs in Wisconsin. He felt it was 'government waste' in that case, only because the money would have been from the Obama administration...

To add insult to injury, the Spanish train company Talgo had planned to build trainsets for the rail line at their plant in Milwaukee - further adding jobs. But since the rail deal never went through, they've since significantly downsized their operation in Wisconsin...

Labor costs and manufacturing

[sjbe]

You need manufacturing to have a strong economy because you need lots of workers all working together in the same place with the same interests. In other words, Unions. What made the US middle class grow was Unions fought (and died) to pry money out of the hands of the working class. You can't do that at a WalMart, there's just not enough of a concentration. Also, the ruling class got this Union busting down pat.

You have the story wrong. The US HAS manufacturing. It never left despite what you might hear from the uninformed. The US manufacturing sector is over $3 TRILLION annually which puts us neck and neck with China for the largest manufacturing sector in the world. By itself the US manufacturing sector would be one the fifth largest economy in the world - larger than the UK and just behind Germany.

What has changed since WWII is our cost of labor and the rest of the world rebuilt. US labor today is among the most expensive in the world. As a result US manufacturing HAS to focus on capital intensive products instead of labor intensive ones. It is literally impossible for US companies to compete on labor prices. 70 years ago US labor costs were a lot closer to the global mean AND the rest of the world was recovering from WWII. Now China has a LOT of labor and simple supply and demand means that having a lot of something means it will cost less and so their labor costs less than ours because they have an abundance of it. QED products that are sensitive to manufacturing cost of labor will inevitably migrate to locations with lower labor costs. Products not so sensitive to labor costs will go to places with low capital costs. The US has the lowest cost of capital in the world currently so we get the capital intensive products instead of the labor intensive ones. In plain english we make cars and airplanes and don't make Happy Meal toys and the cheap crap you buy in Walmart.

As for unions, basically unions were TOO successful. They priced themselves out of the market for labor intensive manufacturing in a global market. And for capital intensive manufacturing there isn't as much need for unions because the pay rates are much higher and there is a lot of automation. As a result when politicians promise to bring back manufacturing jobs they are literally promising the impossible. The only way the US will get back labor intensive manufacturing on a large scale is for the cost of US labor to fall back towards the global mean. This means paying US workers MUCH less then they currently demand. Otherwise the only alternative is to automate the work which is what capital intensive manufacturing does. So pick your poison - much lower paying jobs OR automation.

Ironically when people argue against immigration in our country, they are arguing against the only thing that will allow our demographics to compete with China and India. China has 4 people for every 1 in the US and a lot of those people are very smart and hard working. Without immigrants (both skilled and unskilled), the US will eventually lose that fight just from sheer numbers. China has more labor that costs less AND a lot of very smart high end labor too. Doesn't mean the US will become some backwater but without welcoming the best and brightest into our country with open arms we don't have a prayer of keeping up in the long run.