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Foxconn Still Trying to Tap Dance Around Its Ever-Shrinking Wisconsin Promises

CydeWeys 7y ago
What even was the point of all this? Money wasn't given outright to Foxconn in large quantities, right? There was little reason for them to just lie about their intents while not planning on following through on any of it. That doesn't really help them out either. Wisconsin got played really badly, but I don't understand what even Foxconn is getting out of it at this point. Did they just change their mind and decide it wasn't worth building a factory there at all, but for whatever reason just won't come out and cancel it all?
- SOLAR_FIELDS 7y ago
  This seems like the most likely explanation. If they cancel it looks like a failure on both ends (the politicians and Foxconn).
- hylaride 7y ago
  The government used eminent domain to seize the homes of people so the land could be redeveloped, so it effected people. Apparently, Foxconn has been known to (all over the world) make a large promises in the name of getting tax breaks, etc and then only actually doing a fraction of what was promised.
  - CydeWeys 7y ago
    Yeah, but you don't actually get the tax breaks if you don't even end up doing anything in the state. What is the actual reason for doing this?
    - smt88 7y ago
      In some cases, you do. Bait-and-switch scams are common at the city level. The developer of the land just says things went unexpectedly badly and there was nothing they could do about it.
      - syedkarim 7y ago
        What are those cases?
- moorhosj 7y ago
  That they have done the same thing in Pennsylvania [1] and Brazil [2] implies there is a deeper reason. [1] https://www.pennlive.com/nation-world/2017/03/how_foxconns_broken_pledges_in.html https://www.pennlive.com/nation-world/2017/03/how_foxconns_b... [2] https://www.zdnet.com/article/foxconn-set-to-discontinue-brazil-manufacturing-operations/ https://www.zdnet.com/article/foxconn-set-to-discontinue-bra...
  - CydeWeys 7y ago
    Does anyone know what the reason might be?
    - jayalpha 7y ago
      Well, Brazil has crazy labor laws. You see a worker in court? The worker will win. In the end it was not worth it for Foxcon. And I think a terrible outcome for Brazil. Electronics are absurdly expensive there (Think import tax 1, import tax 2, import tax 3 and in the end taxes on the import taxes. No kidding). Stuff is often three times the price of western prices. At least in the past. It was common for people to ask you to sell them you used Laptop/iPhone/mp3 player.
      - moorhosj 7y ago
        All of that was true when they initially agreed to the deal, so I’m not sure that explains it.
        jayalpha 7y ago
        https://www.zdnet.com/article/foxconn-set-to-discontinue-brazil-manufacturing-operations/ https://www.zdnet.com/article/foxconn-set-to-discontinue-bra... "However, the promises soon proved hard to keep: the company wanted the Brazilian government to come up with 30 percent of the cash, as well as a private investor - both failed to materialize. " "As well as the economic instability that the Brazilian economy, it is also rumored that other factors influencing the decision include the productivity of the local workforce - which at its peak reached about 2,500 workers - which Foxconn considers to be low when compared to its main manufacturing operations. "
- uranusjr 7y ago
  There are a lot of possibilities. Terry Kuo has close relation with China. It is possible he is pressured out of US investment due to the recent tension, but trying to play the situation so he don’t bet everything on China (likely the losing side of the tariff war). He is also running for Taiwan presidential candidacy (of KMT), and might be desperate to avoid negativity. Or, honestly, I wouldn’t be surprised if he just genuinely has second thoughts. Kuo is well-known to be volatile.
- belltaco 7y ago
  It was a political move to help the then state governor Scott Walker with his election last fall. https://www.google.com/search?ei=eBbgXMeXFeOW_Qba2pWYAg&q=scott+walker+foxconn+commercial&oq=scott+walker+foxconn+comm&gs_l=psy-ab.1.0.0i22i30.2321.2984..3839...0.0..1.463.1384.0j2j0j2j1......0....1..gws-wiz.......0.4fkkj8EeBKQ https://www.google.com/search?ei=eBbgXMeXFeOW_Qba2pWYAg&q=sc... https://www.jsonline.com/story/news/politics/2018/07/31/scott-walker-seeks-change-public-opinion-foxconn-project-four-new-ads/867109002/ https://www.jsonline.com/story/news/politics/2018/07/31/scot...
  - CydeWeys 7y ago
    But how does that help Foxconn if they're not even going to be doing business in the state?
    - belltaco 7y ago
      Geo-political influence and leverage of the most powerful man in the world?
    - msbarnett 7y ago
      Walker was then Speaker of the House, and his fortunes were closely hitched to Trump (Wisconsin having unexpectedly flipped Repub in 2016, and being critical to Trump’s re-election chances). The Verge, I think, summarized the situation best: > But the most plausible explanation I heard is that Foxconn’s secret is that it has no idea what it’s doing in Wisconsin. > “In China, people announce projects like this all the time, and some of them get built, and some of them don’t,” said Willy Shih, a Harvard business school professor who consulted in the screen industry for several years. They’re called “state visit projects,” he said. Politicians get a photo op, and companies to get some political goodwill, but everyone knows the announcement is extremely preliminary. Ultimately, the company will do whatever makes economic sense, and sometimes, that turns out to be nothing. > Foxconn has done this in the past, announcing large factories in Pennsylvania, Brazil, and elsewhere that never materialize. But unlike Pennsylvania, which offered Foxconn no incentives and built no infrastructure, Wisconsin politicians threw a tremendous amount of money at the company and rushed to acquire land and start building. > Further complicating matters, the trade war with China still looms, and Trump has personally called Foxconn CEO Terry Gou when the company wavers. This time, Foxconn can’t simply vanish without risking a backlash, but it also makes no sense for it to build what it initially promised. tl;dr Foxconn made a bunch of empty promises in Wisconsin to curry goodwill with a US administration whose trade wars threaten Foxconn, probably expecting the hot air would be understood as such by the politicians, as they would be in China. Wisconsin, under Walker, grossly overcomitted to Foxconn’s silly promises, and now both the State and Foxconn are trapped in a deal that makes no real sense for either party.
- mikeash 7y ago
  I think the right question is, what did Foxconn lose? Maybe they really did just change their minds. Maybe market conditions changed, or they just decided it’s unwise to invest huge amounts of money in a country with insane leadership. If they don’t have a hard commitment then it wouldn’t have to take very much for them to have a change of heart.
  - CydeWeys 7y ago
    They've lost a lot of goodwill. It would've been better for them to have never gotten involved at all than how things are shaping up now.
    - mikeash 7y ago
      I’m not sure how much they care about that given that they don’t sell directly to consumers. But maybe that matters more than I think.
ianhawes 7y ago
> [State House Minority Leader Gordon Hintz] believes Foxconn is trying to slow-walk the project until 2020, continuing to use it to win Trump’s goodwill in the trade war and waiting to see who’s elected.[1] [1] https://www.theverge.com/2019/4/10/18296793/foxconn-wisconsin-location-factory-innovation-centers-technology-hub-no-news https://www.theverge.com/2019/4/10/18296793/foxconn-wisconsi...
tssva 7y ago
The point was to give Scott Walker and Wisconsin Republicans a boost in their efforts to hold on to the Governor's office and control of the legislature. The facade of the factory coming only had to last as long as the fall election. In return Foxconn curried favor with President Trump, who tied himself to the factory coming, and the political party in control of both house of Congress at the time.
dpau 7y ago
There's a wonderful Reply All episode from December 2018 that covers the dramatic origin story, featuring lots of colorful small-town politics and an explanation of the bait & switch tactics commonly used by Foxconn: https://gimletmedia.com/shows/reply-all/wbhjwd/132-negative-mount-pleasant https://gimletmedia.com/shows/reply-all/wbhjwd/132-negative-... It's a good listen even now, now that this story has played out the way it has..
- rahuldottech 7y ago
  Yes! Can't recommend this episode enough.
robertAngst 7y ago
I know most people don't want government to be run with these 'back scratch' promises and corruption- But those who advocate for more taxation, how do you stop this kind of corruption?
- mikeash 7y ago
  How do you stop it with less taxation?
  - haneefmubarak 7y ago
    Not the parent, but I think their general idea is that you can't give a tax break if there's no tax to give a break on.
    - mikeash 7y ago
      Sure, but there’s a big difference between less tax and no tax. You can still give tax breaks when taxes are lower.
      - haneefmubarak 7y ago
        So the whole less taxes less corruption thing isn't my argument, but I think they meant less taxes as in the number of different taxes you can give breaks from, not the total percentage burden.
        mikeash 7y ago
        The potential for tax breaks ultimately depends on the total amount you’d potentially pay. (Edit: even this isn’t the limit. Nothing says you can’t give companies more than they pay.) How it’s divided up doesn’t really matter.
jccalhoun 7y ago
This is mostly just a rehash of The Verge's original reporting. https://www.theverge.com/2019/5/13/18565408/foxconn-wisconsin-innovation-centers-factories-empty-tax-subsidy https://www.theverge.com/2019/5/13/18565408/foxconn-wisconsi... (which is linked to in the techdirt "article."
sct202 7y ago
I know a guy who had been offered a job at one of the facilities, but they kept delaying and delaying the start date for months. There's been a lot of local politicians talking about how and the deal was and undoing it so it could be that Foxconn doesn't want to deal with dumping even more money into an area with political instability. Like, they did go thru the hassle to build a giant empty building so what would even be the point of doing that?

What even was the point of all this? Money wasn't given outright to Foxconn in large quantities, right? There was little reason for them to just lie about their intents while not planning on following through on any of it. That doesn't really help them out either. Wisconsin got played really badly, but I don't understand what even Foxconn is getting out of it at this point. Did they just change their mind and decide it wasn't worth building a factory there at all, but for whatever reason just won't come out and cancel it all?

SOLAR_FIELDS 7y ago
This seems like the most likely explanation. If they cancel it looks like a failure on both ends (the politicians and Foxconn).
hylaride 7y ago
The government used eminent domain to seize the homes of people so the land could be redeveloped, so it effected people. Apparently, Foxconn has been known to (all over the world) make a large promises in the name of getting tax breaks, etc and then only actually doing a fraction of what was promised.
- CydeWeys 7y ago
  Yeah, but you don't actually get the tax breaks if you don't even end up doing anything in the state. What is the actual reason for doing this?
  - smt88 7y ago
    In some cases, you do. Bait-and-switch scams are common at the city level. The developer of the land just says things went unexpectedly badly and there was nothing they could do about it.
    - syedkarim 7y ago
      What are those cases?
moorhosj 7y ago
That they have done the same thing in Pennsylvania [1] and Brazil [2] implies there is a deeper reason. [1] https://www.pennlive.com/nation-world/2017/03/how_foxconns_broken_pledges_in.html https://www.pennlive.com/nation-world/2017/03/how_foxconns_b... [2] https://www.zdnet.com/article/foxconn-set-to-discontinue-brazil-manufacturing-operations/ https://www.zdnet.com/article/foxconn-set-to-discontinue-bra...
- CydeWeys 7y ago
  Does anyone know what the reason might be?
  - jayalpha 7y ago
    Well, Brazil has crazy labor laws. You see a worker in court? The worker will win. In the end it was not worth it for Foxcon. And I think a terrible outcome for Brazil. Electronics are absurdly expensive there (Think import tax 1, import tax 2, import tax 3 and in the end taxes on the import taxes. No kidding). Stuff is often three times the price of western prices. At least in the past. It was common for people to ask you to sell them you used Laptop/iPhone/mp3 player.
    - moorhosj 7y ago
      All of that was true when they initially agreed to the deal, so I’m not sure that explains it.
      - jayalpha 7y ago
        https://www.zdnet.com/article/foxconn-set-to-discontinue-brazil-manufacturing-operations/ https://www.zdnet.com/article/foxconn-set-to-discontinue-bra... "However, the promises soon proved hard to keep: the company wanted the Brazilian government to come up with 30 percent of the cash, as well as a private investor - both failed to materialize. " "As well as the economic instability that the Brazilian economy, it is also rumored that other factors influencing the decision include the productivity of the local workforce - which at its peak reached about 2,500 workers - which Foxconn considers to be low when compared to its main manufacturing operations. "
uranusjr 7y ago
There are a lot of possibilities. Terry Kuo has close relation with China. It is possible he is pressured out of US investment due to the recent tension, but trying to play the situation so he don’t bet everything on China (likely the losing side of the tariff war). He is also running for Taiwan presidential candidacy (of KMT), and might be desperate to avoid negativity. Or, honestly, I wouldn’t be surprised if he just genuinely has second thoughts. Kuo is well-known to be volatile.
belltaco 7y ago
It was a political move to help the then state governor Scott Walker with his election last fall. https://www.google.com/search?ei=eBbgXMeXFeOW_Qba2pWYAg&q=scott+walker+foxconn+commercial&oq=scott+walker+foxconn+comm&gs_l=psy-ab.1.0.0i22i30.2321.2984..3839...0.0..1.463.1384.0j2j0j2j1......0....1..gws-wiz.......0.4fkkj8EeBKQ https://www.google.com/search?ei=eBbgXMeXFeOW_Qba2pWYAg&q=sc... https://www.jsonline.com/story/news/politics/2018/07/31/scott-walker-seeks-change-public-opinion-foxconn-project-four-new-ads/867109002/ https://www.jsonline.com/story/news/politics/2018/07/31/scot...
- CydeWeys 7y ago
  But how does that help Foxconn if they're not even going to be doing business in the state?
  - belltaco 7y ago
    Geo-political influence and leverage of the most powerful man in the world?
  - msbarnett 7y ago
    Walker was then Speaker of the House, and his fortunes were closely hitched to Trump (Wisconsin having unexpectedly flipped Repub in 2016, and being critical to Trump’s re-election chances). The Verge, I think, summarized the situation best: > But the most plausible explanation I heard is that Foxconn’s secret is that it has no idea what it’s doing in Wisconsin. > “In China, people announce projects like this all the time, and some of them get built, and some of them don’t,” said Willy Shih, a Harvard business school professor who consulted in the screen industry for several years. They’re called “state visit projects,” he said. Politicians get a photo op, and companies to get some political goodwill, but everyone knows the announcement is extremely preliminary. Ultimately, the company will do whatever makes economic sense, and sometimes, that turns out to be nothing. > Foxconn has done this in the past, announcing large factories in Pennsylvania, Brazil, and elsewhere that never materialize. But unlike Pennsylvania, which offered Foxconn no incentives and built no infrastructure, Wisconsin politicians threw a tremendous amount of money at the company and rushed to acquire land and start building. > Further complicating matters, the trade war with China still looms, and Trump has personally called Foxconn CEO Terry Gou when the company wavers. This time, Foxconn can’t simply vanish without risking a backlash, but it also makes no sense for it to build what it initially promised. tl;dr Foxconn made a bunch of empty promises in Wisconsin to curry goodwill with a US administration whose trade wars threaten Foxconn, probably expecting the hot air would be understood as such by the politicians, as they would be in China. Wisconsin, under Walker, grossly overcomitted to Foxconn’s silly promises, and now both the State and Foxconn are trapped in a deal that makes no real sense for either party.
mikeash 7y ago
I think the right question is, what did Foxconn lose? Maybe they really did just change their minds. Maybe market conditions changed, or they just decided it’s unwise to invest huge amounts of money in a country with insane leadership. If they don’t have a hard commitment then it wouldn’t have to take very much for them to have a change of heart.
- CydeWeys 7y ago
  They've lost a lot of goodwill. It would've been better for them to have never gotten involved at all than how things are shaping up now.
  - mikeash 7y ago
    I’m not sure how much they care about that given that they don’t sell directly to consumers. But maybe that matters more than I think.

ianhawes 7y ago

> [State House Minority Leader Gordon Hintz] believes Foxconn is trying to slow-walk the project until 2020, continuing to use it to win Trump’s goodwill in the trade war and waiting to see who’s elected.[1] [1] https://www.theverge.com/2019/4/10/18296793/foxconn-wisconsin-location-factory-innovation-centers-technology-hub-no-news https://www.theverge.com/2019/4/10/18296793/foxconn-wisconsi...

tssva 7y ago

The point was to give Scott Walker and Wisconsin Republicans a boost in their efforts to hold on to the Governor's office and control of the legislature. The facade of the factory coming only had to last as long as the fall election. In return Foxconn curried favor with President Trump, who tied himself to the factory coming, and the political party in control of both house of Congress at the time.

dpau 7y ago

There's a wonderful Reply All episode from December 2018 that covers the dramatic origin story, featuring lots of colorful small-town politics and an explanation of the bait & switch tactics commonly used by Foxconn: https://gimletmedia.com/shows/reply-all/wbhjwd/132-negative-mount-pleasant https://gimletmedia.com/shows/reply-all/wbhjwd/132-negative-... It's a good listen even now, now that this story has played out the way it has..

rahuldottech 7y ago
Yes! Can't recommend this episode enough.

robertAngst 7y ago

I know most people don't want government to be run with these 'back scratch' promises and corruption- But those who advocate for more taxation, how do you stop this kind of corruption?

mikeash 7y ago
How do you stop it with less taxation?
- haneefmubarak 7y ago
  Not the parent, but I think their general idea is that you can't give a tax break if there's no tax to give a break on.
  - mikeash 7y ago
    Sure, but there’s a big difference between less tax and no tax. You can still give tax breaks when taxes are lower.
    - haneefmubarak 7y ago
      So the whole less taxes less corruption thing isn't my argument, but I think they meant less taxes as in the number of different taxes you can give breaks from, not the total percentage burden.
      - mikeash 7y ago
        The potential for tax breaks ultimately depends on the total amount you’d potentially pay. (Edit: even this isn’t the limit. Nothing says you can’t give companies more than they pay.) How it’s divided up doesn’t really matter.

jccalhoun 7y ago

This is mostly just a rehash of The Verge's original reporting. https://www.theverge.com/2019/5/13/18565408/foxconn-wisconsin-innovation-centers-factories-empty-tax-subsidy https://www.theverge.com/2019/5/13/18565408/foxconn-wisconsi... (which is linked to in the techdirt "article."

sct202 7y ago

I know a guy who had been offered a job at one of the facilities, but they kept delaying and delaying the start date for months. There's been a lot of local politicians talking about how and the deal was and undoing it so it could be that Foxconn doesn't want to deal with dumping even more money into an area with political instability. Like, they did go thru the hassle to build a giant empty building so what would even be the point of doing that?