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>then just took the tax breaks They didn't get the tax breaks because they didn't meet the targets. From your article: After Foxconn failed to meet its job c

>then just took the tax breaks They didn't get the tax breaks because they didn't meet the targets. From your article: After Foxconn failed to meet its job creation targets, Wisconsin’s governor, Tony Evers, last month pulled a deal that would have handed the company nearly $4.5bn in incentives for completing its plans.

tootie 6y ago
I absolutely don't understand Foxconn's game there. Was this just a scam from the start? What was the upside for them? Or did they actually intend to follow through and just failed?
- helloworld653 6y ago
  Pretend, delay, outlast.
- aeturnum 6y ago
  My read on the situation is they saw the opportunity to get subsidies and so negotiated to maximize what they were given. I imagine it comes from some maximalist position that says that if you plan to do X, you need to say you'll do 10X so you never 'lose out' on subsidies you might have been able to take advantage of in the good years. A lot of the reporting at the time emphasized that Foxconn had a history of doing this in other countries. It seems like a negotiating tactic that evolved in an age of cynical political environments where everyone's proximate goal is to announce a 'deal' with the full expectation that they won't be in a position to take credit (or blame) for the quality of that deal.
  - ethbr0 6y ago
    I don't think Foxconn saw this as screwing anyone. I think they saw it as doing business the way they typically do in China. What would have happened if this deal had been done in China? No one would have reported on the failure. The local jobs numbers would have "jumped." Infrastructure would have been "built." Everyone would have gotten a pat on the back and/or promotion for hitting their economic targets. The weakness of command-style political systems have always been that they incentize systemic lying.
    - aeturnum 6y ago
      Foxconn is an international company that operates in many countries outside of China. Suggesting they are too simple to realize the business climate is different outside of China seems insulting and infantilizing. Their operating income is ~$180 billion USD a year. They are aware that business conditions are different in different countries.
      - ethbr0 6y ago
        The Foxconn deal had $3-4.8B worth of subsidies attached, and investigative reporting says the branch of the company executing on the opportunity couldn't even accomplish basic tasks like "Decide what to build" or "Decide what skills were needed in hired staff." The takeaway is that either (a) everyone who touched the Wisconsin project is an idiot, but an outlier in the company, or (b) the failure to execute in Wisconsin is indicative of the general state of the company. (a) seems like a stretch, given the project's size and visibility. Ergo, (b).
        aeturnum 6y ago
        Leaving a subsidy on the table is not exactly like leaving money on the table for either party. They lower costs and lower the tax revenue from a business, but they don't represent a cost (outside of the cost to negotiate and write the deal). It seems like calling the people involved idiots (or suggesting the entire company is...setting itself up to fail to execute?) requires knowing internal details of Foxconn's financials. A $1bn increase in revenue would be less than a 1% increase for Foxconn overall. That suggests they're probably willing to bear extremely high costs to establish new sites, as long as those sites will eventually yield significant revenue. Their negotiating tactics here seem short sighted from my point of view, but when you're as large as they are you create your own conditions. Edit: Like...this deal seems to allow them to operate any of their businesses in Wisconsin. If they decide not to, they burn bridges in Wisconsin, but they wouldn't care about burning those bridges because burning them means they don't want to do business in the state. It seems like all they lose is their negotiators' salaries, small (for them) facilities costs, and whatever general goodwill they lose.
- AaronFriel 6y ago
  This may be too political for Hacker News, but... Hope that the Governor of Wisconsin stayed a Republican? Now, that's not to say Democrats can't engage in grift, but, the deal was started under a Republican Governor in a notoriously corrupt state where the promise of Foxconn jobs was lauded by legislators, the governor, and the former President as a win for the people of the state, for our country, and a blow to China (that we were taking jobs back). Foxconn's incentives seemed aligned with promising the moon and if those people were reelected, well, wouldn't compensating Foxconn for those promises and their outcome (the election outcome, not the factories) be fair?
  - boomboomsubban 6y ago
    Why would Foxconn care who governs Wisconsin?
    - dodobirdlord 6y ago
      If the deal never really made sense and was just a ploy by the Governor to drum up support, then a change in administration would mean that the new administration has no interest in paying off Foxconn for their part in the charade.
      - aj7 6y ago
        Exactly.
    - AaronFriel 6y ago
      Foxconn negotiated a deal with members of a political party that was in power, that deal was an empty promise, and those power brokers used that promise from Foxconn as part of their political messaging with the hope of being reelected. Had those politicians stayed in office, it's possible they would reward Foxconn for participating in the charade that helped them obtain reelection. Is it certain? No, I won't say it is. But, what else was Foxconn's goal if not to actually realize those incentives without having to make the investment to justify them? They knew they were promised an enormous incentive by the state, and they knew that they would not fulfill their end of the bargain. If they also knew that they wouldn't realize those incentives, why did they pursue them? The simplest answer is that they fully intended to realize them. Surely at least some of the negotiators of that deal legitimately believed that the other party - the Republican Governor and majority legislature in the state - would play ball?
_jal 6y ago
The tax breaks to Foxconn were just one aspect of the deal, and unless you're specifically interested in Foxconn, it makes sense to look at everything that happened. Hundreds of millions were spent on variously infra improvements, eminent-domaining people out of the way, lawyers, etc. https://www.chicagotribune.com/suburbs/lake-county-news-sun/ct-lns-foxconn-investment-fact-check-st-0202-20190201-story.html https://www.chicagotribune.com/suburbs/lake-county-news-sun/... I actually don't know how much Foxconn did get out of it. They've apparently run similar scams elsewhere, it appears to be a Foxconn side gig. There's a fun book in here for a scrappy investigative journalist.
- deleted 6y ago
  [deleted]
- bilbo0s 6y ago
  Well, as a Wisconsinite I'd be remiss in not pointing out that this is the Chicago Tribune. Chicago and Illinois are always gleeful about the various piles of excrement we land ourselves in here in Wisconsin. That said, yeah, I also have to be honest. We're down about 1 billion dollars on that Foxconn thing. That's what we're out of pocket. The new governor, wisely, took what remained of our chips and left that table. You get mad, but you just have to chalk it up to a learning experience. The Illinois people are right on this one by the way. Not even in Illinois would their leaders get away with a 5.5 billion dollar con. The people in Illinois are so used to dealing with corruption that they would have started asking questions and raising a fuss long before it got to that point. Our problem is that we're so accustomed to our corruption that we never raised a fuss until it was way too late. All that said, in Wisconsin our leaders didn't get away with 5.5 billion dollar con either technically speaking. Scott Walker and his boys got us for about a billion, but they didn't get as much as they wanted. So fibs shouldn't gloat too much, because while I can't see anyone in Illinois getting away with a 5.5 billion dollar pure con, I could see someone getting away with maybe a billion. (It's just that they're far more wealthy than we are, so that billion doesn't hurt as much.)
  - ProAm 6y ago
    > you just have to chalk it up to a learning experience Everyone knew from the start this was a BS deal and never going to happen or make ANY sense. This was pure incompetence at a political level that was paid for by tax payers.

tootie 6y ago

I absolutely don't understand Foxconn's game there. Was this just a scam from the start? What was the upside for them? Or did they actually intend to follow through and just failed?

helloworld653 6y ago
Pretend, delay, outlast.
aeturnum 6y ago
My read on the situation is they saw the opportunity to get subsidies and so negotiated to maximize what they were given. I imagine it comes from some maximalist position that says that if you plan to do X, you need to say you'll do 10X so you never 'lose out' on subsidies you might have been able to take advantage of in the good years. A lot of the reporting at the time emphasized that Foxconn had a history of doing this in other countries. It seems like a negotiating tactic that evolved in an age of cynical political environments where everyone's proximate goal is to announce a 'deal' with the full expectation that they won't be in a position to take credit (or blame) for the quality of that deal.
- ethbr0 6y ago
  I don't think Foxconn saw this as screwing anyone. I think they saw it as doing business the way they typically do in China. What would have happened if this deal had been done in China? No one would have reported on the failure. The local jobs numbers would have "jumped." Infrastructure would have been "built." Everyone would have gotten a pat on the back and/or promotion for hitting their economic targets. The weakness of command-style political systems have always been that they incentize systemic lying.
  - aeturnum 6y ago
    Foxconn is an international company that operates in many countries outside of China. Suggesting they are too simple to realize the business climate is different outside of China seems insulting and infantilizing. Their operating income is ~$180 billion USD a year. They are aware that business conditions are different in different countries.
    - ethbr0 6y ago
      The Foxconn deal had $3-4.8B worth of subsidies attached, and investigative reporting says the branch of the company executing on the opportunity couldn't even accomplish basic tasks like "Decide what to build" or "Decide what skills were needed in hired staff." The takeaway is that either (a) everyone who touched the Wisconsin project is an idiot, but an outlier in the company, or (b) the failure to execute in Wisconsin is indicative of the general state of the company. (a) seems like a stretch, given the project's size and visibility. Ergo, (b).
      - aeturnum 6y ago
        Leaving a subsidy on the table is not exactly like leaving money on the table for either party. They lower costs and lower the tax revenue from a business, but they don't represent a cost (outside of the cost to negotiate and write the deal). It seems like calling the people involved idiots (or suggesting the entire company is...setting itself up to fail to execute?) requires knowing internal details of Foxconn's financials. A $1bn increase in revenue would be less than a 1% increase for Foxconn overall. That suggests they're probably willing to bear extremely high costs to establish new sites, as long as those sites will eventually yield significant revenue. Their negotiating tactics here seem short sighted from my point of view, but when you're as large as they are you create your own conditions. Edit: Like...this deal seems to allow them to operate any of their businesses in Wisconsin. If they decide not to, they burn bridges in Wisconsin, but they wouldn't care about burning those bridges because burning them means they don't want to do business in the state. It seems like all they lose is their negotiators' salaries, small (for them) facilities costs, and whatever general goodwill they lose.
AaronFriel 6y ago
This may be too political for Hacker News, but... Hope that the Governor of Wisconsin stayed a Republican? Now, that's not to say Democrats can't engage in grift, but, the deal was started under a Republican Governor in a notoriously corrupt state where the promise of Foxconn jobs was lauded by legislators, the governor, and the former President as a win for the people of the state, for our country, and a blow to China (that we were taking jobs back). Foxconn's incentives seemed aligned with promising the moon and if those people were reelected, well, wouldn't compensating Foxconn for those promises and their outcome (the election outcome, not the factories) be fair?
- boomboomsubban 6y ago
  Why would Foxconn care who governs Wisconsin?
  - dodobirdlord 6y ago
    If the deal never really made sense and was just a ploy by the Governor to drum up support, then a change in administration would mean that the new administration has no interest in paying off Foxconn for their part in the charade.
    - aj7 6y ago
      Exactly.
  - AaronFriel 6y ago
    Foxconn negotiated a deal with members of a political party that was in power, that deal was an empty promise, and those power brokers used that promise from Foxconn as part of their political messaging with the hope of being reelected. Had those politicians stayed in office, it's possible they would reward Foxconn for participating in the charade that helped them obtain reelection. Is it certain? No, I won't say it is. But, what else was Foxconn's goal if not to actually realize those incentives without having to make the investment to justify them? They knew they were promised an enormous incentive by the state, and they knew that they would not fulfill their end of the bargain. If they also knew that they wouldn't realize those incentives, why did they pursue them? The simplest answer is that they fully intended to realize them. Surely at least some of the negotiators of that deal legitimately believed that the other party - the Republican Governor and majority legislature in the state - would play ball?

_jal 6y ago

The tax breaks to Foxconn were just one aspect of the deal, and unless you're specifically interested in Foxconn, it makes sense to look at everything that happened. Hundreds of millions were spent on variously infra improvements, eminent-domaining people out of the way, lawyers, etc. https://www.chicagotribune.com/suburbs/lake-county-news-sun/ct-lns-foxconn-investment-fact-check-st-0202-20190201-story.html https://www.chicagotribune.com/suburbs/lake-county-news-sun/... I actually don't know how much Foxconn did get out of it. They've apparently run similar scams elsewhere, it appears to be a Foxconn side gig. There's a fun book in here for a scrappy investigative journalist.

deleted 6y ago
[deleted]
bilbo0s 6y ago
Well, as a Wisconsinite I'd be remiss in not pointing out that this is the Chicago Tribune. Chicago and Illinois are always gleeful about the various piles of excrement we land ourselves in here in Wisconsin. That said, yeah, I also have to be honest. We're down about 1 billion dollars on that Foxconn thing. That's what we're out of pocket. The new governor, wisely, took what remained of our chips and left that table. You get mad, but you just have to chalk it up to a learning experience. The Illinois people are right on this one by the way. Not even in Illinois would their leaders get away with a 5.5 billion dollar con. The people in Illinois are so used to dealing with corruption that they would have started asking questions and raising a fuss long before it got to that point. Our problem is that we're so accustomed to our corruption that we never raised a fuss until it was way too late. All that said, in Wisconsin our leaders didn't get away with 5.5 billion dollar con either technically speaking. Scott Walker and his boys got us for about a billion, but they didn't get as much as they wanted. So fibs shouldn't gloat too much, because while I can't see anyone in Illinois getting away with a 5.5 billion dollar pure con, I could see someone getting away with maybe a billion. (It's just that they're far more wealthy than we are, so that billion doesn't hurt as much.)
- ProAm 6y ago
  > you just have to chalk it up to a learning experience Everyone knew from the start this was a BS deal and never going to happen or make ANY sense. This was pure incompetence at a political level that was paid for by tax payers.