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View from around the state: Foxconn deal demands due diligence

A development project the magnitude of the $10-billion investment the Taiwan-based Foxconn Technology Group is anticipating making in southeast Wisconsin doesn’t come around very often.

But when it (or a relatively smaller development project) does, the public reaction usually holds to a familiar arc: extreme excitement followed by a healthy dose of cynicism before settling into cautious optimism.

Gov. Scott Walker has touted the “Wisconn Valley” project as a once-in-a-generation opportunity. The 20-million-square-foot-campus would build LCD panels for TVs, computers, the medical field and other uses. The company has said it could eventually employ 13,000. Construction is expected to begin in 2020.

There are two primary concerns with the Foxconn deal: ensuring the Wisconsin taxpayer gets bang for their buck and preventing the corporation from running roughshod over the state’s environment.

Foxconn Wisconsin

Whether you believe states should offer tax incentives in an attempt to boost its economy or if the term “corporate welfare” makes the hair on the back of your neck stand up is a discussion for another day. Like it or not, corporate tax incentive packages have become part of the process of luring businesses to a state.

Wisconsin is considering a $3 billion incentive package, which is more than twice as much as the $1.3 billion Nevada offered to electric car manufacturer Tesla in 2015, but pales in comparison to the $8.7 billion Washington gave Boeing in 2013.

An analysis from the nonpartisan Legislative Fiscal Bureau said it will take at least 25 years for Wisconsin taxpayers to break even under the deal as currently constituted.

A report commissioned by the Wisconsin Technology Council was released stating economic ripple effect could create an additional 19,000 to 26,000 jobs through growth from the company’s suppliers and other businesses in the region. University of Wisconsin-Madison economist Noah Williams, who authored the report, concluded the development could mean a return of $3.90 for every $1 in state subsidy costs. The Wisconsin Technology Council has previously come out in support of the project.

We do know that the technical colleges in the area would have to expand and invest to train the skilled workers needed and that would have additional impact. And it stands to reason there would be other areas of additional growth beyond what Foxconn itself provides. Whether the nearly 4-to-1 return on investment comes to fruition, only time will tell.

Making LCDs often requires heavy metals such as mercury, cadmium, chromium, zinc and copper. In the United States, companies are required to disclose the materials they use. The proposed Wisconsin development is Foxconn’s first American venture.

There is a correlation between the Foxconn plant in China and the pollution of nearby waterways.

Many environmentalists are uneasy that the current bill allows Foxconn to discharge materials into wetlands, fill lakebeds to create more land and reroute streams during construction and operation without obtaining permits from state regulators. The bill also waives the need to provide an environmental impact statement.

Gov. Walker countered by stating the waivers are to ensure the construction timeline, but Foxconn would still have to abide by the usual state and federal environmental standards. The legislation requires that for every 1 acre of wetlands that is lost, the company would restore 2 acres of wetlands.

Foxconn reaffirmed late last week that it is committed to “minimizing the negative impact of our operations on the environment,” in a statement to The Associated Press.

“In line with this, we will be implementing measures for our Wisconsin campus in areas, including environmentally friendly product design, carbon emission reduction, process management, energy efficiency and resource management, and supply chain management, among others,” the company said.

The Wisconsin Assembly passed the incentive package on Aug. 17. The state Senate is expected to to consider and likely pass the bill soon. Then it goes to the Wisconsin Economic Development Council for underwriting and final negotiation with Foxconn.

As legendary UCLA basketball coach John Wooden espoused, “Be quick, but don’t hurry.”

Due diligence is and will continue to be critical as this project moves from inception to completion.

We are encouraged that the Legislature continues to seek firm benchmarks between the incentives and job creation. We need to learn from the mistakes of other states. Washington watched Boeing cut 15 percent of its workforce since 2013, while continuing to take full advantage of the tax credits given. Creating those protections are essential, whether they are obtained through the legislative process (ideally) or through WEDC’s negotiation of the specific terms of the deal after passage.

It is imperative that our government officials deliver the best deal possible for Wisconsin taxpayers while holding Foxconn accountable for its environmental promises.

If those things occur, the Foxconn deal has the potential to be a big win — not only for the company, but for the region’s economy and residents as well.

— Kenosha News

Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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