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Foxconn making changes to massive factory project (UPDATE)

FILE - In this June 28, 2018, file photo, President Donald Trump, center, along with Wisconsin Gov. Scott Walker, left, and Foxconn Chairman Terry Gou participate in a groundbreaking event for the new Foxconn facility in Mt. Pleasant, Wis. Foxconn Technology Group said Wednesday, Jan. 30, 2019 it is shifting the focus of its planned $10 billion Wisconsin campus away from blue-collar manufacturing to a research hub, while insisting it remains committed to creating 13,000 jobs as promised. (AP Photo/Evan Vucci, File)

President Donald Trump breaks ground for Foxconn’s plant in Mount Pleasant on June 28 alongside former Gov. Scott Walker and Foxconn Chairman Terry Gou. Foxconn said on Wednesday it is changing its plans for its $10 billion campus, moving away from blue-collar manufacturing toward having a research hub, while insisting it remains committed to creating 13,000 jobs as promised. (AP File Photo/Evan Vucci)

Foxconn Technology Group said on Wednesday it is changing its plans for its $10 billion Wisconsin campus, shifting the project away from being a blue-collar factory toward becoming a research hub, while insisting it remains committed to creating 13,000 jobs as promised.

The much-ballyhooed plant was heralded by President Donald Trump and former Wisconsin Gov. Scott Walker as a once-in-a-generation opportunity to bring manufacturing back to the Midwest and the United States. Foxconn, a major supplier to Apple, is the world’s largest contract maker of electronics and the largest private employer in China.

In a statement on Wednesday, Foxconn said it remains committed to the project, the creation of 13,000 jobs and “to our long-term investment in Wisconsin.” But because the global market that existed when the project was first announced in 2017 has shifted, “this has necessitated the adjustment of plans for all projects, including Wisconsin.”

Foxconn previously said it would spend as much as $10 billion on the project, but did not recommit to that number on Wednesday. But Wisconsin leaders said Foxconn has repeated that commitment to them.

Louis Woo, special assistant to Terry Gou, Foxconn chief executive, told Reuters that the company is scaling back and possibly shelving its plans to build liquid-crystal-display panel screens in Wisconsin.

“In terms of TV, we have no place in the U.S.,” Woo told Reuters. “We can’t compete.”

Woo said a factory would not be built in Wisconsin: “You can’t use a factory to view our Wisconsin investment.”

Instead, Woo said Foxconn wants to establish a “technology hub” that would consist largely of research centers along with packaging and assembly operations. Woo said about three-quarters of the jobs created will be in research and development and design, rather than blue-collar manufacturing.

Millions in prep work already underway

Although Foxconn officials say its Mount Pleasant project shouldn’t be considered a manufacturing plant, a number of construction projects are already underway to support such an operation.

The Taiwanese company initially billed its massive 20 million-square-foot Wisconsin campus as the first site in North American where it would be producing the sort of next-generation liquid-crystal-display panels that can be used in a wide variety of products, including large-screen TVs, self-driving cars and notebooks and other sorts of monitors.

Wisconsin state and local governments promised roughly $4 billion to Foxconn, the largest incentive in state history and the biggest pledged by a state to a foreign corporation in U.S. history. In return, Foxconn was required to spend $10 billion and create 13,000 jobs.

One key reason why Foxconn chose to develop in Racine County was its proximity to Lake Michigan water. A screen-manufacturing plant of the size promised by Foxconn would pull millions of gallons of water each day from the lake.

To support this massive demand for freshwater, Racine County has embarked on an overhaul of its water infrastructure — and has already awarded millions worth of contracts. In all, the county expects to spend about $120 million on its water system for Foxconn, which was expected to use about 7 million gallons of water a day.

By late November, the Racine Water and Wastewater Utilities had already awarded more than $40 million worth of water-infrastructure work to support the Foxconn project and other developments expected to follow the company to Mount Pleasant. Keith Haas, general manager of Racine utilities, didn’t return a message seeking comment by press time.

Bidding on water-infrastructure projects began in January and has taken place as recently as last week. Local utility officials announced last Thursday that Green Bay-based PTS Contractors and Luxemburg-based Dorner Inc. were the low bidders on water and sewer projects worth more than $9 million. Neither firm responded to messages seeking comment by press time on Wednesday.

The water-infrastructure work comes on the heels of various road projects taking place in and around Racine County.

Largest among these is the three-phase reconstruction of Interstate 94 between Milwaukee and the Illinois border, a job the Wisconsin Department of Transportation hopes to have finished by Memorial Day 2020, a deadline that would make it the fastest megaproject undertaken in state history. Including that project, WisDOT plans to spend more than half-billion dollars on road work to support the Foxconn plant.

Hospitals, utilities and private developers also have all announced plans to build in Racine County near the Foxconn project.

Advocate Aurora Health announced plans in May to build a $250 million hospital complex near the company’s site and Ascension Wisconsin followed suit with plans to build a $42 million medical complex in nearby Sturtevant.

We Energies in May said it would seek approval to build a 50-mile, $196 million gas pipeline near the complex. American Transmission Co. also plans to build a $120 million substation and transmission lines to power the expected Foxconn factory. Developers have snapped up land and announced plans to build a number of housing and commercial projects in Racine County.

According to initial estimates, as many as 10,000 construction workers would be needed to build the factory. In response, workforce-development agencies have been training people for jobs in the trades. WRTP/Big Step, a training organization with offices in Milwaukee and Madison, opened a training center in Racine County in April.

Mark Kessenich, president and CEO of WRTP Big Step, said his group has a partnership with Gateway Technical College and had planned to train workers in the sort of manufacturing work that was to take place at Foxconn. But even if the company’s promised manufacturing plant never materializes, training of this sort is in high demand in Wisconsin.

“Our goal is to upskill the regional labor market as much as possible,” he said. “The economy is going to continue to change. We have to keep pushing forward.”

Foxconn had recently told the newly elected governor, Tony Evers, that it would invest in a state-of-the-art system to reuse water pulled from Lake Michigan.

Evers, in a speech at a renewable-energy conference in Madison on Jan. 17, said Foxconn officials had told him the night before the conference that its planned $30 million Zero Liquid Discharge System would be among the largest of its kind in the country. Evers said he was encouraged by the company’s plans.

“I feel we’ll have a good partnership there,” he said.

An indication that Foxconn wouldn’t follow through with its initial plans came soon after.

In a letter to the Wisconsin Economic Development Corp. that same day, Woo said the company had not hired as many workers as it would have needed if it were to to claim tax credits. The company hired 178 employees last year, 82 short of the minimum number needed to earn $9.5 million from the state.

In the letter, Foxconn said building the new plant had put more than 800 people to work in 2018. The company said it had worked with 93 companies to prepare the site in Mount Pleasant, build a 120,000-square-foot “multipurpose” building and perform other work, and that 95 percent of those companies had their main offices in Wisconsin.

The letter also said the company would break ground on another series of projects this spring, including buildings to be used for work on advanced displays, manufacturing and “8K+5G research and development.”

Concerns and confidence over company’s plans

Marc Levine, senior fellow and founding director of the University of Wisconsin’s Center of Economic Development, called Foxconn’s change of plans “one enormous bait and switch.”

“It seems clear that, whatever Foxconn eventually develops in Wisconsin, this will look nothing like the project that Scott Walker and his cronies … sold to the public,” Levine said in an email.

He called the idea of Foxconn’s developing a research-and-development operation “fanciful” and said it was “highly, highly unlikely” that it would lead to 13,000 research jobs.

Foxconn said in its statement that it was broadening its investment in Wisconsin to ensure the company and its workforce will be positioned for long-term success. Its priorities include research and development in advanced industrial-internet technologies and the production of high-tech applications for schools and medical, entertainment and sports, security, and “smart” cities projecs, Foxconn said.

“Every step of the way Foxconn has overpromised and under-delivered,” Assembly Minority Leader Gordon Hintz, a Democrat, said in a statement. “This news is devastating for the taxpayers of Wisconsin. We were promised manufacturing jobs. We were promised state of the art LCD production. We were promised a game-changing economic opportunity for our state. And now, it appears Foxconn is living up to their failed track record in the U.S. — leaving another state and community high and dry.”

Racine County officials pushed back against the Reuters report on Wednesday, using a joint statement from Mount Pleasant Village President David DeGroot, Racine County Executive Jonathan Delagrave and Racine County Economic Development Corp. Executive Director Jenny Trick.

According to the statement, Foxconn officials on Wednesday repeated their commitments to building an advanced manufacturing facility in Mount Pleasant, hiring 13,000 people and investing $10 billion in Wisconsin — “contrary” to the report.

Local officials plan to spend hundreds of millions of dollars on land acquisition, construction and other costs associated with the Foxconn development.

Racine County and Mount Pleasant spent more than $190 million in 2018 to support the project — including $60 million from Foxconn for land acquisition. In the summer of 2017, officials estimated that the two entities would ultimately need to spend $763 million to support the project. But in late January, village and county officials said that cost estimate had risen to $912 million.

According to the joint statement on Wednesday, the company’s development agreement with local governments obliges it to spend at least $1.4 billion in Racine County, a sum that local officials say will “more than pay for” public spending on the project.

“As Foxconn has previously shared, they are evaluating exactly which type of TFT technology will be manufactured in Wisconsin but are proceeding with construction on related manufacturing, assembly and research facilities on the site in 2019,” according to the statement.

The president of the Wisconsin Technology Council, Tom Still, said he’s not surprised that Foxconn wants to change course since televisions are becoming less expensive and iPhone sales are declining.

Still said he’s not worried Foxconn will leave Wisconsin, noting the company has already invested as much as $200 million in the state. He said Foxconn can succeed if it places a priority on research and development subjects that match up with Wisconsin’s strengths — such as robotics, medical imaging, and industrial imaging.

Wisconsin Republican legislative leaders who pushed the Foxconn project said they blamed Gov. Evers for Foxconn’s changing plans.

Assembly Speaker Robin Vos and Senate Majority Leader Scott Fitzgerald said Foxconn was responding to the “wave of economic uncertainty” caused by Evers. Evers was critical of Foxconn in his campaign against Walker, but did not pledge to undo the deal. Republicans also said Foxconn was likely unsettled by Evers’ support for all-but eliminating a manufacturing tax credit to pay for reducing taxes for people in the middle class.

Evers’ top aide, Joel Brennan, said in a statement that the administration was “surprised” by the news and had talked to Foxconn officials about the development. He did not discuss Republicans’ accusations that Evers was to blame.

Democratic critics, including Evers, said the incentives promised to Foxconn were too rich and questioned whether the company would ever fulfill its promises. They also said the company’s plans to pull water from Lake Michigan for its manufacturing operation posed serious environmental risks.

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2 comments

  1. Wow, who saw this coming. No doubt this is a major blow to the area and to the country as it was a sign of things to come.

  2. BWAHAHAHAHAHAHAHAHAHAHAH!!!!!

    Best and most predictable news of the decade, you kool-aid drinking dummies.

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