Two days after Foxconn said it no longer planned to build a sprawling new factory in Wisconsin, the Taiwanese technology giant appears to have reversed course, citing a “personal conversation” with President Trump.
In case you aren’t following the story, Foxconn pledged 13,000 jobs and a $10 billion dollar plant in return for $3 billion of state tax incentives. The only part of the whole thing that was real was the photo opp with Trump, Scott Walker and the Chairman of Foxconn. This is the most telling part of the story:
Foxconn said in 2013 that it would invest $30 million and create 300 jobs at a new high-tech factory in central Pennsylvania. But after the spotlight faded, Foxconn quietly scrapped those plans.
Can any of you give me a good example of an economic development deal like this that’s panned out in your neck of the woods? Here in Rochester, we have a long track history of the state providing tax breaks and other incentives to companies for them to build new factories and employ scores of new employees, and I can’t remember a single one that overperformed — or even performed according to estimates. If they do get anywhere near estimates, it’s because the company already planned an expansion and was able to get a tax break for something they would have done anyway. But both Republican and Democratic politicians love these kinds of deals: the Democrats because of jobs, and the Republicans because they help their buddies. Only the Republicans seem to get much out of them in the end.
The Moar You Know
No. San Diego voters are repeat suckers for this kind of corporate ripoff and not a one of them has made money or a single job for anyone.
My favorite local tale is that of Buck Knives (because one of the politicians who put this wonderful deal together is someone I know personally and loathe) who took several million dollars from the local EDC to expand their facility and then took that money, closed their plant and fired everyone, and moved to Idaho.
ETA: Foxconn will never build that plant in Wisconsin.
NotMax
The industrial equivalent of sports team owners extorting money for a new stadium. Over and over and over again.
Mary G
LA got wise to this some time ago, and a $5 billion stadium/entertainment center is going up where Hollywood Park used to be, financed by private money.
catclub
@Mary G:
Seattle got wise to it and the NBA yanked the franchise. The difference between being Seattle and LA.
Citizen Alan
Isn’t Foxconn the company that had employees in China killing themselves by leaping from the upper floors of the factory because working conditions were so bad?
Mary G
@catclub: LA had its NFL team yanked, and we lived happily without one. The NFL finally caved. Seattle was screwed by Howard Schultz, wasn’t it?
ruemara
I’ve watched this fuckery play out even with our local Bernista favoring council many nights during meetings. It never works out.
@Citizen Alan: Yep.
chopper
so now they’re backing off the plan of walking away, drumpf is gonna strut over it (and prob brag about it during the SOTU), they’ll extract some more tax breaks and a year from now they’ll pull the plug on the whole thing again and i’ll laugh and you’ll laugh and we’ll all die a little inside.
chopper
@Citizen Alan:
that was before they installed the net. (taps temple)
FlipYrWhig
@catclub: And, because everything connects in a glorious circle of bullshit, the architect of that deal was… Howard Schultz (Slate, “Howard Schultz Is Very Sorry He Sold the Beloved Local Basketball Team,” 1/28/2019).
chopper
@catclub:
and now the fuckbag that made sure the sonics left for oklahoma (fucking oklahoma?) is running for president on the ‘fuck you assholes, i’m a deep thinker’ ticket.
lollipopguild
Toyota built a car plant in Georgetown Kentucky years ago that actually is still there and has 1000’s of people working there. Toyota brought a lot of their suppliers to Kentucky which meant lots of jobs around the state working in those factories. Sen turtle opposed the deal with every fiber of his being(The Gov. was a Democrat) but when Toyota finally decided to build in Kentucky rather than another state it was the Sen. turtle that tried his best to take credit for the plant coming to KY.
Major Major Major Major
San Francisco has paid out a lot to keep tech companies in the Mid-Market area. https://m.sfgate.com/business/article/Companies-avoid-34M-in-city-taxes-thanks-to-6578396.php
chris
Well… shit
More: https://www.washingtonpost.com/local/virginia-politics/va-gov-northams-medical-school-yearbook-page-shows-men-in-blackface-kkk-robe/2019/02/01/517a43ee-265f-11e9-90cd-dedb0c92dc17_story.html?utm_term=.61ba10f5ef19
PsiFighter37
@chris: Paging Governor Justin Fairfax…
WhatsMyNym
@Mary G: Seattle has been awarded an NHL expansion team, and the same arena that the Sonics used is being rebuilt by the owners of the NHL team.
NotMax
@Major Major Major Major
How y’all holding up in your first New York deep freeze? Sabrett dirty water hot dog* carts disappeared from the streets?
*Not necessarily true, it’s what we used to use as a generic for all the brands of outdoor carts.
Martin
No, none.
Nothing about this plan made sense to me from the outset. Foxconns originally stated intentions for the space were obviously non-viable economically. Their revised intentions for the space was a bit more viable, but also revealed that the only way Foxconn can make this work is through highly skilled labor – which is not how it was sold to the public. It might have worked if Walker hadn’t simultaneously hamstrung UofW. The revised-revised plan for a research park certainly could work, but we’re now talking MS/PhD level engineers, which means nothing but H1B visas – again, not helping the white working class that Walker was pandering to. (H1B visas are needed because at best you’ll find 30% of MS/PhD engineers are US residents.)
That Walkers people bought into this plan in the first place is just evidence of how stupid they are. The economics around manufacturing labor in the technology space aren’t really that complex to grasp. If you want blue collar jobs, you need to provide a pool of 100K potential workers, and 2-year industrial engineer numbers in the thousands. Tech scale is way more massive than people seem to realize, in part because the time to market pressure is huge, and annual retooling isn’t uncommon. And you better find a way to pull cost of living in line with your own proscribed minimum wage, because you fucking know that was a selling point for coming to WI in the first place. If you can’t do those things (WI did none of them) then it’s going to fail. You can work up the difficulty ladder, but you’ll trade skilled labor for BS degrees, and AS degrees for MS degrees. That addresses the wage/COL and reduces the workforce numbers, but again, you have to provide those workers.
I went through this more than once with Gov Browns office – with potential employers coming in and laying out the size of the labor pool they’d need, and even here in CA, with 20 million workers and 3 public university systems serving 3 million students, we couldn’t produce the labor pools they needed. We could have, but that would involve building or repurposing two of the states 2-year colleges, and building the equivalent of a top-25 engineering program – all in 3 years. China does shit like that all the time (I should know, I’m helping to build one in China) but there was no fucking way CA was going to be able to pull it off.
This was slightly better considered than the Kansas experiment of ‘burn the education system to the ground, unpave the roads, and good jobs will come’ but only slightly.
chris
@PsiFighter37: I’m not sure what to think at this point but the screeching will earsplitting.
??? Goku (aka Amerikan Baka) ??
@chris:
Fuck. I hope this doesn’t hurt Dems this November in Virginia. It probably won’t.
However, given Northam’s age, he may not be particularly proud of that moment in his life any longer. If it was him in that picture, he needs to apologize and say that no longer represents his beliefs.
Given the GOP’s defense of Confederate monuments, I highly doubt their sincerity in this. Why wasn’t this used when he first ran for governor in 2017?
Smedley Darlington Prunebanks (formerly Mumphrey, et al.)
@chris:
Yes, at this point, I’m dubious. I don’t know if anybody has seen the yearbook itself yet. Another thing I’ll point out is that printers sometimes fuck up. In my high school yearbook, where the picture of my track team should be, there’s a shot of some woman’s track team from some other high school. I’m inclined to wait and see what he has to say. I have to wonder that this didn’t come out before now if it’s for real. He went through two state senate elections and two statewide races, and this never came up? I don’t know…
Martin
@Mary G: And I will point out that LA got two shitty NFL teams and 2 years later one is in the Superbowl, the other in the playoffs, and neither has a stadium. I can only conclude that having a stadium makes them worse.
NotMax
Will ICE stage a break in?
chopper
@??? Goku (aka Amerikan Baka) ??:
i’m sure the explanation the virginia GOP wants is ‘why couldn’t he be in blackface AND wearing a white sheet?’
catclub
Everybody from Seattle hates on Schultz for losing the Sonics. The way I see it, in the Sonics deal he was a businessman who decided the Sonics would not be profitable enough to keep, so he sold them.
I would say the NBA allowed a group that was certain to yank them to OKC buy them, which they could have blocked if they wanted Seattle to keep the team. But the NBA was pissed that the people of Seattle did not pay ransom to keep the team. So the other NBA owners decided to let Seattle learn a lesson. This was not (much) Schultz’ fault.
Note that Schultz did not do the actual yanking to another city. Blame the owners that yanked the team for moving it.
catclub
@chopper:
So Schultz is a Democrat after all. Only Democrats have agency. The guys who bought the team and moved it have zero agency in moving the team. April Glaspie is 100% responsible for Saddam invading Kuwait.
Yutsano
@WhatsMyNym: Key Arena is home to the WHL Thunderbirds. So at least as far as the floor is concerned it’s ice ready. The interior the last time I was there definitely needed some love. And that was 20+ years ago.
I would be totally okay if the new NHL franchise buys out the name and the logo from the current one.
Cause it’s just heckin’ cool.
trollhattan
@catclub:
It was a fuck you from Schultz to the city-county for not building him a spiffy new arena.
The good news is it so mortified the NBA that Stern personally intervened to keep the Kings in Sac, even when a Seattle zillionaire tried to sneak them up there. By contrast the NFL seems pretty cool with their owners shuttling teams wherever the hell they wish.
les
Hey, if you squint just right, incentives work here in Kansas City! Businesses regularly move across the state line to/from KS/MO, and vice versa, to get state and local money. ‘Course the net for the metro area is zero jobs, but hey…
chopper
@catclub:
totally, the fact that he sold to the team to bunch of guys in oklahoma (who wanted oklahoma to have their own team), being pissy about the fact that the city wouldn’t hook him up a fancy new stadium, was meaningless. it’s not his fault.
he wanted luxury boxes for rich people. i mean, if rich people can’t have luxury boxes why even try??
chopper
@trollhattan:
everybody. literally everybody. in seattle knew once the team was sold that it was gonna move. except schultz, apparently. it’s like that simpson’s episode only backwards; everybody knows the Isotopes are gonna move to albuquerque except for homer.
Jay
@catclub:
Deadspin had a great article on Schultz’s Sonics.
He penny pinched on the front end, back end, middle. Treated the Talent like Starbucks employees, drove away the working class fans who filled the seats with high prices, destroyed the product with horrible trades, didn’t do any maintenence or construction on the buildings, team or front office staff,
Then when the City refused to build him a new stadium full of fancy skyboxes that he could fill with the Corporate class for mucho dinero,
He sold the team in a fit of pique.
They couldn’t even give enough tickets away to fill the seats for the last games under Schultz.
Gravenstone
Oh hey! That would our piece of shit former governor who gave away the store to Foxconn for this latest piece of corporate vaporware. Even if they do build some semblance of manufacturing facility, ti will be so heavily automated that the actual job count will barely be in the hundreds, let alone the bald faced lie of 13,000.
Gravenstone
@NotMax: Yeah, my only question was would they sweep her up before the speech, or after. Or maybe as a solid to Dear Leader *spit* they’ll swarm in during the height of it to yank her from the balcony seats.
chopper
@Jay:
exactly. he fucked this over in like 8 different ways. he was your typical rich entitled prick about the whole thing, the whole time. every single day.
fuck that shit.
Jay
@chopper:
Yup, Disruptor Class CEO, drive down costs, drive up prices, loot the Company for short term gain, drive up shares, get while the getting is good.
If the Seattle Sonic’s could have issued stock options they’d still be in Seattle.
Dan B
WA state’s current Governor Inslee gave 8 Billion+ to Boeing to build the 787 in the state. He didn’t get a job guarantee in the deal so……..
I don’t recall all the gory details but a simple search should yield plenty.
NotMax
@Gravenstone
Or, FSM help us, Dolt 45 will stop midway through to perform a citizen’s arrest.
boatboy_srq
I can’t think of one. I can, however, think of a number of European auto makers who are probably reconsidering the plants they set up – mostly in the South – as possibly bad investments now that Donald “no more Mercedes on Park Avenue” Drumpf is PeeOTUS.
debbie
This kind of thing happens constantly around here (at a smaller scale obviously). They hand out tax breaks, TIFs, etc. and rarely will the business follow through on their end of the deal. This has gone on since the 1990s (maybe earlier, but I wasn’t living here then). Two small examples: A company got a TIF in exchange for creating 120 jobs, but only ended up creating 12. A new company moved here, got a 5-year tax break, and then relocated to another state after 4 years. What ticks me off the most is that the benefit is never clawed back or cut off.
miroker
Scripps was supposed to bring a rather large bio-med research facility to the south Floriduh area, and even though they did open it, it was not the job producer Jeb Bush gave them tax credits for.
Michael Cain
Vestas (wind turbine manufacturer) received modest state and local incentives when they located their United States production in three locations along Front Range Colorado. They employ about 3,100 at the three facilities, and are talking about expanding one of the blade factories to handle longer blades. Some of the incentives were “in kind” stuff — eg, additions to the curriculum at a couple of the nearby community colleges so that Vestas could hire pre-trained workers.
OTOH, the Front Range was pretty much the only place that could offer a combination that included a steel mill big enough to handle tower segments, affordable space big enough for blade construction, enough tech infrastructure to subcontract nacelle/generator components, existing rail infrastructure that tied all three locations together, and proximity to their major markets. The incentives were less “Can we bribe you to put the manufacturing here?” and more “How can we help a major local employer be more successful?”