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It's been 18 months since Foxconn Technology Group, the world's largest electronics manufacturer, announced with great fanfare that it would build a US $ 10 billion factory to manufacture TV screens on farmland in southeastern Wisconsin (United States).
The plan was as ambitious as it was daring: fed by billions of taxpayer subsidies, the Taiwanese company, formerly known as Hon Hai Precision Industry, would build a 22 million square foot campus filled with 13,000 workers well paid. At the same time, it would transform the sleepy village of Mount Pleasant, Wisconsin into a state-of-the-art international manufacturing center.
But a year and a half later, a central question remains: where are the jobs?
Foxconn had only 178 employees in December, thus missing its target of 1,040 jobs by the end of the year and leaving millions of dollars in incentive bonuses.
Considered as the largest investment in a new venture by a foreign company in the history of the United States, based on the creation of jobs, the promises contained in the memorandum of understanding signed in July 2017 between the state of Wisconsin and Foxconn were unequivocal. The project would create 13,000 jobs by 2032 on the sprawling Racine County site, for an average annual salary of nearly $ 54,000.
In return, the state offered Foxconn 3 billion US dollars in tax credits and other public incentives.
With the substantial changes resulting from the initial agreement – including greater emphasis on research and development – it is increasingly uncertain that society will achieve its ambitious goal in 15 years, if ever.
"It does not seem to be a workable project," said Susan Helper, an economics professor at Case Western Reserve University. "How do you find 13,000 people going to an institution like this?"
After Donald Trump's intervention, Foxconn announced that it would build a plant in Wisconsin
Union experts said the plant would face headwinds if it wants to meet its hiring goals. A low unemployment rate of 3% in Wisconsin and intense domestic competition for employment in the high tech sector have already allowed Foxconn to attract talent to its nascent campus.
Providing new jobs was the central justification for allocating significant resources to taxpayers, and the lack of early hiring left Foxconn and economic development officials scrambling to rebadure taxpayers that everything is in the mix. right way.
The Foxconn deal, announced in July 2017, has been championed by President Donald Trump and former Wisconsin Governor Scott Walker as a way to create thousands of new manufacturing jobs in the United States . The company planned to make big-screen televisions, staff over time, and make the region the "capital of electronics manufacturing in North America," county officials said.
He would join major companies such as the new, imposing Uline packaging vendor's headquarters and the giant Amazon.com distribution center in a better-known cheese and bratwurst district.
The case immediately faced skeptics. Some thought that national and local incentives of nearly $ 4 billion – among the largest ever offered to a foreign manufacturer – made the transaction too expensive to pay, while others wondered if Foxconn would follow suit this initiative, based on several previous projects that had failed. outside.
The recent reversals of the leaders have only fueled the doubt, but the company reaffirms its commitment to the project.
"Foxconn is continuing its project in Wisconsin," the company said in a statement. "The company remains committed to its long-term investment and the creation of 13,000 Wisconsin jobs."
Foxconn rethinks the possibility of making LCD panels at a Wisconsin plant in the United States
While the main campus, dubbed the Wisconn Valley Science and Technology Park (Silicon Valley, but near Kenosha), began sprouting in the bucolic village 30 km south of Milwaukee and 60 km north. of Chicago, in Racine County.
It is not known, however, how much of the installation will be devoted to manufacturing. The company has made a number of statements over the past few weeks, stating that engineers could account for between two-thirds and 90 percent of the workforce, a composition that is quite different from what was originally envisioned by the manufacturing sector.
Recent doubts began in late January when Foxconn Chief Executive Officer Terry Gou Tai-ming told Reuters that his company was rethinking its commitment to the project.
"In terms of television, we have no place in the United States," he said. "We can not compete." He added that the Wisconsin plant would become more of a research center.
Foxconn plans to plant a factory in Vietnam in response to the US-China trade war
Foxconn's position changed once again after the company, citing a conversation between Trump and Gou, announced that the manufacturing plans would be maintained.
Yet plans are constantly changing. Foxconn said the facility will now produce smaller screens for smartphones and tablets, as opposed to large-screen TVs, reflecting changes in the global market.
The company also presented the construction projects for the next 18 months, including a liquid crystal module packaging plant, a system integration badembly plant, a research and development center and a city center for help people working in the park.
Yet, throughout the discussion, Foxconn has not reached the 260 minimum jobs required by the end of 2018 to qualify for part of the first round of incentives, and may not meet its credit targets. annual taxes by at least 2020, which raises questions. both the scale of the project and the availability of skilled talent in southeastern Wisconsin.
"It's no surprise that Foxconn has struggled to find workers because the job market is very tense," said Noah Williams, professor of economics at the University of Wisconsin in Madison, who had written a report. favorable evaluation of Foxconn's initial proposal.
By focusing more on research and development, Foxconn may find it even harder to achieve its hiring goals as the number of engineering graduates in Wisconsin is not large enough to provide thousands of new jobs, said Williams.
In November, The Wall Street Journal Foxconn, desperate for talent, considered bringing in engineers from China. The report quickly denounces Foxconn's refusal, but it highlights the sales difficulties the company faces as it tries to recruit against established technology hubs such as Silicon Valley.
Williams said the Chicago area is a better pool of potential talent for Foxconn.
"If the workforce demanded shifted to more engineers and knowledge workers, the (recruiting) problem … would be even harder," Williams said. "There has been an effort to recruit in Illinois, and this is likely to intensify."
Mark Hogan, chief executive of the Wisconsin Economic Development Corp. (WEDC), who oversaw the deal with Foxconn, said Tuesday that if the project slowed down and did not achieve its employment goals, taxpayers would be protected.
"WEDC's performance-based contract with Foxconn provides the company with the flexibility to make these business decisions and at the same time protects Wisconsin taxpayers," Hogan said in a statement. "As reported, Foxconn will only be able to claim tax credits at the earliest in 2020, and only if the company meets its annual requirements for job creation and investment.
However, this does not reflect other significant costs already incurred, such as the US $ 50 million pledged by Mount Pleasant for more than 1,000 acres for the project, or the US $ 300 million of infrastructure put in place by the village and the county.
For Case Western's Helper, the former chief economist of the US Commerce Department under the Obama administration, the shift to higher-paying jobs in research and development would essentially Foxconn's goal of 13,000 employees out of scope.
Foxconn announced plans to bademble high-end Apple iPhones in India in 2019
"I have never heard of a 13,000-person R & D lab," said Helper.
Beyond the heaviness of the project, attracting a large number of engineers to southeastern Wisconsin would be a challenge given the competitive opportunities available in more fertile technological climates, she said.
"You're moving to Silicon Valley, this job is not working, there are hundreds of other employers you could possibly go to," Helper said. "But you're going to Mount Pleasant, Wisconsin, and you're rooting, what's the next job for you?"
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