How Wisconsin Lured Foxconn's Massive Manufacturing Plant
If everything goes according to plan, the joint efforts of Wisconsin’s Republican revolution and the Trump administration are about to pay off in a deal of historic dimensions.
Foxconn Technology Group, a Taiwanese multi-national corporation which is the world’s largest contract electronics firm, has agreed to make a $10B investment in a new, state-of-the-art production facility in southeastern Wisconsin. The plant’s purpose will be to manufacture active matrix liquid crystal displays (AMLCDs) for use in assembling computers, televisions, iPhones, medical equipment, aircraft and automotive displays, and the like (Foxconn holds the contract to assemble iPhones for Apple).
The proposed manufacturing campus is expected to occupy some 20 million square feet -- larger than the Pentagon, and equivalent (as Governor Walker noted during the announcement) to 11 Lambeau Fields in area. This will be the first factory of its kind in the United States, and the only one not presently located in Asia (the others are located in China, Japan, South Korea, and Taiwan). The plant is expected, over the next fifteen years, to employ some 13,000 people in all capacities. Its construction will generate some 10,000 construction jobs, as well as 6,000 additional jobs in companies supplying goods and services for the construction contractors. It is expected that as many as 150 suppliers of goods and services in the area will generate as many as another 22,000 jobs in southern Wisconsin and northern Illinois. The company claims that the average salary for employees will be about $54,000 per year with full benefits.
As an inducement to settle in Wisconsin, the state is offering an incentive package totaling some $3B, to be paid out over 15 years as the company ramps up. These include capital improvements in the region, such as the widening of I-94, the highway which connects the Milwaukee area to Chicago, to four lands from the present three. When fully in operation, Foxconn’s payroll is expected to be in the neighborhood of $700m per annum.
Why Wisconsin? There are a number of reasons entirely aside from the incentive package, which many other states might have offered:
- Wisconsin already has a very large manufacturing base. Though the state’s motto is “America’s Dairyland,” Wisconsin has the second-largest manufacturing base of any state in the union (Indiana is first). Among other things, this means that Wisconsin has the technical schools and university system to train the numerous technicians, engineers, and so forth who will be in demand by the new plant (and the technical colleges and local university campuses are already making plans for the expected expansions).
- Since the Walker Revolution of 2010 -- when the Republicans took over nearly all state-wide offices as well as control of both houses of the state legislature -- a number of reforms have made Wisconsin a far more attractive state in which to do business than was the case previously. These include reductions in income and property taxes, balancing of the state budget by curtailing public employee unions and restricting spending, the passage of a “right to work” law, and a much friendlier regulatory climate than was the case previously. Prior to the Republican takeover in 2010, Wisconsin had been ranked near the bottom of states in which one might want to do business, and numerous companies were considering leaving the state or curtailing their operations there. Now, it is considered in some rankings to be among the top five.
- AMLCD manufacture requires access to plentiful supplies of water, and Lake Michigan fills the bill very nicely.
- Location, location, location: Located near the geographical center of the country, shipments to and from the plant to destinations throughout North America can be made in a very cost-effective and economic manner. Proximity to both Mitchell International Airport in Milwaukee and O’Hare in Chicago, as well as smaller regional airports in Racine and Kenosha Counties (where sites for the plant are being considered) are certainly a plus as well.
The southeastern Wisconsin region -- south of Milwaukee County, previously somewhat of a depressed area -- has seen a tremendous uptick in employment since the Walker administration came into office in 2010. A major Amazon distribution center was built in Kenosha County, and numerous smaller firms relocated there from the terrible business environment of Illinois.
Illinois, of course, is still firmly in the grip of the Democratic Party, and is one of the two midwestern states which Hillary Clinton won in 2016.
As a Wisconsin resident: Thank you, Illinois.