Foxconn changes $10B Wisconsin project from factory to "research hub"

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Foxconn Technology Group said Wednesday its planned $10 billion Wisconsin campus will now be a research hub, not a blue-collar manufacturing center, as originally promised, while insisting it remains committed to creating 13,000 jobs at the state-subsidized site.

The much-touted facility was heralded by President Donald Trump and former Wisconsin Gov. Scott Walker as proof that they were returning manufacturing to the Midwest and the United States. Foxconn, a major supplier to Apple, is the world's largest contract maker of electronics and China's largest private employer.

Already, the company's hiring pace is slowing down in Wisconsin. Foxconn fell short of its employment goal in 2018, hiring 80 fewer people than the 260 it promised and missing a $9.5 million state tax credit. It initially projected hiring 5,200 people by 2020, but is on track to hire just 1,000, according to Reuters.

In a statement 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 environment that existed when the project was first announced in 2017 has shifted, "this has necessitated the adjustment of plans for all projects, including Wisconsin."

Louis Woo, special assistant to Foxconn CEO Terry Gou, told Reuters in a story published Wednesday that its plans to build liquid crystal display panel screens are being scaled back and possibly shelved.

"In terms of TV, we have no place in the U.S.," Woo told Reuters. "We can't compete." Woo also 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 create a "technology hub" that would largely consist of research facilities 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 jobs.

Foxconn said in its statement that it was broadening its base of investment in Wisconsin to ensure the company and workforce will be positioned for long-term success. That includes focusing on research and development in advanced industrial internet technologies and producing high-tech applications and solutions for industries such as education, medical and health care, entertainment and sports, security and management of municipal services, Foxconn said.

The Taiwan-based company billed the massive 20 million-square-foot campus as its first North American manufacturing site for the next generation of liquid crystal display panels to be used in a wide variety of products, including large-screen TVs, self-driving cars, notebooks and other monitors.

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

A spokeswoman for Wisconsin Gov. Tony Evers, a Democrat who was critical of Foxconn in the campaign against Walker, did not immediately return a message seeking comment. A spokesman for the Wisconsin Economic Development Corporation, which brokered the deal with Foxconn, also did not immediately return a message. Neither did Wisconsin Republican legislative leaders who pushed the Foxconn project.

Democratic critics, including Evers, said the incentives promised to Foxconn were too rich and questioned whether the company would ever fulfill its job creation and investment promises. They also said the massive plant that was relying on water from nearby Lake Michigan posed serious environmental risks .

"Every step of the way Foxconn has overpromised and under-delivered," said Democratic Wisconsin Assembly Minority Leader Gordon Hintz 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."

What this move does affect is the local businesses that have agreed to partner with Foxconn.

Merrill Steel, County Materials, and the Ginseng Board of Wisconsin have all planned to be involved with Foxconn's Wisconsin presence.

Local legislatures weighed in to say what they think this move means in Wisconsin.

"I don't think someone who wants to drop everything and pull out would give 100 million dollars to University of Wisconsin. So I do think that there is a lot of positive things that are yet to come knowing Mr. Gou and Foxconn,” said Republican Representative Pat Snyder who represents Wisconsin’s 85th Assembly District.

"I certainly would worry whether or not Foxconn would renege on that contract moving forward, and what kinds of protections are in place for the local businesses. At the end of the day I want to make sure our small businesses are thriving and that our local economy is strengthened," added Democratic Representative Katrina Shankland who represents Wisconsin’s 71st Assembly District.