Back in the summer of 2017, to much fanfare President Donald Trump announced that Taiwanese electronics giant Foxconn, best known for making the iPhone, would build a new plant producing LCD panels in Wisconsin that will bring thousands of jobs to the state.
On the surface it was great deal: in what’s being called the “largest economic development project in state history”, Foxconn said it would build a $10 billion plant that will eventually employ as many as 13,000 people, according to the White House and Gov. Scott Walker. To be sure, it was a quid pro quo: to help lure the manufacturer, the state pledged $3 billion in tax and other “performance-based” incentives and local authorities added $764 million. Foxconn must meet hiring, wage and investment targets by various dates to receive most of those benefits.
And while many – including this site – accused the project of being a giant taxpayer-funded boondoggle, calculating that every job created would cost some $230,000 in incentives, a little over a year later and even more disturbing “glitch” in the plan has emerged: according to the WSJ, instead of hiring local talent, Foxconn is considering bringing in personnel from China “to help staff the large facility under construction in southern Wisconsin as it struggles to find engineers and other workers in one of the tightest labor markets in the U.S.”
According to the report, the company has been quietly trying to tap Chinese engineers through internal transfers to supplement staffing for the Wisconsin plant.
And while Foxconn did promise that it would invest $10 billion to build a 22-million-square-foot liquid-crystal display panel plant, hiring 13,000 employees – primarily factory workers along with some engineers and business support positions – it apparently never specified if the workers hired would be American… or Chinese.
Responding to WSJ questions about its hiring plans, the company said its “Wisconsin first commitment remains unchanged,” adding that it still plans to ultimately hire 13,000, and the majority “will work on high-value production and engineering assignments and in the research and development field.”
And while “ultimately” Foxconn intends to hire Americans, it appears to be resorting to Chinese workers in the interim.
Why? It appears that the key hurdle is the tight labor market which is making recruiting a challenge. Unemployment in the state reached a record low earlier this year. At 3.0% in September, Wisconsin’s jobless rate is well below the national average, which hit 3.7% that month—itself a 49-year low.
“It’s very difficult to find skilled labor in our market,” said Loretta Olson, who owns an Express Employment Professionals staffing office in Racine, Wis., near the planned plant. She also serves on the board of the Racine County Economic Development Corp., which worked to attract Foxconn to the area.
In response, area employers are improving benefits and offering more perks to avoid having Foxconn poach their workers, Olson said. She said Foxconn is actively engaged with high schools and local colleges to produce the workers it will need at the plant when it is completed.
“All the technical schools and local universities are gearing up their programs, but I still think Foxconn is going to fall short in terms of finding the people they need,” she said. “They’re going to have to recruit from outside the area.”
And “outside the area” apparently also means China: Foxconn Chairman Terry Gou is looking to company engineers in China to transfer, according to people familiar with the matter.
Here the company has run into yet another hurdle, as some Chinese engineers have expressed reluctance to relocate to Wisconsin, which is less well-known to Chinese workers than U.S. tech hubs in California or New York.
One engineer who declined to give his name said he wouldn’t want to move to a place he worried could be as cold as Harbin, a northern Chinese city known as “Ice City.”
As a result, Chairman Gou is upset that few Chinese workers have volunteered to move to Wisconsin if called upon, the WSJ sources said.
The bizarre twist is hardly good news for Wisconsin Gov. Scott Walker, a Republican, who is in a tight race for re-election, and has been accused by his Democratic challenger, Tony Evers, of making a bad deal with Foxconn. Evers and other state Democrats have said the incentive package given to Foxconn was too large and have highlighted concerns over the company’s changing plans.
In June, Trump, Gou and Walker celebrated Foxconn’s planned investment at a groundbreaking in Mount Pleasant in June. President Trump thanked Mr. Gou for investing in the U.S. and said the plant, about 25 miles south of Milwaukee, “will provide jobs for much more than 13,000 Wisconsin workers.”
While Foxconn may ultimately hit its hiring target, it now appears that a substantial portion of those “Wisconsin workers” will come from China. Which means that despite the spin and posturing, the end results is that US taxpayers will have given Foxconn millions in tax incentives so the company can build a plant in Wisconsin where it hires… Chinese workers.