Foxconn accused of breaking promises for Wisconsin electronics plant
Image credit: REUTERS/Kevin Lamarque
A controversial and costly deal to build an electronics manufacturing plant in the state of Wisconsin, US, is disintegrating, with the state accusing Foxconn of failing to uphold its end of the agreement.
Electronics manufacturing giant Foxconn had made an agreement with state leaders in 2017 to build a $10bn LCD panel manufacturing plant in Mount Pleasant, Wisconsin.
Under the terms of the agreement, Foxconn would employ 13,000 people and the state would give the company up to $4.8bn in subsidies (by far the largest subsidy paid to a foreign company in US history), paid in instalments. The deal was enthusiastically hailed by President Donald Trump as an example of a revival of high-tech manufacturing in the US. He described the proposed factory as the “Eighth Wonder of the World” when he attended a ground-breaking ceremony in 2018. However, critics of the deal have argued that the cost of subsidies per job is unacceptably high.
While the factory was due to begin production by the end of 2020, reports suggest that construction of the facility is yet to begin. Foxconn has also been accused of dawdling over the creation of nearby engineering centres.
Now, the state of Wisconsin has written to Foxconn to say that it will not get its first instalment of subsidies due to the company failing to uphold its end of the deal. According to Wisconsin, Foxconn will not come anywhere near meeting the terms upon which it agreed.
Under the agreement, Foxconn was to hire a minimum of 520 full-time staff to work in the factory by the start of 2020. Foxconn claimed that it had met this requirement by hiring 550 employees in the state overall, but the state argued that just 281 of these staff counted towards the requirement as agreed. Under another term of the agreement, Foxconn was meant to invest at least $3.3bn on the project by the start of 2020, but had only spent around $300m by that time.
“The fact that recipients have neither built, nor started to build or operate, the required Generation 10.5 TFT-LCD Fabrication Facility is not in dispute,” wrote Jennifer Campbell, chief legal officer of the Wisconsin Economic Development Corporation. “The recipients have acknowledged that they have no formal or informal business plans to build a 10.5 fab.”
Foxconn had originally agreed to build a plant to manufacture LCD panels based on the latest Gen 10.5 standard. This would involve cutting vast sheets of glass to provide panels for large display screens. Foxconn is reportedly planning instead to manufacture LCD panels based on the Gen 6 standard, which uses much smaller glass sheets and therefore requires less specialised equipment and fewer employees.
Wisconsin officials expressed a willingness to negotiate a different package of subsidies aligned with Foxconn’s altered plans. Missy Hughes, secretary of the Economic Development Corporation, wrote: “Once Foxconn is able to provide more accurate details of the proposed project, such as its size, scope, anticipated capital investment and job creation, [the corporation] would be able to offer support for the project with tax incentives as it does for many large and small Wisconsin businesses.”
Wisconsin State Representative Gordon Hintz, a Democrat, said that Republican politicians should be held accountable and said that this “cements Foxconn’s legacy as one of broken promises, a lack of transparency and a complete failure to create jobs.”
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