Foxy Con —

Wisconsin blames Foxconn, says $3 billion factory deal is off

Wisconsin says Foxconn has hired far fewer people than promised in a 2017 deal.

Former Wisconsin Governor Scott Walker, Donald Trump, Foxconn Chairman Terry Gou, and former House Speaker Paul Ryan participate in a groundbreaking for a Foxconn facility in Mount Pleasant, Wisconsin in 2018. Foxconn has hired significantly fewer people than it claimed it would do at the time of the company's 2017 development deal with the state.
Enlarge / Former Wisconsin Governor Scott Walker, Donald Trump, Foxconn Chairman Terry Gou, and former House Speaker Paul Ryan participate in a groundbreaking for a Foxconn facility in Mount Pleasant, Wisconsin in 2018. Foxconn has hired significantly fewer people than it claimed it would do at the time of the company's 2017 development deal with the state.
BRENDAN SMIALOWSKI/AFP via Getty Images

The state of Wisconsin was supposed to provide Foxconn with $3 billion in subsidies over the next few years to support the construction of a massive LCD display factory in the state. The deal was negotiated in 2017 by Gov. Scott Walker and announced by Donald Trump at a White House event. It was part of Trump's strategy to bring manufacturing jobs back to the United States.

In a Monday letter, the state informed Foxconn that the company wouldn't get the first installment of the $3 billion because Foxconn wasn't holding up its end of the deal. Under Foxconn's 2017 agreement with the state, Foxconn would be eligible for the first round of subsidies if it hired at least 520 full-time employees to work on the LCD panel factory by the end of 2019. Foxconn claimed that it had cleared this bar by hiring 550 employees in the state. But Wisconsin found that Foxconn had only 281 employees who counted toward the requirement.

Foxconn was supposed to spend $3.3 billion on the project by the end of 2019. Instead, Foxconn had only spent around $300 million by the end of the year.

Foxconn was supposed to build an LCD panel factory based on the industry's new Generation 10.5 standard. This standard uses enormous sheets of "mother glass"—roughly 10 feet (3 meters) square—to provide LCD panels for large televisions. Each glass sheet is typically cut into several displays. The factory was expected to cost $10 billion to build and eventually employ 13,000 workers in Wisconsin. The state now says that Foxconn won't come anywhere close to meeting those targets.

"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 is now reportedly planning to build a plant to manufacture LCD panels based on the Gen 6 standard. That standard uses mother glass that measures about 5 feet by 6 feet (1.5 meters by 1.8 meters)—a quarter the size of the originally planned Gen 10.5 glass. These smaller glass sheets, used for everything from laptop screens to dashboard displays in cars, are easier to work with and require less specialized equipment. That means the factory will be much less expensive to build and require fewer workers when it's complete.

In their letter, Wisconsin officials stressed their willingness to negotiate a new aid package that would be commensurate with Foxconn's new, less ambitious plans.

Donald Trump has made it a priority to bring high-tech manufacturing jobs to the US, but the results haven't always lived up to the hype. Last year, for example, Trump claimed to have opened an Apple manufacturing plant in Texas to build Mac Pros. In reality, Apple has been building the Mac Pro at the same location since 2013.

Channel Ars Technica