Foxconn, one of the world’s largest electronics manufacturers, unveiled plans Wednesday to build a $10 billion factory in southeastern Wisconsin, delivering a much-needed win for President Trump and Gov. Scott Walker.
The move by Foxconn to open its first major factory in the United States is a break with global manufacturing trends over the past 30 years. Foxconn builds electronic gadgets for nearly every major technology company, including Apple, Google and Amazon.com, in massive factories in Asia, South America and Eastern Europe. But until now, it has had a very limited presence in developed countries where labor costs are higher.
The workers it hires at its Wisconsin facility would represent a tiny fraction of the company’s workforce of 1.2 million. And officials gave contradictory numbers on exactly how many jobs Foxconn was creating in the state.
Walker, a Republican who is facing a difficult reelection next year, said the investment would create 13,000 jobs, with an average pay of $53,000 plus benefits. But the company said that it would be hiring 3,000 workers over four years. It added that it could eventually hire more but did not provide further details.
The governor also said his state would offer $3 billion in economic incentives to seal the deal. The high cost drew criticism from Democrats lawmakers in Wisconsin.
The deal was announced in the East Room of the White House, reflecting its political importance for Trump and Walker. But Foxconn has made splashy job announcements in the past that have not quite panned out.
In 2013, the company earned headlines for a plan to invest $30 million and hire 500 workers for a new high-tech factory in central Pennsylvania. The state’s governor boasted about the deal. Economists wrote think pieces explaining how this was the leading edge of a U.S. manufacturing renaissance.
But once the attention died down and the politicians moved on, Foxconn never followed through with its plans in Pennsylvania.
Still, White House officials were ebullient about the deal. They stressed that Trump personally negotiated the deal with the chairman of the company, Terry Gou.
“I would see Terry, and I would say, ‘Terry, you have to give us one of these massive places you do great work with,’ ” Trump said, adding that he told Gou, “The American worker will not let you down.”
The high-profile announcement follows a pledge from Foxconn shortly after Trump was elected to invest at least $7 billion in the United States and create between 30,000 and 50,000 jobs.
Gou visited the White House in April to discuss the potential expansion with Trump. Foxconn also met with Jared Kushner, Trump’s son-in-law and a senior adviser to the president.
Trump and Walker have been looking to deliver on their promise to lift the fortunes of blue-collar workers. A Marquette University Law School poll last month found that Walker had a 48 percent job-approval rating among the state’s voters.
Trump was also in need of a boost. His overall approval rating in July sat at 36 percent, down from 42 percent in April, according to a Washington Post-ABC News poll. More concerning for Trump, his approval ratings for his handling of the economy also showed signs of slippage for the first time this month.
Foxconn, a Taiwanese company also called Hon Hai Precision, is not well-known in the United States but makes almost every recognizable video game console, smartphone and laptop that Americans use. It made nearly $140 billion in revenue in 2015.
“We are confident that making American products will be a great success,” Gou said during the announcement. “We are also committed to creating great jobs for the American people.”
The tech giant had been talking to at least six states about its new factory. Wisconsin officials have said they would consider legislative sweeteners to attract the company. Myranda Tanck, a spokeswoman for state Senate Majority Leader Scott Fitzgerald (R), said Monday: “The senator has said that if a bill is necessary to help facilitate a Foxconn location in Wisconsin, he is hopeful that it will take the form of bipartisan legislation that is tackled after the budget is passed.”
But Foxconn’s the prospect of such sweeteners was met with skepticism from Democratic leaders in the state.
“While I welcome new businesses to the state, I want to ensure any state-subsidized private sector jobs offer a living wage and safe working conditions,” Senate Minority Leader Jennifer Shilling (D) said in a statement Wednesday. “This company has a concerning track record of big announcements with little follow through. Given the lack of details, I’m skeptical about this announcement, and we will have to see if there is a legislative appetite for a $1 [billion] to $3 billion corporate welfare package.”
Pennsylvania was not the only place that was disappointed by a promised Foxconn investment.
In 2014, the company signed a letter of intent to invest up to $1 billion in Indonesia. That investment has yet to occur. That same year, Foxconn said it planned to invest $5 billion over five years in India, creating 50,000 jobs. But three years later, Foxconn’s investment has amounted to only a small fraction of its original promise.
And there was Foxconn’s plans for a $5 billion investment in Vietnam and $10 billion in Brazil — both projects have fallen far short of expectations.
Foxconn also has a reputation for high-stress work environments.
In 2011, an explosion at one of the company’s Chinese factories killed three workers and injured 16. Dust caught in an air duct triggered the blast, the company said at the time.
Reports also surfaced around that time that Foxconn employees sometimes worked seven days a week and lived in cramped dorms. Some workers told reporters they stood for periods so long their legs would swell. Foxconn responded by reducing worker overtime and installing a safety net to catch suicidal people who jumped from its buildings.