Wisconsin lawmakers voted Monday to advance a $3 billion deal to bring a Foxconn factory the size of seven football fields to the state's southeastern edge. But as they consider plans that could transform the area, Dennis Wiser, the mayor of Racine, says he wants to know more about it.
Would taxpayers in his manufacturing town, which is next to Lake Michigan, have to absorb the cost of new water and sewer lines? And if the company really did hire 3,000 workers over the next four years, where would they come from? Where would they live?
“There [are] so many unknowns,” Wiser said. “People are a bit perplexed.”
At the White House last month, Wisconsin Gov. Scott Walker (R) and President Trump celebrated a tentative agreement with Foxconn, a Taiwanese company that makes gadgets for Apple, Google and Amazon, to bring a flat-screen-display plant to the state.
But the deal relies on an incentives package that has roused concerns from some Wisconsin residents.
Foxconn's interest in the Midwestern state has triggered a debate about government efforts to lure companies via tax breaks, betting the public will benefit in the long run from spikes in economic activity. If Walker's plan works, the payoff is long-term prosperity. If it falls apart, the state will have shelled out serious cash for broken employment dreams.
Under the agreement, Wisconsin would pay Foxconn up to $3 billion over the next 15 years in refundable tax credits, much of which could be dispensed in cash. The tax credits, to be paid out in yearly installments, depend on performance — Foxconn would have to both construct the facility and hit its hiring goals to keep receiving the money.
And as they prepare the votes to make it happen, many are questioning what, and when, the state can expect from this.
A report last week from the nonpartisan Legislative Fiscal Bureau found that it would take Wisconsin at least 25 years to break even. And that comes after a May audit of the Wisconsin Economic Development Corporation, dug up by CNBC, showed that the agency that would be responsible for tracking Foxconn’s job creation has failed to independently verify past jobs numbers from businesses.
“The potential for jobs is enormous,” Wiser said. “But there are a lot of ground-level details and answers [that] have not been forthcoming.”
Racine, population 77,000, splits water and waste expenses with villages outside its borders, the mayor said. The Foxconn factory is expected to be built somewhere between his city and Kenosha, which is about 11 miles south.
Expanding the local infrastructure could be costly, Wiser said, and there’s no guarantee the jobs would go to Wisconsin residents. Employers in the state, where the unemployment rate is a tight 3.2 percent, already struggle to fill positions.
People in neighboring Illinois, meanwhile, which has a 4.7 percent rate, could commute over the border for the work. (If Illinois residents fill a significant portion of the Foxconn jobs, Wisconsin's break-even point on the investment could extend to 2045, according to the Fiscal Bureau’s report.)
Walker’s office has maintained that the deal would boost Wisconsin’s economy, since Foxconn would spend $10 billion of its own money to build the factory in the state, which could indirectly benefit other local industries.
The company has also said the site has the potential to eventually employ 13,000 workers.
“This is a once-in-a-lifetime opportunity that brings high-tech manufacturing back to America, right here in Wisconsin,” Walker spokesman Tom Evenson said in an email. “The company’s investment is $10 billion, which is $6.70 of private investment for every $1 of public funds. This is an excellent investment for our entire state.”
Frank Carmichael, an entrepreneur and talk show host in Kenosha, remains skeptical of the governor’s proposal and speedy timeline. The public just learned of the Foxconn deal last month, he said, and lawmakers could vote on it this week.
“We all know the devil lies in the details,” he said.“When you’re offering those kinds of incentives, there shouldn’t be a rush to judgment.”
Carmichael, 65, said he’s concerned about the potential environment impact to his lakeside community. The bill that lawmakers are reviewing this week would allow Foxconn to dump dredge into a nonfederal waterway or wetland without a permit.
“We are geographically blessed,” he said. The deal, he added, “could change the rural face of the county.”
In Bristol, Wis., about 13 miles west of Kenosha, John McCabe, a village trustee, is excited about job creation in his county but worried about the taxpayers shouldering the burden.
“It will cost the state 25 years to pay back when the state is kind of broke on money already,” he said. “I don’t know if they should have given so many incentives.”
Some think the incentives are justified.
Lisa Bell, chairman of the Racine County Republican Party, said she wants to see the area’s manufacturing footprint grow. Beyond that, she said, the Foxconn plant could jump-start the area’s construction industry.
Bell, 63, hopes to see the legislation pass soon.
“We’ve got our fingers crossed,” she said. “We don’t want anything to botch it up.”
Others feel that even if the state rubber-stamps the bundle of perks, there’s no guarantee Foxconn will hold up its side of the bargain.
Kathleen Gallagher, executive director of the Milwaukee Institute, a technology-focused nonprofit, pointed out that the company has previously pledged to open factories elsewhere that never materialized.
In 2013, Foxconn’s chairman said the firm would build a $30 million factory and hire 500 workers in central Pennsylvania — a promise that has not come to fruition.
“There’s a feeling of: What’s the whole story?” Gallagher said. “What are they really going to do? They’ve pulled back on projects in other states.”