When news broke that Foxconn – the company which makes the iPhone – had decided to build a factory in Wisconsin, politicians like Governor Scott Walker jumped with joy. Foxconn announced it would invest as much as $10 billion and hire as many as 13,000 at a new plant manufacturing LCDs, the flat panel displays used in televisions, tablets and other electronics. The Foxconn facility would be the only LCD manufacturing facility in North America and the only one outside of Asia.
Press release after press release celebrated that workers’ average salary would be almost $54,000 plus benefits. Supporters of the project anticipate 10,000 construction jobs between now and 2020 and then 22,000 more indirect jobs once the plant is open.
Sound too good to be true? Well, it probably is. To gain these jobs, the state of Wisconsin is offering up to $3 billion in incentives to Foxconn, the largest incentive package ever offered by a state to a foreign business. The exact deal is still being worked out, but, the broad outline is that Foxconn will get tax credits of up to $3 billion based on how much it invests and how many jobs it creates at the plant. The non-partisan Wisconsin Legislative Fiscal Bureau estimates that Wisconsin will not breakeven on its investment until 2042-2043. Moreover, the promise of jobs paying $54,000 a year masks that many of those jobs will be management or technical: the bigger question is what they will pay production workers.
But it’s about more than whether the state is making a bad investment in Foxconn with its super-rich incentive package. How will Foxconn be as an employer of the great people of Wisconsin? Its record as overseas is disturbing. Foxconn has over 1 million workers in China making parts for the Apple iPhone and other consumer electronic products. The plants are so big, they are called “Foxconn City” and have hundreds of thousands of workers each. In 2010, working conditions at the plants were so bad that workers started committing suicide by jumping off the roof. The company installed nets around the buildings to catch falling workers and asked employees to sign pledges promising that they wouldn’t kill themselves. What does that mean for Wisconsin? What will the company do when workers complain of low pay, long hours, poor management? Will they viciously fight if workers want to form their own union?
Foxconn may also not be the economic savior that Wisconsin thinks it’s inviting into its state. They’ve made these kind of promises before and not followed through. Investments in Pennsylvania, Brazil, Indonesian and India were promised—but never happened.
The manufacturing process for making LCDs is also something that people should be concerned about. Potentially harmful and polluting materials and chemicals are used in manufacturing LCDs. It’s not a good sign that several environmental regulations have been scaled back for Foxconn in order to grease the wheels of the company’s planned plant.
The negotiations between Wisconsin and Foxconn are ongoing. Wisconsin is looking at including “clawbacks” so Foxconn would have to pay the incentives back if it leaves the state or doesn’t meet other obligations. However, the agency that monitors job creation numbers has a checkered record when it comes to doing just this. The incentive deal should also include language that if the company violates Federal law – whether it’s labor law or environmental laws – it would be assessed a penalty when it comes to its tax credits.