• Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.

The Foxconn Wisconsin conjob would cost WI Taxpayers $290,000 per job

Trojita

Rapid Response Threadmaker
Feb 9, 2009
36,603
1,635
1,585
https://www.theverge.com/2019/8/6/20747166/wisconsin-foxconn-deal-state-report-lcd-factory-innovation-centers

In 2017, Wisconsin offered Foxconn a record-breaking subsidy to build an LCD factory in the state, only to see the promised factory fall behind schedule and grow progressively smaller. Now, the Wisconsin Department of Administration has requested a reassessment of the costs and benefits to the state regarding the far-tinier facility.

The report, which was conducted by Tim Bartik of the Upjohn Institute for Employment Research, finds that the smaller facility raises the already unusually high cost per job even further. If the subsidy levels in the current contract are kept, each Foxconn job would cost taxpayers about $290,000, Bartik found, compared to $172,000 if Foxconn built the original $10 billion, 13,000-job facility.
For comparison, Bartik estimated the subsidies Virginia offered Amazon for its second headquarters amounted to between $10,000 and $13,000 per job.
The Foxconn deal, which was signed by Walker and touted by President Trump, was supposed to be transformational for Wisconsin. As the first large-panel LCD factory in the Western Hemisphere, it was supposed to span 20 million square feet and create 13,000 jobs. Proponents of the deal said the benefits more than justified the considerable costs: at least $4.5 billion in subsidies and other incentives that the Wisconsin Legislative Fiscal Bureau estimated wouldn’t be recouped until 2043.
The Fiscal Bureau analysis was based on a best-case scenario. It relied on economic impact estimates supplied by the consulting firm EY (formerly Ernst & Young), which Foxconn had hired to pitch its project. It also assumed Foxconn would actually build what it promised and hire at an extremely fast rate. Instead, the company has repeatedly scaled back its plans and fallen far behind on hiring. Rather than a 20 million-square-foot factory manufacturing large LCD screens, Foxconn says the factory it’s now building will be less than 1 million square feet and make smaller screens. While the company had initially planned to employ 5,200 people by next year, it now says the new factory will employ only 1,500 people. Even that seems like a stretch goal: at the end of 2018, Foxconn employed only 156 people in the state.
Hi I'm Scott walker and I'm about to drop this bag of dookie on the Wisconsin taxpayer.

 
Last edited:

Horns

Member
Jun 23, 2010
4,223
316
740
They should go after Scott Walker and others who mislead the public....if they legally can. This was long predicted. These publicly funded deals more often than not screw tax payers.
 

undrtakr900

Member
Oct 30, 2007
1,423
14
890
33
Why are their no fines or penalties listed in these deals when these companies fail to live up to their end of the deals?
Because Corporations spend millions of dollars lobbying politicians (like Scott Walker), so they'll give out Billions of dollars in contract Subsidies (aka Corporate Welfare) with no accountability.
 

bucyou

Gold Member
Feb 3, 2018
1,465
2,114
550
Im sure OP was equally as outraged when Obama Admin wasted billions on green energy scams that ended up failing
 

Trojita

Rapid Response Threadmaker
Feb 9, 2009
36,603
1,635
1,585
Im sure OP was equally as outraged when Obama Admin wasted billions on green energy scams that ended up failing
Solyndra was a disaster. I think the tax payer burden may be around 15 or 16 dollars per tax payer, if my number crunching is right. This isn't anywhere near the level of the turd nugget Scott Walker dropped on Wisconsin.

https://www.scientificamerican.com/article/obama-has-done-more-for-clean-energy-than-you-think/
The program has made a profit of nearly $1 billion in interest payments to the U.S Treasury to date. At least $5 billion more is expected over the next few decades as loans are paid back. That compares with $780 million in losses to date, the bulk of which is accounted for by the $535 million loaned to Solyndra.
Already, Tesla has repaid its $465-million loan nine years early, thanks to the innovative financing terms devised in its deal, part of $3.5 billion in loans that have already been repaid.
 

Trey

Member
Mar 3, 2010
27,753
488
790
Why are their no fines or penalties listed in these deals when these companies fail to live up to their end of the deals?
Because corporations have local politicians by the ball hairs. At least US congresspeople can pretend to keep them in line; state senators, mayors, and Governors just get their lunch money taken.

This was a large reason AOC et Al pushed back against Amazon coming to NYC.
 
  • Fire
Reactions: <+)O Robido O(+>

ssolitare

Banned
Jan 12, 2009
17,167
2,039
1,180
Because corporations have local politicians by the ball hairs. At least US congresspeople can pretend to keep them in line; state senators, mayors, and Governors just get their lunch money taken.

This was a large reason AOC et Al pushed back against Amazon coming to NYC.
Amazon didn't really wanna come to NYC anyway.
 

Joe T.

Member
Oct 3, 2004
1,899
1,695
1,545
Montreal, Quebec
That's an extravagant amount of taxpayer money per job, assuming it all gets paid out. The story and the report it's based on rely on a lot of assumptions because it's unclear how the deal will change. This strikes me as an opportunity The Verge is taking to put some weight on them to shed some light on what's going on. I skimmed it, but the report linked in the story specifically states:

The original Foxconn incentive offer, although very large, did impose some annual limits and total caps that stretched out the incentive offer. These limits and caps ended up reducing somewhat the real present value of the incentive offer. In any revised offer, the details of whether the offer keeps the original annual and lifetime caps, or lowers them to reflect the reduced project scale, make a large difference. Imposing lower annual limits and lower lifetime caps could lower Foxconn costs per job by almost one-quarter, or by over $60K per job.
And ends with:

The project does have a better benefit-cost ratio if the incentive costs are significantly cut back. If the state government decides to move ahead with the Foxconn incentives, the details of how the Foxconn incentives are limited or capped make a big difference in the project’s net benefits.
So this one's more of a wait and see than "OMG we're screwed!"
 
Oct 26, 2018
4,179
3,330
440
So the government didn't do a sliding scale deal based on employee count, sales, or any other metric?

They went all in with a fixed amount of subsidy?

That's government wheeling and dealing for ya..... always the worst business negotiators. For any of you trying to run a business, try to get government contracts. If you score, you won't believe the stupidly sky high prices they will pay, while Bob's Variety Store down the street run by a husband and wife team could score better costs from vendors.
 
Last edited:

DunDunDunpachi

Patient MembeR
Apr 18, 2018
13,152
23,849
1,260
USA
dunpachi.com
This sounds mighty socialist of you mate
I'm not certain what you're getting at. The government already agreed to subsidize and provide grants to bring manufacturing back to the USA (to create local jobs), and I'm pointing out that they should've just given it to local businesses instead of giving it to a foreign country.