The Foxconn deal Trump championed won't make Wisconsin money for 25 years
The deal President Trump called "incredible" and Gov. Scott Walker hailed as "once-in-a-century" opportunity to bring the electronic manufacturing giant Foxconn to Wisconsin wouldn't generate profits for the state until 2042, a new legislative analysis projects.
The state's Legislative Fiscal Bureau, a nonpartisan agency that analyzes proposed economic investments, looked at Walker's bid last month to bring a new flat-screen display factory to the state in exchange for a roughly $3-billion incentives package.
Foxconn said it would break ground in southeastern Wisconsin and hire 3,000 workers there over the next four years, with the "potential" to create 13,000 jobs.
If the company hits that growth target, Wisconsin would break even after 25 years, said Rob Reinhardt, a program manager who worked on the report. If 13,000 jobs never materialize, it could take decades longer.
"We kind of dig a hole for ourselves," Reinhardt said.
Meanwhile.... 'Wisconsin taxpayers would need until 2043 to recoup nearly $3 billion in Foxconn payments' https://t.co/A5JG3sUKEh— Kai Ryssdal (@kairyssdal) August 9, 2017
State officials, however, maintain the deal would bring more prosperity.
"The state of Wisconsin is investing in a once-in-a-lifetime economic development opportunity that will be transformational as the state will become home to the only LCD manufacturing facility outside of Asia," said Mark Maley, spokesperson for the Wisconsin Economic Development Corporation. "Bringing Foxconn to Wisconsin will have an estimated annual economic impact of $7 billion that will touch every region of the state."
That value, he added, will come from generating an estimated 13,000 direct and 22,000 indirect jobs.
Under Walker's terms, Wisconsin, which competed with six other states to attract the business, would provide Foxconn with up to $2.85 billion in state income tax credits, which could be made in cash payments, and up to $150 million in sales tax breaks over a 15-year period.
The state legislature was expected to vote on the package early this month, but as of Wednesday, Wisconsin's senate majority leader Scott Fitzgerald, R-Juneau, told local reporters that he did not yet have the votes to approve it.
"We should be cautious," he said, according to the Milwaukee Journal Sentinel.
For those interested, here's the state's timeline for when Wisconsin will break even after ~$3 billion Foxconn investment: pic.twitter.com/r7AsF8N9ED— Danielle Paquette (@DPAQreport) August 9, 2017
The Fiscal Bureau's analysis, released Tuesday, said other factors could delay the investment's payoff.
Wisconsin has an unusually low unemployment rate (3.2 percent), which is significantly lower than the country's 4.3 percent. Employers there already complain about having trouble finding workers. (As the Post reported last week, some are easing the labor demand with robots.)
If Foxconn fills jobs with workers from neighboring Illinois, where the unemployment rate is 4.7 percent, analysts predict the deal won't start making money for Wisconsin until 2045.
Walker's office did not respond to a request for comment. But the governor has said that community colleges and technical schools will adapt to meet Foxconn's needs. The factory isn't slated to open until at least 2021.
The Taiwanese giant, which makes gadgets for Apple, Google, Amazon and other companies, said it would spend $10 billion to build the 20 million-square-foot plant and pay workers an average annual wage of $53,000. It would hire Wisconsin construction workers and purchase building materials in the state - a further boost to the local economy, Walker's office has noted.
The governor has maintained the deal will spark more prosperity in Wisconsin.
"We are calling this development 'Wisconn Valley,' " he said last month at the White House, unveiling the development news alongside Trump, "because we believe this will have a transformational effect on Wisconsin just as Silicon Valley transformed the San Francisco Bay area."