Wisconsin’s $4.1B Foxconn factory boondoggle
theverge.com
theverge.com
WTF? Wisconsin is a beautiful state with rich wetlands and farmland. Letting a Taiwanese* company fuck that up for 13,000 jobs that will never pay back the incentives makes no sense, other than a small tick on Walker's re-election campaign resume which he is now shying away from anyway. This project needs to be cleaned up or killed before it starts to literally kill people in Wisconsin.
There's no indication, moreover, that Foxconn has received waivers from ordinary state and federal rules that regulate dumping heavy metals into the soil. The article misleadingly tries to suggest that by juxtaposing the fact that the LCD panels "require benzene, chromium, etc." with the fact that Foxconn has been authorized to fill in certain wetlands.
> requirement that they create 2 acres of additional wetlands elsewhere for every acre they fill in
I did this type of work during high school. The new wetlands are inspected regularly and must meet quality standards to count. After a period of time (10 years in my state), the wetlands are certified and no longer need to be inspected nor maintained. I have visited old projects that the state signed off on. After maintenance stopped, nearly all of the "high quality" wetlands that I worked on rapidly deteriorated into cattail, or worse, reed canary grass monocultures. When I was planting, I believed I was creating valuable habitats, but I was actually just working to check a box on a form.
More info: https://ballotpedia.org/Fact_check/Does_Wisconsin%27s_Foxcon...
https://www.jsonline.com/story/news/politics/2018/04/25/dnr-...
1. The diversion violates the interstate compact, which says that significant diversions are supposed to have some public or residential benefit. Foxconn's doesn't. It's not inherently problematic for the environment, but it sets a precedent they don't like.
2. Foxconn might pollute Lake Michigan.
That second concern is of course valid, but has nothing to do with the amount of water Foxconn consumes. I found one complaint that claimed consumptive use of water (that is, unlike NIPSCO, water that is diverted from the lake and not fed immediately back) could cause long-term problems because Michigan only replenishes 1% of its water annually. But Foxconn's draw is something like 0.0000002%.
If the lake was ringed with Foxconns from Gary to Mackinaw City, I'd see the problem. And: totally legit to be vigilant about precedent! But I don't see the intrinsic practical impact from Foxconn today (in terms of water usage).
Worth noting: Foxconn came back and cut their water demand in half with a recycling plant. Not that I want to sound like I'm defending Foxconn, because I think this is a really bad deal for Wisconsin.
That’s enough to justify the scale part of the appeal.
(From the factory footprints on the lakeside, sure!)
We're agreed about the Foxconn project in general. I'm just crusading against Michigan water supply alarmism.
Also worth noting that the average salaries required to get those subsidies have dropped substantially since the beginning of this process; we've gone from "lots of skilled jobs" to "mostly $15/hr factory labor". Totally predictable to those of us who know the difference between "iPhone factory" and "Apple HQ", but this was a huge source of confusion among my non-tech blue collar Wisconsin friends. They [1] really did think there would be six figure tech jobs available to anyone with a CC degree.
[1] edit: here "they" refers to 10-15 specific people, and isn't intended to generalize to "all Wisconsites", although I do believe there's a demographic that's being intentionally deceived and who would change their opinions on Foxconn if someone sat them down and explained that "working in an LCD factory" is not a "tech job" in the sense of six figure salary with good benefits, and that if those "tech jobs" do come to Wisconsin via Foxconn it's going to be a relatively small number of them and most certainly won't go to people who are straight out of high school after 6 months in a fast-tracked community college program.
I get the feeling that people who snub factory jobs live too high on the economic ladder to realize how much of a step up that sort of job can be for a person.
More importantly, Foxconn's agreement with WI states that up to 93% of workers can be paid $15/hour. That's barely enough to live on even in Wisconsin.
If Foxconn were legally required to pay 50k+ with benefits for factory work, I would happily agree with you. But that's not what the contracts say. The contracts say basically everyone except management and engineering can be paid $15/hr.
Also, the Amazon fulfillment center just a few miles from the site of Foxconn's new plant pays $15/hour and is constantly hiring. So we're basically paying 4.1 billion for... a bunch of jobs that are roughly equivalent to openings that already go unfilled just down the street.
Finally, remember that we're talking about 4.1 billion dollars. That's a lot of healthcare/education/infra/small business development/etc. opportunity cost.
I also agree with you that the working conditions for factory workers have been degrading significantly for the past 20 years or so.
$15/hr might be barely enough to live on, but it's still better than minimum wage. Also the nature of working on an assembly line is different from working in a fulfillment center. Being able to tell people "I help build those" has more pride behind it than telling people you run around shoving stuff into boxes for people.
I'm in Iowa, which I imagine is similar cost of living to Wisconsin. My dad worked in factories almost his entire working life. I stand by my statement that if you are lucky enough to land a full time factory job, it can be a viable way to raise a family.
That's unfair. Wisconsinites are not stupid. We knew what this deal meant for the most part. The issue is corruption. We have few effective methods of fighting it here in Wisconsin. I'm not trying to wuss out or anything, but there is a reality to life in a place like Wisconsin.
Think of it this way, there is probably some percentage above which corruption becomes too ingrained, and you can't do anything about it anymore. Maybe that percentage is 10%? Maybe it's 20%? Whatever. But if a place reaches that tipping point, that's it.
And I don't think that's unique to Wisconsin by the way. I think MOST states and municipalities would present the same issues if their tipping point number was reached. It just becomes very hard to do anything about what's going on around you.
I'm not painting with a broad stroke here. I'm referring to specific people I have had specific conversations with.
Of course, Milwaukee, Madison, and also many of the smaller cities in Wisconsin have great engineering cultures with extremely smart people who understand this distinction. And also many Wisconsites with non-Engineering backgrounds obviously understand the distinction.
All I'm saying is that, based on my first-hand experience, there were many in Wisconsin who did not/do not understand this distinction. Which is good news, because that means that explaining simple and easily demonstrable facts can change people's minds.
Perhaps sustained canvassing on this issue would be a good way to change things in WI. I've been able to win a few people over by explaining over a year ago where this whole thing was going to go and then reminding them any time there's a development.
Walker is as much of a track mark on Wisconsin's dirty drawers as Blagojevich was on local and state government back when I lived in Chicago--perhaps a bit less obvious about it, and with an (R) instead of a (D) pinned to his dark money drop box.
From my perspective, it looks like the corruption is growing, the normal measures to fight it are not effective, and it may be necessary to take up arms to bring it back under control, or just leave and not look back. It seems like almost everywhere is at least near its tipping point, if not already well past it. The Citizens United decision might have made it a runaway.
Newsflash, American companies are do it too.
I grew up around Milwaukee. There are plenty of hot summer days where you'd love to go to Bradford Beach on Lake Michigan, and often it's out of the question because E. Coli levels are too high. We dump raw sewage into the lake. Nobody is concerned about Foxconn pollution.
edit: For the record, I was against this deal as soon as it was announced and still am, but not because of pollution.
That being said, it's definitely a developing area and becoming more urban. Oak Creek especially is becoming very nice. In 30 years or so, it would not surprise me if that whole stretch of 94 between Milwaukee and Chicago became urbanized.
Go take a look in the marinas in the counties between Milwaukee and Chicago. A lot of Big City money floating in those communities (and in condos/houses along the lakeside).
What? Eau Claire is 260 miles away from Racine. Green Bay is 150 miles. An Eau Clare location can attract people who want to stay near Minneapolis. And the Downtown Milwaukee location is a more desirable place to work to Milwaukee metro residents than out in Sturtevant, home of that one Amtrak stop.
You can't put a 4 square mile factory downtown, but I'm not sure why all your engineers have to work at the factory.
Also, lesser universities? They mean not Madison. But if you're ruling out Madison (maybe they figure a Madison to Milwaukee commute is reasonable), they seem like good choices. Maybe La Crosse lost out to Eau Claire because of proximity to Minneapolis?
Also, Racine really is driving distance from Milwaukee. The southern suburbs literally border Racine.
The factory is a dumb idea, but this is not the reason why.
The vast majority of Republican voters in WI live in a ring of suburban counties surrounding Milwaukee. Yes, some rural counties are also red, but the absolute numbers of voters there is tiny. Go to suburban MKE, you hit a sweet spot of attractive economics for FC and possible political impact for state Repubs.
[0] https://www.dhs.wisconsin.gov/population/southeastern.htm
Parent's observation that the WOW counties determine the statewide offices and electoral college vote allocation is absolutely accurate.
Oh, I misinterpreted the parent post's comment. Yeah, that's not true.
2016 was strange across the ballot in Wisconsin. Clinton was not a Wisconsin-friendly Democrat. The 2018 and 2020 elections will be interesting to watch. In general, it's a good rule of of thumb that getting things just right in WOW is one path to victory. There are other paths, of course, depressed turnouts being one of them.
You seem to be suggesting these locations are a political favor. But one is downtown (not suburban) Milwaukee, and the others are 150+ miles from Milwaukee. Not in that Charlie Sykes listening suburban ring of Milwaukee.
And anyway, the factory itself is near suburban Milwaukee so why would a downtown engineering (sales/business?) be a favor? And I'm not sure, but Racine is probably the least conservative county that touches Milwaukee.
As a sidenote, what kind of firms are up there? I'm familiar with madison and milwaukee, and know some companies in the Fox River Valley, but am not real familiar with Eau Claire and the surrounding area.
>“If, six months ago, you asked me, what would be the mix of labor? I would pull out the experience that we have in China and say, ‘Well, 75 percent assembly line workers, 25 percent engineers and managers,’” Woo said. But “now it looks like about 10 percent assembly line workers, 90 percent knowledge workers.”
1. the percentages changed because the total numbers dropped. I.e., it's not like there's going to be a ton of white collar jobs. It's more like there aren't going to be a ton of jobs, period.
2. And even then, this is a Foxconn representative who has every incentive to mis-characterize. They're basically just saying whatever they think is best to say at the moment. Not even 3 months ago they were pushing hard on an ad campaign about manufacturing jobs. Then the projected manu salaries dropped and now they're saying that the avg salary will be higher because we'll hire so many tech people. All while hoping (1) gets lost in the exchange.
2. If you're not from Wisconsin, why would you move to Wisconsin? There's nothing wrong with Milwaukee, BTW. Nice city. But there are dozens of other nice low-CoL cities in the USA, many with nicer weather and many still in the Midwest.
>The Walker administration had also exempted Foxconn from the state’s usual environmental rules, allowing it to discharge materials into wetlands and reroute streams during construction and operation. The state also exempted the company from doing an Environmental Impact Statement.
How is that even a legal possibility? The state's administration can just decide to suspend these rules on a case-by-case basis without any kind of supervision or accountability?
Walker didn't do it unilaterally; the legislature passed a law to exempt Foxconn specifically. They are considering giving Kimberly-Clark a similar deal:
https://madison.com/wsj/news/local/govt-and-politics/gop-law...
Wisconsin is under one-party control, which makes many things legally possible.
(See also: most stadium deals.)
The main problem here, (and it's frustrating), but the main problem is that due to the way the system is structured, we can do nothing about all the corruption. I don't like always being on the national news because of the latest governmental thuggery, neither does anyone among my family and friends. (And I was born and raised in small town Wisconsin.) There's just so little the average person can do, so you just sit in Markesan, or Racine, or Independence, or LaCrosse or wherever and you just stew in your anger.
Then it even gets thrown in your face on Hacker News.
Can you be more specific about what you mean by "corruption" in this instance? Repeatedly pointing to a faceless "corruption" de-focuses the conversation from the specific issues with this deal, including the magnitude of the subsidy, and what might be the lack of recourse for WI residents against Foxconn.
Is it to suggest that Gov. Walker had expected, or at least decided it was acceptable if Foxconn significantly altered their plan in a way that undermined the deal, in return for a short term political "win".
If not, then what is the "corruption" you are referring to in this situation? Weren't the terms of the deal, including the latitude it offered the parties, fully public?
> The difference is that in Wisconsin we ... have mass protests.
Wisconsin is not the only place that has protests over corruption and mismanagement. It's a common occurrence, especially at the local level, in many places.
Or if he is corrupt (as in he knew that it was a raw deal for WI but carries forward for personal benefit), can he be a sucker?
In this instance, is it possible he was both corrupt and a sucker? Maybe so if he was playing WI residents while getting played by Foxconn? Not drawing conclusions here but trying to play out the implications of what others have stated here.
Well, yeah, there's that.
I guess I didn't even go into that stuff in my post on Wisconsin's corruption. (https://news.ycombinator.com/item?id=18329653)
But really there's so much out and out criminal behavior that goes on here that I really don't think something like a really bad Foxconn deal should be entirely unexpected.
If there's an opportunity to spend, 1 billion, 2 billion, 4 billion whatever in state tax dollars...
I mean, yeah, in a place like Wisconsin, you have to pretty much expect that there are going to be some irregularities. It's just how things are done here.
The good news is that desired resources vary. It could be mineral resources. It could be location. It could be the labor pool. Infrastructure is a large part of it along with the local labor pool or ability to host one satisfactorily.
All strategies that increase the attractiveness of the area by actually making the area a better resource pool over time, and in a way that helps citizens.
The amount/job may be lower, but it might also be a higher percentage of overall state budget...
We get the politicians we deserve.
For example, we are getting a $1.7 billion Toyota-Mazda plant for $350 million in incentives, creating about 4k jobs. The state has a 4-5% income tax and 9-10% sales taxes, so I'd bet that, even if the 4k number is exaggerated, then the state and local govts will earn much of that money back within a few years (provided it doesn't create some pollution disaster).
Also what is with Foxcon's constantly changing plans with all this? It doesn't seem like they have a coherent plan on what they wanted to do / want other than gather up taxpayer dollars...
If Foxcon has no coherent plan, the deal should be off.
There's also the question of corruption in both areas, where on the business end you get people perfectly willing to have the government spend billions of dollars of other people's money as long as it's possible to skim a few million of profits off it. On the labor side you (used to?) end up with the historical corruption of union politics (e.g. Jimmy Hoffa and organized crime), though I'm pretty sure the backlash against that has resulted in things being a lot cleaner. The corresponding backlash against the business side's issues (e.g. Dodd-Frank after the financial crisis) has been less successful and many measures have been rolled back.
Social Security privatization has kind of been a holy grail for the business side, with the concept of all.that.money being invested in stocks (and the fees! think of all the fees! skimmed right off the top!) rather than remaining as US Government bonds.
Edit: I'm not sure how a different lumping would work out - there's obviously huge ground for combining of "conservative" and "labor", but I'm not as sure about "progressive/liberal" combined with "business."
I'd imagine Walker and his colleagues would want to get rid of state taxes and environmental reviews for all corporations, not just Foxconn, if they could get that past the Democrats. I fail to see what isn't "conservative" about that.
I believe the "not conservative" part is that they're giving massive amounts of public money, both directly and via free infrastructure, to a private business. That's basically the opposite of any sort of free-market capitalism. According to standard conservative thought & rhetoric that should've been applied to gov't debt paydown, legitimate gov't functions (roads, schools) or rebated to taxpayers.
I'll be honest, I think you misread what "conservatism" is really about... and I say this as someone that thought he knew it and considered himself to be a "conservative" for a long time.
Their pitch is smaller government, but you shouldn't construe that to mean a non-interventionist government. They see a very active role for government in 1) foreign affairs; 2) economic activity; 3) social policy... in other words, quite a lot of intervention. The only real difference between the conservatives and the progressives are the goals of those interventions (somewhat) and the how up-front they are about their positions.
Once realized that the pitch and the actual goals were saying contradictory things... I can tell you that I'm no conservative.
Team Red lies about what principles they hold; there are exceptions, like abortion, but on the whole they say they're for one thing when in fact they are largely about another.
Team Blue is pretty up-front about their principles. For Team Blue rules much more by the ends justifying means. So they'll tell you what they're after generally, but will lie about/hide the details of what it takes to achieve the ends or the broader consequences of their goals that might not be readily apparent.
Both of them want you to have an emotional response to their proposals or opposition than to try to have you respond rationally to facts. Lying or not, an emotional response is stronger, harder to dislodge, and avoids pesky details that complicate an otherwise perfectly painted, if not fully real, picture.
Who the hell knows what Foxconn is actually going to end up doing. Somehow that seems worse.
I'm not saying either are good deals, but the contrast is surprising too.
An honest accounting of where one stands allows you to calibrate for it. Dishonest impartiality--and, for reals, it's all dishonest--robs you of that ability.
I'm not saying this disparingley, just to point out that they've always had an explicitly left point of view.
I'm not exactly shocked that they dislike Scott Walker.
The article goes on and on about wasted subsidy funds (there are other valid criticisms of the deal, but this is the big one). The Foxconn deal may not be working out, but if everything is structured in terms of tax then the state finances are not really getting impacted.
On another note, I wonder what it will take for middle America to let go of the dream of well-paid manufacturing jobs. I understand the hope and allure, but it's plain that this ship has sailed long ago. Watching these snakeoil salesmen literally and financially strip-mine the country is just sad. I don't know that there is a good solution to the problem, as these states aren't really set up to sustain knowledge-based industries. How will they pivot into the 21st century? I can't help but think that 20 years from now, we will still just see more of the same.
Liberalization of global markets has not had that long of a time to run its course. You speak so confidently that the status quo will run eternal. What is happening in middle America should be seen as pragmatism, the people of Wisconsin are beginning to accept their current predicament. They are accepting a leveling of environmental standards to foster competition with East Asia rather than choosing to go the way of the Dodo. Is this not what classical liberals dream of, a leveling of competition across boarders? So quickly the west is ready to externalize the cost of environmental pollution in the name of liberalization of markets but hypocritically don't appreciate the same leveling of standards domestically out of necessity. Perhaps the coasts should subsidize the cost of living in the mid-west to maintain the cost of keeping environmental standards well above those in developing countries.
Please don't turn your nose up at people that are desperate to make a living and are willing to sacrifice a lot in order to do so.
Furthermore, the attitude that "either you're a coastal elite or you believe in the future of well-paid manufacturing jobs" is extraordinarily presumptive.
Has it occurred to you that some of us want "middle America to let go of the dream of well-paid manufacturing jobs" precisely because we are from/currently live in middle America, desperately want what's best for it, and believe manufacturing isn't going to provide that?
By the way, why on earth do you believe the Midwest needs manufacturing for a robust economy? That assertion -- that the Midwest can't build a thriving information/services-based economy -- seems far more like "turning your nose up" at the Midwest than your parent's post!
Frankly, whenever I encounter this mentality, I read it as: "oh yes, those [small-town] midwesterners, what could they ever do for society if they don't have assembly lines to work on."
I am only going off what the article purports as truth.
But all the studies finding that they're a stupid idea never make it onto the evening news, and sound bites from politicians do.
But what confuses me is Foxconn changing what they said they would do. When they announced that instead of building the 10.5 plant they had committed to building, they were going to build a Gen 6 plant, why didn't the state of Wisconsin say "OK, that's great, give back every last penny of money you have ever received from us immediately, and then we will begin discussions on a different deal since you have broken the contract on the first one?" Instead they just keep giving money to Foxconn no matter what they do? Just how many shares of Foxconn did Walker and his family and friends get for this?
I think that people are forgetting that this a subsidy to build. The state is not "giving" Foxconn money, it's just choosing not to collect taxes/permit fees/construction costs, for them to put in the factory. Once the factory is built, there is nothing stopping the state from modifying their corporate tax laws to recoup this investment much faster.
Also your last statement is just preposterous notion. Governor Walker is not personally gaining anything financial from this deal. It was a desperate bid to push his re-election campaign. Personally I think that the deal has soured so much that it should be cancelled, but the original $3 billion for jobs sounded very sound. Especially for a very economically repressed location like Racine.
A highly educated workforce is the best way out.
Now picture the world 20 years from now when drought and depleted aquifers make California not as viable for intense food production as it is now.
Suddenly the east/northeast/midwest around the great lakes look pretty damn attractive.
It is not the money that is lying around with government, ready to be spent. It is something that government could have collected if factories were built and they paid all the taxes. And I am not sure, they are getting built without squeezing governments on taxes.
Wisconsin is corrupt. Very corrupt. What might work for you in squeaky clean Vermont, or wherever, is not going to work here in Wisconsin.
It's just not.
I've tried to explain this to people from outside Wisconsin before. Why don't I just repost a sort of run down of just a few of the kinds of things you can expect to see from our "extraordinarily well run" government here in Wisconsin:
>"We've had our share of bent DA's here in Wisconsin. Probably the best story I can tell you about is a DA that would allow drug dealers and other criminals to "contribute to charity" in lieu of going to jail for their crimes. Of course, all of the "charities" they could contribute to were controlled by he and his buddies. (This way they could make sure all the "contributions" went for the benefit of the local community you see.) It got so bad that drug dealers were routing their shipments through that municipality because if you get caught, you just paid the bribe. I mean, "charity". You didn't have to go to jail.
I won't go into too much detail on this one, because it's disgusting. That said, we have a juvenile detention facility where the guards were discovered to have using the boys for... Well, I think you can figure it out. If not just Google "Lincoln Hills". (but I'd recommend just ... yeah... just not googling it.)
Moving on, we have something called the Wisconsin Economic Development Corporation. Basically everyone chips in to a fund, via taxes, and that fund gives money to entrepreneurs and businesses to stimulate economic growth. That's the idea. In practice, whatever politician is in power funnels the money to his/her cronies. They're pretty open about it too. So small businesses in the state end up having to make do with whatever they get out of the federal SBA. Because the big political guys take all the money from WEDC.
And that's just scratching the surface with the criminal related stuff. There's all kinds of political and public spending related stuff that happens here all the time. There's the typical police corruption that you need to look out for. Man don't even get me started on Wisconsin's part in the VA nursing home scandal. Wisconsin is so bad that at one point there were 100's of thousands of protesters outside our Capitol building in Madison. We're just a really bent state, and there's not much that can be done about it because of how we're set up. There's a lot going on up here. Despite what you may have heard on Netflix, the corruption up here is not ALL about Steven Avery.
Illustrative factoid, there is a restaurant in Madison right on the Capitol Square. It's pretty conveniently located for the state senators and assemblypeople. Kind of a nice place too.
What's it's name?
"Graft", I kid you not.
Located on the ground floor of a building full of lobbyists. I mean, "lawyers". Right across from the Capitol.
I know that sounds just WAY too brazen, but it's a true story..."
PS - People generally REALLY find the part about the Graft restaurant difficult to believe. I understand. So I encourage you, don't take my word for it. Go ahead, Google it.
If you are going to site examples of a states corruption, at least use concrete evidence rather than vague allusions. The only real corruption you listed was an on individual/(small group) basis. This is not an indicator of a corrupt system, but rather anecdotal evidence of a the most noteworthy bad apples.
Overall in my very humble opinion I have found that the Wisconsin government is fairly well run.
Finally I don't see how the name of a restaurant has anything to do with government corruption. The name is purely based on its location, (within 400 ft from the capitol), and has nothing to do with politics. Also they have great food, I would highly recommend trying it out!
Everything mentioned in your post is relatively recent. If you go back even a decade or two, a lot in WI government was working well.
I measure governments in terms of "politician generations", so 5-10 years is still "the present" in the sense that anything less than 10 years can very easily encapsulate just a single set of people in leadership.
https://onmilwaukee.com/movies/articles/evidenceagainstavery...
Which is a suit for equitable relief (now, your pedantry might be accurate if excessively pedantic if the claim was that they had filed a lawsuit, since a suit in equity is not a suit at law, but since it was just “suing”, which applies equally to a suit in equity, the pedantry is misplaced even with the possibility you point to.)
Wow. You sometimes hear of things like roadworks project taxes costing a household $100 per year. But this kind of sum to create a handful of new jobs and a pittance of additional tax revenue?
This is such a blatantly bad deal that I don't know if this says more about the governor or the rest of the state.