Foxconn's promise to invest $10B in Wisconsin is now a distant memory | Hacker News Reader

Foxconn's promise to invest $10B in Wisconsin is now a distant memory

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Hopefully it's an ongoing lawsuit, although my memory is the various gifts the state gave to Foxconn came with very little in the way of guarantees.

Some of this debacle was very well documented in a 2018 Reply All podcast. https://gimletmedia.com/shows/reply-all/wbhjwd

Far out that podcast was a great show. I miss it so much.

The fall was swift and complete. Sadly.

Would highly recommend Underunderstood and Darknet Diaries if you liked RA

Am on DnD, will try Underunderstood, thanks!

PJ has a new show in a very similar vein called “Search Engine”. Great stuff.

Indeed, have subscribed. It's good but still, I miss the old format and team.

Reminds me of the American Plant Foods deal in Louisiana.

They promised 100+ jobs at $120K+ a year salaried.

What they actually came up with was 13 jobs at $56K a year.

For this, they're getting a $47M tax break. If you want to know why Louisiana is consistently one of the most poorly educated and poorly funded states in the country, it's situations like this. The locals end up subsidizing out of state businesses who get sweetheart deals with local politicians in exchange for favors.

Tax subsidies like you describe here don’t just hurt the state being taken advantage of, it hurts the entire country because no one is getting that tax revenue.

Instead of a business paying their share, all that money is instead transferred to the already-rich owners and investors (and yes, the corrupt officials in the local state).

It’s a prisoners-dilemma style arrangement for the benefit of the already rich and powerful. If it’s not Louisiana, they’ll find some other suckers to bribe.

If you have evidence politicians are getting kickbacks out of that $47M tax break you'll be famous before the end of the week.

It is particularly endemic to Louisiana which has an insane amount of chemical factories due to proximity to the Gulf of Mexico and the Mississippi River. All of them are getting tax breaks even though many have been here for 50 years and couldn't move if they wanted to.

And probably would owe more than they are worth if charged with cleaning up all the pollution they have caused.

A while ago, research came out that showed that the California oil industry had not squirreled away enough money, and there were not enough profits in the future, to clean everything.

https://www.propublica.org/article/cost-of-california-oil-cl...

Their leaders may be dumb

But their voters are an order of magnitude dumber

At least in the case of the Foxconn plant, I don't even think anyone actually got any favors. The politicians in question (Trump, Scott Walker?) just think that the appearance of a deal like this makes them look good to their voters. That's all the "favor" they needed.

> For this, they're getting a $47M tax break.

This presumes someone else would be paying the $47M. Often that isn't the case, so the "tax break" is just money the locality would not have received anyway.

They need roads and other public services to operate. They are basically taking a free ride on the backs of the tax paying population.

One useful outcome of this debacle is that it exposed a loophole in the Great Lakes Water Resources Compact.

Under that agreement, pumping water from the Great Lakes for industrial purposes is supposed to be disallowed, preventing e.g. chip makers or bottled water companies from buying land and setting up shop to pump water out of the lakes for export.

During this agreement, the city of Racine was given enough incentive to allow FoxConn to pull water from the lake via the city (there's an exception in the compact that allows cities who already pull their drinking water from the lakes to keep doing it). So Racine bypassed the compact by using their legal way to pump Lake Michigan water to supply FoxConn's industrial needs.

Fortunately this didn't happen, but the GLWRC needs some editin'.

Any lawyers here? If I were a fresh law grad, how would I help to make this happen?

You could get involved locally but just be aware that whiskey is for drinking, and water is for fighting.

Loopholes like that are intentional.

So, why the hell aren't governments putting clawback clauses in these taxation contracts with companies? They claim the world, and provide a couch, they should have to pay for the contract.

But nooooope. We small folk have to pay OUR taxes each year without fail. When have any of you individuals got a "5 year abatement" from your household taxes? Anyone?

If it's a 5 year abatement to develop vacant or abandoned land, it's not much of a concession, if the alternative is the land continues to sit vacant.

https://www.theverge.com/23030465/foxconn-lcd-factory-wiscon...

Here's a nice frustrating article that kind of but doesn't really explain it.

Why would a low-cost electronics contract manufacturer with factories in China and South East Asia suddenly make a factory in Wisconsin, USA?

The factory was never going to happen. It was all about political favors.

They were going to produce LCD panels. Presumably Detroit auto companies would find value contracting with them. Otherwise there's no point in making something to be shipped back to SEA for assembly.

Because they expected import tariffs which were threatened but not materialized.

Wasn't there also a site in Mount Pleasant? 3 sites total in Wisconsin?

https://www.wisn.com/article/village-of-mount-pleasant-appro...

Yes, I think that was the biggest investment

I remember listening to a podcast episode a few years ago about this, very skeptical it was ever going to happen. It had totally divided the local community.

I can't remember which podcast though!

Reply all did an episode about the Foxconn stuff at a specific town. Looked it up and it’s called “Negative Mount Pleasant”. It’s been a long time since I’ve listened but I remember being very skeptical of the whole thing as well. I just have no idea why Foxconn would ever have an economic reason to pay for American labor when presumably they have a pretty large pool of much cheaper and closer labor available.

Ah yep, that would be the one.

Nobody believed the hem when they made the deal. It was an obvious Trump illusion. The mend is just didn’t want to say anything in print and look like jerks.

I’m sceptical as to whether this was _ever_ a real thing (as opposed to a photo op for Trump et al). It always seemed rather far-fetched.

Maybe Trump meant that the Foxconn factory will happen on his second term when he gets elected (:

I've heard of some of these "tax deals" working out well for the community, but often they don't end up providing nearly the amount of development or jobs that were originally promised.

Montréal is now the fifth most important city for video games in the world due to tax credits that are directly applied per employee. No company needs to strike a backroom deal to get a lump sum. The more employees they bring to Montréal, the more they save automatically.

https://www.npr.org/sections/money/2022/01/04/1068916102/how...

Agreed. It's like the time the Trump regime asked China to "promise" to buy some huge amount of grain from US farmers. Trump got the photo op, but I don't think we even ever pressured the Chinese to sign any kind of actual deal. They just had to talk about some vague future promise.

IMO, this stands out among other things as a big reason for why Tony Evers was elected. So in a way, this helped WI in the end (by finally getting folks to see how big of an idiot Scott "open for business" Walker is).

Distant memory maybe, but I'd call it the beginning of the end of Republican control over a blue/purple state. Evers has been the only thing holding back a lot of terrible ideas until recently. Fingers crossed for new maps before 2024, but I'll be fine with 2026.

I think it harms WI in the principle: someone got elected for reasons that turned out to be illusory.

Just because it helped “your guy” this time doesn’t make it a good thing.

Agreed. Id prefer a world where the Republican Party wasn’t just a collections of scammers and the scammed.

I think you might be misunderstanding. Evers didn't get elected by selling the scam Foxconn plant. He got elected after it was clear that Scott Walker, his opponent, made promises about the plant that he could not keep.

Ahhh. I was misunderstanding. Thanks.

I'm pretty sure they're saying the opposite of that. It was Trump who made it a big PR thing and then he and Walker lost after voters realized it was illusory.

Politicians come and go, but major investment tends to stick around. I don't really care about the partisan politics of WI (or America, for that matter) but this sounds like cutting off the nose to spite the face.

What they’re claiming, I think, is that the imaginary Foxconn facility lead to Walker’s downfall. It’s not like anyone said “let’s make the Foxconn facility go away, to get rid of Walker” (this _would_ arguably be cutting off the nose to spite the face); the facility was always imaginary, and this arguably lead to Walker’s downfall. There was never a nose to start with.

Yeah. Walker also turned down federal infrastructure funds because he didn't want to be seen using federal tax dollars.allbbecause he thought he was gearing up for a presidential run ... Until Trump ate his lunch

I am still incredibly angry that the train was never constructed.

It was constructed, just somewhere else, and we still paid for it, I believe

Maybe you missed the part where Vos is openly talking about impeaching Protasiewicz before she hears a single case. https://apnews.com/article/wisconsin-supreme-court-justice-i...

There was an interesting 'Reply All' episode about the town that this impacted - https://gimletmedia.com/shows/reply-all/wbhjwd

Do we have a tldr for that 1h podcast?

Basically the local politicians were suckered in by the promise of massive investments, and made some terrible decisions including forcing out some local residents to make room for development that never happened. It's definitely worth listening to the whole thing, as it's a pretty compelling story about why local communities should be very cautious and skeptical about these types of investments promises.

Yes. The British were also promised Hong Kong would have democracy. Whenever there is a lack of enforceable accountability as part of an agreement, then it is a foolish agreement. It's another reason it's vital that the people should strive for political participation and power because such matters cannot be left to chance with foolish or corrupt decision-makers to screw them over.

The British were not promised that.

They were promised after decolonization, Hong Kong would get elections for 50 years and then China would fully take over.

China was also allowed to implement laws protecting national security.

What the British didn't foresee is China being able to gerrymander and also influence which politicians could run in the name of national security.

Incompetent politicians and a lot do wishful thinking.

I'm not sure if this is a subtly genius reference to their previous podcast called 'tldr', but if so, bravo.

My primary take on it is that the local government was overwhelmed and out of their depth and their naivete was exploited with promises of jobs and funding. At one point they declared people's homes uninhabitable to force them out. It's a pretty sad story on the local level.

This is not a new problem. How many places was Amazon going to build the new HQ? When I was a teenager GE got a big financial package to build a factory in our area. They built the building but it always remained empty. And on it goes.

Never not a scam.

I agree. I never understood how this deal could have made business sense from the beginning. I grew up in south-east Wisconsin and I was disappointed at how gullible-seeming the local officials were. I was hoping I would be wrong and it would come to fruition some day, but unfortunately my initial gut feeling seems to have been right. I don't view Foxconn as a highly trustworthy partner, but I don't think the people in Wisconsin really understood who they were dealing with.

Vote democrats and you get Barry's infamous those jobs never coming back. We know Biden is more popular and the actual real McCoy behind Obama votes result. People voted Biden and not Barry. Sure miss Trump. That guy really an economic powerhouse. Any economist graduated with just AP Economy can easily beat that old guy.

What's the real story here? Why did Trump say the $10B would not be spent if he was not re-elected? What "changing global market conditions" is Foxconn referring to?

Edit: I found this interview here with a former Foxconn exec that goes some more detail: https://www.theverge.com/23030465/foxconn-lcd-factory-wiscon.... Summary as far as I can tell is that the deal from the previous republican governor was controversial because of the tax breaks and the next democratic governor renegotiated the deal. Politics, basically. I guess locals are OK with this? Seems unfortunate though since people lost their homes and it would have brought jobs.

> if he was not re-elected

He didn’t say that. He said this investment wouldn’t have happened if he hadn’t been elected in 2016.

Thanks. That makes more sense.

Wow, that claim aged like milk didn't it?

Now it reads like "Wisconsin voters wouldn't have gotten scammed if you didn't elect Trump and Walker."

He was talking about his election in 2016, claiming that Foxconn would not invest this great sum of money had Hillary Clinton been elected. As usual, he was looking backwards and spewing nonsense.

The real story is that Scott Walker offered FoxConn a nonsensical deal for a political victory for himself (Trump jumping onto it was a sideshow and irrelevant…the primary work was done by Scott Walker).

The deal essentially gave Foxconn free money without requiring it do anything and Foxconn figured why not take the money and then see if we can also do something.

They found out they couldn’t. They tried to pivot to a more software/IT focused investment but the properties they had picked were not ideal for that being far away from where IT people lived. And they eventually gave up.

> I found this interview here with a former Foxconn exec that goes some more detail

Alan Yeung is full of crap, completely untrustworthy.

You can see multiple times during the interview where Nilay immediately calls him out on his B.S. lies.

Trump was taking credit for something someone else did, as per usual. It's really that simple.

The plans were always idiotic. The fact that Trump was too ignorant and/or poorly-advised not to take credit for them is just the icing on the kakistocracy.

So will be similar article in 2027 in which Foxconn -> TSMC?

TSMC situation is different because of the political situation around Taiwan. They want to get out.

Morris Chang at least is actually doesn't believe that state of teh art TSMC fab can perform well outside TW.

Taiwan is paying for US protection by securing some of the chips supply for US companies in case China invades Taiwan. They were pressured into doing this because in their interest is keeping most of the fabs producing cutting edge chips on the island, which would make invading them a huge hit into US interests, which in conclusion would make higher chance for US to defend Taiwan.

It comes off as US global imperialism to park nukes and battle groups near the other side's mainland. Although the South China Sea and Taiwan == China both come off as Chinese global imperialism, so both major powers need to learn to play nice without saber-rattling expansionism.

My read is more that they do not want to build outside of Taiwan as the TSMC fabs on the island have become of enormous strategic interest to the United States (as well as China). Building fabs in the US is directly counter to this, and I would wager we have twisted their arm to do so. I am so far not surprised by all the complaining and foot dragging they are doing in Arizona.

TSMC wants out of PRC's crosshairs but they're concerned about labor costs and labor skills in the red, white, and blue. I think they'll find greater labor costs are worth the peace-of-mind. The skilled labor gap is one that's closable when industry, education, and government invest in supporting wise teachers and upping teacher pay.

No, they don't want. They accepted the deal because they want to have a plan B in case something bad happens. That's why they're delaying the construction.

I'm not sure it's really that different. If a fight over Taiwan started, mainland Chinese businesses would also be unavailable to America. Doesn't matter what side of the straight it's on. Now, maybe chipmaking is of more geostrategic importance than later electronics assembly is. It's certainly harder to do. But given how much Foxconn makes, I think losing them would be significant.

TSMC situation is very suspicious. How can Taiwan be sure that their technology will not be copied by Intel and other American companies if they build a factory in US?

At least TSMC is actually building something and recruiting in the US. Foxconn just pinky promised.

No, because in the case of TSMC, they actually are building things in AZ and have already spent hundreds of millions on construction.

Exact same things is happening with TSMC's $40 Billion plant in AZ. [1]

[1] https://www.datacenterdynamics.com/en/news/tsmc-delays-40bn-...

I think it’s slightly more likely this will happen. From the Taiwanese perspective, this could be seen as partly collateral for some of the big defense sales that happened recently. The US is very motivated to bring some chip manufacturing back within its borders.

> The US is very motivated to bring some chip manufacturing back within its borders.

And Taiwan is very motivated not to let this happen. They only agreed because of political pressure, but I wonder if they will ever build this factory.

Not really, tsm is delaying to find enough workers for their plant. They are still building it in AZ. Foxconn is changing a $40b investment into a $672m investment and selling the properties they had. Related but not the same thing at all. Not surprising TSM can't find workers with the low unemployment rates in the US.

Exactly. TSMC has no intention to build anything in the US because it would be too expensive and counter to Taiwan interests. But of course they need to play the role. They already started to delay the construction date.

This is incorrect. The TSMC site has already seen a massive amount of construction and is scheduled to begin producing 3nm chips in 2024. [1]

1. https://www.tomshardware.com/news/tsmc-fab-21-arizona

Edit: They've apparently delayed the start of production to 2025 [2]. However, the situation with Foxconn is simply not comparable to what TSMC has invested.

2. https://www.anandtech.com/show/18966/tsmc-delays-arizona-fab...

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