New Report Further Clarifies Foxconn's Wisconsin Deal Was An Unsustainable Joke
from the grifters-ahoy dept
It hasn't taken long for Trump's and Paul Ryan's once-heralded Foxconn factory deal in Wisconsin to quickly devolve into farce. The state originally promised Taiwan-based Foxconn a $3 billion subsidy if the company invested $10 billion in a Wisconsin LCD panel plant that created 13,000 jobs. But as the subsidy grew to $4.5 billion the promised factory began to shrink further and further, to the point where nobody at this point is certain that anything meaningful is going to get built at all.
Reports last fall detailed the ever-shrinking nature of the deal, and how Foxconn was using nonsense to justify its failure to follow through, claiming it was building an "AI 8K+5G ecosystem" in the state to somehow make everything better. But the buildings Foxconn have purchased remain largely empty and the lion's share of the company's promises unfulfilled, despite mounting taxpayer cost.
Fast forward to this week, when an analysis of the cost impact of the downsized project basically concluded what most knew all along: the deal was never going to work as structured, and throwing taxpayer funds at Foxconn isn't likely to pay dividends. And while there's still the possibility some jobs get created (assuming the company actually builds anything of note), the math still doesn't add up:
"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 most important conclusion of this analysis is that it is difficult to come up with plausible assumptions under which a revised Foxconn incentive contract, which offers similar credit rates to the original contract, has benefits exceeding costs,” Bartik wrote. “The incentives are so costly per job that it is hard to see how likely benefits will offset these costs."
That is, if you're playing along at home, a polite way of saying the deal was bullshit. The game for Foxconn will now shift toward restructuring the deal to not only make it more realistic, but to ensure Foxconn can't be held liable for effectively bullshitting taxpayers out of billions. The Verge reporter Josh Dzieza has been doing a phenomenal job clearly highlighting the ever-shrinking nature of the deal:
"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."
Of course getting billions in taxpayer subsidies for doing nothing isn't unique in American industry. Just ask the telecom sector, which has received countless billions over the last few decades for fiber optic networks they only half constructed. This scandal, like that one, likely ends in deep-pocketed campaign contributions ensuring that nobody in this chain of dysfunction sees anything even vaguely resembling genuine accountability for promises they likely knew would never fully materialize from the start.
Filed Under: grifters, paul ryan, scott walker, wisconsin
Companies: foxconn
