Employees Say Foxconn & Donald Trump's Wisconsin Factory Scam Was An Absurdist Hellscape

from the empty-promises dept

You might recall how the Wisconsin GOP, with Donald Trump and Paul Ryan at the head of the parade, struck what they claimed was an incredible deal with Foxconn to bring thousands of high-paying jobs to the state. Initially, the state promised Foxconn a $3 billion subsidy if the company invested $10 billion in a Wisconsin LCD panel plant that created 13,000 jobs. The amount of political hype the deal generated was utterly legendary, helping market Trump as a savvy dealmaker who'd be restoring technological greatness to the American Midwest.

Of course experts repeatedly warned that the deal was too good to be true, and likely would never recoup the taxpayer cost as structured. Those warnings were ignored. And unsurprisingly, as the subsidy grew fatter, the promised factory began to shrink further and further, to the point where it's incredibly unlikely much of anything will be built at all. All now cold comfort to taxpayers who have already doled out a small fortune, or the local residents who had to move thanks to a factory that will likely never exist.

Last week, reports emerged that Wisconsin finally appears to be waking up to the scam, and would finally be blocking any more taxpayer subsidies from lining the company's pockets. This week, The Verge (which has done a phenomenal job tracking this bottomless grift from the get-go) penned a great breakdown of the scam, which Trump initially called "the eighth wonder of the world." Ultimately the project isn't much of a project, much less a wonder of any real note:

"The renovations never arrived. Neither did the factory, the tech campus, nor the thousands of jobs. Interviews with 19 employees and dozens of others involved with the project, as well as thousands of pages of public documents, reveal a project that has defaulted on almost every promise. The building Foxconn calls an LCD factory — about 1/20th the size of the original plan — is little more than an empty shell. In September, Foxconn received a permit to change its intended use from manufacturing to storage."

Great, cool. Of course doling out billions in taxpayer subsidies to giant corporations in exchange for fluff and nonsense (then pretending to be really concerned about balancing the budget) is kind of an American tradition. Just ask the telecom sector, which routinely gets a massive fortune in tax breaks and subsidies in exchange for jobs and broadband investment that repeatedly, almost-comically, never actually arrives. Promising the Earth, sea and sky in exchange for bupkis is kind of a national pastime at this point. That's certainly the case in Wisconsin, where any meaningful employment was largely theatrical in nature:

"Even the handful of jobs the company claims to have created are less than real: many of them held by people with nothing to do, hired so the company could reach the number required for it to get tax subsidy payments from Wisconsin. Foxconn failed at that objective, too: last week, Wisconsin rejected the company’s subsidy application and found it had employed only 281 people eligible under the contract at the end of 2019. Many have since been laid off."

Effectively, the company hired just enough people to pretend to be hitting benchmarks. But with the whole thing effectively being a head fake, the few folks who were hired got to experience something that feels more at home in a Kafka-esque satirical comedy than actual reality:

"Soon, the office began to fill with people who had nothing to do. Many just sat in their cubicles watching Netflix and playing games on their phones. The reality of their situation became impossible to ignore. Multiple employees recall seeing people cry in the office. “The best is when you’re in the elevator with somebody and then they just scream out of nowhere,” said an employee who experienced this several times. “They’ve had enough, because things don’t make sense here."

The whole thing is really worth reading, processing, and truly understanding on the off chance we might learn something. A year or so ago, the company routinely became indignant at the mere hint by The Verge that the deal was a farcical dud. Now the company won't even offer a comment to the website's inquiries. Meanwhile, taxpayers have doled out $400 million on land, equipment, and infrastructure that will never actually be needed. Numerous Wisconsinites were forced from their homes using eminent domain, and watched as their homes were subsequently bulldozed as part of a con they had to pay for.

You know, just another day in America.

Filed Under: boondoggle, donald trump, paul ryan, scott walker, wisconsin
Companies: foxconn

Wisconsin Gets Wise To Foxconn's Grift, Blocks New Subsidies

from the took-you-long-enough dept

You might recall how Donald Trump and Paul Ryan's once-heralded Foxconn factory deal in Wisconsin quickly devolved 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 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.

Last October, reports emerged clearly illustrating the ever-shrinking nature of the deal and the way Foxconn was just using nonsense to justify its failure to follow through. While the company hadn't built much of anything meaningful in the state, it was still routinely promising to deploy a "AI 8K+5G ecosystem" in the state to somehow make everything better. Shockingly, that mish-mash of buzz words wound up being effectively meaningless.

Fast forward to late 2020, and Wisconsin finally appears to be getting wise to Foxconn's grift. Attempts to renegotiate the original deal understandably aren't going so well, and the Wisconsin Economic Development Corporation (WEDC) has finally rejected Foxconn’s latest application for tax subsidies, correctly noting Foxconn hasn't come close to fulfilling the promises in the original contract, which included spending $3.3 billion by the end of last year (Foxconn spent $280 million) or hiring 13,000 employees (they only hired 550).

Needless to say, the WEDC isn't particularly thrilled, since Foxconn's original promises died long ago, and the company has been consistently intractable in efforts to renegotiate a new agreement:

"The Recipients are ineligible for tax credits because of their failure to carry out the Project,” WEDC wrote in its letter to Foxconn, quoting the passage defining the project as a Gen 10.5 in the original contract. “The fact that the Recipients have neither built, nor started to build or operate, the required Generation 10.5 TFT-LCD Fabrication Facility (the “10.5 Fab”) is not in dispute. The Recipients have acknowledged that they have no formal or informal business plans to build a 10.5 Fab within the Zone, and WEDC and the State of Wisconsin have corroborated that fact from observation, evaluations, and from industry experts hired to provide consulting services."

For those keeping score at home, that's yet another Donald Trump show pony proposal that wound up being more trouble than it was worth.

Filed Under: boondoggle, donald trump, paul ryan, scott walker, subsidies, wedc, wisconsin
Companies: foxconn

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

Foxconn's Wisconsin 'Factory' Is An Even Bigger Joke Than Everybody Thought

from the words-are-but-wind dept

We've been covering for a while how Paul Ryan's once-heralded Foxconn factory deal in Wisconsin quickly devolved into farce. The state originally promised Taiwan-based Foxconn a $3 billion state subsidy if the company invested $10 billion in a Wisconsin LCD panel plant that created 13,000 jobs. But as the subsidy grew 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.

Last October, reports emerged clearly illustrating the ever-shrinking nature of the deal. They also highlighted how Foxconn was effectively just using nonsense to justify its failure to follow through, showing that while the company hadn't built much of anything meaningful in the state, it was still routinely promising to deploy a "AI 8K+5G ecosystem" in the state to somehow make everything better. Shockingly, that mish-mash of buzz words is effectively meaningless.

Fast forward to this week, and reporters who've been visiting the state to determine the progress of the project continue to find its even lamer than everybody had initially worried. One local politician effectively compares the scandal directly to the Fyre Festival, and the piece is littered with disappointment by locals who say the company is being aggressively secretive and often misleading. Even many of the "innovation hubs", which Foxconn promised would somehow be better than the ever-shrinking factory it originally proposed, are little more than empty buildings at this juncture:

I walked to the second building in Foxconn’s technology hub, down a street lined with lampposts mounted with speakers playing smooth jazz. At first, the six-story former bank seemed to be farther along. A yellow debris chute snaked out from a top window, and there were hardhats visible in the foyer in front of heavy circular vault doors. But there was also a sign in the window that said the building was for lease. I called the number and asked whether Foxconn was renovating the building, as it announced it would last summer. No, the person on the other end told me. The building never sold.

In short there have been endless promises but little to nothing of substance accomplished, all covered in a cloak of secrecy -- which isn't going over particularly well in Wisconsin. But for its part, Foxconn itself just keeps doubling down on meaningless jargon in the apparent hope that it will satisfy those concerned that taxpayer money may have been wasted on a glorified head fake:

Foxconn is building an AI 8K+5G ecosystem in Wisconsin because the positive impact we envision far surpasses that which can be achieved by building a factory or manufacturing site alone. We are creating Wisconn Valley, which will comprise an ecosystem, or a thriving community, of partner organizations that are intimately linked and interact with each other to develop technological solutions.

Again though, that's a combination of terms that sounds nifty, but is utterly meaningless (the only thing lacking is a fleeting reference to the blockchain). While Foxconn has convinced a few folks an "AI 8K+5G ecosystem" is a real thing, the general consensus of the piece is that the company bought numerous buildings to use effectively as props to justify its massive handout, but then failed to do anything of substance with the lion's share of them. Something will come from the massive subsidies being thrown in Foxconn's general direction, but whether it's more than glorified set dressing remains an open question.

Filed Under: boondoggle, factory, paul ryan, scott walker, subsidy, wisconsin
Companies: foxconn

Wisconsin's Overhyped Foxconn Deal Keeps Getting Lamer By The Week

from the pray-I-don't-alter-the-deal-further dept

Last year, you probably recall that former Wisconsin Governor Scott Walker signed a "revolutionary" deal: the state promised Taiwan-based Foxconn a $3 billion state subsidy if the company invested $10 billion in a Wisconsin plant that would create 13,000 jobs. Walker hoped the deal would finally help cement job growth that he had been promising supporters for years, and the press was quick to hype the plan without really focusing too much on the math, or Foxconn's history of not really living up to similar promises in countries like Vietnam, India, and Brazil.

Quietly buried under the blistering hype (greatly fueled by the Trump administration), groups like Wisconsin’s non-partisan Legislative Fiscal Bureau began to point out that it would take until 2043 for taxpayers to recoup the subsidy. And as the finer details of the plan began to emerge late last year, the $3 billion subsidy quickly ballooned to $4.1 billion, leading some to point out that the math no longer made sense at all and, with an unemployment rate of 3.2% and a $100,000 per job subsidy, it was technically impossible for the massive subsidy to ever be repaid (in jobs, walnuts, or anything else).

Worse, as the project moved along and subsidies ballooned, the scale of the project began to shrink. An excellent report at The Verge last October noted how the original plan for a 20 million square foot factory that would build 10-foot by 11-foot panels for 75-inch TV screens, slowly shrunk to a Generation 6 plant that only produces 5-foot by 6-foot glass panels, and with original plans for $10 billion worth of investment (Foxconn's original promise) also shrinking to a $2.5 billion investment. Walkers response to the dubious deal was, it should be noted, that critics should "suck lemons":

"There’s a whole lot of people out there scrambling to try and come up with a reason not to like this,” he said in July of last year. “They can go suck lemons. The rest of us are going to cheer and figure out how we are going to get this thing going forward.” Several weeks later, he called the deal a “once-in-a-lifetime opportunity” that will be “transformational” for the state. “These LCD displays will be made in America for the very first time, right here in the state of Wisconsin."

About that. This week, a Reuters report revealed that the original plan for a massive factory bringing 13,000 jobs to the region had changed yet again. Now, Foxconn executives claim, there will be no factory or manufacturing jobs at all. While Wisconsin might get an engineering office, even that doesn't sound all that certain according to Foxconn executives:

"Now, those plans may be scaled back or even shelved, Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters. He said the company was still evaluating options for Wisconsin, but cited the steep cost of making advanced TV screens in the United States, where labor expenses are comparatively high.

“In terms of TV, we have no place in the U.S.,” he said in an interview. “We can’t compete."

Rather than a focus on LCD manufacturing, Foxconn wants to create a "technology hub" in Wisconsin that would largely consist of research facilities along with packaging and assembly operations, Woo said. It would also produce specialized tech products for industrial, healthcare, and professional applications, he added.

“In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment,” Woo said.

And instead of the 5,200 new jobs that were supposed to arrive before the end of 2020, the Reuters report is now saying those numbers will be closer to 1,000. Maybe? Who knows. Given its expertise in this subject, it's hard to believe Foxconn didn't realize all of this from the start, since the market hasn't magically shifted in just a year or two. Also keep in mind that while the project shrinks, taxpayer money has already been spent preparing for the factory's construction, including the demolition of some homes previously on the target site.

Given the incredible shrinking nature of this project it's also unclear (especially if you've listened to the excellent Reply All podcast on this subject) why anybody would believe anything being said now about this ever-devolving boondoggle.

Filed Under: factories, lcds, scott walker, subsidies, suckers, wisconsin
Companies: foxconn

America's Best Has Some Fun With Scott Walker's Super-Similar Campaign Logo

from the 'murica dept

Politics can be tricky territory for companies and brands to wade through. While some corporations have made notorious claims on political matters, and occasionally even get behind candidates, the vast majority of companies know that they're better off endorsing nobody and nothing. As Michael Jordan once famously put it when he'd been urged by a Democratic campaign to be more politically active: "Republicans buy sneakers, too."

That's what makes the reaction of America's Best, the eyeglass and contact-lens company, to Scott Walker using a logo for his campaign that is nearly identical to the company's so special. They didn't lose their minds. They didn't go trademark ballistic. They just had some fun with it.

Both Walker's campaign and America's Best Contacts and Eyeglasses feature a cartoonish, four-part American flag logo as the "E" in their names. The same flag icon is also their stand-alone logos when the text is removed.

In a brief phone call on Monday, America's Best CEO Reade Fahs told Business Insider that his company wasn't taking sides in the presidential race. But he said he appreciates the Walker campaign approving of the design.

"We don't endorse presidential candidates, but we sure love it when they endorse us," he quipped.

So, yeah, they're the same. And it could have been very easy for the company at that point to completely flip out in anger, or to rush to assure everyone that it hadn't endorsed any political candidate for any political office. Instead, the CEO's calm and measured response was endearing. Not to mention the company's response on social media.

And they go on and on like that on Twitter, making sure everyone knows the company isn't endorsing anyone, but likewise insisting the company isn't going to go legal on Walker's logo. In the meantime, rather than coming off like some kind of petty and frightened corporation by flipping out, America's Best engenders a fun, laid back, hip sensibility. You know, good public relations, which has us talking about how cool a move it is rather than having some legal filing buried in the news that nobody cares about. Well done all around.

Filed Under: elections, logos, scott walker, trademark
Companies: america's best