Business

Foxconn's change of plans for massive U.S. deal hailed by Trump could mean fewer jobs

Foxconn Technology Group says it is shifting the focus of its planned $10-billion US Wisconsin campus away from blue-collar manufacturing to a research hub, while insisting it remains committed to creating 13,000 jobs as promised.

Company now says most jobs may be in R&D, not blue-collar manufacturing

President Donald Trump, centre, along with then- Wisconsin Gov. Scott Walker, left, and Foxconn chair Terry Gou participate in a groundbreaking event for the new Foxconn facility in Mt. Pleasant, Wis., in Junr. Foxconn Technology Group said Wednesday it is shifting the focus of its $10-billion Wisconsin campus away from blue-collar manufacturing to a research hub. (Evan Vucci/Associated Press)

Foxconn Technology Group said Wednesday it is shifting the focus of its planned $10-billion US Wisconsin campus away from blue-collar manufacturing to a research hub while insisting it remains committed to creating 13,000 jobs.

The much-ballyhooed facility was heralded by U.S. President Donald Trump and Wisconsin's then-governor Scott Walker as a once-in-a-generation opportunity to return manufacturing to the Midwest and the United States. Foxconn, a major supplier to Apple, is believed to be the world's largest contract maker of electronics and China's largest private employer.

In a statement Wednesday, Foxconn said it remains committed to the project, the creation of 13,000 jobs and "to our long-term investment in Wisconsin." But because the global market environment that existed when the project was first announced in 2017 has shifted, "this has necessitated the adjustment of plans for all projects, including Wisconsin."

Louis Woo, special assistant to Foxconn CEO Terry Gou, told Reuters in a story published Wednesday that its plans to build liquid crystal display panel screens are being scaled back and possibly shelved.

"In terms of TV, we have no place in the U.S.," Woo told Reuters. "We can't compete."

In terms of TV, we have no place in the U.S. We can't compete.- Louis Woo, special assistant to Foxconn CEO Terry Gou

Woo said it would be more profitable to make LCD panels in greater China and Japan, ship them to Mexico for final assembly, and import the finished product to the United States.

He said that would represent a supply chain that fits with Foxconn's current "fluid, good business model."

Woo said a factory would not be built in Wisconsin: "You can't use a factory to view our Wisconsin investment."

Instead, Woo said, Foxconn wants to create a "technology hub" that would largely consist of research facilities along with packaging and assembly operations. Woo said about three-quarters of the jobs created will be in research and development and design, rather than blue-collar manufacturing jobs.

That raises the prospect, given Wisconsin's labour force demographics, that many qualified engineers and other tech professionals would have to be recruited from out of state.

Massive government support 

Foxconn said in its statement that it was broadening its base of investment in Wisconsin to ensure the company and workforce will be positioned for long-term success. That includes focusing on research and development in advanced industrial internet technologies and producing high-tech applications and solutions for industries such as education, medical and health care, entertainment and sports, security and smart cities, Foxconn said.

The Taiwan-based company billed the massive 1.86-million-square-metre Wisconsin campus as its first North American manufacturing site for the next generation of liquid crystal display panels to be used in a wide variety of products, including large-screen TVs, self-driving cars, notebooks and other monitors.

Foxconn CEO Terry Gou, centre, and special assistant Louis Woo, right, celebrate a signing agreement on Aug. 27 up on announcing the investment of $100 million in engineering and innovation research at the University of Wisconsin-Madison. (Steve Apps/Wisconsin State Journal via AP)

Wisconsin state and local governments promised roughly $4 billion to Foxconn, the largest incentive in state history and the biggest promised by a state to a foreign corporation in U.S. history. Foxconn was required to invest $10 billion and create 13,000 jobs to get the full incentives.

It hired 178 full-time jobs rather than the 260 targeted in 2018, failing to earn a state tax credit worth up to $9.5 million.

A spokesperson for Wisconsin Gov. Tony Evers, a Democrat who was critical of Foxconn in the campaign against Walker, did not immediately return a message seeking comment. A spokesman for the Wisconsin Economic Development Corporation, which brokered the deal with Foxconn, also did not immediately return a message.

Every step of the way Foxconn has overpromised and under-delivered.- Gordon Hintz, Wisconsin Assembly minority leader

Wisconsin Republican legislative leaders who pushed the Foxconn project also did not immediately return messages Wednesday.

The White House had no immediate comment Wednesday. Last summer, Trump highlighted his economic policies at a groundbreaking event for the massive Foxconn complex, which state officials initially said could house 11 football fields.

"America is open for business more than it has ever been open for business. Made in the USA: It's all happening and it's happening very, very quickly," Trump said in June after visiting the Foxconn site. "Today we're seeing the results of the pro-America agenda. America First, Make America Great Again. Greatest phrase ever used in politics, I suspect."

Democratic critics, including Evers, said the incentives promised to Foxconn were too rich and questioned whether the company would ever fulfill its job creation and investment promises. They also said the massive plant that was relying on water from nearby Lake Michigan posed serious environmental risks.

"Foxconn has broken its promises in Pennsylvania, Brazil, China, and now Wisconsin. Everywhere they've gone, they have exploited taxpayers to line their pockets," Democratic state legislator Jimmy Anderson said on Twitter on Wednesday. Anderson's social media post was retweeted by Mark Pocan, a Democratic congressman representing Wisconsin on Capitol Hill in Washington.

Gordon Hintz, Democratic Wisconsin Assembly minority leader, said in a statement that revised Foxconn plans were "devastating for the taxpayers of Wisconsin."

"Every step of the way Foxconn has overpromised and under-delivered," said Hintz.

"And now, it appears Foxconn is living up to their failed track record in the U.S. — leaving another state and community high and dry."

Wisconsin Republican legislative leaders who pushed the Foxconn project said they blamed the state's new Democratic governor for Foxconn's changing plans.

Assembly Speaker Robin Vos and Senate Majority Leader Scott Fitzgerald said Foxconn was reacting to a "wave of economic uncertainty" that Evers has brought.

Republicans also cited Evers's support for all-but eliminating a manufacturing tax credit program to pay for a middle-class income tax cut.

Evers's top aide Joel Brennan said in a statement that the administration was "surprised" by the news and talked with Foxconn leaders about the development. He did not address the Republican accusations that Evers was to blame.

With files from Reuters and CBC News

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