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Foxconn Says It Will Build Wisconsin Factory, Cites 'Conversation' With Trump

Foxconn Says It Will Build Wisconsin Factory, Cites 'Conversation' With Trump

By Danielle Paquette, The Washington Post | Updated: 4 February 2019 15:58 IST

Two days after Foxconn said it no longer planned to build a sprawling new factory in Wisconsin, the Taiwanese technology giant appears to have reversed course, citing a "personal conversation" with President Donald Trump.

The surprise announcement followed heavy backlash in Wisconsin, which in 2017 agreed to pay the prominent electronics maker and supplier to Apple at least $3 billion (roughly Rs. 21,300 crores) in state tax incentives. At the time, Foxconn pledged to deliver up to 13,000 blue-collar jobs and a $10 billion display-making plant in the state's southeastern corner - a move Trump has repeatedly touted.

"After productive discussions between the White House and the company, and after a personal conversation between President Donald Trump and Chairman Terry Gou, Foxconn is moving forward with our planned construction of a Gen 6 fab facility, which will be at the heart of the Wisconn Valley Science and Technology Park," the company said in a statement Friday. "This campus will serve both as an advanced manufacturing facility as well as a hub of high technology innovation for the region."

Foxconn declined to comment on how Friday's decision was reached and when hiring is expected to begin.

"Great news on Foxconn in Wisconsin after my conversation with Terry Gou!" Trump tweeted Friday.

The White House did not respond to requests for comment.

On Wednesday, Foxconn said it would hire engineers and researchers in Wisconsin, rather than factory workers, asserting a change in global economic conditions had compelled the shift. The statement was a sharp reversal from its stance two years earlier, when officials announced what was billed to be a local manufacturing revival.

"In Wisconsin we're not building a factory," Louis Woo, special assistant to Foxconn chief executive Terry Gou, told Reuters in a report released Wednesday. "You can't use a factory to view our Wisconsin investment."

The company did not say precisely what conditions prompted the pivot.

The flip-flop puzzled analysts who have followed the deal.

"Going back and forth seemingly at random gives employees, investors and the community in which you operate cause for concern," said Joe Holt, a business professor at the University of Notre Dame in Indiana. "Their inconsistency is dizzying."

When companies draft factory plans, they conduct months of research, said Jeffrey Dorfman, an economics professor at the University of Georgia who has followed the Foxconn deal. Hundreds of people work on the project, studying the local workforce and infrastructure.

"It takes years to set up supply chains and logistics," he said. "You don't just turn around on a dime." It's too early to tell what will unfold in Wisconsin, Dorfman said."When the jobs and the manufacturing equipment shows up," he said, "we'll believe it."

Trump had unveiled the deal in the East Room of the White House with former Wisconsin Gov. Scott Walker in 2017 and attended a groundbreaking ceremony last summer in Racine County.

Economists pointed out that the subsidy package was 10 times larger than what's typically offered in the United States. Critics slammed the deal after Wisconsin's nonpartisan Legislative Fiscal Bureau reported the state would not make any money from the agreement for at least 25 years.

State officials had said Wednesday that Foxconn will not receive tax credits and breaks until the company meets its job creation and workplace investment targets.

"WEDC's performance-based contract with Foxconn provides the company the flexibility to make these business decisions, and at the same time, protects Wisconsin's taxpayers," said Kelly Lietz, vice president of marketing at the Wisconsin Economic Development Corporation in a statement.

Foxconn didn't hire enough employees last year to claim the economic sweeteners, ending 2018 with 178 full-time employees in the state, according to a letter the company sent state officials. That's 82 positions shy of the minimum requirement.

The company has a history of walking back investment plans in the US.

Foxconn said in 2013 that it would invest $30 million (roughly Rs. 210 crores) and create 300 jobs at a new high-tech factory in central Pennsylvania. But after the spotlight faded, the electronics maker quietly scrapped those plans.

The company did not specify Friday how many of the future Wisconsin positions would be in manufacturing and how many would support the research side.

The US never made sense for a touch screen factory, said Steven Deller, an economics professor at the University of Wisconsin. Those goods are cheaper to make in Asia.

Analysts guessed in 2017 that Foxconn wanted roots in the Midwest to jump-start brand recognition among American shoppers.

But when the company said Wednesday it would refocus on engineering and research in Wisconsin, Deller thought: That checks out.

"We still lead the world in developing new ideas and product lines," he said. "That's what we're good at."

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