US’s Foxconn subsidies stir debate

Donald Trump shakes hands with Terry Gou in July after announcing Foxconn's investmentImage copyright

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Donald Trump shakes hands with Terry Gou in July after announcing Foxconn’s investment

Wisconsin, a state located in the middle of the US on the shores of Lake Michigan, has offered $3bn (£2.3bn) in subsidies to convince Taiwanese manufacturer Foxconn to construct a new plant there.

President Donald Trump and others say the investment will help spur a US manufacturing revival. But as state legislators debate the costs of the proposal, another question looms in the background: will it work?

Foxconn, one of the largest electronics manufacturers in the world, said it expects to invest $10bn over four years in the plant.

It will make liquid crystal display panels – screens for everything from televisions to cars and healthcare equipment.

The firm said it would employ 3,000 workers initially, with the potential for up to 13,000.

Wisconsin leaders say the investment is a once-in-a-century opportunity that will jumpstart a new electronics manufacturing industry in the US.

They see a bright future well worth the $3bn in subsidies that the state is offering in exchange for hiring and spending in the state.

“It is transformational and once in a while, I think it’s worthwhile for Wisconsin to do something to take that big leap,” said Robin Vos, who leads Republicans in the Wisconsin State Assembly.

The deal got a high-profile endorsement from President Trump, who announced Foxconn’s investment last month at the White House, claiming it as a victory for his push to revive US manufacturing.

“We have companies pouring into our country. Foxconn and car companies, and so many others, they’re coming back to our country,” he said at an event this month.

But critics say Foxconn and the president have histories of making big promises that don’t pan out.

They point to Foxconn announcements in places such as Pennsylvania, India and China that have not borne fruit. And they say the subsidy proposal does not have strong enough safeguards if the firm’s investment is smaller – and less transformative – than promised.

“How much Kool-Aid do you have to drink to believe that is going to happen?” asked Gordon Hintz, a Democrat, during the debate in the Wisconsin State Assembly.

What’s the case for the subsidy?

Foxconn, which employs about one million people globally, told the BBC it was “committed to all of the projects that have been proposed… and have invested billions more to ensure that those investments are realised”.

The firm, which works with US companies such as Apple and Tesla, has cast the investment as part of a global expansion that will place it in the heart of one of the world’s major markets. It expects to use the plant to create cutting-edge manufacturing systems.

Foxconn, which considered offers from other states before picking Wisconsin, said it always worked with governments on big projects because of the infrastructure needs involved.

“If we are to make large investments, in any location, we need a government partner who is able to commit the levels of support needed to make them economically viable for our company and, in many cases, also for the many other companies whose investments are attracted by the technology manufacturing hub we establish,” the firm said in a statement.

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Foxconn does much of its manufacturing in China

The subsidy package negotiated by Wisconsin Governor Scott Walker, a Republican, has won widespread support from business groups.

Despite fierce debate, it is expected to pass in the Republican-controlled state legislature, where advocates say the deal will help reverse decades of manufacturing job losses and have broad economic impact.

Supporters say benefits are already evident, as Foxconn announces partnerships with local ginseng growers and other companies. Glass-maker Corning is expected to follow Foxconn with an investment of its own.

Daniel Gouge, vice-president of sales at Triangle Tool Corp, says he expects his company to win work from Foxconn if the proposal moves forward and cannot believe the state would hesitate with this type of investment at its door.

“This is a huge win for Wisconsin,” he said. “Everyone should be on board.”


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