Senate should press for better Foxconn deal

WISCONSIN DEFINITELY WANTS A giant Foxconn plant with thousands of jobs to locate here.

But not at any cost.

The state Assembly last week approved Gov. Scott Walker’s $3 billion incentive package for the Taiwanese manufacturer of flat-screen televisions and other devices. The Assembly included language encouraging Foxconn and state officials, in negotiating final terms of the deal, to prioritize the hiring of Wisconsin residents. Some workers are expected to come from Illinois, given the plant’s likely location near the state line in Kenosha or Racine counties.

The Senate, which has been more deliberate in assessing the Foxconn agreement, now should press for a better deal for state taxpayers as it takes up the bill.

Specifically, taxpayers deserve a guarantee from the company for a minimum number of jobs, given the enormous amount of investment taxpayers are being asked to make.

According to the deal Republican Gov. Scott Walker negotiated with Foxconn, the company would create up to 13,000 jobs over 15 years at a plant in southeastern Wisconsin valued at as much as $10 billion. In exchange for locating here, the state would give Foxconn as much as $3 billion in state subsidies, plus lower utility rates and relaxed environmental rules.

But what if the plant doesn’t work out as optimistically as planned? An initial analysis of the Foxconn proposal by an accounting firm suggested 8,200 jobs would be created, which is considerably less than the 13,000 the governor is touting.

The company plans to open the plant with 3,000 employees, but there’s no guarantee that will happen.

If, for example, the company invested heavily in automation, creating as few as 1,500 jobs in Wisconsin, it could still collect about half of the $3 billion state incentive package. That’s because the state would send Foxconn cash payments for capital investment in the plant, not just personnel.

So some lawmakers, including many

Democrats, want the deal to include a guaranteed minimum number of jobs. The Republican-run Senate should embrace this reasonable position that the GOP-led Assembly last week rejected.

Taxpayers deserve a bigger backstop against unforeseen problems if they’re going to be investing so much public money into this plant. According to the nonpartisan Legislative Fiscal Bureau, it could take 25 years or longer for the state to break even on the deal, though that doesn’t count the positive economic impact from companies that serve and supply the plant.

Senators should demand more detail on what the Foxconn supply chain is expected to be, and how many of those businesses would be likely to operate in Wisconsin. So far, details on that have been sketchy.

Assembly Republicans mostly voted for the Foxconn deal last week, while Democrats largely opposed it. Yet a handful of lawmakers crossed party lines.

Rep. Cory Mason, D-Racine, said the promise of jobs in his district won him over, while Rep. Todd Novak, R-Dodgeville, said his constituents in southwestern Wisconsin want more assurance the deal will pay off.

State senators should require more certainty for taxpayers before signing off on the Foxconn bill. — Wisconsin State Journal, Aug. 20

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