Tanzina Vega: You're listening to The Takeaway, I'm Tanzina Vega. As we just heard, President Trump pledged to do many things when he took office in 2016, and while he's fulfilled some of those promises, he's failed on others and that includes his promise to revive the industrial economies and key battleground states like Michigan, Ohio, and Wisconsin.
In 2018, Trump promised to bring the Taiwanese company, Foxconn, to Wisconsin and along with it 13,000 jobs to reinvigorate manufacturing in the region, but today, more than two years later, Foxconn has only hired a few hundred employees and the factory itself is largely being used as a storage facility. Josh Dzieza is investigations editor and feature writer at The Verge and he's here with me now. Josh, thanks so much.
Josh Dzieza: Thanks for having me.
Tanzina: Why did Trump promise Foxconn was coming to Wisconsin? What was his political agenda there?
Josh: If you think back to 2017, Trump was making a push to bring back manufacturing to the US, and particularly, to Rust Belt states like Wisconsin. The Foxconn deal began, really, right after he took office, when Foxconn founder, Terry Gou, floats the idea of a large manufacturing presence in the US. Gou makes these overtures frequently, and often, nothing comes to them. Factories that he promises often don't arrive, but the Trump administration really ran with this proposal, arranged a meeting between Guo and Walker, then-governor, Scott Walker, who then proceeded to offer the company an enormous subsidy package to build a 13,000-employee, 20 million square foot large panel LCD factory in Wisconsin.
Tanzina: Now that has not materialized so far, the 13,000 jobs and everything else, what happened there? Why? Was it Foxconn that failed to deliver on its promise to Wisconsin?
Josh: There are a couple points of failure here, and the main one, the short answer is that the factory Foxconn was proposing never really made commercial sense. There was a glut in the LCD industry that was foreseeable at the time, the cost of labor would have demolished the thin margins of the industry, there weren't suppliers in Wisconsin that Foxconn would need to be able to run this kind of facility.
Foxconn leadership, from what I've been able to find, was aware of this pretty shortly after the groundbreaking ceremony, if not before, and really started searching around for anything else to do in Wisconsin. That would have been a short story if Foxconn concluded that what it had proposed wasn't going to work, but instead, Foxconn and supportive politicians, including the Trump administration, continued to insist that everything was on track and going well as the company vacillated wildly from plan to plan.
Tanzina: We keep saying there were 13,000 jobs promised, how many jobs have actually materialized, Josh?
Josh: Very few. The Wisconsin Economic Development Corporation found that, at the end of last year, there were 281 employees eligible under the terms of the contract. At that time, Foxconn was supposed to have a little over 2,000 and it needed about 520 to get subsidies. That number was supposed to increase rapidly. It was supposed to reach 13,000 by 2022. Instead, it was going in the wrong direction. I found Foxconn laid people off beginning this year, shortly after the deadline to receive subsidies passed, so a small, small fraction of what Foxconn was supposed to employ.
Tanzina: President Trump touted the Foxconn plant as part of this major economic investment in the region, and we know that, even more broadly, the president has really failed to keep that promise in the region, in Michigan, Wisconsin, Ohio. Is Foxconn one of the biggest examples of promises not kept to bring back these types of jobs?
Josh: Foxconn was really a centerpiece of that effort. This was supposed to be a major employer, a new industry in the US, and in particular, an industry that is currently based almost entirely in China. This was supposed to be an example of reassuring manufacturing, specifically a type of tech manufacturing that could be the foundation for a new industry in the US. It really has not come to pass.
Tanzina: What does this tell us about-- I mean, you mentioned China, and I know that President Trump has-- What we've all now heard the president comments about China, everything from the coronavirus on down, this is a Taiwanese company, does this tell us anything about the president's maybe broader geopolitical business strategy in wanting to do business with Taiwan versus China?
Josh: Foxconn is a Taiwanese company. Most of its manufacturing is in China, where it has these massive complexes, hundreds of thousands of workers in some of them, and it's a major exporter from China. I think Trump wanted to bring that back to the US, though, I think the Foxconn project shows all the reasons why that is difficult. In some ways, you have Trump policies working at cross-purposes here, where the trade war made some of the things Foxconn was trying to do more difficult by raising the price of some of the supplies it would need to manufacture anything in the US.
Tanzina: We know that Wisconsin is a key state in this election, it has been for prior elections, but this year, in particular, with coronavirus, with everything that's going on, with recent Supreme Court decisions on ballot counting, Wisconsin has become even more critical to the overall election. Does this failure from the Trump administration and Foxconn actually matter to voters on the ground in Wisconsin?
Josh: I think we'll find out. My sense is there is general disappointment about the Foxconn project. Trump has continued to tout it. Even last month, he would mention it in rallies, he would talk about this wonderful factory, and say Foxconn will bring even more investment if he's reelected, but I think it's apparent even to people who haven't been following the project closely that it's fallen short, that the giant factory is just not there. It's not employing nearly the number of people that it was supposed to at this point.
Tanzina: Where does the project go from here? Does it still continue to get funding from the state? Are they going to just keep using it as a storage facility? I mean, your reporting really paints a picture of this, I can imagine, empty hallways sitting vacant.
Josh: Yes, it's a good question. I'm really not sure where it goes from here. The building that Foxconn calls the LCD factory, it was permitted for storage recently. A government report found that even if it were to be an LCD factory, it would be the smallest such factory in the world, but it's more of a display or demonstration facility than a viable business. Foxconn has built it and they've built several other buildings of unclear purpose. They have a lot of land that was provided by the state and local governments. They have this infrastructure there.
It's unclear what Foxconn does from here. They have started some very small scale manufacturing of circuit boards, something that would employ dozens to a few hundred people, not the 13,000. It's unclear to me whether Foxconn leaves Wisconsin or ekes out a small manufacturing presence. Its statements after the story ran said that it was disappointed to be denied subsidies to regrow and a separate statement said that the company, paraphrasing, would remain a partner to places that were a good partner to Foxconn and spoke highly of Trump, specifically, rather than a more broad comment about the US administration. There was a sense among employees that the fate of the Foxconn project hinged in part on the outcome of the election.
Tanzina: Josh Dzieza is an investigations editor and feature writer at The Verge. Josh, thanks so much for your reporting.
Josh: Thanks for having me.
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