‘It’s a huge subsidy’: the $4.8bn gamble to lure Foxconn to America
It is the largest giveaway to a foreign firm in US history. Trump claims a win but will struggling Wisconsin benefit?
Wisconsinites joke that there are two seasons in Wisconsin: winter and construction. As traffic crawls down the Interstate 94, sandwiched between endless columns of orange cones, construction is in full bloom.
Mount Pleasant, a sleepy village of about 26,000 people in Racine County, halfway between Milwaukee and Chicago, is developing into one enormous construction site as it prepares to become home to a $10bn (7.6bn) state-of-the-art flat-panel display factory for Foxconn, the Taiwanese electronics company best known for making Apple iPhones in China.
President Trump was present for the groundbreaking on 28 June, and the plant is due to be completed in 2019. Already there is so much orange along this corridor of the I-94 it looks like an particularly dour installation by the environmental artist Christo.
The Foxconn deal, the biggest tech-firm tax break of the Trump presidency so far, was announced at an all-star press conference at the White House last year where Donald Trump was joined by Wisconsins governor, Scott Walker; Foxconns chairman, Terry Gou; and House speaker Paul Ryan.
Trump, characteristically, took all the credit. Everybody wanted Foxconn, he said. Frankly, they werent going to come to this country. I hate to say it, if I didnt get elected, they wouldnt be in this country. They would not have done this in this country. I think you know that very well.
But what probably sold Foxconn on Mount Pleasant were the massive tax breaks Wisconsin offered to seal the deal breaks that could end up costing the state $4.8bn if the project hits all of its targets. It’s the latest giveaway in a series of corporate welfare cheques cut for highly profitable tech companies and the largest to a foreign firm ever in the US.
So-called megadeals defined by lobby group Good Jobs First as subsidies valued at $50m or more are becoming increasingly common in the US as states line up to hand cash to big corporations, especially those in the sexy tech sector, in return for the promise of jobs. According to Good Jobs First, there were typically fewer than a dozen megadeals per year through 2007. Since 2008, that rate has more than doubled to an average of 25.
The benefit of such deals to taxpayers, especially in an economy with low unemployment, is increasingly being questioned.