The new Foxconn factory will stretch 20 million square feet, the size of eleven football fields – and Wisconsin will shell out serious cash for it, if all goes according to Gov. Scott Walker’s plan.
On the table is up to $3 billion in state tax breaks. The state legislature could approve the economic incentive package as early as August.
These payouts, state officials said, come with lofty expectations. As long as Foxconn – an electronics titan that makes gadgets for Apple, Google and Amazon, among other firms – keeps hiring U.S. workers at the new flat-screen manufacturing facility, Wisconsin would cut the company $200 million to $250 million a year for up to 15 years.
That works out to a rough cost to the state of about $230,700 per worker, assuming the factory goes on to generate 13,000 jobs.
The coming plant represents a political victory for Walker, who bills himself a jobs creator and who faces re-election next year, as well as for President Donald Trump, who has made American manufacturing central to his economic agenda.
Foxconn has so far committed to creating 3,000 jobs at the plant by 2020, with an average yearly wage of $53,000.The company said in a statement to the Washington Post that the number has the “potential to grow” to 13,000.
Approval of the full incentive package would mean the Taiwanese giant, which made nearly $140 billion in revenue in 2015, could net up to $1.5 billion for creating Wisconsin jobs and another $1.35 billion for building the plant in the state’s southeast.
Foxconn said it will pour $10 billion of its own money into the plant, which Walker’s office described as “three times the size of the Pentagon.”
An estimated $5.7 billion of that amount will go toward construction and equipment from Wisconsin businesses, a spokeswoman for Walker said. Neither the state nor Foxconn would say how much of the investment would fund automation.
Foxconn would also be allowed to skip another $150 million in sales tax on purchases such as building goods.
After President Trump, along with Foxconn chairman Terry Gou, announced the deal Wednesday, Walker called it a “once-in-a-century opportunity” for his state.
“We are calling this development ‘Wisconn Valley,’ ” he said, speaking from the East Room of the White House, “because we believe this will have a transformational effect on Wisconsin just as Silicon Valley transformed the San Francisco Bay Area.”
Walker proposed the tax incentives in order to beat six other states in the quest for the factory. Indiana, North Carolina, Ohio, Texas, Pennsylvania and New York were also in the running.
The federal government won’t offer Foxconn any new tax breaks, a senior White House official said. But Trump said he personally discussed the deal with Foxconn chairman Terry Gou.
“I would see Terry, and I would say ‘Terry, you have to give us one of these massive places you do great work with,'” Trump said Wednesday.
The announcement came about six months after Foxconn pledged to create between 30,000 and 50,000 jobs in the United States.
The company caught a reputation in the past for abandoning plans. Four years ago, Foxconn unveiled a plan to build a new $30 million plant in Pennsylvania, and the state’s governor praised the move.
But after the political attention faded, Foxconn never built that factory.
Mark Muro, an economics scholar at the Brookings Institution, a Washington think tank, said he expects global firms will increasingly consider moves to the U.S. in order to slash shipping costs.
Earlier this summer, Samsung cited proximity to American customers for its plans to open a new factory in South Carolina.
“Flat screen displays are large enough to be costly to ship,” Muro said. “Time to market is becoming an important aspect of these decisions.”
States, meanwhile, will likely have more opportunities to compete for the next generation of factories. Take Tesla’s Gigafactory, which will make batteries in Nevada. The state beat four others for the facility by offering $1.3 billion in tax benefits over the next two decades.
