Foxconned book cover
When word first spread that Foxconn might build a mega-factory along I-94 in Racine County, my political sleaze-o-meter shot into the red. The site was within the districts of the most powerful members of both the state and national legislatures — Robin Vos and Paul Ryan, respectively. It was just up the road from the hometown of President Trump’s chief of staff, Reince Priebus. And it was in a swing state crucial to Trump’s 2020 re-election chances.
The new book Foxconned, by Madison’s own Lawrence Tabak, confirms that the factory was a sordid political charade from its inception. In a fit of negligence and malfeasance, political leaders abused the citizens of Wisconsin on behalf of a foreign corporation. The Foxconn affair was a scandal, and Wisconsinites should treat those responsible as political pariahs.
At first glance, Foxconn was an attractive opportunity. According to Tabak, a dazzling 2017 economic impact report provoked excitement among Wisconsin officials. The report showed the cascading “multiplier” effects of Foxconn’s proposed investment. Ancillary materials suppliers would surely station themselves nearby. Even more businesses would spring up, then, to support all the new workers.
The producer of the report, Ernst & Young, was a reputable consulting firm. But Ernst & Young worked for Foxconn. Though the arrangement between the companies was confidential, a site-location professional told Tabak, “it seems unlikely that Ernst & Young’s compensation wasn’t linked to the size of the deal.” So the sweeter the projections, the more Ernst & Young would earn.
This particular conflict of interest aside, site-location analysis is systematically biased toward positivity. The way it works, in Tabak’s telling, is that “business development professionals and their friendly consultants put together scientific-sounding reports that almost always show that a project is too good to forgo.” For example, when a company says that it will hire 13,000 workers, as Foxconn said it would, industry-standard planning software assumes the workers will come entirely from the ranks of the unemployed. None, it assumes, will be poached from other employers. Though adjustments can be made to correct for this obviously absurd premise, to Tabak “it seems likely that Ernst & Young ran [the planning software] on the assumption that these [jobs] would not cannibalize existing employment.”
The highest-flying red flag was Foxconn’s long history of under-delivering or completely blowing off its commitments to communities. Wisconsin Economic Development Corporation CEO Mark Hogan was asked if he had considered Foxconn’s mercurial history. “We didn’t spend a lot of time on that,” he answered, “because, in the end, we got to know these people so well.” “These people” were, of course, the Foxconn representatives. A professional like Hogan should have been negotiating with Foxconn in a respectful but adversarial manner, on behalf of the citizens of Wisconsin. It sounds like he was focused on making friends instead.
Almost the entire Assembly Democratic caucus voted against the Foxconn package. Notable exceptions were Rep. Cory Mason (D-Racine), who is now mayor of Racine, and Rep. Peter Barca (D-Kenosha), who is now secretary of the Wisconsin Department of Revenue. Just a couple weeks ago, Mason told Wisconsin Public Radio’s The Morning Show, “Everybody thought that this was going to be a huge win for jobs in the region.” Not everybody, not even close. Foxconn supporters were warned loudly and repeatedly to beware Foxconn’s jobs projection. Rep. Gordon Hintz (D-Oshkosh) asked, from the Assembly floor, “How much Kool-Aid do you have to drink to believe that is going to happen?” As Tabak puts it, “the gap between promises and reality was there for anyone to see — that is, anyone who took the time to look.” In the end, Wisconsin offered Foxconn nearly $3 billion in direct incentives.
Republicans tailored their Foxconn talking points to instill a false sense of security. In a joint statement, Vos and then-Senate Majority Leader Scott Fitzgerald (R-Juneau) claimed, “We looked out for the best interest of the taxpayers of the state. Not a dollar would be paid out until jobs in the Foxconn development area were created.”
An Associated Press fact check charitably labeled Vos and Fitzgerald’s claim “misleading.” Though direct incentives to Foxconn would be tied to job creation, mountains of money were already committed to buying up Mount Pleasant property, expanding infrastructure and paying exorbitant consulting fees. Longtime Isthmus columnist and Urban Milwaukee editor Bruce Murphy has pegged the total upfront costs (spent and promised) at $1.23 billion. By way of comparison, Ketchikan, Alaska’s so-called Bridge to Nowhere, which Congress canceled after it became a high-profile symbol of outrageous government spending in the 2000s, would have cost taxpayers $566 million in today’s dollars.
For some Wisconsinites, the suffering was personal. Tabak profiles several of the Foxconn site’s former residents. The right-wing Mount Pleasant government callously booted them from their homes, bulldozed their land, and handed it over to a foreign corporation. Tabak amusingly contrasts Mount Pleasant’s maniacal, anti-democratic abruptness with the meticulously consultative approach Madison took with his west-side neighbors, before installing a dog run in Walnut Grove Park. If Foxconn did anything good for Wisconsin, it finally, undeniably exposed the hypocrisy of the state’s “conservatives” when it comes to free market economics and property rights.
Hypocrisy is a hallmark of political greed. A 2018 study cited by Tabak found that voters favor politicians who bid for development. To Donald Trump and Scott Walker, both obsessed with re-election, that likely meant the bigger the development, the more votes it would bring. Whether any actual good would come of the Foxconn deal was, at best, of secondary concern.
Foxconn’s strategy might have been even more shortsighted. During the Trump presidency, international businesspeople were preoccupied by U.S.-China trade relations. The possibility of a trade war was Foxconn’s “biggest challenge,” according to CEO Terry Gou. Giving Trump a big win would earn Gou presidential access, which he might parlay into favorable trade decisions.
Once the Foxconn/Wisconsin deal was sealed, it quickly became clear that only one side took the terms seriously. While state and local officials were expropriating land and making a dangerous mess of I-94, Foxconn was playing games. The company bought several buildings around the state and dubbed them “Innovation Centers.” If the business purpose of these outposts was unclear, Tabak posits, it was because they had no business purpose. Their sole purpose, it seemed, was to aid Foxconn ally Scott Walker in his re-election bid, allowing him to brag that the Foxconn deal benefited all Wisconsinites, not just those in the southeastern region. Years later, many of these buildings remain empty.
Then there was the comedic, make-work mini-bustle that happened at the end of 2019. According to the incentives agreement, Foxconn must meet certain employment goals to receive annual payments. The job count for each year — the entire year — is determined by a year-end snapshot. As Tabak notes dryly, this method “was in retrospect clearly a weak spot in the deal, particularly with a partner as eager to game the system as Foxconn was.” In fall 2019, Foxconn raced to sign up as many disposable employees as possible, largely through paid “training programs” for college students. In the end, the company missed the employment incentive on a technicality.
Unfortunately, Wisconsin will have to put up with these corporate miscreants for the foreseeable future. We actually need them to stick around. If Foxconn were to default on its property taxes, it would put the state in a bad fiscal bind. Tabak believes that that frightful scenario is what motivated the Evers administration to sign a radically scaled-back agreement in spring 2021.
Commenting on the amended agreement, Vos said, “Hopefully we can now put the politics surrounding the development behind us.” By “politics,” of course, he meant any notion of accountability for the greatest dereliction of duty in Wisconsin governmental history.
Michael Cummins is a Madison-based business analyst.
