Trump’s Foxconn Con

“Eighth wonder of the world!” 

Brand new $10 billion state-of-the-art manufacturing facility!  More than 13,000 high-paying blue-collar jobs building flat-screen televisions right here in Wisconsin!  “Only one part of the exciting story that is playing out across our nation!”

If only half of Trump’s boasts about Foxconn were true.  Right now, the people of Wisconsin would gladly settle for any of it.

The plan was supposedly that Foxconn, an enormous Taiwanese electronics company, was going to build a $10 billion plant in Wisconsin to make flat-screen televisions.  Last year, Trump milked this scheme for all of its political worth, holding it up as the centerpiece of his promise renew United States manufacturing by attracting foreign investment.

Even at the time, the whole scheme sounded like a preposterous con.

In 2013, Foxconn had announced that it would invest $30 million and hire 500 workers for a new factory in Pennsylvania.  But the factory was never built, and the jobs never came. It turned out to be nothing more than a cruel publicity stunt.

But forget the Pennsylvania scam. 

There was far better reason to suspect, right from the start, that Trump and Foxconn were running a con in Wisconsin.

Foxconn is notorious for using the cheapest Chinese labor to manufacture electronics.  Even that cheap labor is more than Foxconn is willing to pay, so it is rapidly replacing low-wage Chinese workers with robots, which are cheaper still, and never complain.

Why in the world would a Taiwanese company, whose success is based largely on cheap labor in China, all of a sudden start paying American workers American wages to do the same work?

Well, of course, they haven’t.

They’ve just said that they will, sometime in the future.

Big difference between saying you’re going to build a factory, and actually building a factory.

Either way, they stand to be richly rewarded.

How about a commitment by the State of Wisconsin to give Foxconn $4 billion in subsidies and tax credits?  That’s what Gov. Scott Walker promised Foxconn in exchange for its promise to build “the eighth wonder of the world,” and create 13,000 new, high-paying manufacturing American jobs.

For those of you who are arithmetic-averse, that comes out to over $300,000 per job assuming, of course, that Foxconn actually delivers all 13,000 of the promised jobs. If they deliver fewer jobs, the per-job rate would be even higher. But let’s not be picky. Let’s assume that Wisconsin ultimately gets all 13,000 new jobs at the bargain basement price of just over $300 per job.

That’s roughly 10 times the highest per-job subsidy Wisconsin has ever offered a company in the past.  But that’s what Walker promised that the people of Wisconsin would pay to lure Foxconn, rather than spending the money on, say, health care, infrastructure or fighting the opioid epidemic that is wracking the state. 

Must be awfully good jobs.

Well, never mind.

Citing “new realities” (you know, the Foxconn people just realized that paying Chinese workers less than $300 a month, with minimal or no benefits, was cheaper than paying American workers 10 times that amount, plus benefits), Foxconn now tells us that it’s not going to build the television manufacturing plant it promised to build in exchange for all those subsidies and tax breaks.

“In terms of TV, we have no place in the U.S.,” Louis Woo, Foxconn’s special assistant to the CEO, told Reuters this week.  “We can’t compete.”

No kidding.

So instead of building a manufacturing plant, Foxconn now says that it’s going to build a “research hub.” And instead of creating 13,000 blue-collar manufacturing jobs, it’s going to hire 1000 people for “knowledge positions,” meaning highly skilled researchers and engineers.  Foxconn still claims that it will eventually produce 13,000 jobs (and, of course, you can take that promise to the bank), but Woo acknowledged that three-quarters of the new jobs will be in research and development, rather than manufacturing.

In other words, these are jobs that will not only not go to factory workers, they will drive them out.

But don’t worry.  Foxconn’s “internal projections,” which are undoubtedly reliable, show that Wisconsin will recoup the full value of its $4 billion subsidy.

In 2045.

Assuming, again, that Foxconn delivers on its promise to create 13,000 new jobs.

So take heart.  What could go wrong?

And remember, this is “only one part of the exciting story” of how Trump is making America great again.

Brace yourself for the next chapter.