Foxconn, Wisconsin, and Delusions of Grandeur 10 23 2020
In 2017 Foxconn and Donald Trump announced they would be building an LCD screen factory in Wisconsin. Mount Pleasant was chosen to host the factory, south of Milwaukee, near Racine Wisconsin.
This was when the bourgeois Paul Ryan was speaker of the House of Representatives, the congressman from the district of what was promised by Foxconn to be a huge project. Scott Walker, another Republican bourgeois, was governor then. Donald Trump came to Wisconsin to officially open the project, digging the first shovel of soil in 2018 with the leader of Foxconn, Terry Gou.
It was done with fanfare, and reported by the press as a major accomplishment for Trump and his followers Paul Ryan and Scott Walker. But from the start there were strange things about the factory, a 4 billion dollar state subsidy approved by Scott Walker, that was to arrive as 250 million dollars a year to Foxconn. There was also the diversion of 7 million gallons a day of water from Lake Michigan, which was to be returned polluted.
Along the same lines there was little or no Environmental Impact Statement, the project was simply approved by the government to go forward.
Perhaps at this point it should have been clear something was wrong with this picture. There were no protests, but opposition to the factory due to ecological concerns was common among the people who inhabited the regions near the Great Lake that was going to be polluted to make the LCD Screens, with heavy metals. It was also going to create air pollution on a large scale.
But the project seemed to be going through, and by 2018 work was underway building the beginnings of the factory. There were huge buildings constructed on land that had to be removed from the residents, often against their will. A dome started to take shape, and the factory was being built. The state and local government began investing 400 million dollars into construction of roads and bridges for the factory in Mount Pleasant.
“Hopes were high among the employees who joined Foxconn’s Wisconsin project in the summer of 2018. In June, President Donald Trump had broken ground on an LCD factory he called “the eighth wonder of the world.” The scale of the promise was indeed enormous: a $10 billion investment from the Taiwanese electronics giant, a 20 million-square-foot manufacturing complex, and, most importantly, 13,000 jobs.
“Which is why new recruits arriving at the 1960s office building Foxconn had purchased in downtown Milwaukee were surprised to discover they had to provide their own office supplies. “One of the largest companies in the world, and you have to bring your own pencil,” an employee recalls wondering. Maybe Foxconn was just moving too fast to be bothered with such details, they thought, as they brought their laptops from home and scavenged pencils left behind by the building’s previous tenants. They listened to the cries of co-workers trapped in the elevators that often broke, noted the water that occasionally leaked from the ceiling, and wondered when the building would be transformed into the gleaming North American headquarters an executive had promised.
“The renovations never arrived. Neither did the factory, the tech campus, nor the thousands of jobs. Interviews with 19 employees and dozens of others involved with the project, as well as thousands of pages of public documents, reveal a project that has defaulted on almost every promise. The building Foxconn calls an LCD factory — about 1/20th the size of the original plan — is little more than an empty shell. In September, Foxconn received a permit to change its intended use from manufacturing to storage.
“Soon, the office began to fill with people who had nothing to do. Many just sat in their cubicles watching Netflix and playing games on their phones.
The Verge
The Eighth Wonder of the World
10 23 2020
Foxconn was attempting to gain state money to build by gaming the system to make it look like they had been hiring, as the subsidy was based on how many employees they had hired. The office for Foxconn was being packed full of bureaucrats, to make the required number of employees to be able to get the Treasury’s money to keep building.
It was the employees who began to see there was something wrong, that Foxconn was not what it seemed. Working for Foxconn was a rough job, with no real work to do in the office, in a broken down old building.
“Even the handful of jobs the company claims to have created are less than real: many of them held by people with nothing to do, hired so the company could reach the number required for it to get tax subsidy payments from Wisconsin. Foxconn failed at that objective, too: last week, Wisconsin rejected the company’s subsidy application and found it had employed only 281 people eligible under the contract at the end of 2019. Many have since been laid off.
“Foxconn did not return repeated requests for comment.
“It’s not unusual for either the Trump administration or Foxconn to make announcements that prove hollow. But for Foxconn, the show went on — for two years, the company, aided by the vocal support of the Wisconsin GOP, worked to maintain an illusion of progress in front of a business venture that never made economic sense.
The Verge ibid.
The jobs never came, and Foxconn would not get their subsidy. But the money for the roads and bridges would be spent, all to host what was supposed to employ 13,000 workers, at a 10 billion dollar investment.
The illusion Foxconn had of a partially completed factory that would soon be producing LCD Screens continued for several years, until now, where it is now obvious there will be no 10 billion dollar LCD factory in Mount Pleasant. But in the leadup to this realization, the Republican bourgeoisie tried to mislead the public about the progress made by Terry Gou and his Foxconn factory.
“That illusion has had real costs. State and local governments spent at least $400 million, largely on land and infrastructure Foxconn will likely never need. Residents were pushed from their homes under threat of eminent domain and dozens of houses bulldozed to clear property Foxconn doesn’t know what to do with. And a recurring cycle of new recruits joined the project, eager to help it succeed, only to become trapped in a mirage.
“Foxconn would spend the next two years jumping from idea to idea — fish farms, exporting ice cream, storing boats — in an increasingly surreal search for some way to generate money from a doomed project. Frequent leadership changes, a reluctance to spend money, and a domineering corporate culture would create an atmosphere employees described as toxic. Many of the employees The Verge spoke with have since left the company, and all of them requested anonymity out of fear of retaliation. It has been a baffling ordeal for the people who thought they were building the Silicon Valley of the Midwest — “Wisconn Valley,” Walker called it — all the more so because so many others still believe the vision.
The Verge ibid.
The broken promise of an LCD factory led to attempts to figure out how Foxconn could possibly make a profit doing something other than producing LCD Screens. By this time desperation was starting to set in, and it was clear the factory would never produce LCD’s, or any commodity for that matter.
“Foxconn’s Wisconsin saga began two days after Trump’s inauguration, when the company’s founder and CEO, Terry Gou, told reporters he was considering building a $7 billion factory in the US and employing as many as 50,000 people.
“A contract with WEDC (Wisconsin Economic Development Corporation, a state-run organization that administers the Foxconn deal and approves the tax subsidies if the hiring quotas are met) signed in November made it official: nearly $3 billion in “refundable” tax credits, most likely to be made in the form of direct payments to Foxconn. Combined with infrastructure the state promised to build, approximately $800 million in additional incentives mostly from the small town of Mount Pleasant, where the “Fab” was to be located, and other contributions, the package totaled more than $4 billion. In a best-case scenario, the Legislative Fiscal Bureau found the state wouldn’t break even until 2043. Depending on how many people Foxconn hired, each job would cost taxpayers somewhere between $200,000 and more than a million dollars. The average subsidy in the US is around $24,000 per job.
“Such announcements are far from unusual for Gou, and often, nothing comes of them. In Vietnam in 2007, in Brazil in 2011, in Pennsylvania in 2013, and in Indonesia in 2014, Foxconn announced enormous factories that either fell far short of promises or never appeared. Just this year, the industries minister of Maharashtra, India, which aggressively pursued one of Gou’s multibillion-dollar projects in 2015, finally confirmed the factory isn’t coming, saying the state had learned a lesson about believing businesses promising big investments.
Ibid.
Yet the illusion of Foxconn building in Wisconsin continued, and the subsidy for building was not negated until 2020, when a new governor, a member of the liberal progressive bourgeoisie Tony Evers, removed the subsidy.
“…the 1,040 people Foxconn intended to hire by the end of 2018, per its contract with the state, or even the 260 needed in order to receive subsidies, an audit found the company had managed to hire only 113. At the Mount Pleasant campus, it had erected a single structure, a 120,000-square-foot space that sat virtually empty. Its very name, “the multi-purpose building,” seemed noncommittal. As for the promised LCD factory, the “Fab,” Foxconn boasted in a letter that a contractor had moved 4 million cubic yards of dirt. As 2018 came to an end, the company froze budgets and canceled planned career fairs. The project entered a complete stall.
“Foxconn’s vacillations spilled into public view in January 2019, when Woo told Reuters, “In Wisconsin we’re not building a factory,” having finally discovered it was unprofitable to make LCDs in the US. The comment caused an uproar. State Republicans swiftly blamed Evers for driving Foxconn out; the administration expressed surprise at the change; Trump spoke with Gou, and Foxconn immediately announced that LCD production was back on. “Great news on Foxconn in Wisconsin after my conversation with Terry Gou!” Trump tweeted, claiming credit for bringing Foxconn to Wisconsin a second time.
Ibid.
In Works volume 4 I detailed when this occurred, Terry Gou’s admitting the factory could not be built in Wisconsin, as there was no way the company could compete in America. It looked like the end of Foxconn, until Donald Trump intervened to keep the illusion going, saying he was keeping the project going. At this point many of us were starting to question whether or not the factory would go forward.
“If the factory was meant to earn Trump’s goodwill, the January incident showed that the company couldn’t simply vanish as it had elsewhere. Foxconn was stuck in Wisconsin, and it needed to find a way to cut its losses. Employees at every level of the project were enlisted in a search for something — anything — Foxconn could do to generate revenue.
“In meetings at Racine’s City Hall, Foxconn representatives and city officials started developing a plan, elements of which Racine submitted to a competition called the Smart Cities Readiness Challenge in 2019: camera-festooned autonomous vehicles would patrol high-crime areas, the city said in its proposal, guided by 5G cells mounted on lamp posts. Self-driving vehicles — retrofitted golf carts at first, then shuttles as soon as 2020 — would ferry Racine’s workers to Foxconn’s campus. Foxconn, the city noted in the submission, was a “particularly important stakeholder” and would help provide financing and technology.
“But when city officials started asking basic questions about the sort of infrastructure they needed to build in order to accommodate Foxconn’s technology, Foxconn employees found they were unable to get clear answers from the company. “They were losing confidence, and then we parade in more new shiny ponies, and more people who couldn’t answer what should have been easy questions,” an employee said.
“Foxconn only ever got as far as buying the golf carts. They arrived from China disassembled, in orange, pink, and other festive colors. One employee described them as “the biggest pieces of shit,” like something “bought off Wish.com.” Unable to make them autonomous, Foxconn put them in storage in the multipurpose building. At one point, the company discussed outfitting them with lights and turning them into security vehicles, but the subsidiary in charge of security refused to pay FEWI (Flying Eagle Wisconsin, the Foxconn subsidiary run by Alan Yeung initially tasked with laying the foundation for the Wisconsin project) for the carts, according to one employee. As the divisions bickered, bored employees would come down from the Milwaukee headquarters to race the carts around the empty building, until the batteries finally died.
Ibid.
It looks like Racine was easily fooled by promises of high tech industrial development from capitalists; in the form of a company from Taiwan, that would make a massive amount of profit doing manufacturing in Mount Pleasant. The fraud is a product of the more reactionary bourgeois desperation to appear to be making progress by partnering with large capitalist companies, that society would miraculously prosper if the workers just accepted their leadership, and supported them.
Racine should have known they were being taken, that Scott Walker was not telling them the whole truth about who was going to invest in their city. But their trust of Republicans led them to believe the false promises delivered by a billionaire with the support of Donald Trump, Paul Ryan. and Scott Walker.
“Earlier partnerships announced with local companies like Rockwell Automation had been followed by total silence. (Employees say they quickly fizzled; Rockwell did not return a request for comment.) Of the $100 million gift Gou promised the University of Wisconsin-Madison, the school confirmed that only $700,000 ever arrived.
“The original plan had been grandiose: the sphere was to be the dot in the “i” of a complex of data centers spelling out “Fii” (Foxconn Industrial Internet) when viewed from the air. But according to three employees, Foxconn balked at the cost. An employee with knowledge of the project said that Foxconn finally moved forward with the sphere — and only the sphere — when the architect told the company it had to put a deposit down for the steel if construction was going to finish in time for a long-promised visit from Trump.
“But the building without the data centers was just a glass orb in a field — at best, “really, really, really expensive office space,” in the words of one employee. Adding to Fii’s troubles, FEWI (Flying Eagle Wisconsin, the Foxconn subsidiary run by Alan Yeung initially tasked with laying the foundation for the Wisconsin project.), also trying to cut its losses, had “tricked” Fii into buying more land than was needed for the sphere, according to a second employee. A Foxconn executive briefly entertained an elegant solution, according to two employees: starting a Foxconn tree farm, so the company could get free trees for the terrarium-like interior of the sphere that Gou wanted, and sell the excess trees for profit.
“It’s endless,” said an employee, noting with frantic exasperation that the sorts of tropical trees Foxconn wanted can’t even grow in Wisconsin’s climate. “When you’re desperate and you have no product to sell and the only asset you have is land, what can you do? You build on it or you grow crops on it.”
Ibid.
The sphere now sits empty in Mount Pleasant, Wisconsin, surrounded by farmland. There are roads to it though, thanks to the state that picked up the costs of building them to the factory. The buildings that were supposed to be factories are now considered useful for storage. Their official purpose is now this, storage.
“In many ways, the Foxconn debacle in Wisconsin is the physical manifestation of the alternate reality that has defined the Trump administration. Trump promised to bring back manufacturing, found a billionaire eager to play along, and now for three years the people of Wisconsin have been told to expect an LCD factory that plainly is not there. Into the gap between appearance and reality fell people’s jobs, homes, and livelihoods.
“The buildings Foxconn has erected are largely empty. The sphere has no clear purpose. The innovation centers are still vacant. The heart of the project, the million-square-foot “Fab,” is just a shell. In what an employee says was a final cost-cutting measure, only the portion that was to host the Trump visit was ever finished. Recent documents show the “Fab,” once intended for use as manufacturing, has been reclassified as a massive storage facility.
“WEDC, as part of its audit of the company’s 2019 subsidy application, had Foxconn survey its employees about what they were working on. Not a single respondent mentioned LCDs because no one is working on LCDs, and they never were.
“The project has fallen orders of magnitude short of its hiring and investment targets. WEDC found Foxconn had only 281 eligible employees at the end of 2019, 13 percent of what it had originally aimed for. (Many of the employees Foxconn tried to claim were paid too little or hired too late in the year to get a paycheck in 2019.) After this year’s layoffs, it is nowhere near meeting its 2020 target of 5,200 employees. Foxconn itself acknowledged, in its subsidy submission, that it has so far invested 2.8 percent of the $10 billion it promised. It has built less than 2 percent of the 20 million square feet of manufacturing space it originally planned.
“The company’s desperate quest to maintain appearances caused it to fail repeatedly and in ways more destructive than mere ordinary failure would have been: local businesses were strung along, civil servants spent years figuring out what the company is doing, residents were removed from land the company didn’t need, and again and again recruits were lured in by the vision of a grand manufacturing renaissance in Wisconsin.
“That vision got Gou regular access to the White House during a trade war and gave Trump a groundbreaking and almost a ribbon-cutting, too. But maintaining the mirage required a culture of secrecy. Employees were warned not to talk to the press (including, specifically, me). Many were afraid to speak — afraid of getting fired, or of retribution even after they’d left. Publicly, the company issued announcement after announcement — innovation centers, career fairs, smart cities, AI 8K+5G, the AI Institute — each one erasing the memory of the last missed deadline. (One employee quipped that one of the few things Foxconn succeeded in making in Wisconsin was press releases.) The illusion was defended by GOP officials at all levels of government, from Mount Pleasant to the State Assembly to the White House, who accused anyone pointing out that the project was off track of trying to scuttle it for partisan ends, as if the existence of the factory were open to debate and positive thinking might make it real.
“…in actual reality, the project has succeeded in manufacturing mostly this: an endless supply of wonderful things for the President to promise his supporters. This past weekend, in an interview with a local Wisconsin TV station, Trump insisted Foxconn had built “one of the most incredible plants I’ve ever seen” in Mount Pleasant and would keep its promises and more if he was reelected.
The Verge
10 22 20
It was another Trump promise that was an illusion. The grandiose claims of 13,000 jobs, 10 billion dollars for a small town in Wisconsin, was designed to fool people to support him.
Clearly all that would have occurred if Scott Walker was still Governor, and Paul Ryan Congressman, was the fraud would have continued.
But in the end it had to fail, and reality to make itself felt. It was after hundreds of millions of dollars were spent by the state to build the roads, bridges, etc. to support the Foxconn factory, which will never make LCD Screens, or employ 13,00 people.
The factory is a monument to an illusion, and illusion of a bourgeois with worldly connections bringing investment into small town Wisconsin. Although the office referred to in the article was in Milwaukee, Racine and Mount Pleasant are more like suburbs, the latter mostly rural. It was to convince Trump’s rural following he could deliver investment, and this would result in prosperity.
It seems to have failed. It is a relief that the LCD Screens will never be produced here, as it would damage the ecology of Lake Michigan, which is why I was always against it. Hopefully if anything is produced there, it will have to have a real Environmental Impact Statement, not the farce we were handed last time. But in reality, it looks like nothing will ever be produced there. It is a dream of something that was an illusion, like Trump’s vision of America, that society would progress if everyone just believed capitalism was working.
Nicholas Jay Boyes
Milwaukee Wisconsin
10 23 2020
Ecological Era 