from the what-do-you-expect-for-$4.5-billion? dept.
Exclusive: documents show Foxconn refuses to renegotiate Wisconsin deal
Whatever Foxconn is building in Wisconsin, it's not the $10 billion, 22 million-square-foot Generation 10.5 LCD factory that President Trump once promised would be the "eighth wonder of the world." At various points over the last two years, the Taiwanese tech manufacturer has said it would build a smaller LCD factory; that it wouldn't build a factory at all; that it would build an LCD factory; that the company could make any number of things, from screens for cars to server racks to robot coffee kiosks; and so on.
Throughout these changes, one question has loomed: given that Foxconn is building something completely different than that Gen 10.5 LCD facility specified in its original contract with Wisconsin, is it still going to get the record-breaking $4.5 billion in taxpayer subsidies?
Documents obtained by The Verge show that Wisconsin officials have repeatedly — and with growing urgency — warned Foxconn that its current project has veered far from what was described in the original deal and that the contract must be amended if the company is to receive subsidies. Foxconn, however, has declined to amend the contract, and it indicated that it nevertheless intends to apply for tax credits.
Related Stories
For years, iPhones (or their boxes) have said that they were "designed by Apple in California. Assembled in China." But thanks to an escalating trade war between the US and China, that might not be true in the coming years. Reuters reports that two of Apple's biggest manufacturing contractors, Foxconn and Pegatron, are working to expand their facilities in Mexico with an eye toward eventually building iPhones there.
[...] This isn't Foxconn's only effort to diversify away from China. Last year, Foxconn announced plans to begin manufacturing iPhones in India, and the company is now manufacturing the iPhone SE there.
Sources told Reuters that Taiwan-based iPhone contractor Pegatron is also considering a shift to Mexico, but few details about its plans are known.
Previously:
(Score: 1, Insightful) by Anonymous Coward on Saturday December 14 2019, @12:23PM (13 children)
They can apply for tax credits, then government can say "Fuck you, Foxconn".
(Score: 2) by driverless on Saturday December 14 2019, @12:41PM (4 children)
They're making an inifinitely drawn-out stalling maneuvre to ensure Foxconn doesn't get slapped with sanctions like Huawei and others have. At worst it'll cost them a few tens of millions, at best they may even make money off it. It's a strategically sound move for Foxconn.
(Score: 2) by RamiK on Saturday December 14 2019, @01:32PM (3 children)
Unless you're trying to promote the reunification of ROC-Taiwan and the PRC-China, I strongly suggest you avoid sanctioning Taiwanese companies that depend on Chinese production chains while losing in a trade war with China.
compiling...
(Score: 0) by Anonymous Coward on Saturday December 14 2019, @03:32PM (1 child)
Taiwanese companies are producing in China because of subsidies offered by Beijing policy, and the products can be marketed to western purchasers. If that condition no longer holds, they will return production to Taiwan or build up facilities in other countries. Preeminent choices would likely be Malaysia or Thailand in that case.
(Score: 3, Insightful) by RamiK on Saturday December 14 2019, @08:03PM
There's a long list of complaints going back and forth between the two nations and so far the WTO been ruling on the subsidies issues mostly in favor of China and against the US: https://www.nytimes.com/2019/11/01/business/wto-china-us-trade.html [nytimes.com]
And lets be honest here, the general public might not perceive it as such, but throwing money on Musk and Lockheed to build rockets to the moon and novelty cars that need tax breaks to be affordable for consumers is nothing but a pork dispensary meant to keep engineers in the States with busy work instead of having them work abroad where there's actual infrastructure to build. The WTO aren't idiots. They don't look at the H1B program like some kind of charity work. And when they see at how overpriced smartphones and carrier plans are in the US they aren't thinking like consumers and complaining how unfair it is. They understand it's a policy to use the ISPs to meddle in the smartphone market by having them block cheap phones so Apple can keep cranking out overpriced ones.
Don't go pointing fingers at the Chinese just because their methods are less roundabout.
compiling...
(Score: 0) by Anonymous Coward on Saturday December 14 2019, @05:42PM
I make the best deals; believe me.
(Score: 1, Insightful) by Anonymous Coward on Saturday December 14 2019, @01:26PM (6 children)
The only thing that makes this "news" is that it serves as a cut against Trump.
(Score: 0) by Anonymous Coward on Saturday December 14 2019, @01:35PM (1 child)
It's only a multi-billion dollar deal. Nuffin ter see 'ere, folks!
(Score: 0) by Anonymous Coward on Saturday December 14 2019, @07:37PM
Deal = tax payer subsidy.
(Score: 1, Troll) by VLM on Saturday December 14 2019, @02:35PM (3 children)
And especially the former Republican governor of Wisconsin. The leftists absolutely hate that guy for destroying the teachers union in WI. You don't get to strike and take out the foot soldiers of the Cathedral without a nuclear grade propaganda response, LOL.
The whipped up story seems to be, if you carefully avoid the fact that the plant is planned and financialized out to the 2040s, then as high tech consumer goods naturally change over the years you can pretend the whole deal is a scam for political propaganda purposes. However, no, I don't think a plan for profit in 2015 where deals were made for land years ago, will survive a fast paced industry where in 2020 nobody is still buying "billie the singing bass fish" anymore or whatever was cool and selling heavily in early 2010s. Maybe 10.5 inch screens were proposed as ridiculous sized smart phone screens in 2015 in the earliest planning stages but honestly its "OK" if a profit making business now plans in 2020 to build whatever the iphone 11 uses or similar actual profit (and later on, tax) generating products.
Now the deal is kinda shitty in that Walker (the former gov) was willing to take anything to get jobs jobs jobs for election purposes. So the theoretical breakeven for tax purposes is in 2040. However, note, this isn't downtown Manhattan so the "loss" from not paying prop taxes is very theoretical in the sense that if they didn't make that deal, it would be a low tax revenue field of cow patties. So they're "losing" staggering amounts of tax money in the sense that if Tesla tried to build there and they said F Tesla and taxed the living hell out of them, then in theory if they stuck around to be taxed to death they could get billions of tax revenue. Which is exactly why Tesla wasn't there and Wisconsin is mostly a field full of cow patties, on a percentage of acreage basis.
Hilariously the linked article seems to imply the Evil Trump and Evil Walker invented the very idea of assembly plants in the USA assembling subassemblies and components imported from foreign plants. Holy shit, yo, like every order I've ever made from Digikey has country of origin on each anti-static bags label and a typical big box of parts for a project seems to have at least one bag from every freak'n country in Asia, PLUS a ton of made in the USA parts, despite the mandatory mantra that nothing is made in the USA anymore.
Aside from Trump Derangement Syndrome and propaganda, its a very neutral project, not really a win for anyone, .gov or .com. Maybe thats a good model of government and corporate relations, LOL. You have a fair deal when both sides feel equally Fed over.
Any deal where short term politicians are signing ultra-long term contracts longer than the current lifespan of medium term corporations is always going to be pretty screwed up compared to, well, pretty much any other parameters for a deal. Still, despite it being "meh", there's land being used more productively than it was before, and people with better jobs than before, and more productive economic activity, less environmental damage than building a factory in more left-wing countries where all pollution is permitted, so its on average a net positive deal, even if its maybe not the best deal ever made by anyone involved.
Looking at it another way, the government in WI is famous for taxing corporations to motivate them to move out of the state, so not F-ing some company over as bad as usual seems in relative comparison to be ridiculously biased toward the company compared to how they've F-d over so many other companies in the past, but in an absolute sense, its pretty fair overall. I mean, the company wants to make money, right, so if the propaganda were true, they'd just double up, triple up, 100x up the existing investment to make 100x the profits, right? Or maybe, just maybe, the Trump Derangement Syndrome propaganda isn't entirely true and the company would have no motivation to expand by 100x because they're NOT making "rapacious profits" LOL.
(Score: 5, Informative) by sjames on Saturday December 14 2019, @07:06PM (2 children)
The deal is a turkey. It got altered before the land was even cleared with the number of jobs sharply reduced, but not the infrastructure whose costs would have been offset by income or property taxes (but now won't be since the property tax was negotiated away and the jobs went poof before the first interview happened)). It has turned into a loss for the state and county. The field of cow patties would have been a net win for them at this point since at least they wouldn't have needed to expand infrastructure to support the cow patties.
As is frequently the case in a Trump deal, other people will bear the cost of it's failure (in this case WI taxpayers).
(Score: 0) by Anonymous Coward on Saturday December 14 2019, @07:39PM (1 child)
> As is frequently the case in a Trump deal, other people will bear the cost of it's failure (in this case WI taxpayers).
Then it is a great deal. If you get something of value and the other sucker holds the bag, you won.
(Score: 5, Touché) by sjames on Sunday December 15 2019, @12:11AM
Too bad Trump was supposed to be representing the Americans...
(Score: 2) by Bot on Saturday December 14 2019, @07:43PM
Hm I guess then they say ok nvm bye and they leave some buildings that will be later revealed to be full of asbestos or something.
Account abandoned.