Perhaps lemonade should be the official beverage of Mount Pleasant.
It might have been Champagne in July 2017, when Taiwan-based Foxconn Technology Group announced that the Racine County village would be the site of a state-of-the-art flat-screen factory that then-President Donald Trump hyped as “the eighth wonder of the world.” The projected $10 billion investment would have been the largest ever made by a foreign company in a new U.S. location, bringing with it 13,000 jobs.
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State and local officials sweetened the deal by offering Foxconn up to $3 billion in tax incentives and spending another $1 billion on land and infrastructure.
But attitudes turned sour as Foxconn’s promises dissolved. The planned LCD plant was downgraded and has yet to materialize. Other ideas for the site have come and gone. Foxconn has built a few buildings – including a glassy globe, nearly 100 feet tall, that it calls a data and network center – and the company has hired about 1,000 people, far short of its original goal.
Before long, the Foxconn deal was looking like a gigantic lemon. The state renegotiated its agreement to slice the incentives.
Yet that supposed lemon turned into something more pleasant-tasting last year, when Microsoft decided to buy most of the Foxconn site to build a $1 billion data center. The software giant’s investment offered a measure of vindication to elected officials pilloried for supporting Foxconn.
That doesn’t mean everything is even, however, particularly not when measured against Foxconn’s initial promises.
“They came in and overpromised and underdelivered. There’s no question about it,” Racine County Executive Jonathan Delagrave says of Foxconn. And even as the community welcomes Microsoft, Delagrave says, “We’re not declaring victory,” stressing his county must do more to attract development and market itself as a technology hub.
Foxconn representatives didn’t respond to requests for interviews.
Here’s how Foxconn’s plans evolved and how Microsoft’s plans are shaping up:
Foxconn 1.0
The company initially said it would build the nation’s first Generation 10.5 plant to manufacture large liquid-crystal display screens. It envisioned other companies building their own factories on the site to supply the LCD plant, and its workforce needs spurred talk of housing developments that would draw retailers, restaurants, hotels and other businesses.
That original announcement was steeped in Republican politics. It allowed Trump to claim his first big economic win at a time when he was threatening tariffs on Chinese imports such as the iPhones that Foxconn assembles for Apple. It handed Gov. Scott Walker the state’s largest-ever development deal as he was gearing up to seek a third term. And it targeted a site in the districts of both U.S. House Speaker Paul Ryan and Assembly Speaker Robin Vos.
Walker and the Legislature approved income tax credits of up to $2.85 billion for Foxconn – tied to the company’s progress toward investing $10 billion and creating 13,000 jobs paying an average of $53,875 a year – plus a sales tax break of up to $150 million.
Shrinking Away
By the time Trump appeared at the site’s June 2018 groundbreaking, Foxconn had scaled back its plans to a Generation 6 plant, building screens for mobile phones, tablets and televisions, although it insisted that would be a first step toward its original goal.
Early in 2019 – after Walker lost his re-election bid to Democrat Tony Evers and Ryan retired from the House – Foxconn suggested the Mount Pleasant site might be used more for research than for manufacturing, then walked back that statement after a call from Trump.
That was followed by a parade of other proposals for the site. Foxconn produced 100,000 face masks there during the COVID-19 pandemic, but nothing came of ideas to manufacture robotic coffee kiosks, electric cars and ventilators. The company says it is now making data servers and solar energy system components in Mount Pleasant.
By 2019, Foxconn was too far short of its goals to earn any state tax credits. Evers’ administration renegotiated the contract to vastly reduce both the credits and the goals, offering up to $80 million in credits for investing $672 million and creating 1,454 jobs at the same average pay target.
Through 2022, the Wisconsin Economic Development Corp. verified that Foxconn had qualified for $43.7 million in credits, with $571.2 million in capital investment and 1,029 jobs. The company claims it has invested almost $1 billion in Wisconsin, “inclusive of all expenditures,” apparently counting wages and other day-to-day spending not normally considered investment.
Promises Broken
Education: Foxconn pledged $100 million to UW-Madison, to be matched by donors, to build a technology research institute. The campus never saw any of that money, although it did receive a separate $700,000 research grant from the company, UW-Madison spokesman John Lucas says.
But plans to train Foxconn workers helped boost technology courses at Gateway Technical College, says Matt Janisin, the school’s executive vice president for academic affairs. Gateway ramped up its automation and cybersecurity programs and added new data analytics and supply chain programs, all of which provide skills that other employers need, Janisin says.
Transportation: Foxconn laid out a fantastical vision of self-driving vehicles ferrying workers and materials to and from its complex in reserved freeway lanes 24/7. Transit advocates dreamed of expanding bus service and reviving commuter rail plans, while Republican lawmakers pushed for van shuttles for the projected 13,000 employees.
None of that happened, but GOP Gov. Scott Walker leveraged Foxconn’s plans to win $160 million in federal aid as part of the last $500 million needed to finish rebuilding I-94 in Racine and Kenosha counties by 2020 instead of 2032. That $1.5 billion project had started in 2009 and was supposed to end in 2016, but it fell 16 years behind schedule after Democratic Gov. Jim Doyle yielded to Republican pressure to start work on the Zoo Interchange before the north-south stretch was finished.
Buildings: Foxconn bought a Downtown Milwaukee building that it said would become its North American headquarters, plus buildings in Racine, Madison, Green Bay and Eau Claire that it said would become technology centers.
Reporters found little evidence of employees or other activity in any of those buildings. The company eventually listed the Green Bay and Eau Claire buildings for sale, while seeking to lease the Racine and Madison buildings and most of the Milwaukee building.
“Valley” Forged
Crucial to the plan was the site, dubbed “Wisconn Valley.”
Racine County spent $105 million, matched by $60 million from Foxconn, to buy more than 2,500 acres. While some residents displaced from their homes appreciated the money, others described heart-wrenching decisions to give up land their families had farmed for generations, under threat that Mount Pleasant would use its eminent domain powers to seize their property.
The village contributed $120 million for water lines and local roads, $80 million for sewers, and $8 million for professional fees. The state kicked in another $134 million to expand state and county highways, while We Energies upgraded electric service.
Foxconn is required to repay the village through tax-incremental financing, which earmarks 30 years of property taxes to cover infrastructure costs, and to repay the county through 20 years of $7.3 million annual special assessments. The company also committed to add $1.4 billion to the site’s taxable value by 2023. Although Mount Pleasant found the site’s value up just $528 million by 2022, the development agreement requires Foxconn’s 2024 taxes to jump as if the company had met its guarantee of $1.4 billion in added value.
Blank Space
Even after Foxconn erected four major buildings on a nearly 1,200-acre parcel, most of the site’s hard-won land remained vacant. State and local officials started pitching the site to other tech companies, losing to Ohio in the 2021 competition for a $20 billion Intel semiconductor plant.
Microsoft paid $225.8 million for 1,363 acres, including $76 million to the last family that held out against selling its 407 acres for Foxconn. The Washington-based company has promised to invest at least $1 billion, build four buildings and add another $1.4 billion in taxable value.
While it hasn’t promised a specific number of jobs, Microsoft has said its data centers typically employ 300 to 400 people. The company will partner with Gateway Technical College on a Data Center Academy to train workers.
Unlike Foxconn, Microsoft didn’t seek tax incentives, but state officials estimate a recently approved data center sales tax break could save the company $8.5 million on construction and $735,000 a year on operations.
Bottom Line
So was it all worth the effort? “We don’t get the opportunity to get Microsoft without Foxconn” and the work that went into the site, Delagrave says. Land acquisition and infrastructure would be more expensive today because of inflation, adds Matt Janisin, Gateway Tech’s executive vice president for academic affairs.
Yet Foxconn wasn’t a sure thing even in 2017. News media reported the company never kept its 2013 promise to build a $30 million plant with 500 workers in Harrisburg, Pa.
By contrast, Microsoft has been a reliable partner in the Green Bay Packers’ Titletown Tech project and has brought its Techspark education program to northeastern Wisconsin.
Marc Levine, UW-Milwaukee professor emeritus of economic development, says state and local officials likely would offer millions of dollars in financial incentives to a company promising 1,000 to 2,000 jobs, but “nothing remotely on the scale of the original Foxconn package.” Even at more modest levels, economists agree such incentives “are not justified,” Levine says.
Delagrave can’t say for sure that his fiscally conservative county would have assembled such an enormous site if Foxconn’s initial promises matched today’s reality.
Still, he adds, “I’m really glad that we did it and that we will be the center of a technological boom” that will benefit future generations.
