When a Wisconsin lawmaker was driving home from Chicago last month, he pulled up outside the Foxconn factory in Mount Pleasant, Wis., and was struck by the emptiness of the area.
“There is literally a magnificent six-lane highway that was built for 18,000 automated vehicles and trucks [that looks] totally abandoned. It’s amazing,” said Representative Gordon Hintz, Member of the Wisconsin State Assembly.
The highway had been widened to accommodate the transport of electronics produced at the site, which is operated by the Taiwanese multinational best known for assembling the iPhone.
On July 12, 2017, then-Wisconsin Governor Scott Walker, a Republican, and then Foxconn CEO Terry Gou signed a 14-word agreement written in pen on a single sheet of paper: Foxconn would invest $10 billion to build a 20 million square foot complex. manufacturing campuses and create 13,000 jobs, which the State of Wisconsin would encourage with $3 billion.
The deal electrified the Republican Party leadership at the time: President Donald Trump and Speaker of the House Paul Ryan, a representative from Wisconsin, were both eager to cast themselves as revitalizers of America’s manufacturing sector. For Gou and Foxconn, the factory announcement came at a time when the Trump administration was considering tariffs on electronic imports.
At one point, Trump dubbed the future factory “the eighth wonder of the world.” But the sprawling complex and 13,000 jobs never came, and the project became a case study in the gap between hype and reality on the ground.
Only four buildings, including a conspicuous glass sphere, have been constructed in Mount Pleasant, which, despite describing itself as a village, has a population of around 28,000.
US media have reported detailed allegations in recent years from Foxconn employees who said they had no business at the plant, while the company gave few details about what was done there, if applicable.
A former employee, who requested anonymity, estimates that in a three-month period this year, only one month had work to do, when the factory produced motherboards for Google and Amazon servers.
“Very quickly then [initial announcement]it sounded too good to be true,” says Kelly Gallaher, a local resident who leads the watchdog group A Better Mount Pleasant.
In its original announcement, Foxconn said it will use the plant to manufacture Gen 10.5 LCDs, the latest generation in display technology. It scrapped those plans and said it would make smaller Gen 6 displays, but later scrapped those as well.
Sources say Foxconn spent years trying to figure out what to do with the plant. The company counters that “the macro environment of the global tech industry has changed very dramatically” since 2017, and says it “does not disclose the nature of our manufacturing operations to protect commercially sensitive aspects”.
The company says it “continued to find ways to create new business opportunities in Wisconsin, while investing more than $1 billion and hiring hundreds of employees.”
Substantial investments have also come from the local community. Along with surrounding Racine County, Mount Pleasant has purchased land to create the 3,000-acre Foxconn site, with compulsory purchase a possible option, says Robin Palm, a municipal planner in the village. According to a payout spreadsheet seen by the Financial Times, Mount Pleasant spent more than $181 million buying private property.
Mount Pleasant and Racine County issued more than $310 million in debt to acquire the land and make infrastructure improvements, with about two-thirds of the funds raised by the village, according to the Wisconsin Legislative Fiscal Bureau.
Despite early signs that Foxconn’s plans were failing, the village and county continued to spend, and the town’s infrastructure is now overdeveloped. (The local deal with Foxconn included nearly $800 million in addition to state incentives.)
The state, however, changed course. After a new governor, Democrat Tony Evers, took office, the Wisconsin Economic Development Corporation, the public entity that made the Foxconn deal on Wisconsin’s behalf, renegotiated last year.
Foxconn is now eligible for just $80 million in state incentives based on investing $672.1 million and creating up to 1,454 jobs by 2024, a far cry from numbers from the original 2017 deal. The latest available headcount, reported by Foxconn in December 2020 as part of its fiscal arrangement with the state, is 600 employees.
Kathleen Gallagher, executive director of the 5 Lakes Institute, a nonprofit focused on establishing high-tech businesses in the Great Lakes region, believes Mount Pleasant has been exploited. “Any village that size wouldn’t have the sophistication to understand all of this,” she says. “The village relied on this small slice of the business community and the state. . .[but]they didn’t have the right people.
Approached for his views on the deal, Mark Hogan, head of WEDC at the time it was struck, declined to comment. The WEDC, Racine County Executive, Racine County Economic Development Corporation and Mount Pleasant Village Chairman Dave DeGroot did not respond to requests for comment.
debt and interest The payments assumed by Mount Pleasant represent a considerable sum for a community of 28,000 people – they represent more than 500% of the village’s annual operating income, according to Moody’s, which downgraded Mount Pleasant’s credit rating.
The contract with Foxconn stipulates that the city will meet the reimbursement of its debt thanks to the property tax paid by the company. To do this, Foxconn must pay an annual bill of about $30 million, which equates to a property value of at least $1.4 billion. But since the property’s valuation is closer to $500 million, Foxconn must cover the resulting tax shortfall – about $17 million.
While that’s relatively small for a company that made a record $214 billion in revenue in 2021, Hintz says some locals fear what could happen if Foxconn doesn’t pay up. A Better Mount Pleasant’s Gallaher discusses a lawsuit filed against Foxconn in Illinois, in which Foxconn argued that because it was a foreign company, it could not be sued in the United States.
Others are more optimistic. Mount Pleasant is confident Foxconn will make its payments, said village administrator Nancy Washburn, especially since it has met its tax obligations so far. Foxconn notes that it is “Racine County’s largest ratepayer” and has demonstrated its “ability to meet contract payments while adapting to market demand.”
Alan Yeung, Foxconn’s former point of contact in Wisconsin, said the company intended to build the Gen 10.5 displays, but “market conditions have changed” with Chinese LCDs undermining competition. He adds that “Wisconsin’s investment climate has changed dramatically,” referring to the fact that Walker was removed from office.
On claims that Mount Pleasant workers sometimes have nothing to do, Foxconn says it “is not immune to supply chain shortages for critical materials” but considers “a hand -flexible and fulfilled workforce” as essential to seize business opportunities. The site, he says, remains “a key strategic asset”.
“Are we disappointed that it happened like this? Absolutely,” Washburn says. But she and Palm say Mount Pleasant is now betting another company will move into the Foxconn site — either to share it or take it over — because the community’s infrastructure is now set up to handle growth.