Foxconn Deal Draws Praise, Skepticism, and Interest from Other Firms

Over the past week, business news in Wisconsin has been dominated by Taiwan-based Foxconn’s announcement that it plans to invest $10 billion to build a facility in the state’s southeastern corner—exact location still to be determined—and manufacture LCD displays for televisions and other electronics there. State officials have said the plant could employ as many as 13,000 workers, and Wisconsin would provide Foxconn with as much as $3 billion in tax credits and other incentives over 15 years, provided the company meets various investment and job-creation requirements.

Let’s review some of the coverage and analysis of the Foxconn deal published in the last week:

—The Milwaukee Journal Sentinel has arguably done the highest volume and quality of reporting around the Foxconn storyline, going back to mid-June, when the company’s interest in building in Wisconsin (or elsewhere in the U.S.) first became public. The newspaper printed a lengthy article about the deal’s origins, another featuring insights from experts on the incentives package the state is providing Foxconn, and an exclusive interview with Terry Gou, the company’s founder and chairman.

—Other U.S. companies—some based in Wisconsin, some not—are wasting no time in responding to the announcement. Rockwell Automation (NYSE: ROK) on Friday announced a partnership with Foxconn aimed at connecting machines in the future factory to the Internet, and to each other. (The so-called Internet of Things is becoming a bigger focus area at Milwaukee-based Rockwell.)

Corning, a company based in eastern New York that manufactures glass and other materials, is reportedly also considering building a plant in Wisconsin, which could trigger an additional $1 billion in investment.

Illinois-based businesses, including some startups, are reportedly taking interest in the Foxconn project as well. Tom Still, president of the Wisconsin Technology Council, said last week that the company’s facility would likely be in Racine County or Kenosha County. That would put the plant within reasonable commuting distance of some Chicago-area residents.

—There have also been a number of skeptical takes on Foxconn’s pledges. Bloomberg Businessweek columnist Tim Culpan wrote that the total capital expenditures of Foxconn’s parent company, Hon Hai Precision Industry, have been about $9.5 billion over the past five years, less than the amount Foxconn said it will invest in the Wisconsin facility. Moreover, Foxconn has in recent years announced multiple plans to build factories, but they never materialized.

Separately, a report by Wired notes that “the 3,000 jobs Foxconn says it will create in Wisconsin [by 2020 are] part of a new generation of advanced manufacturing jobs, requiring high levels of engineering skills.” If that turns out to be the case, it could disappoint auto and steel workers who lost their jobs are now looking to find similar work. However, if political and business leaders in the U.S. invest in education and training to prepare people for careers in advanced manufacturing, it could benefit American workers in the long term, according to the report.

Jeff Buchanan is the editor of Xconomy Wisconsin. Email: jbuchanan@xconomy.com Follow @_jeffbuchanan

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