Taiwan electronics manufacturer Foxconn is drastically scaling back a planned $10 billion factory in Wisconsin, confirming its retreat from a project that former President Donald Trump once called "the eighth wonder of the world."
Under a deal with the state of Wisconsin announced on Tuesday, Foxconn will reduce its planned investment to $672 million from $10 billion and cut the number of new jobs to 1,454 from 13,000.
The Foxconn-Wisconsin deal was first announced to great fanfare at the White House in July 2017, with Trump boasting of it as an example of how his "America first" agenda could revive U.S. tech manufacturing.
For Foxconn, the investment promise was an opportunity for its charismatic founder and then-chairman, Terry Gou, to build goodwill at a moment when Trump's trade policies threatened the company's cash cow: building Apple's iPhones in China for export to America.
Foxconn, the world's largest contract manufacturer of electronic devices, proposed a 20-million-square-foot manufacturing campus in Wisconsin that would have been the largest investment in U.S. history for a new location by a foreign-based company.
The proposed 20-million-square-foot manufacturing campus in Wisconsin would have been the largest investment in U.S. history for a new location by a foreign-based company.
It was supposed to build cutting-edge flat-panel display screens for TVs and other devices and instantly establish Wisconsin as a destination for tech firms.
But industry executives, including some at Foxconn, were highly skeptical of the plan from the start, pointing out that none of the crucial suppliers needed for flat-panel display production were located anywhere near Wisconsin.
The plan faced local opposition too, with critics denouncing a taxpayer giveaway to a foreign company and provisions of the deal that granted extensive water rights and allowed for the acquisition and demolition of houses through eminent domain.
Town residents claim Trump’s FoxConn factory deal failed themJuly 21, 201902:36
As of 2019, the village where the plant is located had paid just over $152 million for 132 properties to make way for Foxconn, plus $7.9 million in relocation costs, according to village records obtained by Wisconsin Public Radio and analyzed by Wisconsin Watch.
Foxconn, formally called Hon Hai Precision Industry, said the new agreement gives it "flexibility to pursue business opportunities in response to changing global market conditions." The company said "original projections used during negotiations in 2017 have at this time changed due to unanticipated market fluctuations."
After abandoning its plans for advanced displays, Foxconn later said it would build smaller, earlier-generation displays in Wisconsin, but that plan never came to fruition either.
Prior to Tuesday's announcement, Foxconn Chairman Liu Young-way told reporters in Taipei that the company currently makes servers, communications technology products and medical devices in Wisconsin, adding that electric vehicles have a "promising future" there. He did not elaborate.
Liu had previously said the infrastructure was there in Wisconsin to make EVs because of its proximity to the traditional heartland of U.S. automaking, but the company could also could decide on Mexico.
Hon Hai shares fell as much as 1.6 percent on Wednesday morning.
Wisconsin Governor Tony Evers said the new agreement will save Wisconsin taxpayers "a total of $2.77 billion compared to the previous contract, maintain accountability measures requiring job creation to receive incentives, and protect hundreds of millions of dollars in local and state infrastructure investments made in support of the project."
Evers said under the deal negotiated between the Wisconsin Economic Development Corporation and Foxconn, the Taiwan company is eligible to receive up to $80 million in performance-based tax credits over six years if it meets employment and capital investment targets. He stressed that the incentives were in line with those available to any company.
Foxconn is eligible to receive up to $80 million in performance-based tax credits over six years.
The state will reduce the tax credits authorized for the project to $80 million from $2.85 billion.
The original Wisconsin package also included local tax incentives and road and highway investments by state and local governments, which brought total taxpayer-funded subsidies to more than $4 billion.
Foxconn noted that since 2017, it has invested $900 million in Wisconsin, including several different facilities in the state.
The state has already spent more than $200 million on road improvements, tax exemptions and grants to local governments for worker training and employment, according to the records obtained by Wisconsin Public Radio.