* I seriously doubt that this particular POTUS would’ve favored a state he lost by 17 points over a state he unexpectedly won and which helped make him President, but whatever…
Early this month, when they hit taxpayers with a 32 percent jump in the individual income tax rate, many legislators broke a promise they had made: No more tax hikes without major reforms to help Illinois’ moribund economy. Don’t worry, said Democrats who pushed the tax hike. We’ll get to those reforms soon enough.
But not soon enough, we now see, to keep electronics giant Foxconn from bypassing Illinois to make a jobs-rich investment in southeast Wisconsin. This is a huge win for Scott Walker, the Republican governor of Wisconsin whom Illinois Democrats loathe. Just as this is an embarrassment for Illinois House Speaker Michael Madigan and Senate President John Cullerton.
Once again, the people of Illinois see how Madigan and Cullerton, with their combined 86 years in Springfield, have left Illinois ill-prepared to compete for 21st-century jobs. Their agenda is about raising taxes, not about delivering those reforms. As we wrote a few days ago, every other state on Foxconn’s short list looked better than Illinois by the basic measures of financial stability and pro-growth economies. […]
But we do know this: Wisconsin boasts a freshly burnished global image. One of the planet’s largest tech firms, with a million workers worldwide, says its search led it to bet a fraction of its future on Wisconsin. Assuming that happens, expect robust economic growth from suppliers, subcontractors, construction companies and other businesses that will serve Foxconn and its workforce.
Illinois is a train wreck. The government is paralyzed with infighting and barely keeping its fiscal head above water, it can’t figure out how to fund its schools, the state has a lousy economic climate overall and is losing population. What’s not to love?
But it will still benefit from this because workers in the northern part of the state could find employment, and some or even many of those suppliers and contractors could wind up being from Illinois (unless they move operations north, of course).
* Not to mention that, at a time when the state is still struggling mightily to recover from the just-ended impasse and can’t even revive its most important corporate incentive (click here for that story), shelling out as much as $3 billion in subsidies probably would be frowned upon here…
Let’s take a look at those figures: Wisconsin is paying as much as $1 million per job, which will carry an average salary of $54,000. The state’s economic development corporation is selling the project to taxpayers with a claim that it will create 10,000 construction jobs for building the facility and another 6,000 indirect positions. It’s expecting $3.3 million of investment per employee from the Taiwanese company.
Politicians, lobbyists and Foxconn can make the figures work by being generous with the facts. For example, if every one of those jobs came to fruition, they can claim 29,000 positions for $3 billion, or $103,000 per job. But that’s not going to happen.
Foxconn has factories in China and another dozen countries globally, yet that stated $10 billion investment is more than the group’s publicly traded flagship — Hon Hai Precision Industry Co. — has devoted to capital expenditure over the past five years combined.
There is potential for the payroll to climb to 13,000 in the future — a figure crucial to Wisconsin justifying the expense — but I wouldn’t bet your 401(k) on it. That’s because if Gou really does dish out $10 billion on this facility, the only way to make it viable is by keeping staffing low and leaning on automation to boost productivity. This LCD factory will be either labor intensive or highly automated. It can’t be both.
* But it still would’ve been a big win…
The agreement represents an opportunity as well as a risk for Wisconsin — state lawmakers must now consider a subsidy package nearly 50 times bigger than the state’s previous record.
The factory project would involve a virtual village, with housing, stores and service businesses spread over at least 1,000 acres, according to interviews. That acreage, a 1.5 square-mile area the size of Shorewood, could be assembled from parcels that initially aren’t contiguous, the source said.
At 20 million square feet, the factory would be three times the size of the Pentagon, making it one of the largest manufacturing campuses in the nation. It would initially employ 3,000 workers making an average of $53,900 a year plus benefits and could eventually boast more than four times that.
*** UPDATE *** Greg Hinz reached out to an upbeat Mark Peterson, the new head of Intersect Illinois...
Intersect Illinois already has been talking with county officials about how to plug local folks into Foxconn Technology Group’s talent search, and has had preliminary talks with the company that likely will be followed by a fuller discussion later this year, he said.
“We want to talk to them about what they need,” he says. “What can we do to customize (through worker training and other programs)?”
The state also may facilitate a connection between Foxconn and Northwestern University, Peterson said. Foxconn likes to work with academic institutions, and engineering-heavy NU “has a lot of things that could be beneficial.” […]
The potential is at least equally large for suppliers, Peterson said.
Though some will be located on a campus with Foxconn’s main factory—and still, a site hasn’t been chosen—”A lot of times, they want their suppliers close but not in their backyard. They don’t want to cannibalize their own workforce.”