Though the White House is expected to hail Apple’s manufacturing partner Foxconn for breaking ground on a new Wisconsin factory tomorrow, state and local officials paid dearly to “win” the deal — around $4 billion, up nearly $1 billion over initial estimates, the Wall Street Journal reports today. That works out to a government subsidy of $307,692 per job for each of the 13,000 jobs Foxconn says it will create at the facility.
While the deal has been somewhat controversial since it was announced at a $3 billion cost to Wisconsin, and subsequent local media reports estimated that incentives might reach $4.5 billion, the reality is sinking in ahead of a ceremony that President Donald Trump is slated to attend on Thursday. Even prior to the ballooning of costs, Wisconsin was not expected to recoup its Foxconn investment for 25 years.
To win the $10 billion factory project, state, county, and town officials collectively ponied up nearly $4 billion, promising everything from subsidies to new roads and infrastructure around the plant. Roughly $3 billion comes from income tax credits and sales tax exemptions, with around $900 million in local incentives and improvements. If the project fails, Wisconsin must pay back 40 percent of the public bonds that are funding it, though Foxconn chair Terry Gou has assumed some personal liability, as well.
As the Wall Street Journal reports, the questionable deal was compounded by separate state and local negotiations, a “bad practice” that was apparently compelled by Foxconn’s insistence on making quick progress on announcements. Additionally, the infrastructure funding for Foxconn is pulling significant resources from other pressing state road projects. Wisconsin officials and legislators continue to disagree as to whether the deal was a “once-in-a-generation opportunity” to bring the state into the high-tech economy or a gross misuse of public funds.
Bringing foreign manufacturing jobs back to the United States has been a priority of the Trump administration, though the costs to do so may be prohibitive. Most of Foxconn’s factories are in Asia, including city-sized complexes in China, where workers are paid well below U.S. wages to assemble consumer electronics products, including many top products from Apple and other major brands. The Wisconsin factory is expected to produce LCD screens for yet-to-be announced products and hire 13,000 Wisconsin residents over several years.