Transformational. That was the word that Mark Hogan, secretary and CEO of the Wisconsin Economic Development Corporation, used often on Thursday during an “On the Issues with Mike Gousha” program. Hogan was describing the impact he expects to result from Foxconn, a high-tech megacorporation, building a huge plant in Racine County where it will make liquid crystal display equipment.
Hogan endorsed and defended every aspect of the agreement between Foxconn and state and local governments, from its cost – expected to total well over $3 billion in public expenses – to the plant’s environmental impact to what benefit Foxconn will bring to people in northern Wisconsin to the availability of workers to transportation issues connected to the plant to the political process that led to approving the deal to the precedent it might set for supporting other economic development ideas.
Hogan’s agency had struck a deal with HARIBO, the European company that makes Gummy Bears, to build a plant in southeastern Wisconsin when it got an unspecific inquiry from an agent involved in putting together economic development packages about whether Wisconsin was interested in a proposal that would require a large amount of land.
The HARIBO agreement, with $250 million in incentives by the state, was Wisconsin’s largest economic development package until that point. What quickly grew into the Foxconn agreement dwarfs that, Hogan said. But, he said, it will have strongly positive impact across the whole state, including spin-offs, opportunities for supply businesses and other effects that will create an estimated 35,000 jobs.
Hogan recounted the fast-paced narrative of how the initial query grew into a meeting between Gov. Scott Walker and Terry Gou, the founder and chairman of Foxconn, in the White House office of Reince Priebus, the then-chief of staff for President Trump. That led quickly to a trip by Walker, Hogan and several others to Taiwan to work on the idea further, and soon to a remarkable one-page, handwritten agreement signed by Gou and Walker in which Gou said the company would build a $10 billion manufacturing complex employing 13,000 people if the state committed more than $3 billion to help it.
Hogan said the fast-paced negotiations were focused on cost, the availability of workers, and Foxconn’s demand for no unnecessary delays. Secrecy was also a high priority — until President Donald Trump spoke publicly about the proposal during a visit to Waukesha County Technical College in Pewaukee in June. Hogan said that Trump was directly involved in pushing the idea with Gou. “Foxconn would not be in Wisconsin without President Trump being in office,” he said.
As for the public money that will go to Foxconn, if it meets its commitments to create jobs, Hogan used that word – “transformational” – to defend the price tag. He said other states were willing to offer big amounts to get Foxconn.
“At some point, you have to make a decision, do you want this in Wisconsin?” Hogan said. Asked by Gousha, the Law School’s distinguished fellow in law and public policy, about criticisms that the state was giving too much money for the plant, at the expense of other needs, Hogan said, “We do a great job at the state level of balancing the priorities of the state.”
Hogan said the state was working on ways to make sure there were significant job opportunities with Foxconn for unemployed and underemployed people living in Milwaukee. That includes dealing with transportation needs many people would have, he said.
Gousha asked what’s in the plan for people in northern Wisconsin. Hogan said, “We want this to be a positive for all 72 counties” in Wisconsin. The supply chain that will be needed by Foxconn will offer business opportunities across the state, he said. “We need to spend a lot of time north of Highway 29 to make sure that works,” he said, referring to the road that crosses Wisconsin roughly from Green Bay to near Minneapolis.
Critics have expressed strong concerns about the environmental impact of the plant and environmental regulation related to it. Hogan said that wetlands rules had been altered to help the proposal and that the need for an environmental impact statement for the plan was dropped because Foxconn didn’t want the delays that would result. But Hogan said all other state and federal environmental rules remain in effect. He also said the projected seven million gallons of water Foxconn says it will need each day will not harm Lake Michigan. The plant location is a short distance from the lake.
Foxconn expects to pay salaries averaging over $53,000 a year. One audience member said his rough estimate, based on the amount of state taxes someone would pay on such an income, was that it would require 96,000 people making that salary to cover the state’s projected annual payments to Foxconn. He called that “incredible.”
Hogan did not respond to the math, but said, “I come back to the transformational nature of it.”
To watch the hour-long program, click here.