There's a wonderful Reply All episode from December 2018 that covers the dramatic origin story, featuring lots of colorful small-town politics and an explanation of the bait & switch tactics commonly used by Foxconn:
What even was the point of all this? Money wasn't given outright to Foxconn in large quantities, right? There was little reason for them to just lie about their intents while not planning on following through on any of it. That doesn't really help them out either.
Wisconsin got played really badly, but I don't understand what even Foxconn is getting out of it at this point. Did they just change their mind and decide it wasn't worth building a factory there at all, but for whatever reason just won't come out and cancel it all?
Well, Brazil has crazy labor laws. You see a worker in court? The worker will win.
In the end it was not worth it for Foxcon. And I think a terrible outcome for Brazil. Electronics are absurdly expensive there (Think import tax 1, import tax 2, import tax 3 and in the end taxes on the import taxes. No kidding).
Stuff is often three times the price of western prices. At least in the past. It was common for people to ask you to sell them you used Laptop/iPhone/mp3 player.
"However, the promises soon proved hard to keep: the company wanted the Brazilian government to come up with 30 percent of the cash, as well as a private investor - both failed to materialize. "
"As well as the economic instability that the Brazilian economy, it is also rumored that other factors influencing the decision include the productivity of the local workforce - which at its peak reached about 2,500 workers - which Foxconn considers to be low when compared to its main manufacturing operations. "
Politics. Wisconsin is a normally-blue state that went for Trump in 2016 but may not do so again in 2020 (as evidenced by the fact that they ejected Scott Walker). It would help Trump immensely in the state to have a big foreign company with lots of high-paying jobs open up there, which is why he and Foxconn met and put out a “things are on track!” press statement immediately after the Verge broke the initial story about the project not moving.
Walker was then Speaker of the House, and his fortunes were closely hitched to Trump (Wisconsin having unexpectedly flipped Repub in 2016, and being critical to Trump’s re-election chances). The Verge, I think, summarized the situation best:
> But the most plausible explanation I heard is that Foxconn’s secret is that it has no idea what it’s doing in Wisconsin.
> “In China, people announce projects like this all the time, and some of them get built, and some of them don’t,” said Willy Shih, a Harvard business school professor who consulted in the screen industry for several years. They’re called “state visit projects,” he said. Politicians get a photo op, and companies to get some political goodwill, but everyone knows the announcement is extremely preliminary. Ultimately, the company will do whatever makes economic sense, and sometimes, that turns out to be nothing.
> Foxconn has done this in the past, announcing large factories in Pennsylvania, Brazil, and elsewhere that never materialize. But unlike Pennsylvania, which offered Foxconn no incentives and built no infrastructure, Wisconsin politicians threw a tremendous amount of money at the company and rushed to acquire land and start building.
> Further complicating matters, the trade war with China still looms, and Trump has personally called Foxconn CEO Terry Gou when the company wavers. This time, Foxconn can’t simply vanish without risking a backlash, but it also makes no sense for it to build what it initially promised.
tl;dr Foxconn made a bunch of empty promises in Wisconsin to curry goodwill with a US administration whose trade wars threaten Foxconn, probably expecting the hot air would be understood as such by the politicians, as they would be in China. Wisconsin, under Walker, grossly overcomitted to Foxconn’s silly promises, and now both the State and Foxconn are trapped in a deal that makes no real sense for either party.
The government used eminent domain to seize the homes of people so the land could be redeveloped, so it effected people.
Apparently, Foxconn has been known to (all over the world) make a large promises in the name of getting tax breaks, etc and then only actually doing a fraction of what was promised.
In some cases, you do. Bait-and-switch scams are common at the city level. The developer of the land just says things went unexpectedly badly and there was nothing they could do about it.
I think the right question is, what did Foxconn lose? Maybe they really did just change their minds. Maybe market conditions changed, or they just decided it’s unwise to invest huge amounts of money in a country with insane leadership. If they don’t have a hard commitment then it wouldn’t have to take very much for them to have a change of heart.
There are a lot of possibilities. Terry Kuo has close relation with China. It is possible he is pressured out of US investment due to the recent tension, but trying to play the situation so he don’t bet everything on China (likely the losing side of the tariff war). He is also running for Taiwan presidential candidacy (of KMT), and might be desperate to avoid negativity. Or, honestly, I wouldn’t be surprised if he just genuinely has second thoughts. Kuo is well-known to be volatile.
> [State House Minority Leader Gordon Hintz] believes Foxconn is trying to slow-walk the project until 2020, continuing to use it to win Trump’s goodwill in the trade war and waiting to see who’s elected.[1]
The point was to give Scott Walker and Wisconsin Republicans a boost in their efforts to hold on to the Governor's office and control of the legislature. The facade of the factory coming only had to last as long as the fall election.
In return Foxconn curried favor with President Trump, who tied himself to the factory coming, and the political party in control of both house of Congress at the time.
So the whole less taxes less corruption thing isn't my argument, but I think they meant less taxes as in the number of different taxes you can give breaks from, not the total percentage burden.
The potential for tax breaks ultimately depends on the total amount you’d potentially pay. (Edit: even this isn’t the limit. Nothing says you can’t give companies more than they pay.) How it’s divided up doesn’t really matter.
I know a guy who had been offered a job at one of the facilities, but they kept delaying and delaying the start date for months. There's been a lot of local politicians talking about how and the deal was and undoing it so it could be that Foxconn doesn't want to deal with dumping even more money into an area with political instability. Like, they did go thru the hassle to build a giant empty building so what would even be the point of doing that?
https://gimletmedia.com/shows/reply-all/wbhjwd/132-negative-...
It's a good listen even now, now that this story has played out the way it has..