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Learning From Wisconsin’s Foxconn Debacle

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Michael R. Ford
November 10, 2019

The day-to-day work of economic development, like much of governing, is not always glamorous. The conditions that attract residents and jobs to a place take years to build. Transportation infrastructure, housing stock, public services, political culture, tax climate and quality of life all collectively contribute to a business’s decision to locate in a particular locale. While politics plays an important role in creating a climate conducive to economic development, the timeline needed for creating and implementing a sustainable long-term economic development strategy is longer than a single politician’s term of office. Hence, economic development is a place where our politics and administration can clash. Wisconsin’s ongoing saga with Foxconn illustrates the consequences of this clash.

In the summer of 2017 Wisconsin beat out several other states to lure the Taiwan company’s new manufacturing plant to Wisconsin. The original announcement was attended by President Trump, then-Wisconsin Governor Scott Walker, and various other political figures. The promise of Foxconn was enticing; thousands of middle-class jobs at a state-of-the-art manufacturing facility, innovation centers all across the state and a once-in-a-generation chance to transform the Milwaukee region’s economy. But there was trouble from the start. Estimates showed the three-plus billion dollar incentive package used to lure Foxconn would not pay off financially for Wisconsin until 2032. Critics questioned the viability of the project from the start, citing Foxconn’s spotty track record in fulfilling its promises in other locations. But the project became a political inevitably and went forward.

Thus far, the project’s progress has confirmed the fears of its critics. The local governments that invested in infrastructure, and even displaced residents, have not seen the company’s promises realized. Foxconn has not hit employment targets, and the specifics of their plans change frequently. Nobody appears able to give a clear example of what Foxconn is planning to build, and when it will materialize. Supporters of the project rightly point out that much of the state’s incentive package is tied to hitting job creation numbers, meaning Wisconsin has some protection. While true, that protection does not help the municipalities that have already invested much in the project.   

Other aspects of the Wisconsin Foxconn story have bordered on the bizarre. The company announced plans to build a giant nine-story glass orb to serve as a data center, only to retract the idea a few hours later, and then reopen the possibility. Part of the statewide appeal of Foxconn was the promise of innovation centers in large cities across the state. Though Foxconn bought some properties, the company does not appear to be actually building anything. The company also promised a $100 million donation for a research center at the University of Wisconsin-Madison. This partnership was celebrated by Wisconsin political leaders, but like so much with Foxconn, it does not appear to be happening. Recently the libertarian Reason Foundation declared the whole Foxconn project a boondoggle. At this point it is hard to disagree.

So what can be learned from Wisconsin’s ongoing saga with Foxconn? I argue there are three big lessons relevant to the field of Public Administration. First, purchasing jobs is not a viable nor sustainable economic development strategy for most places. Consider a baseball analogy. Though the Yankees can afford to sign the most expensive free-agent every year even if some turn out to be busts, the vast majority of teams cannot afford to take that risk. Success for a small-market team requires the deliberate development of organizational assets.

Second, we must be wary of economic development by shiny object. The promise of innovation centers, grants to the university, and giant glass orbs attract immediate attention. The processes involved in creating a high quality of life do not yield immediate measurable dividends. But while slow and deliberate can be sustained, moonshots cannot.

Third, political inevitability in economic development invites a race to the bottom. Though hard to pinpoint exactly when it happened, at some point during the process Foxconn became a political inevitability. At that point Foxconn held all the cards; it became more important for state leadership to announce the company’s commitment than to ensure it was worth the cost, or even viable. 

I hold out hope that I will be proved wrong; that Foxconn will create something transformational for Wisconsin’s economy. But everything that has occurred up to this point suggests that the final Foxconn project will fall far short of what was promised. Most upsetting is the fact that the Foxconn failure was predicted by so many. Though Wisconsin’s experience will add value as a cautionary case study in how not to do economic development, the real-world costs of committing to a to-good-to-be-true project will be felt for decades.

Author: Michael R. Ford is an associate professor of public administration at the University of Wisconsin Oshkosh, where he teaches graduate courses in budgeting and research methods. He frequently publishes on the topics of public and nonprofit board governance, accountability and school choice. He currently serves as the president of the Midwest Public Affairs Conference.

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