Foxconn to open new LCD manufacturing plant in Wisconsin

Wisconsin may soon be known for something more high-tech than cheese. Taiwanese electronics manufacturer Foxconn announced early Wednesday that they would be investing US$10 billion to build and staff an LCD manufacturing plant in the state over the next three years.

Politicians ranging from Wisconsin governor Scott Walker to United States President Donald Trump hailed the deal as a massive triumph for the state’s economic atmosphere and the country’s economic growth as a whole. Walker even called the deal “the single largest economic development project in the history of Wisconsin.” The factory, which will occupy over 1,000 acres of land, could draw in US$3 billion in taxpayer subsidies granted by the state of Wisconsin, by far the largest subsidy granted to any other corporation in the state’s history (the former #1 spot was held by Mercury Marine, which was promised $65 million in subsidies).

Perhaps the biggest boon to the state’s economic outlook is the creation of jobs. Foxconn estimates that the factory will require 3,000 staff for operations to run smoothly, and other estimates peg total job creation between 10,000 and 22,000, which account for construction, service, and secondary jobs created due to the deal.

Nothing has been finalized as of yet, and Wisconsin may do well to wait for these chickens to hatch before counting them. Foxconn recently pulled out of Brazil after a similar subsidy deal fell through. Other sites have suffered similar fates. On top of all that, the US$3 billion in tax subsidies is greater than the expenses of several other state services combined.

Aside from new jobs, what could this mean for the US tech industry? Higher smartphone component prices, for one. In the past, Foxconn has come under fire for its lackluster pay practices and working its employees to their breaking points in other countries, particularly China. The United States has much stricter labor laws and much steeper penalties for violators. Foxconn estimates that the average wage of a worker at the proposed Wisconsin factory would exceed US$53,000 per year, plus benefits. Some estimates peg wages in Foxconn’s Chinese plants at less than a tenth of that, roughly US$5,000 per year. Higher wages and increased cost of labor would result in much higher production costs which Foxconn would likely pass on to their customers. These customers, in turn, would probably pass on at least part of this increased expense to the end consumer with a final result of higher priced electronics, specifically smartphones.

Again, this is all hypothetical. Foxconn representatives will be meeting with lawmakers later this week to hammer out details, and nothing will be set in stone until construction begins on the factory.

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