Skip to main content

The Journal Gazette

Friday, September 08, 2017 1:10 pm

Fact check: Trump's repeated claim of credit for Foxconn's Wis. deal

NICOLE LEWIS | Washington Post

 

"A lot of people are coming back in. We have Foxconn, they make the iPhones, as you know, for Apple, and so many companies are building now in our country, including the auto companies who are coming back." -- President Trump, remarks at a rally in Phoenix, Aug. 22, 2017

"I believe that the fact that I brought in -- it will be soon -- millions of jobs -- you see where companies are moving back into our country. . . . We have companies coming back into our country. We have two car companies that just announced. We have Foxconn in Wisconsin just announced. We have many companies, I say, pouring back into the country." -- Trump, remarks at a news conference on infrastructure, Aug. 15, 2017

President Donald Trump has repeatedly highlighted a proposal for Foxconn's new LCD manufacturing plant in Wisconsin as evidence of progress toward one of his signature campaign promises -- bringing manufacturing jobs back to the United States.

Regular readers of The Fact Checker know we have faulted Trump for his habit of taking credit for new business investments that were in the works well before he took office. So the Foxconn deal seems worthy of a deeper exploration, especially because the president often describes it as a done deal, not withstanding the need for legislative approval and the company's history of announcing deals that later evaporate. Let's take a look.

The facts

On July 26, Foxconn chief executive Terry Gou announced plans to create a new facility in Wisconsin during a news conference at the White House, with Trump and Gov. Scott Walker, a Republican, at his side. Foxconn pledged $10 million and promised to create 13,000 jobs, a proposal that would require $3 billion in subsidies from the state of Wisconsin during a 15-year period.

Less than one month after the announcement, during a news conference on Aug. 15 to unveil a new initiative to invest in U.S. infrastructure, Trump inaccurately claimed he had "created over 1 million jobs" since he became president, listing Foxconn among one of the many companies "pouring back" into the United States.

On Aug. 22, Trump told a crowd gathered at his rally in Phoenix that he was doing "good work" to bring jobs back in the country, again listing Foxconn as one of the company's expanding opportunities for U.S. workers.

On both occasions, he took credit for the Foxconn deal and praised it as though the project were already set in stone.

But the proposal for the new plant is still in the process of being hashed out in the state legislature. To date, the plant has created zero jobs.

The project has raised major concerns from both local lawmakers and Wisconsin residents.

A report by Wisconsin's Legislative Fiscal Bureau found the project would not be profitable for Wisconsin until 2042. Some have raised concerns about the environmental effect of the new facility, slated for construction in a wetland area. Others have taken issue with the project's hefty cost to the state, which would be shouldered by Wisconsin taxpayers.

If Foxconn makes the full investment for 13,000 jobs, it will cost Wisconsin $15,000 per job, but if the company uses robots and only employs 2,000 workers, it could wind up costing the state $54,200 per job.

The national average yearly per job incentive is just more than $2,400, according to the W.E. Upjohn Institute for Employment Research in Michigan. By comparison, the Wisconsin project could be up to 22 times more expensive than the national average.

After Labor Day, the state legislature continued its negotiations on the proposal. The Republican-controlled state Assembly voted 59-30 on Aug. 14 to advance the project. It is now under review by the legislature's joint finance committee. If approved, the proposal moves onto the Senate for consideration.

In August, state Senate Majority Leader Scott L. Fitzgerald, R-Juneau, voiced concerns that the Senate did not yet have the votes needed to pass the bill. He stressed the Senate needed more time to ensure the proposal is beneficial for Wisconsin taxpayers.

The finance committee and several senators have moved to address those concerns, issuing amendments to safeguard taxpayer money. With the additional provisions, many Republicans in the Senate are confident the bill will pass, seeing the project as a boon for the state of Wisconsin.

"Whether it's the 13,000 family-supporting jobs, construction workers building a $10 billion manufacturing campus or supply-chain companies, the ripple effects of this new industry sector will be felt across the state," said Senate President Roger Roth in a statement. "I look forward to the Senate voting in favor of family supporting jobs and economic growth for our state."

But some Democrats in the Senate aren't sold on the idea.

"The best day this deal had was the day it was unveiled," said Senate Minority Leader Jennifer Shilling, D-LaCrosse, in a statement. "Every day since has been a constant line of questions and concerns. It's a legislative mess right now and the public is still not sold on this deal."

With the deal still being sorted out, Trump can't take credit for Foxconn as though it's a done deal. But can he take credit for facilitating the proposal in the first place?

Both Walker's office and Foxconn say yes.

Tom Evenson, Walker's communications director, said Trump's clear message of bringing manufacturing back to the U.S. was influential in attracting Foxconn to Wisconsin.

"It is clear that Donald Trump set the stage and the tone for this project and for companies looking to move and expand into the United States," he said. "Without the president playing his role, we probably would not have a deal."

Foxconn has made similar claims that Trump's pledge to boost U.S. manufacturing has been a major impetus for the Wisconsin deal.

"The timing for this investment was certainly impacted by what we saw as very pro-business and co-investment policies that encouraged investments like ours," Foxconn Technology Group wrote in a statement.

But here's the rub: Foxconn has been making plans to expand in the U.S. since 2012.

In 2010 and 2011, both Apple and Foxconn received negative publicity after reports surfaced of poor working conditions and several worker suicides at Foxconn's iPhone manufacturing facilities in China.

Then in December 2012, Apple chief executive Tim Cook announced the company's intentions to move a portion of the production of its Mac computers from China to the United States. One day after Apple's news, Foxconn followed with an announcement of its own -- the company was planning to expand its manufacturing efforts in the United States.

Following the consecutive announcements, reporters speculated that Foxconn would move its Mac production to the U.S. from China to address the negative media and to help fulfill Apple's promise. But officials for the company told CNN Money that the move was part of its long-term global expansion plans.

"Foxconn is exploring the opportunity to expand its existing manufacturing operations in the U.S., which have always been a part of our global manufacturing operations, to meet the needs of our customers and to leverage the high-value engineering talent that is available in that important market," the company told CNN in a statement.

The White House did not respond to a request for evidence of Trump's role in the deal.

In November 2013, about a year after the company announced its interest in expanding U.S. operations, Foxconn announced it was considering a new plant in Harrisburg, Pa. The company vowed to invest $30 million in a high-tech manufacturing facility, creating 500 new jobs in the process. The company also pledged to donate $10 million for robotics research and development at Carnegie Mellon University.

During a ceremony unveiling the plan in Washington, D.C., Gou reiterated the plant would not replace manufacturing performed by workers in low-wage labor markets. Instead, Gou said the investment aimed to capitalize on the U.S.'s highly skilled labor force, which has the potential to automate the manufacturing process using robotics.

But the plant never came to fruition.

"It just seemed to fade to black" after the announcement, a local official told the Washington Post.

When asked why the investment in Pennsylvania failed, Foxconn Technology Group cited several factors in an emailed statement, including shifting consumer interests and a "lack of co-investment" from local government to make the project "economically viable."

The abandoned plan for a plant in Harrisburg is not the first time Foxconn has not lived up to business hype. Foxconn has a history of announcing major projects around the globe that don't live up to the initial burst of publicity.

In 2015, Foxconn announced plans to invest $5 billion in India, opening 12 new manufacturing plants and creating 1 million new jobs by 2020.

The investment was an early win for Prime Minister Narendra Modi's "Make in India," initiative which aims to expand the country's domestic manufacturing sector.

One of Modi's core campaign promises was to create jobs for the millions of Indian people who enter the workforce each year. In July 2017, more than two years after the initial plan was announced, the Times of India reported that Foxconn was still firming up the details for the new plants.

In 2015, Reuters reported that Foxconn's 2011 promise to expand manufacturing in Brazil had not panned out. The company pledged to invest $325 million to create an industrial production hub to manufacture iPhones in Brazil. Four years after the plan was announced, Foxconn has only achieved a fraction of its initial projections, which included 100,000 new jobs and the creation of a new supply chain for electronics manufacturing.

Foxconn and officials from Brazil's government declined to comment on why the project fell short, but Reuters cited a failure of Brazil's "industrial policy" and Foxconn's difficulty with "navigating politics and managing expectation beyond China" as some of the main hurdles.

Foxconn has repeated the pattern of stalled projects in Indonesia, where it pledged $1 billion in 2014, and Vietnam, where it pledged $5 billion in 2007.

The Pinocchio test

In 2012, Foxconn reported that expanding into the United States was part of a long-term strategy to expand its global reach. Though Trump flirted with the idea of running for the country's highest office in 2012, he was still a reality-TV star on "The Apprentice" when Foxconn was making plans to bring new facilities into the U.S.

While Foxconn and Walker credit Trump with setting the stage for the new plant, the fate of the project is in the hands of the Wisconsin state legislature. Ultimately, it is up to Wisconsin to negotiate and pass a proposal that appeases both Wisconsin taxpayers and Foxconn.

The Foxconn proposal is an example of what happens when business meets politics. Foxconn is seizing on Trump's pro-American manufacturing message in the hopes of striking a favorable deal, one that critics say is bad for Wisconsin taxpayers.

The reality is Foxconn has been looking for ways to expand in the United States for the last five years, and the new plant has yet to create any jobs in Wisconsin. If history is any indication of the future, it might not ever.

Trump earns Three Pinocchios for counting his chickens before they hatch.

Three Pinocchios