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Kitchens Sees Foxconn Deal as State’s Rust Belt Exit

Some see it as a jumpstart for Wisconsin to shake off its Rust Belt trappings and enter the 21st century, while others see the deal with Taiwanese contract manufacturer Foxconn Technology Group as the sort of corporate welfare that House Speaker Paul Ryan and President Donald Trump have railed against in the past.

“This is a once-in-a-century opportunity for our state and our country, and Wisconsin is ready,” Gov. Scott Walker said in a statement announcing the Foxconn plan, which includes $3 billion in state tax breaks to the tech giant to build a $10 billion plant in southeastern Wisconsin to make flat-screen TVs. Initially the plant would hire 3,000 workers and could grow, according to Gov. Walker, to 13,000 workers.

Under the deal, Foxconn would receive up to $200 million annually in refundable tax credits for 15 years, up to $2.85 billion. It also waives $150 million in sales taxes on building materials, equipment and supplies.

The draft legislation also calls for issuing up to $252.4 million in state debt to update beleaguered Interstate 94, which is in the area being considered for the plant.

Troubling to environmental groups, the draft legislation also waives the required state environmental impact statement and does away with wetland and waterway permitting.

“A rollback of such an extreme nature is unnecessary,” the nonpartisan Wisconsin League of Conservation Voters said in a statement.

Others have pointed out that Foxconn has a history of making big promises without delivering, and point to a plant in Pennsylvania that never materialized and several others around the world. And at least one economist, Michael J. Hicks at Ball State University, wrote in a column at Marketwatch.com that, “Foxconn bears no meaningful risk in this deal.”

But after a meeting with Gov. Walker and other officials on Tuesday, Rep. Joel Kitchens said he and his colleagues learned more about the deal.

Kitchens said going into the meeting, he had a pretty good understanding of the economic side of the deal, but he did have some concerns about environmental questions.

“It’s being portrayed that we’re giving them a pass on all this stuff,” Kitchens said. “I really feel pretty comfortable about it at this point. We’re just trying to streamline it. When the chairman [Terry Gou] was looking at Wisconsin, one of the most important things to him is that it could be done quickly. He wanted this place up and running as soon as possible. We’re trying to streamline the process. Wastewater treatment, air pollution standards, exactly the same, all federal requirements the same. It’s just the permitting process that’s being changed.”

For example, he mentions the state waiving the environmental impact study.

“That takes a year to do that and in the end all it is, is an advisory. They still have to do a federal environmental impact study,” Kitchens said, adding the Wisconsin Department of Natural Resources will oversee the project.

“In the case of wetlands remediation, normally you’re required to replace 1.2 acres for every acre that you degrade,” Kitchens said. “We bumped it up to two acres. They don’t have to go through the permitting process ahead of time, but the DNR will be watching and they will certainly be held to the standard that is required. It is incumbent upon us that the DNR provides necessary oversight. There’s not a single standard being loosened for them. It’s just the permitting process.”

As far as the economics, Kitchens said unlike other states that made corporate deals without promises of jobs, the Foxconn deal is tied to performance.

“They don’t get a penny until they’ve hired people and until we see paystubs,” he said. “If they don’t produce the jobs, they don’t get the money.”

Kitchens agrees that it is a good deal for Foxconn, but adds, “honestly for me it goes beyond just what this plant will produce. I think it can transform the economy. We’re sort of stuck in the Rust Belt economy and we need to move into the 21st century. We can’t do that by sitting back. These companies have a lot of places they can go, and we can argue philosophically that we shouldn’t give away money to businesses, well, every other place is doing it, so you’re either in the game or you’re not. I think compared to other deals other states have done, it’s a pretty good deal.”

Kitchens mentions there has already been talk that American glass manufacturer Corning could invest another $1 billion to set up shop close to Foxconn as a supplier of glass for the LCD screens.

“Supposedly they will have 150 suppliers, and they want people that are close,” Kitchens said. “I think a lot of Wisconsin businesses are going to see benefits from it or even be created from it. That’s where there’s an impact. And 10,000 people to do the construction.”

Kitchens added that Foxconn would like to break ground next May. Gov. Walker is expected to call a special session of the legislature to consider the Foxconn deal.

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