Other Views: Three reasons why taxpayers should question the Foxconn deal


Michael J. Hicks

Friday, August 4, 2017

Foxconn’s announcement of plans for a $10 billion factory in southeastern Wisconsin is big news for those of us who care deeply about the manufacturing economy in the Midwest.

After all, Foxconn, best known for making Apple’s iPhone at factories in China, is the world’s largest manufacturer of computer electronic parts. Its products are found in nearly every American home, business and government office.

Southeast Wisconsin may be an ideal place to produce goods in the USA. The state has a long manufacturing history and continually scores near the top in Ball State’s annual Manufacturing and Logistics Report Card. The labor force in Wisconsin is one of the strongest in the nation, the tax climate is favorable and the logistics supply chain is robust.

Still, the numbers on this economic development deal, touted as the largest in state history, don’t seem to add up on many counts. In fact, by one measure, the subsidy from Wisconsin taxpayers could more than cover the salaries Foxconn will pay its workers.

Here are three reasons that Wisconsin taxpayers should question this deal.

1) Worldwide, Foxconn sold about $136 billion in goods last year while employing 1.3 million workers. That translates into labor productivity of about $105,000 per worker. That is pretty good given that most of the Foxconn factories are in developing counties.

But by American standards, that is lousy. By comparison, on a per-worker basis, Wal-Mart sells about twice that value of goods each year. Moreover, Wisconsin-based Harley-Davidson reported sales of $970,309 per worker in the most recent report.

That begs the question of just how will Foxconn, which has a profit rate at nearly double Wal-Mart’s, remain profitable paying workers…

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