Sparks Fly: Kenosha Steps Away From Foxconn Development

KENOSHA COUNTY, WI — The City of Kenosha is voluntarily taking itself out of consideration for the potential $10 billion Foxconn electronics factory development.

And if you read the letter from Kenosha mayor John Antaramian to Gov. Scott Walker, one gets the impression that project as a whole represents a giant mess for the people of Kenosha.

Antaramian was considerably more tactful in his letter to Gov. Walker on Tuesday, concluding, "based upon the current status of the legislative bill which addresses the project, the City of Kenosha regrets that we will not be able to support this development in our community," he wrote. "We wish you, the State and Foxconn all the best in finding reasonable resolutions to all the issues surrounding this project."

Antaramian outlined those issues as following: Types of expenditures allowed from the Tax Incremental District, limitations of specific amounts allowed for reimbursement from the TID tax increments, Uncontrolled incorporation of Towns, Specific funding rules regarding Water Utilities, Impacts to the State's Levy Limit law and the Expenditure Restraint program.

"Throughout this planning process, we have been consistent in our belief that without significant adjustments to specific current State laws impacting local municipalities, we would be unable to support and/or absorb the development of the project," Antaramian wrote.

State Senator Having None of It

State Sen. Van Wanggaard (R-Racine) wrote back to the Kenosha mayor, pulling no punches.

"It is disappointing that you have decided to turn your back on housing thousands of jobs in your city at the last minute, but that is your prerogative," he fired back. "The legislature and the rest of the region has had tremendous cooperation in attempting to land Foxconn. Your missive to Governor Walker, and the fact that, technically, I still have not heard directly from the city shows you chose to not participate in that cooperation."

Foxconn Plan Draws Criticism

Gov. Scott Walker has said Foxconn would invest $10 billion by 2020 to create a 1,000-acre campus in southeastern Wisconsin and up to 13,000 jobs., the Journal reported.

The $10 billion deal comes with criticism. WTMJ reported a government analysis as saying the Wisconsin Foxconn deal may not break even until 2042 and will provide 4,000 fewer jobs than original projections say.

According to an analysis by the nonpartisan Wisconsin Legislative Fiscal Bureau, the cost of the tax credits would exceed potential increased tax revenues by $1.04 billion at the end of fiscal year 2032-33.

After that year, payments to Foxconn would end and increased tax collections are estimated at $115 million annually. Their analysis, which was released Tuesday, implies that the break-even point would come during the 2042-43 fiscal year.

But it might not.

The Legislative Fiscal Bureau in its analysis said that any cash-flow analysis that covers a period of nearly 30 years must be considered highly speculative, especially for a manufacturing facility and equipment that may have a limited useful life.

Related Reading:

Legislative Fiscal Bureau Analysis Document

Technological advances and changes in Foxconn's market share, operating procedures, or product mix could significantly affect employment and wages at the proposed facility over time.

Also, state law changes could affect the estimated amount of tax collections received from the additional economic activity, and any future state assistance that may be provided to Foxconn would affect the analysis.

Wisconsin is offering $3 billion worth of incentives to Foxconn, which PolitiFact reported as the most any U.S. state has ever given to a foreign company. The incentives include tax subsidies and environmental exemption permits.

Also, Foxconn chairman Terry Gou has expressed desire to more fully-automate Foxconn factories because the work is labor intensive. The Verge reported that Foxconn aims to have 30 percent full automation in Chinese factories by 2020.

Reuters reported that a 2013 Foxconn deal with Pennsylvania claimed it would create 500 jobs, but the project was never finished.

In fact, the agreement between Foxconn and Wisconsin includes no minimum for hiring workers or capital investment, PolitiFact reported.

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