Foxconn will continue to make news in 2018

Economic Trends

Foxconn Technology Group dominated local business news headlines in the second half of 2017 and every indication is the company will continue to make waves this year, but the focus will turn to the progress of construction and the potential political ramifications in the state.

Businesses in southeastern Wisconsin will also potentially begin to see the impact of the massive project, both in opportunities for construction firms and suppliers, and in creating an even tighter labor market.

Foxconn’s Terry Gou at the contract signing at SC Johnson’s headquarters in Racine.
Credit: Arthur Thomas

Foxconn’s plans call for a groundbreaking sometime this spring. The company hopes to build a more than 1.5 million-square-foot assembly facility on the eastern end of its Mount Pleasant site and have it operational by next year. The first facility would allow the company to ramp up assembly of televisions and other products even as the rest of its LCD plant is built up.

Before construction gets going, the village and county have to acquire the land that will become Foxconn’s Wisconsin home. In late December, one week after an established deadline, Foxconn put $60 million in an escrow account to fund land acquisition, prompting the village and county to exercise options on 1,400 acres of land in the project area. Those deals are expected to close in early February.

Even before those deals go through, work is already beginning on the infrastructure projects that will support the Foxconn plant. Black River Falls-based Hoffmann Construction Co. was awarded a $12.7 million contract to rebuild part of the frontage road and began work in early January. Green Bay-based Advance Construction Inc. and Pleasant Prairie-based DK Contractors Inc. have also begun work on two water main projects in the area.

There’s nearly $160 million in water and sewer infrastructure work planned and another $134 million in local road projects to support Foxconn’s campus. A lawsuit filed in early January by a group of property owners near roads targeted for upgrades could potentially cause issues for the work, depending on how long the court fight drags on.

Crews may be moving dirt, but there are other approvals portions of the project will need before Foxconn’s grand vision can become reality.

Waukesha-based American Transmission Co. LLC is asking the state Public Service Commission to sign off on $140 million in power line upgrades between Racine and Pleasant Prairie, including a new substation near the Foxconn plant.

The City of Racine will be seeking approval to divert Lake Michigan water to the Foxconn plant, which will be just outside the Great Lakes basin. The state Department of Natural Resources will need to approve the diversion, which could also include the town of Yorkville to the west of I-94.

The state Department of Transportation is also waiting to find out if it will receive $246.2 million in federal grant funding it applied for to help with the expansion of I-94. The state has to receive some federal funding to be able to use $252.4 million in bonding authorized in the Foxconn legislation. The department’s website shows the I-94 project getting started as early as the spring, but the schedule is dependent on the money being available.

As the pieces come together to clear the way for the Foxconn project, the company has already pressed ahead with hiring, posting positions to online job boards and holding recruitment events at universities. The company is also leasing space at an industrial building in Mount Pleasant to begin TV assembly operations.

The leased facility and the first assembly building are a key part of the first few years of Foxconn’s project. The company told the Wisconsin Economic Development Corp. it plans on $233 million in revenue this year and $3.33 billion through the end of 2020 from its Wisconsin operations. Over that same period, the company’s employment needs to reach 5,200 to receive the maximum tax credits, including 1,040 by the end of this year.

Statewide unemployment is approaching record-low levels and even though the City of Racine has the highest unemployment rate among Wisconsin’s largest cities, at 4.1 percent in November, it is in healthy territory. A tight labor market has employers scrambling to find workers, which some have said has limited job growth. Racine County alone hasn’t added a net of more than 1,000 private sector jobs in a 12-month period since the end of 2014.

Foxconn ramping up employment will only increase pressure on the workforce. And while many business leaders have said they expect Foxconn to benefit the state, many have also expressed concern about what it will mean for finding workers. Groups that include Milwaukee 7, higher education and workforce development boards have started working on filling the pipeline, but it remains to be seen how successful they will be and how quickly their work can be done.

Another area of uncertainty is on the political front, where what seemed like a winning issue for Gov. Scott Walker is now a much murkier picture as he begins his re-election campaign. Two polls completed in October by Marquette University Law School and North Carolina-based Public Policy Polling showed voters are split on whether the state is paying too much for the project and what Walker’s motivations were for striking a deal.

Democrats running for governor haven’t shied away from criticizing the state’s $3 billion subsidy for the project, and Walker has said other Foxconn projects that didn’t materialize were the result of political changes. Regardless of the progress made in building the Foxconn campus, the project will likely play a central role in the campaign.

Foxconn Technology Group dominated local business news headlines in the second half of 2017 and every indication is the company will continue to make waves this year, but the focus will turn to the progress of construction and the potential political ramifications in the state.

Businesses in southeastern Wisconsin will also potentially begin to see the impact of the massive project, both in opportunities for construction firms and suppliers, and in creating an even tighter labor market.

Foxconn’s Terry Gou at the contract signing at SC Johnson’s headquarters in Racine.
Credit: Arthur Thomas

Foxconn’s plans call for a groundbreaking sometime this spring. The company hopes to build a more than 1.5 million-square-foot assembly facility on the eastern end of its Mount Pleasant site and have it operational by next year. The first facility would allow the company to ramp up assembly of televisions and other products even as the rest of its LCD plant is built up.

Before construction gets going, the village and county have to acquire the land that will become Foxconn’s Wisconsin home. In late December, one week after an established deadline, Foxconn put $60 million in an escrow account to fund land acquisition, prompting the village and county to exercise options on 1,400 acres of land in the project area. Those deals are expected to close in early February.

Even before those deals go through, work is already beginning on the infrastructure projects that will support the Foxconn plant. Black River Falls-based Hoffmann Construction Co. was awarded a $12.7 million contract to rebuild part of the frontage road and began work in early January. Green Bay-based Advance Construction Inc. and Pleasant Prairie-based DK Contractors Inc. have also begun work on two water main projects in the area.

There’s nearly $160 million in water and sewer infrastructure work planned and another $134 million in local road projects to support Foxconn’s campus. A lawsuit filed in early January by a group of property owners near roads targeted for upgrades could potentially cause issues for the work, depending on how long the court fight drags on.

Crews may be moving dirt, but there are other approvals portions of the project will need before Foxconn’s grand vision can become reality.

Waukesha-based American Transmission Co. LLC is asking the state Public Service Commission to sign off on $140 million in power line upgrades between Racine and Pleasant Prairie, including a new substation near the Foxconn plant.

The City of Racine will be seeking approval to divert Lake Michigan water to the Foxconn plant, which will be just outside the Great Lakes basin. The state Department of Natural Resources will need to approve the diversion, which could also include the town of Yorkville to the west of I-94.

The state Department of Transportation is also waiting to find out if it will receive $246.2 million in federal grant funding it applied for to help with the expansion of I-94. The state has to receive some federal funding to be able to use $252.4 million in bonding authorized in the Foxconn legislation. The department’s website shows the I-94 project getting started as early as the spring, but the schedule is dependent on the money being available.

As the pieces come together to clear the way for the Foxconn project, the company has already pressed ahead with hiring, posting positions to online job boards and holding recruitment events at universities. The company is also leasing space at an industrial building in Mount Pleasant to begin TV assembly operations.

The leased facility and the first assembly building are a key part of the first few years of Foxconn’s project. The company told the Wisconsin Economic Development Corp. it plans on $233 million in revenue this year and $3.33 billion through the end of 2020 from its Wisconsin operations. Over that same period, the company’s employment needs to reach 5,200 to receive the maximum tax credits, including 1,040 by the end of this year.

Statewide unemployment is approaching record-low levels and even though the City of Racine has the highest unemployment rate among Wisconsin’s largest cities, at 4.1 percent in November, it is in healthy territory. A tight labor market has employers scrambling to find workers, which some have said has limited job growth. Racine County alone hasn’t added a net of more than 1,000 private sector jobs in a 12-month period since the end of 2014.

Foxconn ramping up employment will only increase pressure on the workforce. And while many business leaders have said they expect Foxconn to benefit the state, many have also expressed concern about what it will mean for finding workers. Groups that include Milwaukee 7, higher education and workforce development boards have started working on filling the pipeline, but it remains to be seen how successful they will be and how quickly their work can be done.

Another area of uncertainty is on the political front, where what seemed like a winning issue for Gov. Scott Walker is now a much murkier picture as he begins his re-election campaign. Two polls completed in October by Marquette University Law School and North Carolina-based Public Policy Polling showed voters are split on whether the state is paying too much for the project and what Walker’s motivations were for striking a deal.

Democrats running for governor haven’t shied away from criticizing the state’s $3 billion subsidy for the project, and Walker has said other Foxconn projects that didn’t materialize were the result of political changes. Regardless of the progress made in building the Foxconn campus, the project will likely play a central role in the campaign.

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