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Trump

Taylor Glascock

MOUNT PLEASANT, Wis. — A 30-minute drive from the site of this week’s Republican debate in Milwaukee stands a mysterious glass globe that has come to symbolize the failure of one of Republican front-runner and former president Donald Trump’s big promises.

The 100-foot-tall sphere is one of few buildings on a largely empty plot of land bigger than three Central Parks. The globe’s owner, Taiwanese manufacturer Foxconn, calls it a high-performance computing data center. But local residents say they’ve seen few signs of life at the building. Last year, a local catering company <a href="https://www.facebook.com/redonioncaferacine/posts/pfbid0EpadHdivwqNdoauUJdQEoDveAPaTFfYYsdFwX4GUwCctdGygD54pmZCdScKxrzV4l" target=_blank>announced</a> that outside groups could rent the space for events.

The orb and the three partially used buildings nearby are nothing like the giant manufacturing campus with 13,000 high-tech jobs that Trump and Foxconn promised five years ago, when Trump — wielding a golden shovel for the groundbreaking — <a href="https://www.c-span.org/video/?447699-1/president-trump-remarks-foxconn-facility" target=_blank>called</a> the project the “Eighth Wonder of the World.” Instead, the orb is the butt of local jokes.

“It just looks to me like sort of a low-rent Epcot Center. … What almost turns it into comedy is that they were renting it out for banquets,” said Kelly Gallaher, head of a local government watchdog group.

It might be funny, she added — except that local and state governments spent roughly $500 million to buy land, bulldoze houses and build infrastructure for an unfulfilled manufacturing megasite  that was supposed to include dozens of futuristic buildings and a factory to produce flat-panel displays for televisions.

Trump’s Carrier deal fades as economic reality intervenes

Foxconn today does some manufacturing at the site, where the company says it employs 1,000 people building computer servers for data centers and <a href="https://twitter.com/HonHai_Foxconn/status/1685183385478823937" target=_blank>electronic devices</a> for solar panels.<b> </b>But so far, it hasn’t been the massive investment that Trump and the firm initially touted.

“The enormous debt and financial exposure we took on and that still hangs above us was built on promises that I really don’t believe Foxconn had any intention of fulfilling,” said Gallaher, who recently lost her bid to unseat the village president, a supporter of the Foxconn project.

As the 2024 <a href="https://www.washingtonpost.com/elections/election-2024/" target=_blank>presidential campaign</a> gets underway, the economy is front and center, with candidates of all stripes pledging they can do a better job of steering the nation’s growth. The stalled dreams of this town of 27,000 are a reminder that those promises don’t always work out as planned.

The ill-fated project, backed by heavy state and municipal spending, comes as the federal government is pouring tens of billions of dollars into <a href="https://www.washingtonpost.com/us-policy/2022/08/09/micron-40-billion-us-subsidies/" target=_blank>subsidizing</a> domestic manufacturing, hoping that the funds will help spur projects that might otherwise not happen.

“It’s very easy for things to go awry in a big way,” David Merriman, a professor of public policy at University of Illinois at Chicago, said of government-backed economic development. “The standard should be, if it doesn’t make economic sense to do the project, you don’t do the project. There’s got to be some spillover benefits beyond the developer.”

The original Foxconn deal signed in 2017 called for Wisconsin to provide the firm with nearly $3 billion in tax credits if it created 13,000 jobs at a $10 billion state-of-the art factory for the production of liquid crystal displays, or LCDs — the flat screens used in televisions and other electronics.

Brendan Smialowski

Seeing little progress, the state under new Democratic Gov. Tony Evers significantly <a href="https://content.govdelivery.com/accounts/WIGOV/bulletins/2ce239d" target=_blank>scaled down</a> the deal after Trump left the White House in 2021, reducing the tax credits Foxconn was eligible to receive to a maximum of $80 million if the company created 1,500 jobs in a tech and manufacturing campus.

Many critics say the original promises were never destined to be kept. Trump and the GOP  were looking for a quick political win from the deal, while Foxconn was hoping to placate the Trump administration to stop it from hiking import tariffs on the iPhones the firm assembles in China, said Gordon Hintz, a Democrat and former minority leader in the Wisconsin State Assembly.

“It was all about politics,” Hintz said in an interview. “You had a swing state President Trump needed to win … and from Foxconn’s standpoint, President Trump had threatened tariffs on electronics imports. For Foxconn, it was always about evading tariffs.”

A Foxconn spokesman said the firm “makes business decisions based on market demand and opportunities that strengthen the long-term corporate health to the Group and our shareholders.”

Referring to the renegotiation of the deal, the company said that “macroeconomic and industry sector challenges require the ability to adjust quickly to market demand.” The company said it “remains committed to Wisconsin and looks forward to growing with the state, county and village.”

Foxconn confirmed that it has made the globe available to outside groups, but added that the building is primarily an operations center supporting Foxconn’s manufacturing operations. It declined to make executives available for an interview.

A Trump spokesman didn’t respond to a request for comment.

By the time the Foxconn deal was slimmed down, the Village of Mount Pleasant and Racine County had already borrowed more than a combined $300 million to buy land and lay water and sewer pipes required by the originally promised LCD factory. State taxpayers and a local utility, meanwhile, were in the process of spending nearly $300 million on roads and power lines, according to the Wisconsin Legislative Fiscal Bureau.

David DeGroot, president of the Village of Mount Pleasant and a longtime supporter of the project, said in a statement that Foxconn has invested more than $750 million in the area, creating “significant benefits” for the community. The company is now the largest taxpayer in Racine County, he said.

He added that “some of the largest businesses in America” have shown interest in the site as a result of the infrastructure investment, pointing to Microsoft’s recent <a href="https://www.mtpleasantwi.gov/DocumentCenter/View/3131/03282023---Microsoft-Press-Release?bidId=" target=_blank>decision </a>to build a data center on about one-tenth of the roughly 3,000-acre campus.

State and county officials either declined to comment or didn’t respond to requests for comment.

Roughly 100 homeowners and farmers were forced to move, sometimes under threat of eminent domain, so their properties could be bulldozed to make way for the campus, according to residents and village officials. The village paid more than 40 percent over market value for that land, officials noted.

“Generational family farms were torn up,” Gallaher said. “Racine County has a very, very long tradition as being one of the biggest cabbage-growing areas in the country. And so much of that now is gone.”

At a <a href="https://www.facebook.com/watch/live/?ref=watch_permalink&v=1969892699869603" target=_blank>public hearing</a> last year, the town’s project manager for the site, Claude Lois, acknowledged that the infrastructure spending was sized for a giant factory that never materialized. But he disputed the idea that the community had sacrificed too much.

“Because of all the work we did, we’re actually sitting pretty good for a number of other projects that we can maybe talk about in the future,” Lois said. He added that the campus’s value now exceeds that of many municipalities in the state, including Wisconsin Dells, a kitschy tourist area known as the water park capital of the world.

One of the few homeowners to avoid bulldozing was Kim Mahoney, who negotiated to have her house raised from its foundation and moved to a new location.

On a recent evening, Mahoney drove around the largely vacant Foxconn site, pointing out where her home and her neighbors’ properties used to stand. The freshly widened roads and new bike paths around the massive site’s perimeter were mostly empty at 6 p.m. Weeds had overgrown the extensive landscaping adorning the roadway medians.

Mahoney and her husband built their dream home on the land in 2017, just months before news of the Foxconn deal surfaced. After a years-long negotiation with the village, the Mahoneys finally moved in December 2022.

“We didn’t want to stand in the way of 13,000 jobs and a $10 billion investment in our community. We just wanted to be treated fairly,” Mahoney said. Watching those promised jobs and investment evaporate after so many residents were displaced has been crushing, she said.

Soon after the initial grand promises, Foxconn began repeatedly changing plans for the site, throwing out so many ideas that locals lost track. First it said the LCD factory would be scaled down to produce smaller flat-panel displays. Then, even as houses were being demolished in early 2019, a Foxconn executive told <a href="https://www.reuters.com/article/uk-foxconn-wisconsin-exclusive/exclusive-foxconn-reconsidering-plans-to-make-lcd-panels-at-wisconsin-plant-idUKKCN1PO0DU" target="_blank">Reuters</a>: “In Wisconsin we’re not building a factory.” A <a href="https://www.washingtonpost.com/business/2019/02/01/foxconn-says-it-will-actually-build-factory-cites-conversation-with-trump/" target="_blank">conversation</a> with Trump prompted the company to backtrack again and recommit to an LCD plant.

As the months ticked by, Foxconn <a href="https://www.prnewswire.com/news-releases/briggo-coffee-announces-us-manufacturing-contract-with-foxconn-industrial-internet-300912565.html" target="_blank">announced</a> plans to build automated coffee machines at the site, and then <a href="https://apnews.com/article/technology-wisconsin-mexico-scott-walker-taipei-313ff82519f7ac551f1a149eebf82b4e" target="_blank">raised</a> the possibility of electric vehicles. Neither came to pass.

During the pandemic, the company made <a href="https://www.foxconnwiofficial.com/foxconn-in-wisconsin" target=_blank>face masks</a> at the site. It also <a href="https://news.medtronic.com/2020-06-18-Medtronic-and-Foxconn-Partner-to-Increase-Ventilator-Production" target=_blank>said</a> it would start producing ventilators with Medtronic, though that never happened. This year, Foxconn <a href="https://asia.nikkei.com/Spotlight/Supply-Chain/Foxconn-says-it-will-build-EV-batteries-in-Wisconsin-and-Ohio#:~:text=%22We%20will%20build%20capacity%20for,Liu%20told%20an%20investors'%20conference." target=_blank>said</a> it’s aiming to make batteries for energy storage in Wisconsin.

“Foxconn is sort of like this parable of overpromise and under-delivery,” said Nick Demske, a librarian who joined Racine County’s board of supervisors soon after the original investment deal was signed in 2017. At the 2018 groundbreaking, Demske remembers an elaborate model Foxconn presented of its future campus, with dozens of buildings, ponds and lush landscaping. “I kept saying to people … this is imaginary, it’s not real,” he recalls.

Asked about its changing plans, Foxconn said it “remains committed to driving its ongoing business operations and to finding new opportunities in response to market demand.”

Biden’s visit shows high stakes of $20 billion Ohio chip factory

What’s actually happening inside the four buildings Foxconn has constructed is a mystery to many local residents. The largest structure, dubbed the fab, was supposed to house the LCD factory, but manufacturing experts say it was never suited for that purpose. Foxconn in recent months has used the building for storage, according to a former employee who declined to be named, to avoid reprisals. The parking lot outside the building was empty on several recent workdays.

In a smaller building next door, Foxconn workers have been assembling computer servers for Google, according to former employees who spoke with The Washington Post. In September 2022, one employee told the <a href="https://www.jsonline.com/story/money/business/2022/09/16/foxconn-employee-says-workers-assemble-motherboards-have-little-do/8034547001/" target=_blank>Milwaukee Journal Sentinel</a> that there wasn’t enough work to keep people busy, prompting some to sit in the break room or go home early.

Foxconn said its business as a contract manufacturer “is based on customer demand and experiences on- and off-peak seasonal intensity.” It added that its workforce at the site has grown by 42 percent in the past three years.

Some in the community remain positive about the site’s prospects. Randy Ortloff, general manager of a nearby restaurant, the Charcoal Grill, said Foxconn provides some lunch and dinner business.

“Just today, we had a party of 10,” he said while wrapping up the lunch shift.

Politicians probably overpromised about the deal, he said, but he remains optimistic about other companies arriving. “It makes it easier to develop and bring other big companies in here because everything’s done,” he said.

Many others are dispirited. Sandy Dieck, a Mount Pleasant resident who works in education, said she was bothered by so many people losing their homes for what she sees as a mediocre result.

“I was initially hopeful that it was going to be something transformative in a positive way to the region, because I’ve lived here my whole life,” she said. But “it’s not the big employer it was supposed to be,” she added. “It just doesn’t seem like it’s doing what they promised.”

The deflated job opportunities are a big enough letdown for many in the community. But the real test comes in January, when Foxconn is supposed to start paying substantially more in property taxes to the village — about $26 million a year, until 2047.

Mount Pleasant’s borrowing to build Foxconn infrastructure left it with a “very high” debt load, equal to 570 percent of its annual revenue, compared with a median of about 250 percent for U.S. cities, according to Moody’s Investors Service. The town is counting on Foxconn’s property tax payments to pay its bondholders.

“The real risk for us is if they don’t start making those payments,” Gallaher said. “Obviously, we didn’t get the jobs. This has not been a culture change for our region. But if they don’t pay us, we’re in serious trouble.”

Local officials stress that Foxconn has met all of its tax and other financial obligations to date. And in a mark of confidence, Moody’s recently upgraded Mount Pleasant’s investment rating from negative to stable.

“If there were concerns about the ability to pay [bondholders], the rating would be much lower,” Moody’s analyst Natalie Claes said in an interview.

Foxconn said it abides by all laws and regulations where it operates. “We are the largest taxpayer in Racine County and it is a responsibility we take seriously,” the company said.

Trump isn’t expected to attend Wednesday’s debate in Wisconsin, where he was neck and neck with Florida Gov. <a href="https://www.washingtonpost.com/elections/candidates/ron-desantis-2024/" target="_blank" class="contextual_link">Ron DeSantis</a> (R) in a June <a href="https://law.marquette.edu/poll/category/poll-release/page/2/" target=_blank>poll</a> by Marquette University, with Trump at 31 percent and DeSantis at 30 percent among Republicans and Republican-leaning independents.

Dieck said she doesn’t plan to watch the GOP debate anyway because debates too often go “off the rails.” And Trump, she added, “makes a lot of promises he doesn’t follow through on.”

Finalist for a 2016 Pulitzer Prize as part of a WSJ team

National Institute for Health Care Management print award, 2017

Association of Health Care Journalists first-place award, 2015

Newswomen's Club of New York award, 2017

Cornell University, BA in English

Jeanne Whalen is a reporter covering business around the world. She previously reported for the Wall Street Journal from New York, London and Moscow. 

Jeanne Whalen

washpost

Trump promised giant Foxconn factory in Wisconsin that never materialized

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FOXCONN

For the Washington Post

The Washington Post

Trump promised this town a manufacturing boom. It never arrived.

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