Foxconn’s Wisconsin plant will take at least 25 years to break even

This analysis was done by the non-partisan Legislative Fiscal Bureau.

As per a legislative analysis of Wisconsin’s $3 billion incentive package to Foxconn’s proposed LCD screen plant in the states, it will take at least 25 years for the state to break even, if it were to go ahead with this project.

Foxconn hopes to install a $10 billion plant in 2020 at a 1,000-acre site in southeastern Wisconsin and state leaders, including Republican Governor Scott Walker, have touted the incentives as a boon because of the jobs that will be created.

However the plan has attracted strong criticism since it is seen as being very expensive and potentially harmful to the environment.

According to officials, Taiwan’s Hon Hai Precision Industry Co Ltd, also known as Foxconn, will employ only 1,000 people in the second half of 2017; this is however forecast to grow to 13,000 by 2021.

Based on estimates from the non-partisan Legislative Fiscal Bureau, the state of Wisconsin will not receive a return on its investment until 2042.

Wisconsin Representative Peter Barca, the state Democratic minority leader from Kenosha, stated the report proves legislators will need more time to examine the deal.

“The fiscal analysis released today creates new questions on the state’s cash flow and on the state’s ability to ensure a good return on the investment for taxpayers,” said Barca in a statement.

The Legislative Fiscal Bureau’s projections are contingent on Foxconn following through on several of its commitments, including an average annual salary of about $54,000, said Rob Reinhardt, a bureau program supervisor.

“Any cash-flow analysis that covers a period of nearly 30 years must be considered highly speculative,” stated the report.

The analysis is based on Foxconn reaching its threshold of 13,000 employees, said Reinhardt. However, if the actual employment number was 3,000, the break-even point would be so far into the future that it is “silly to talk about”, he said.

According to the report, even if 10% of the projected new jobs were filled by Illinois residents, which incidentally is a concern of several lawmakers, the breakeven point for the state will not be until around 2044.

Wisconsin is likely to see a positive cash flow in the first three years of the project if there is a a delay in state payments; this will also positively impact tax revenues from construction workers, said Reinhardt.

Categories: Creativity, Economy & Finance, Entrepreneurship, HR & Organization, Regulations & Legal, Strategy

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