A worker walks past shovels in a patch of dirt ahead of the groundbreaking ceremony for the Foxconn Technology Group facility in Mount Pleasant, Wisconsin, U.S. (Photographer: Daniel Acker/Bloomberg)

Foxconn Changes Could Dent Trump’s Re-Election Effort

(Bloomberg) -- President Donald Trump has heralded a $10 billion Foxconn Technology Group factory in Wisconsin as proof of his campaign to create more American manufacturing jobs, but fresh uncertainty about the project could dent his already fragile hopes of winning a state central to his re-election bid.

The Taiwan-based company said Wednesday it plans to shift the focus of a campus it’s building in southeast Wisconsin from manufacturing to research, while remaining committed to the 13,000 jobs it has promised to create there.

When the project was announced from the East Room of the White House 18 months ago, it was viewed as a political triumph for both Trump and then-Wisconsin Governor Scott Walker.

The reality has proved more complex.

If the move away from manufacturing significantly cuts into the number of blue-collar positions, it could fuel criticism of a project already unpopular with many voters. There has been deep division in the state over the $3 billion in subsidies that were pushed by Walker, who personally lobbied Foxconn Chairman Terry Gou for the factory.

Foxconn Changes Could Dent Trump’s Re-Election Effort

Walker, once considered a rising star in the Republican Party, was defeated in the November election.

The manufacturing campus, about 25 miles south of Milwaukee, had been presented to the state as a place to build screens for car dashboards, aviation and next-generation medical devices. The company is the biggest assembler of Apple Inc.’s iPhone.

‘New Realities’

“The global market environment that existed when the project was first announced has changed,” the company said in a statement. “This has necessitated the adjustment of plans for all projects, including Wisconsin. While the project’s focus will be adjusted to meet these new realities, the Wisconsin project remains a priority for our company.”

Democrats were quick to criticize.

“Trump claimed credit for Foxconn’s planned investment in manufacturing in the United States, repeatedly pointing to Foxconn’s promise as evidence that his economic agenda was working,” the Democratic National Committee said in a statement. “But now, Foxconn is looking at moving its manufacturing to China instead.”

Martha Laning, chairwoman of the Democratic Party of Wisconsin, called the deal “reckless" from the beginning. “Despite multiple red flags throughout the negotiation process, Wisconsin Republicans put taxpayers on the line,” she said in a statement. “They charged forward with this deal with themselves and their political futures in mind, not the people of Wisconsin.”

An administration official, who was granted anonymity to discuss the matter, said the White House would be disappointed if Foxconn cut back its investment.

2020 Impact

Public perceptions of the massive deal is likely to play a critical role in Trump’s 2020 re-election plans in Midwest states and especially in Wisconsin, where he beat Democrat Hillary Clinton in 2016 by less than 1 percentage point.

Even without the uncertainty of the Foxconn project, Trump faces a tenuous situation in the state, according to the most recent polling in the state.

A Marquette Law School Poll earlier this month showed 49 percent of registered voters say they plan to “definitely vote for someone else” other than Trump in 2020, while 27 percent say they would definitely vote for him. Similarly, 46 percent strongly disapprove of how he is handling his job as president and 30 percent strongly approve.

“Trump faces a challenging electoral situation in Wisconsin," said Charles Franklin, the poll’s director.

While Trump’s support remains substantial among Republicans, with 60 percent strongly approving and 23 percent somewhat approving, independent voters have slipped away and 42 percent of them now strongly disapprove of his job performance.

“Looking to 2020, he needs to hold that GOP base but also win back some significant independent support," Franklin said.

Tax Breaks

The state tax breaks and other incentives represent what Walker called the largest economic development project in Wisconsin’s history. In exchange, the company has promised to create jobs with an average salary of nearly $54,000. Construction is underway at the site in Mount Pleasant, which is near the Illinois border.

If both sides deliver fully, the economic package for Foxconn would cost roughly $230,000 per job.

Walker, a two-term Republican governor, narrowly lost to Democrat Tony Evers, the state schools superintendent and a critic of the Foxconn subsidies. A Marquette poll taken before the election showed opinion nearly evenly split among registered voters on whether the state is overpaying the company.

The Wisconsin Economic Development Corporation, a public-private agency that helped woo the company, said in a statement that taxpayers will be unharmed.

“WEDC’s performance-based contract with Foxconn provides the company the flexibility to make these business decisions, and at the same time, protects Wisconsin’s taxpayers," the agency said. “Foxconn will not qualify for tax credits until, at the earliest, 2020, and then only if the company meets its annual job creation and capital investment requirements. Our ongoing discussions with company officials reflect Foxconn’s continued commitment to the state of Wisconsin.”

©2019 Bloomberg L.P.