Our Sunday Long Read this week is how Donald Trump and Scott Walker allowed Taiwanese tech company Foxconn to scam Wisconsin taxpayers out of billions with a massive 13,000 job tech factory that never got built and never will be, and left the state holding the bag for a generation.
HOPES WERE HIGH among the employees who joined Foxconn’s Wisconsin project in the summer of 2018. In June, President Donald Trump had broken ground on an LCD factory he called “the eighth wonder of the world.” The scale of the promise was indeed enormous: a $10 billion investment from the Taiwanese electronics giant, a 20 million-square-foot manufacturing complex, and, most importantly, 13,000 jobs.
Which is why new recruits arriving at the 1960s office building Foxconn had purchased in downtown Milwaukee were surprised to discover they had to provide their own office supplies. “One of the largest companies in the world, and you have to bring your own pencil,” an employee recalls wondering. Maybe Foxconn was just moving too fast to be bothered with such details, they thought, as they brought their laptops from home and scavenged pencils left behind by the building’s previous tenants. They listened to the cries of co-workers trapped in the elevators that often broke, noted the water that occasionally leaked from the ceiling, and wondered when the building would be transformed into the gleaming North American headquarters an executive had promised.
The renovations never arrived. Neither did the factory, the tech campus, nor the thousands of jobs. Interviews with 19 employees and dozens of others involved with the project, as well as thousands of pages of public documents, reveal a project that has defaulted on almost every promise. The building Foxconn calls an LCD factory — about 1/20th the size of the original plan — is little more than an empty shell. In September, Foxconn received a permit to change its intended use from manufacturing to storage.
Soon, the office began to fill with people who had nothing to do. Many just sat in their cubicles watching Netflix and playing games on their phones
Even the handful of jobs the company claims to have created are less than real: many of them held by people with nothing to do, hired so the company could reach the number required for it to get tax subsidy payments from Wisconsin. Foxconn failed at that objective, too: last week, Wisconsin rejected the company’s subsidy application and found it had employed only 281 people eligible under the contract at the end of 2019. Many have since been laid off.
Foxconn did not return repeated requests for comment.
It’s not unusual for either the Trump administration or Foxconn to make announcements that prove hollow. But for Foxconn, the show went on — for two years, the company, aided by the vocal support of the Wisconsin GOP, worked to maintain an illusion of progress in front of a business venture that never made economic sense.
That illusion has had real costs. State and local governments spent at least $400 million, largely on land and infrastructure Foxconn will likely never need. Residents were pushed from their homes under threat of eminent domain and dozens of houses bulldozed to clear property Foxconn doesn’t know what to do with. And a recurring cycle of new recruits joined the project, eager to help it succeed, only to become trapped in a mirage.
Months after the 2018 groundbreaking, the company was racing to hire the 260 people needed to receive the first tranche of payments from the lucrative subsidy package passed by then-Gov. Scott Walker. Recruiters were told to hit the number but given little in the way of job descriptions. Soon, the office began to fill with people who had nothing to do. Many just sat in their cubicles watching Netflix and playing games on their phones. The reality of their situation became impossible to ignore. Multiple employees recall seeing people cry in the office. “The best is when you’re in the elevator with somebody and then they just scream out of nowhere,” said an employee who experienced this several times. “They’ve had enough, because things don’t make sense here.”
“Imagine being in a job where you don’t really know if it’s real or not. Or you know it’s not real, but you don’t know it’s not real. It’s a constant thing you’re doing in your head day after day,” said one employee, who returned to the rented building Trump had spoken at, where workers had been assembling TVs, only to find the line shut down and the lights dimmed a couple of weeks after the photo op was over. “I think all of us were on the verge of a major breakdown.”
It was just the beginning. Foxconn would spend the next two years jumping from idea to idea — fish farms, exporting ice cream, storing boats — in an increasingly surreal search for some way to generate money from a doomed project. Frequent leadership changes, a reluctance to spend money, and a domineering corporate culture would create an atmosphere employees described as toxic. Many of the employees The Verge spoke with have since left the company, and all of them requested anonymity out of fear of retaliation. It has been a baffling ordeal for the people who thought they were building the Silicon Valley of the Midwest — “Wisconn Valley,” Walker called it — all the more so because so many others still believe the vision.
“All people see is the eighth wonder of the world,” said an employee. “I was there and it’s not real. I mean, it’s not. This is something I can’t talk about ever again, because people think you’re crazy, like none of this could ever happen. How could this happen in the US?”
The project was a disaster from the beginning.
Key Findings:
- Foxconn said it would build a 20 million-square-foot LCD complex. Instead, it constructed an empty building 1/20th that size it calls the “Fab.” Records show Foxconn recently changed the intended use of the building from manufacturing to storage.
- The company said it would aim to employ 5,200 people at the end of 2020, a number that was to grow to the promised 13,000 jobs. At the end of 2019, Wisconsin found Foxconn employed only 281 people eligible under the terms of the contract.
- Foxconn attempted to exploit a loophole in its contract with the state by hiring a sufficient number of employees to receive subsidies just before the end of the year. Employees were hired with no actual work to do. Many were laid off after the deadline passed.
- One recruiting program targeted foreign recent graduates on student visas. Employees say these workers were targeted because they would work longer hours for lower pay, and their immigration status was used as leverage.
- Employees describe a toxic workplace, where supervisors often berated and publicly humiliated employees. Many of the original Wisconsin hires have quit or been laid off.
- Despite publicly insisting it was building an LCD factory, as early as 2018, Foxconn employees had been asked to figure out a business plan for the company in Wisconsin.
- Foxconn’s search for a viable business led it to consider everything from fish farming to exporting dairy to renting storage space. Almost every idea collapsed in corporate infighting and a reluctance to spend money.
- Very little manufacturing ever occurred with the Foxconn project. Recently, the company set up a small manufacturing line for servers.
- Foxconn raced to finish buildings and set up an assembly line in time for a visit from Trump during the 2020 campaign. It obtained a temporary occupancy permit for the empty factory building and tried to finish a glass sphere, which had no clear business purpose, before falling behind.
It's a failure of Trumpian proportions, and more economic carnage like this is coming to your state in a Trump second term.
Let's make sure that doesn't happen.
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