Foxconn says it will build flat screens in Wisconsin after Trump call

Manufacturer had considered dropping plans

By CHRIS ISIDORE, CNN BUSINESS
Andy Manis/Getty Images

President Donald Trump breaks ground with Wisconsin Gov. Scott Walker (2nd L), Foxconn CEO Terry Gou (2nd R), U.S. House Speaker Paul Ryan, R-Wis., (R) and Christopher “Tank” Murdock (L), the first Wisconsin Foxconn employee, at a ceremony…

(CNN) - Foxconn says it is returning to its plan to make flat screen panels at a new plant in Wisconsin following an appeal from President Donald Trump.

The Taiwan-based electronics manufacturer caused a storm this week when it said it was considering dropping plans to build the panels at the facility, even though it said it was still anticipating hiring 13,000 workers. The company has been promised $4 billion in state and local incentives to develop the Wisconsin facility.

In a statement Friday, Foxconn said that after a call between Trump and its chairman, Terry Gao, the company has decided to stick with its manufacturing plans after all.

"Our decision is also based on a recent comprehensive and systematic evaluation to help determine the best fit for our Wisconsin project," the company said.

A Foxconn spokesperson said she was not aware of any additional incentives or inducements that were offered to the company in the conversation with Trump.

She also could not say how the decision affects the mix of work to be done on the site, or how many of the hired workers would be involved in manufacturing. She also could not say how many employees would be tech workers and engineers doing research and development.

Earlier this week, Louis Woo, special assistant to Gou, told Reuters that the company planned to create a "technology hub" in Wisconsin rather than a factory promised by Trump and former Wisconsin Governor Scott Walker. The facility would largely consist of research facilities along with some packaging and assembly operations. Woo said three-quarters of Foxconn's eventual jobs will be in research and development and design, not blue-collar manufacturing jobs. He said it would not be a factory.

Foxconn said changing global market conditions had made it reconsider plans to build flat screens in Wisconsin. It said that it would do some manufacturing on site, but would only commit to less extensive products, such as high-precision molding and system-integration assembly. It did not deny the statements made by Woo, including his comment that the Wisconsin plant could not compete in making flat screens.

Those comments caused a stir because when Foxconn announced plans to build flat screen panels in Wisconsin, it was heralded by President Trump and his supporters as proof of manufacturing jobs moving back to the United States. Critics said the $4 billion package of tax breaks and incentives Foxconn received -- the richest ever offered to a foreign business to locate a plant -- was an example of corporate welfare.

Trump on Friday hailed the company's decision to resume plans to build flat screens in Wisconsin.

"Great news on Foxconn in Wisconsin after my conversation with Terry Gou!" he tweeted shortly after the announcement.

Even still, Foxconn has scaled back plans from what was originally announced in late 2017 when it indicated it would build large flat screens, the types used in big screen televisions and other high end product. By groundbreaking last summer, it had shifted to much smaller flat screens, the types used in consumer electronic products like appliances and autos. It is the latter product, the small screens, that are back in its plans as of Friday.

And Foxconn could not say how many of the flat screens it will build in Wisconsin under the latest plans as compared to its original announcement.

Some experts following the facility's development have doubts about whether Foxconn will ever follow through on completing the Wisconsin plant. Steven Deller, an economics professor at the University of Wisconsin, laughed when told of the latest announcement Friday afternoon, pointing to other promised Foxconn plants that were never built.

"I think they're playing games," he said. "They've done the same thing to India, Brazil and Pennsylvania. They have a track record of making promises and not living up to them."

Deller said from the beginning of the negotiations it made zero sense to build a flat screen plant in the United States.

"These kinds of screens have become a commodity," he said. "The only way to be competitive is to drive costs down as much as possible. That means going to Asian markets for cheap labor. The R&D component, that makes sense. If you're looking at expanding your product line, it makes sense to do it in the US."

CNN's Betsy Klein contributed to this story.

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