The recent Foxconn announcement continues to ripple through the state as more details are released. Wisconsin is at the start of the journey in determining the economic opportunities for both businesses and consumers. Bankers should keep three things in mind as this development unfolds:
One: There is something about Wisconsin
It has been reported that Ohio offered $4 billion in incentives to Foxconn, a much higher offer than Wisconsin. Michigan was also in the running, along with other states like Pennsylvania, Illinois, Indiana, and Texas. So, why Wisconsin? A strong connection between Foxconn and the Badger State was apparent throughout the bidding process.
For example, Foxconn Chairman Terry Gou has specifically praised Governor Scott Walker and House Speaker Paul Ryan on their responsiveness. It should be noted there is even a Wisconsin banking connection; Johnson Bank’s Jim Popp was present at the White House for the Foxconn announcement as one of several business leaders invited to the event.
According to the Milwaukee Journal Sentinel’s exclusive interview with Gou, here are the main reasons Wisconsin was chosen.
- Foxconn has corporate partners and potential partners that already are based in Wisconsin. Gou specifically mentioned GE Healthcare, Rockwell Automation, Johnson Controls and Harley-Davidson.
- Wisconsin’s geographic location is advantageous with Wisconsin and Milwaukee at the center of the United States. The state also is close to Chicago, a global hub.
- Wisconsin has the transportation and logistics to accommodate the company’s growth including access to railroad lines, Milwaukee’s General Mitchell International Airport and Chicago’s O’Hare International Airport.
- Wisconsin’s tradition as a manufacturing mecca is appealing to Gou, who believes the state can rise again as a beacon of advanced manufacturing by deploying robotics and artificial intelligence.
- The state has strong university and technical college systems that can be leveraged to develop the high-tech workforce the company will need.
- The state’s proximity to Lake Michigan provides an abundant supply of fresh water, which is a critical component in the production of glass panels.
- The availability and reliability of energy in the state will be a key asset for the company.
Two: Fiserv is part of the Wisconn Valley Special Session
Gov. Walker is calling a special session for Tues., Aug. 1 focussed on the incentive package for Foxconn. Fiserv is also part of the measure as lawmakers consider incentives to keep the Brookfield-based firm headquartered in the state.
The bill would authorize WEDC to certify enterprise zone tax credits to a financial services technology business after the company completes a competitive corporate location process and retains at least 93 percent of its full-time employees in the state. WEDC has confirmed that this is aimed directly at Fiserv. Read the initial bill draft.
Three: Foxconn is just the tip of the iceberg; Wisconsin bankers should look deeper
At a glance, Foxconn’s core business will have an impact on Wisconsin’s economy but Wisconsin’s bankers also need to keep an eye on the businesses that will support Foxconn. Ernst & Young prepared an analysis highlighting a more detailed picture of Foxconn’s additional economic impact, which goes beyond the reported $10 billion facility and 13,000 jobs. Here are just a few things to watch for:
- Including jobs at the Foxconn factory, the project would support more than 34,000 jobs throughout the state, including suppliers and companies that sell to the plant and to suppliers.
- Four hundred jobs would come from a glass manufacturer that would be "co-located" within the plant.
- The total impact on state economic output would be about $11.11 billion, nearly half of which would be state GDP (gross domestic product).
Where are some of the services coming from? According to the report, indirect jobs include:
- Manufacturing (1,300 jobs)
- Trade and transportation (5,000 jobs)
- Business services (4,000 jobs)
- Professional and financial services (4,000 jobs)
- Health care and education (3,000 jobs)
As previously indicated, this is just the start of the journey in discovering the opportunities for Wisconsin. Bankers are uniquely positioned to support both new and existing businesses and help the state thrive.