Milwaukee Biz Blog: Walker, GOP legislators didn’t properly vet Foxconn deal

When the need is greatest, man will believe anything

Foxconn chairman Terry Gou and Gov. Scott Walker hold up a memorandum of understanding spelling out terms of the company’s Wisconsin investment.

Last updated on July 2nd, 2019 at 09:11 pm

Editor’s note: This article first appeared in the Capital Times.

There is a story about Andrew Carnegie that may or may not be true. He was asked to contribute to a new hospital in Ireland. He gave $10,000. But in spite of his generosity, the trustees announced that he was donating $100,000, a virtual fortune in 1902.

He was annoyed, but said he would give the larger donation if the trustees agreed to place a verse from the Bible on the hospital’s entrance. They agreed. The verse was: “They saw him coming and they took him in!”

Foxconn has a reputation for sharp dealings. That is understood given their past history. But former Gov. Scott Walker and his team were desperate to do a deal before the election. They were not looking to the projection, an optimistic one at that, that the state wouldn’t break even until 2043. They were not considering technological innovation that will make Foxconn’s products obsolete.

BizTimes Milwaukee published my futurist observations on this subject in August 2017.

My guess is that none of the political decision-makers negotiating the deal had the business experience to dig deeply. If so, they plainly did not use their common sense.

Foxconn planned to manufacture large panel screens for TVs in southeast Wisconsin, but Foxconn did not bother to ask Corning, a manufacturer of the necessary gorilla glass, if they would coordinate with them. Corning could not build the needed plant in Wisconsin unless it was subsidized. That alone might hint on the poor economics of the deal. There now is a glut of these screens on the market, so Foxconn plans to build smaller screens, yet they just “discovered” that labor is more costly in the United States than Asia. Who would have guessed?!

So Foxconn will build smaller screens for mobile phones, tablets, wearables, and notebooks. But Walker, Wisconsin Senate Majority Leader Scott Fitzgerald and Assembly Speaker Robin Vos never bothered to ask the basic questions that a futurist or business person would ask: Will these “products” continue their growth? Will technology make them obsolete? How will markets change in  five or 10 years?

Few companies adjust well to change. Chips replaced cathode tubes; the cell phone replaced the telephone. Does anyone use a Walkman now? IBM reinvented itself several times from a big computer company, to desk and laptop, to services like the cloud and AI, but it and a very few other companies who similarly reinvented themselves are outliers. My guess is that Foxconn’s size and top-down management style will make reinvention difficult.

The TV screen business is glutted. It will not be long before computer-driven light projection will be commercial. Folding TV screens are a reality now.

Foxconn needs to produce the most for the least in the fastest time for its customers. They apparently know what they are doing. But our naïve politicians do not. In fact, Fitzgerald and Vos were so anxious to shift the blame for this bad deal that they attacked recently elected Gov. Evers on rumors that Foxconn would change its plans. They would have been better off thinking about the future realities during early negotiations than now. Their short-term goals have made suckers of Wisconsin taxpayers.

We need no verse from the Bible to know that Wisconsinites have been taken.

Bob Chernow is a Milwaukee businessman and a futurist. He is former vice chair of the World Future Society.

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