Howes: Hello, GOP? Michigan is in hunt for Foxconn jobs

Daniel Howes
The Detroit News

Michigan’s chance to land a multibillion-dollar investment by Taiwan-based Foxconn Technology Group is for real. Quick, someone tell the foot-dragging Republicans in the state Legislature.

The world’s largest contract electronics manufacturer is considering Michigan, neighboring Ohio, Wisconsin, Pennsylvania and North Carolina for a $10 billion liquid-crystal display production site, Foxconn CEO Terry Gou told a shareholders meeting in Taipei, according to Reuters.

A decision could be made as soon as the end of next month. Confirmation that Michigan is in the mix comes as House Republicans continue to slow-walk the so-called “Good Jobs for Michigan” legislation that is designed to land big economic development prospects like Foxconn.

Speaker Tom Leonard, R-Dewitt, canceled a vote on the jobs package late Tuesday, accusing Gov. Rick Snyder of scheming with Democrats to pass the bills — allegedly at the expense of Republican priorities the speaker declined to identify.

Gives new meaning to the phrase snatching defeat from the jaws of victory. Here Michigan is in play to become a U.S. hub for the maker of Apple Inc.’s iPhone and other devices. Here’s a chance to diversify into high technology production, to land other promising investment prospects, to pump tax-paying jobs into the state economy. And House Republicans dawdle.

It would be comical if the stakes weren’t so potentially large. Notwithstanding the lament that there’s “no evidence” tax incentives help close big deals, economic development professionals across the state say Michigan too often is not competitive enough in the jobs sweepstakes.

They should know. Business, like the capital it deploys, tends to go where it is invited and stay where it is welcomed. Competitive tax rates help; talent and infrastructure help; a clear-eyed assessment of the competition helps. And incentives tied to incremental investment help, too.

The plan being pushed by Snyder, Senate Republicans and a wide array of business groups aims to change that. It would enable new employers investing in Michigan to capture some or all of the state income tax revenue associated with new hires, subject to annual audits and sustained investment.

“This time we go to America, it’s not just to build a factory, but to move our entire supply chain there,” Gou said, according to Reuters. “In the U.S., the state governors’ sincerity and confidence to attract investment … is beyond my imagination.”

It shouldn’t be, considering the numbers at stake. The first phase alone envisions a $4.2 billion investment in a plant that would employ as many as 5,200 — bigger, in employment terms, than most auto assembly plants operating today.

That’s why the governor and Detroit Mayor Mike Duggan flew to Japan earlier this month, The Detroit News first reported, to meet with Foxconn and other potential investors. The goal: to pitch would-be investors hard, and to leverage any meaningful interest into passage of the tax-incentive package two successive Republican speakers have effectively opposed by their inaction.

“The governor and I learned a lot in Asia, and there are going to be I believe a lot more opportunities,” Duggan said. “I don’t know what’s going to happen to Foxconn, but there will be a lot more opportunities, and I think we’re prepared for it.”

Foxconn’s LCD plant would be the first of its kind in the country, says a two-page document circulated among a small group of business leaders and state lawmakers at the Detroit Regional Chamber’s Mackinac Policy Conference earlier this month. The multiphase investment, which could begin unspooling with ground breaking for the first phase as early as the third quarter of this year, could total $11 billion and create 20,000 jobs.

A later phase for “advanced manufacturing factories” would invest another $700 million in multiple factories and create another 6,000 jobs, with an opening projected for the first quarter of 2020. Product lines would include precision machining, tool and die, and robotics and automation.

Foxconn has been in this position before. In 2013, the contract manufacturer pledged to invest as much as $30 million to build a plant in central Pennsylvania to employ as many as 500 workers. Four years on, the Washington Post reported earlier this year, there is no plant and none of the promised jobs.

Just days after President Donald Trump’s inauguration, the Post reported, Gou used a news conference in Taiwan to say precisely what the new president wanted to hear: the iPhone assembler with $136 billion in annual revenue planned to invest $7 billion in the United States to build a plant that would make liquid-crystal displays.

Yet Gou has a documented history of touting investments that often do not materialize as envisioned — in Pennsylvania, in Indonesia and in India, where a promised $5 billion investment over five years turned out to be less than advertised.

Would Michigan — or its Great Lakes rivals — fare better this time around, whatever additional pressure could be exerted by the Oval Office in the name of the “fairness” touted by the president? No way to know without first winning the prize.

“Always definitely felt we have a strong position,” Steve Arwood, CEO of the Michigan Economic Development Corp., said in an interview. “We continue to work on all these opportunities. We’re a total value proposition state.”


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Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.