Foxconn

[boondocks]

I heard about it the other day not real impressed. I live in far northern Wisconsin most around here consider this a separate state. Views up here are way more conservative and from talking around a little most were upset with the deal. That plant being that far south I don't think is gonna do the "great" boost in economy as they say. I know our state prides itself on industry but this deal seems to benefit foxconn way more than the state for now. I guess we'll wait and see. Just another government hack job that will get lost in space in a couple years and everyone will forget about except those who got heavy pockets from the deal.

Looks like you may be on to something. Apparently they got a similar deal from Brazil and then cut and run: https://www.reuters.com/article/us-foxc ... CP20150413

 

[Jogeephus]

When did it become the government's job to pick the winners and losers in business? I've never seen any business venture the government has gotten involved in that worked like they said it would. This sounds similar to the big ethanol plant Obama stuck here in Georgia a few years ago. Difference here was he used tax dollars to build the plant and the product was heavily subsidized with tax dollars and the people running the plant were working off grant money. When this money dried up so did the plant and the founders walked off with a bank roll we are stuck with an ethanol plant that didn't work. Just like the one Jimmy Carter put in with tax dollars years ago. Matter of fact, it is the same plant. They just moved it to a new location.

The Trump deal will probably fall through but the only thing I see being lost are projected opportunity taxes. If they don't build then they don't get a sales tax exemption of materials. If they don't hire they don't get the payroll tax credits. So compared to most government sponsored projects it looks like Trump made a great deal even though it sucks. It just doesn't suck as bad as most gov't deals.

 

[boondocks]

I asked that we discuss the economics (rather than politics per se) of these subsidies, not only because of the forum rules, but also because there's no question politicians of all stripes have engaged in them over the years. Here, the plan is drawing criticism from experts on both sides of the aisle: https://www.nytimes.com/2017/07/27/busi ... .html?_r=0
I guess the larger question was, should a (foreign-owned, right?) business be subsidized to such a large extent? It appears the government in some possible scenarios here could ultimately be the de facto employer (essentially paying all or most of the job costs per year). That gets to Jo's point about picking winners and losers. Eg, the next town over from us subsidized a small restaurant to go in (even though other local eateries were hurting). The new place folded within weeks.
I'd rather see the issue fixed by having truly level playing fields in any trade agreements.
As an aside, here's some good data on subsidies for businesses:
http://www.goodjobsfirst.org/sites/defa ... report.pdf

 

[Nesikep]

I gotta love that new standard for excellence... "It doesn't suck as bad as before"

I really wonder about our town council... In a town where everyone is hurting, eateries especially, they keep giving business licenses to new coffee shops, etc.. RIGHT NEXT DOOR to each other... And yes, there are all sorts of small business grants, hiring subsidies, etc, so the guy who wants to do it right, without gov't intervention is right away playing with a handicap.

 

[Smoothy]

I agree boondocks. That's my main concern. Investing in a foreign company for 15 years seems a little sketchy to me. For one technology changes almost by the minute these days so what's the long term outlook on this kind of facility. Yeah people use this style of phone now but who knows what is to come. Only 9 years ago the smart phone hit the market and look how it's changed already. And on the case of being a foreign company I guess I'd feel way better if was American owned because I'm thinking when these guys see either a change in technology or sales start to slide it's close the doors and see ya around. They have no obligation to stay it'll be pack the jet and head home across the pond.

 

[Nesikep]

On companies of that size, what constitutes an "American" company? you have shareholders from all over the place.. CEO's come and go, etc.

 

[Jogeephus]

On companies of that size, what constitutes an "American" company? you have shareholders from all over the place.. CEO's come and go, etc.

Yep. One world order and all that dandy stuff. I imagine those in the know - I won't say politicians since we've been asked not to talk politics on a subject whose root problem is political - bought up some shares before this announcement.

In reading one of the links it looks like this thing will never get off the ground since it looks like the Chinese are trying to take over the smartphone and tablet market by offering these items at prices much less than what you can buy an Apple or a Samsung. Their biggest obstacle is the perception of the poor quality of their product. If they can ease this fear or at least mitigate it with a much lower price for the same product it won't matter what anyone does because people want a bargain so why pay a $1000 for an Iphone when you can get something similar made in China for $500. That, I believe is what capitalism is all about. The person who is the most efficient wins the race but its awfully hard to run fast when you have a big fat bureaucrat riding on your back and no amount of incentive will make him run faster as long as he is caring all this dead weight. That's just how it is.

 

[Nesikep]

The thing with phones is that quality really isn't a big deal... usually you're going to drop it, drive over it, get it wet, etc anyhow, good or bad product it'll break... And it's going to be obsolete in a year or two anyhow... A lot of people are paying these stupid prices for cell phones because they're a status symbol.. It used to be a Ferrari, but since they can't afford that, they get an overpriced cell phone.

 

[HDRider]

I see it as a no lose. They gave up sales tax and property tax, but gain taxes from workers, and workers get money to spend which gens sales tax and property tax.

There should be no corporate income tax any way.

All the states are offering deals like this. It is a good thing,

 

[TexasBred]

I see it as a no lose. They gave up sales tax and property tax, but gain taxes from workers, and workers get money to spend which gens sales tax and property tax.

There should be no corporate income tax any way.

All the states are offering deals like this. It is a good thing,

This has pretty much become the norm. Places not offering these incentives have NO chance of getting any large major corporation to relocate to their area. If it's a viable company with a successful track record the cities stand to make many times the amount of the incentives over a period of years.

 

[boondocks]

I see it as a no lose. They gave up sales tax and property tax, but gain taxes from workers, and workers get money to spend which gens sales tax and property tax.

There should be no corporate income tax any way.

All the states are offering deals like this. It is a good thing,

This has pretty much become the norm. Places not offering these incentives have NO chance of getting any large major corporation to relocate to their area. If it's a viable company with a successful track record the cities stand to make many times the amount of the incentives over a period of years.

Big IF, though, right? http://www.goodjobsfirst.org/states/ohio
Kinda makes for a race to the bottom--states bidding against each other and worker being pitted against worker. And seems inequitable to favor some companies over others. I'd like to see an unbiased meta-study of the extent to which these deals are net-revenue-positive for states. (As you can see from some of the above links, and lots more online, Foxconn does not have a good history of delivering what they promise).
But getting back to the underlying problem, doesn't at least some of it go back to trade agreements that disadvantage countries who pay a living wage and have environmental and workplace safety standards? Why are we putting ourselves in a position to have to compete against people who can and will work all day for a bowl of gruel and a tarp over their heads? (I don't begrudge them the gruel and the tarp!).

 

[TexasBred]

I see it as a no lose. They gave up sales tax and property tax, but gain taxes from workers, and workers get money to spend which gens sales tax and property tax.

There should be no corporate income tax any way.

All the states are offering deals like this. It is a good thing,

This has pretty much become the norm. Places not offering these incentives have NO chance of getting any large major corporation to relocate to their area. If it's a viable company with a successful track record the cities stand to make many times the amount of the incentives over a period of years.

Big IF, though, right? http://www.goodjobsfirst.org/states/ohio
Kinda makes for a race to the bottom--states bidding against each other and worker being pitted against worker. And seems inequitable to favor some companies over others. I'd like to see an unbiased meta-study of the extent to which these deals are net-revenue-positive for states. (As you can see from some of the above links, and lots more online, Foxconn does not have a good history of delivering what they promise).
But getting back to the underlying problem, doesn't at least some of it go back to trade agreements that disadvantage countries who pay a living wage and have environmental and workplace safety standards? Why are we putting ourselves in a position to have to compete against people who can and will work all day for a bowl of gruel and a tarp over their heads? (I don't begrudge them the gruel and the tarp!).

I really haven't read up on "Foxconn" but I know Texas has had many companies relocate here from California, NY and other states all getting tax incentives to do so, all extremely sound financially and all having plans for large construction of new facilities and thousands of new jobs. But if you lower your standards and start trying to get those "sub prime" companies to come to town with the promise of $$$$ you're just asking for a good screwing.

 

[HDRider]

Sometimes it just doesn't work...

Unfortunately for Dell, having not met the terms of their agreement with Forsyth County, will need to repay every penny of the $281 million they received in 2005.

 

[boondocks]

Sometimes it just doesn't work...

Unfortunately for Dell, having not met the terms of their agreement with Forsyth County, will need to repay every penny of the $281 million they received in 2005.

Good for the "foresight in Forsyth"!

Locally, a city put in a new multimillion $ water system to ensure a large plant would stay. (They said they needed lots of cheap municipal water to stay competitive). The company left after a few years and I guess there weren't "clawbacks" in place, so the city is stuck with a huge eyesore empty building, and a bonded water system that the (much-reduced) taxpayer base doesn't need but will be paying off for generations....