A Message from President Mike Theo: This Is a Big Deal

 December 08, 2017

By any and all measures, Foxconn is a big deal. That deal, in the form of legislation with tax incentives and a contractual agreement with performance benchmarks, really couldn’t get much bigger. 

The promise and vision of the Foxconn project are big. The Taiwan-based company is the world’s largest contract manufacturer of electronics. The Wisconsin plan calls for a $10 billion manufacturing plant in Mt. Pleasant in Racine county where the company plans to manufacture liquid crystal panels for all kinds of electronic devices. Foxconn estimates creating 10,000 construction jobs to build the massive manufacturing plant as well as a tool-and-die plant, an assembly plant and a packaging plant — 32 million square feet in all on 1,200 acres of land. As

Gov. Walker likes to say, that’s the size of 15 Lambeau fields. Foxconn expects to eventually have 13,000 employees.

The state incentives for the project are equally big. The state has approved $2.85 billion in tax credits, the largest economic development investment in the state’s history. The state approved $1.35 billion in construction-related tax credits for up to 8,450 jobs through 2025, and another $1.5 billion in tax credits was also approved for up to 13,000 manufacturing jobs by 2022 and maintained through 2032. Those jobs must pay a minimum of $30,000 a year, with an average annual pay for all manufacturing employees of $53,875. The company estimates it’ll do $1.4 billion a year in business with Wisconsin companies. The legislation stipulates that the tax credits will only be provided based on performance and not promises. If the promised jobs are not created, the tax credits will not be provided.

The political repercussions of the mega-project will also be a big deal. With a few exceptions, legislative Republicans supported the tax incentives package while legislative Democrats opposed it. Gov. Walker will make his leadership and support for the project a centerpiece for his 2018 reelection campaign, while his Democratic opponent will surely make his or her opposition the cornerstone of their campaign. Since the project will be far from complete during this election cycle, the political debate will largely be a rhetorical war of words with no measurable way for voters to know who’s right and who’s wrong.

But there is one part of this big deal that’s not getting much attention — and it’s a really big deal. Where are all these construction, manufacturing, hi-tech and executive workers going to come from?

Wisconsin has a serious labor shortage, and it’s becoming increasingly acute. If unaddressed, the consequences will not only impact Foxconn but will also impact other projects, companies and industries across Wisconsin. Moreover, Wisconsin’s labor demographics will eventually result in an erosion of our state and local tax revenues, which will complicate government efforts to provide the public services, infrastructure and quality of life needed to support credible, successful marketing, workforce recruitment and worker retention efforts. The ugly downward economic spiral this could create is not far-fetched. 

Our workforce shortages are driven by three systemic issues: too few babies being born here, too few people moving here, and too many workers reaching retirement age here. In other words, our birth rates are low and have been declining for more than 50 years; our net in-migration has been, and is projected to remain, very weak; and we’re getting older, with many workers, particularly in key professions, nearing retirement. So, I’d call this a pretty big and bad deal.

Finding solutions won’t be easy, made more elusive by the labor demand of just building Foxconn much less staffing it. But the search for solutions has begun, and the WRA is at the forefront of one such effort.

The WRA, as a member of Competitive Wisconsin Inc. (CWI), is partnering in a new Be Bold Wisconsin effort to develop realistic and actionable strategies to increase in-migration of workers between the ages of 18 and 35 at a rate that will address the state’s current and projected needs. In addition, this effort will develop strategies to retain potential workers to keep them working in Wisconsin. The research into defining the need — for example, the number and type of workers needed and the demand curve timelines — and identifying the best practices of numerous existing regional efforts and efforts in other states, has already begun. The key will be recommendations that catalog our best qualities — our primary and secondary education systems, our relatively low cost of living and our above-average quality of life, to name a few — and package them into a comprehensive and sustainable worker retention and recruitment campaign. 

Like the Foxconn deal itself, the effort to keep and attract the quality and quantity of workers that Wisconsin needs will be as big as it is critical. It will require the coordinated efforts of our local communities and regional economic and workforce development organizations as well as our educational infrastructure, state government and certainly the private sector. The goal is to have recommendations ready for release, discussion and debate by the fall of 2018. 

There’s nothing like the promise of a big deal to compel focus. The big deal of Foxconn has helped us focus on Wisconsin’s labor shortages and the need for a plan to retain and recruit the workers of our future. And, needless to say, the positive impact of all of this will greatly benefit Wisconsin’s real estate industry and REALTORS®. That would be a big deal too.

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