A former Foxconn executive tries to explain what went wrong ...

Wisconsin promised more than $4 billion in tax credits to Foxconn, cleared land by pushing people out of their homes, and diverted water from ... Skiptomaincontent clock menu more-arrow no yes mobile PhotoIllustrationbyTheVerge Filedunder: Policy AformerFoxconnexecutivetriestoexplainwhatwentwronginWisconsin AplantoreviveUSmanufacturinggonewrong By NilayPatel@reckless Apr19,2022,10:30amEDT Sharethisstory SharethisonFacebook SharethisonTwitter Share Allsharingoptions Share Allsharingoptionsfor: AformerFoxconnexecutivetriestoexplainwhatwentwronginWisconsin Linkedin Reddit Pocket Flipboard Email AlanYeungisaprofessorofentrepreneurshipattheUniversityofWisconsin-MadisonandtheformerheadoftheFoxconnprojectinWisconsin. Ifyoudon’tquiteremember,theFoxconnprojectinWisconsinwasannouncedin2017asamassivedealtobuildthefirst“Generation10.5”LCDfactoryinNorthAmerica.ItwasalsooneofthefirstbigmomentsintheTrumppresidency,completewithPresidentTrumpholdingagoldenshovelatalavishgroundbreakingceremonywherehesaidthefactorywouldbe“theeighthwonderoftheworld.” Thedealwassupposedlyquitesimple:Foxconn(thecompanybestknownformanufacturingtheiPhone),PresidentTrump,andWisconsinGovernorScottWalkerallannouncedthatFoxconnwouldbuilda20-million-square-footdisplayfactoryinWisconsinthatwouldbring13,000manufacturingjobsbacktotheUnitedStates.Wisconsinpromisedmorethan$4billionintaxcreditstoFoxconn,clearedlandbypushingpeopleoutoftheirhomes,anddivertedwaterfromLakeMichigantosupportthefactory.AlotofpeoplegotexcitedaboutthispromisedAmericanmanufacturingrenaissanceandleftgoodjobstojoinit. ButitturnedoutthatwhileFoxconnwasputtingonagreatshow,noLCDfactorywasactuallygettingbuilt,eventhoughFoxconnkeptsayingitwashappening. VergeinvestigationseditorJoshDziezaandtherestoftheVergeteamwrotemorethan20storiesaboutFoxconn,thefactory,the“innovationcenters”thecompanypromisedtobuildaroundWisconsin,andthepeopleinWisconsinwhofeltbetrayedwhenitneverhappened.JoshwonbothDeadlineClubandSidneyawardsforhisreportingonFoxconn. AstheFoxconnexecwhowasinitiallyinchargeoftheproject,Yeungwasoneofthecentralcharactersinthisentirestory.JoshandIbothtriedtointerviewhimmultipletimeswhilethiswasallongoing,andhealwaysturnedusdownsinceFoxconnhasapolicyofnottalkingtoreporters.AlanhassinceleftFoxconnandwrittenabookcalledFlyingEagle—thecodenameoftheproject.WhenhereachedouttocomeonDecoder,wecouldn’tsayno. Thistranscripthasbeenlightlyeditedforclarity. NilayPatel:AlanYeungisaprofessorofentrepreneurshipatUniversityofWisconsin-Madison,andwastheleadontheFoxconnprojectinWisconsin.WelcometoDecoder. Thankyouforhavingme. NP:Iamveryexcitedtotalktoyou.IalsohaveJoshDziezahere,thereporteratTheVergewhocoveredFoxconnmostextensively.WelcomeJosh. JoshDzieza:Hi.Goodtomeetyou,Alan. Hey,Josh. NP:Alan,youhavewrittenabookaboutFoxconninWisconsincalledFlyingEagle.Tellusaboutthatbook. Iwrotethebookinthepastyearandahalf,partlybecauseIthinktherearealotofuntoldstoriesthatneedtobetold.IwantedtosharesomeoftheinterestingbackstoriesandnarrativesofthetirelesspeopleandpatriotswhoputinagreatdealofworktobringthisinvestmentintotheUnitedStates,andtoWisconsin. NP:JoshandIcoveredthisprojectextensivelyatTheVergethewholetime,andwehavebothreadthebook.Ifyoujustreadthisbookcovertocover,youwouldendfullybelievingthatthereisaGeneration10.5LCDfactoryinsoutheasternWisconsin.Thereisnotafactory.Whathappened? Well,ifyoureadthebook—whichyoudid,andIthankyouforthat—itstoppedrightaroundtheendof2017.Ithinkeverybody,includingmyself,fullybelievedthattheGen10.5projectwouldhappen.Agreatdealofworkwentinthere,aswastheplanandtheintent.Bytheway,IwanttothankthetwoofyouandTheVergeforcoveringthestorysoextensively.Noteverybodyhadactuallyputinthetimeandefforttodothat.Ialsowanttoclarifythat,upuntilthispoint,IhavenottalkedtothemediaorTheVerge. NP:Wetriedtotalktoyoualot,andyoualwayssaidno. Yes,wehaveverystrictpolicy,especiallygivenmyroleatthecompanyandmyresponsibilityfortheproject.Idoappreciateyoutakingtheinterestanddoingveryextensivereportingonthat.Icommendyouforthat.Alotofthefactsanddatayousharearemorecompleteandextensivethananyotheroutletorreportorganization.Thatisareallygreatcontributionandgreatdiscourse. NP:Joshdidallthework,socongratulationsgotohim.Iappreciatethecompliment,butIjustwanttogetbacktothis.YouwroteanentirebookaboutFoxconnWisconsinthatendsbeforethethinghappens.Itisallabouthowthedealcametobe,butitdoesnotaddressthefactthatitwasneverexecuted.Thereisnofactory.Whynotaddressthatinthebook? “Thereisnofactory.Whynotaddressthatinthebook?” Thatwillbethenextbook.Originally,therewasgoingtobeonlyonebook,butitwouldjusttakewaytoolongandwouldbeverythick.WhatIwouldliketodofornowissharethefirstchaptersofthestoryandhowthatcameabout.Ithinkyourreportsovertheyearshavetalkedabouthowpoliticalthisendeavorandprojecthavebecome.Ithadneverbeenintendedtobepolitical,butunfortunately—onceitgotintothathighprofile—itturnedverypoliticalandbecameabitofafootballlater.Thatnarrativeandalotofthestorieswillcomeinthesecondbook. JD:Youwerethereduringthecrucialperiodwhenthefactorydidnotgetbuilt,andyoumusthavesomeideasaboutwhythatdidnothappen.Evenifyouhavenotwrittenthesecondbookyet,couldyoutelluswhy,inyourview,thereisnotafactoryinWisconsin? IamwritingthatsecondbookanditshouldcomeoutsometimethisyearwiththetitleWisconnValley.Quitehonestly,mostpeopledonotwanttomentionthat,andthescienceparkwillprobablyhaveitsnamechangedbacktoFoxconnSciencePark.Longandshortanswer,Josh,isthatthebusinessconditionandtheinvestmentclimatechangeddramaticallyinWisconsin.Ihaveexpandedonthatalittlebitinmypubliccommentsthelastfewweeks,butIwillprobablyhavealotmoretoshareinthesecondbook.IfyouinvitemetocomebackIcantellyouabitmorelater. Intheglobalsense,ChinesemanufacturerswerefloodingthemarketwithbigpanelsbecausetheyhavealotofGen10.5—ormaybeevenaGen11—fabscomingonstream.AlotofthoseproductswereshippedbasedontremendousamountsofsupportandsubsidieswithinmainlandChina.EventheFoxconnfabinsouthernChinahadatoughtimecompeting. Thatwouldbethemarketside,butinthelongterm,itwouldabsorballthevolume.ThecompanyhadeveryintentiontobuildboththeGen6andtheGen10.5fab.Ithinkwehaveshareditpubliclythatifthemarketconditionisnotripefora10.5,wewillbuildGen6first,andthenwewillfollowonthe10.5. ThebusinessenvironmentandinvestmentclimatechangedalotinWisconsin,partlybecausewedidhaveachangeofleadershipwithinthegovernor’smansion.Thatisnottheentirereason,butitisabigchunkofit.Ifyouremember,therewerealotofcollaborationsbetweenGovernorWalkerandtheadministrationwiththecompanycalledFoxconn.Weappreciatethatandwearegratefulforthesupport.WearealsoverythankfulforthebipartisanshipthatweencountercomingintonotjustWisconsin,buttheotherstatesaswell.Youbothreadmybook;IhavecomplimentedalotofthatwithinWisconsin,goingupanddownI-94.ThemayorsandthecountyexecutivesofMilwaukeeandKenoshawerealsoverysupportive. “Everypoliticianwantstoseeagiantfactorywith13,000jobsintheirbackyard.” NP:Ibelievethat.Everypoliticianwantstoseeagiantfactorywith13,000jobsintheirbackyard.JoshwrotethestorywherehevisitedallofFoxconn’sinnovationcentersthatwereemptybeforetheelection—beforeWalkerwasvotedoutandEverswasvotedin—andtherewasnofactory.IwouldtellyouthatmaybethepeopleofWisconsinsaid,“Theguywhomadeusthesepromises,ScottWalker,didnotdeliver,sowevotedinanewperson.”TheelectionofTonyEversisnotwhyFoxconndidnotbuildafactory,becausetheywerealreadynotbuildingafactory. Actually,thatisnottrue.Iamnotpraisingalltheseattributesorreasoningbehindtheelectionhere.Whenyouhaveacompanycominginmakinganinvestment—whetheritis$100millionor$10billion,inthiscase—thekindofattackthatwereceived,almostfromdayoneafterthecontractwassigned,wasbasicallyunprecedented. NP:Thatattackwasrootedintheexactthingyousaid,whichisthatthemarketforLCDswasbeingoverwhelmedbyChinesesuppliers.NoonecouldseethebusinesscaseforanLCDfactoryinWisconsinathigherlaborratesandwithoutthesupplyofworkerstostaffsuchafactory.Thecriticismwasthatthisdoesnotmakeeconomicsense. Iwouldjustanswerthatpointbysayingacouplethings.Wehaveconsultantsandadvisors—andotherstateshavehiredthem—butnobodyreallyhasacrystalball.Themarketchangesdramaticallyintermsofsupplyanddemand,anditisverytechnical. ListentoDecoder,ashowhostedbyTheVerge’sNilayPatelaboutbigideas—andotherproblems. Subscribe here! Whenyougobacktowhatwesaidbefore,Istillbelievetoday—andfiveyearsfromnow—thereisatremendousneedforaTFTLCDfabintheUnitedStates.WhenwebuiltinWisconsinandsignedthecontract,peoplebecamealotlesssupportive,notbecausetheydidnotwanttheinvestment,butbecauseitbecamepolitical.Articlescameoutattackingussothattheymayscoreapointortwo,andthatwasnotveryhelpful. Ifaftertheelection,theyalldieddownandeverythingwentbackto,“Let’sworktogetherandmakeithappen,”wewouldbeveryhappy.Thatwasn’treallythecasethen,andweknowwhy.Therewasanotherelectioncomingupwiththebiggestsupporterofall,whichwasPresidentTrump,sowelivewiththat.Thecompanyhasbeenveryreservedandconservativeintermsofmakingstatements.Wedidworkwiththeincumbent,andwehavesaidnothingnegativeaboutthepriororthelateradministrations.Ithinkthatremainstobethesame. Iwillcomebacktowhatyousaidabouttheinnovationcenter,becausethatwasmyidea.Wehadtalkedabouthowtobuildupthecapability,andhowtoleverageallotherplacesandlocationswithinWisconsin.Thatwillbeoneofthewaysthatwetapintolocaltalent.Ithinkyourpressorganizationhadsaidthat,too.Anytimeyouputwellover$50million—alongwithpayingforupkeepandpropertytaxes—intoinnovationcenters,theycangetcomparedtoPotemkinoffices,usedtohelpanincumbentgetreelected.Wedonotdothat;weactuallyworkforourshareholders,andIwouldliketoclarifythat.Ifthatwastheappearance,anditreallyshouldn’tbe,thenthatwasunfortunate. IwillmentioninthenextbookthatweactuallypurposelyscaledbacktheannouncementoftheinnovationcenterforMadisonuntilthefollowingApril,becauseitwastooclosetotheelection.ItreallyisnotfairthatweannouncedthatoneafewweeksbeforetheNovemberelectionin2018. NP:WearebackwithAlanYeung.Beforethebreak,Alanhadbeentalkingabouttheinnovationcenters. JD:Alan,torevisittheinnovationcenters,youannouncedseveralofthemacrossWisconsininlate2018.Ivisitedthemin2019,wellaftertheyweresupposedtobeopen,andtherewasnooneinthem.Itwasjustdustysawhorsesandconcretefloors.WhenIreportedthat,yousaidthattheywerenotemptyandthatacorrectionwouldbeforthcoming.OnenevercameandIcheckedbackamonthlater,andthenayearlater,andtheycontinuedtobeemptyandtheyneveropened.Iguessmyquestionis,whydidyousaytheywerenotemptywhentheywere?Whydidtheyremainemptyforsolong? Letmeputitthisway:Wedidansweryou,butourcorporaterulesonengagementandcommunicationarestrict.Unlesswehavesomethingsubstantivetoreallyshare—eitherbecauseoftheplanorsomethingthatwehavedone—Iwouldnotbeabletoactuallysayawholelot.Ihaveindicatedtoyouandeverybodyelsemultipletimesthattherearepeopleworkingthere.Ididworryaboutyourwellbeing.Iwastalkingandjokingaboutyouclimbingtreesandallthat.Really,weareveryfondofyouandyourreportingbecauseyouobviouslyhaveakeeninterestintheproject.Wedidhaveourselves,ourpartners,andourclientsinmanyofthebuildings. TheonlyonesweneveractuallydidanythingwithwereinEauClaire;thebrickbuildingsweremeanttobeadormitoryandshort-termhousingwhenweactuallyrotateengineersandprogramsin.Theprincipalwhowassupposedtosellustheprojectandthepropertyneveractuallydelivered.Hewentaroundandtoldusboththatwedidnotfulfillourcommitment,buthedidnotfulfillhisperformancecontractwithus.Weterminatedhim,whichwasunfortunate. NP:Whynotjustsaythesethingstous?IunderstandthatFoxconnhasapolicy,butweaskedyou5,000timesandtherewasjustdeadsilence.Also,Joshneverriskedlifeorlimb;Iwouldn’tletourreportersdothat.Hejustlookedthroughthewindow.TherearestillpeopleinWisconsingoingaroundtothesesitesandlookinginthewindowsandseeingnooneinthesebuildings. ThoseEauClairesites,thetwobrickbuildings,areunfortunatebecauseImadethedecisionthattheywouldhavebeenagoodmixed-usestructure. NP:Theideawasthatyouweregoingtohaveshort-termhousingforengineers.Whydoyouneedtohouseengineersinthatbuilding? Forpeopletoworktogetherandbringupsomeofthetalent,wewouldrotateengineersandprogrammerstobeon-sitearoundourinnovationcenter.Iwillbringthatupinmynextbook.Wehaveaconveyorbeltconcept.ItisnotfeasibletotapintojustMountPleasantorMilwaukeealonetoreallybuildupthetalentpool.WeweregoingtouseMilwaukeeasourradiationpointandheadquarters,anditwouldtapintoMadison,EauClaire,Racine,andotherplaces.Wecouldfindasitetoactuallyworkwithinnovators,programmers,andengineers.Thatworkwassupposedtobepartlylocalandpartlyremoteworkbythen,butthatwasbeforeCovid-19.WedidmakeithappenwithinMilwaukeeandabitofRacine,butnototherplaces. AsIsaidbefore,wetryalotofdifferentideas.Someofthosegetreported,othersdonot.Unfortunately,withinthemedia,wheneverythingbecomesnegative,thatsellsalotmoreclicksandeyeballs.Ninety-sixpercentofthethingsweweretryingdidnothappenandgotreported;theother4percenthappened,butdidnotgetpickedup.Thatbecamealittleunfortunate,buttheinnovationcenterissomethingthatweactuallyfeelveryproudofandwemadeacommitmentto.TheyweresupposedtobelinkedbyWhiteboardandbroadband,andreallytapintoEauClaireandGreenBay.Wedidnotwanttoleasebuildingsbecausethatdidnotshowcommitmentand,asImentionedbefore,weweremakinginvestmentsinWisconsinwithorwithoutcredits.NoneofthebuildingsthatwepurchasedinGreenBay,EauClaire,Madison,Milwaukee,orindowntownRacineearnedustaxcredits.Thatwasnottheprimaryobjectivefordoingthisproject. NP:Wedon’tevenhaveanyquestionsabouttaxcredit.IamjusttryingtogettotheheartofwhyyousigneduptobuildaGen10.5factoryinWisconsin,whichisafamouscocktail-napkincontractwithScottWalker.Allofthisotherstuffseemslikeadistractionfromthatproject.NowyouaresayingyoudonotthinkthereisatalentbaseinWisconsinalone,andyouhavetobringengineersintoshort-termhousingfromallthesecitiesaroundWisconsintohelpgrowatalentbase.Thisentirebookisaboutwininganddiningwithpoliticians,gettingthedealtogether,andwhetherScottWalkerarrivesinChinaandgoesstraightonthefactorytourorstopsatthehotelfirst.Nowhereinthisbookisthereaneconomicdefenseofthisinvestmentthatsays,“Thisisagoodideathatwethinkwillreturnaprofittous.” Letmecomebacktoyouwithacouplethings.Therewerenonapkins,okay?Theonethingthatyoupublished,basedonanopenrecordrequest,isactuallywhatIwroteaboutinthebook.ThereisapieceofstationerythatbothChairmanGouandGovernorWalkersigned,tomakeacommitmenttoreshoremanufacturing—thatisafact—butthereisnonapkinandallthat. NP:Iwillconcedethatthereisnotanapkin. HavingtheteamflyintoJapan—notChina—isawaytoshowcase,impress,andcommunicatewiththemhowbigthisprojectwouldhavebeen,andhowcommittedthecompanywouldbeinfindingtherightpartnerandtherightstateofmakinginvestment.IputsomeworksandpagesbehindthatandIthinkyoureadthroughthatalready.Foxconnisa$180-plusbillioncompany.Ifyoudotheaveraging,halfabilliondollarsofproducts,financialresources,orcashmovesaroundtheworldeveryday.Wedonotmakeinvestmentsverycasually.Therefore,thebiggestcriteriawehaveisthecommitmentofthepeopleweworkwith. PresidentTrumpandtheOfficeofAmericanInnovation,throughourengagement,haddemonstratedthat.Oursiteselectionprocesswentdowntothestateandthelocallevelandallowedustogaugewhowouldbethebestpartners.Intheend,wesaidthereweretwo:OhioandWisconsin,GovernorKasichandGovernorWalker.Thatwasourconclusion,andwasoneofmypointswithinthebook.Iwouldjustbringoutaverysimplebutinterestingfactthatifstaffsupportandinputweretakenintoaccount,theGen10.5fabwouldhavegonetoOhio. NP:Itwouldnothavebecausethereisnofab. OhioisalotclosertotheEasternseaboardandend-usemarket,andthelogisticswouldhaveworkedalotbetter.Givenwhatweseeinhindsightwiththebusinessenvironment,Ohio’sinvestmentclimate—unlikeWisconsin—hasonlygottenbetter,notworse.WisconsinwantedtheGen6fab;theywantedtheapplicationandtheabilitytoworkwithmedical,withdualuse,andothersolutionsthataGen10.5wouldnotworkwith.Solateron,whenwepivotbackto,“Hey,let’sgobacktowhatyouwantatWisconsin,”theWalkeradministrationactuallywouldhavesupportedthat,butunfortunately,wedidnotgettherewiththenextadministration. JD:IwanttopushbackonthatbecauseaccordingtorecordsthatIreceived,therewasoverayearperiodwhentheEversadministrationwasaskingFoxconntotellitwhatitwasbuilding—whetheritwasaGen6oraservermanufacturingfacilityorsomethingelse—sothattheycouldrevisethecontracttoreflectthat.You,amongotherFoxconnexecutives,refusedtotellthem.IthinktheideathattheWalkeradministrationwouldhavewelcomedtheGen6whiletheEverswouldn’thaveisnotaccurate.Whywouldn’tFoxconntelltheEversadministrationwhatitwasbuilding? WetoldtheWisconsinDepartmentofCommercesecretaryduringtheWalkeradministration,wetoldhissuccessor,andwetoldthegovernor.Unfortunately,Ithinkthepublicnarrativehasbeenone-sided,sothecompanydecidednottoactuallytalkornegotiatethisintheopen.Iwillshareabitmoreinmynextbookonthat.Iunderstandwhereyouguysarecomingfrom. NP:Iunderstandyouhaveanextbook,butyouhavetoanswerthisquestion.ThereisnotaGen6fab.ThereisnotaGen10.5fab.Thereisnotafactorythatismakinganythingthatisknowntoanyone,asfaraswecantell.Ifyouhadjustsaid,“WearegoingtomakeaGen6fab,”Ithinkeveryonewouldhavebeenlike,“Okay,whereisit?”Thereisn’tone. TheideathatitistheEversadministration,thatbusinessclimatechanged,orthatWisconsinwasthewrongchoice—whichiswhatyouaresuggestingrightnow—thatisallonFoxconn.IfyouchosewrongandshouldhavechosenOhiobecauseofpolitics,itisstillonFoxconn.Ifyoudecided10.5wasnotgoingtoworkoutandGen6wasbetter,andyoucouldnotconvincetheEversadministrationthatyouwereactuallygoingtobuildanLCDfactory.Whatwehaveheardfromthatadministrationisthatyouneverengagedortoldthemanything.Sowhereistheaccountabilityherefortherenotbeingafactory? Letmeactuallycorrectwhatyoujustsaid.WisconsinwasthefirstchoiceandWisconsinremainedthetopchoiceforFoxconnforthisproject. NP:YoujustsaidOhioisbetter. “OncewemadethecommitmenttobuildthefabinWisconsin,therewasnolookingback.“ OhiowouldhavebeenbetterforGen10.5,butoncewemadethecommitmenttobuildthefabinWisconsin,therewasnolookingback.Thatisreallysomethingthatyoushouldgetfromthefirstbookandyouwillprobablygetmorefromthesecondbook.YoukeepaskingwheretheGen6fabis.Ifyoulookatsomeoftheinvestmentandthesizingofthecleanroomandeverything,itisactuallybuiltforaGen6fab.Iwouldcautionyou—sinceyouhavemeheretospeakwiththetwoofyou—youcannotmakeconclusionsorinferenceswithoutgettingtheotherside’sstory.Inotherwords,itisnotlikenothingisbeingbuiltthere.Theywouldjustchoosenottotellyou. NP:Whatisbeingbuilt? FoxconnandChairmanGoubelievethatpublicityisnothelpfulintermsofthecustomersbecausetheydonotwantyoutoshareclientconfidentiality.Publicityisnothelpfulintermsofcompetitionbecausewewereactuallytelegraphingtoourcompetitors. NP:Therewasanenormousamountofclientpublicity,though.WeweretoldthatBriggowasgoingtobuildcoffeerobotsthere.WeweretoldthatGooglewasgoingtobuildserversthere.WeweretoldtherewasgoingtobeaGen6LCDfactorythere.Weweretoldthatyouweregoingtobuildventilators.Noneofthatstuffhappened. WhatweintendedtodoinWisconsinisacombinationofboth,andwedidbuildcertainthingsinthere.Whetherornotitwouldcontinueisnotuptothecompanytodisclosepublicly,inmanycases.Wehavenoobligationtosharewhetheritlaunched,itcommenced,oritended.WedidhavecommitmentandobligationtothestateofWisconsinanditspeopleintermsofthespiritofthecontractorwhentheagreementdemandsit.Inthecaseofventilators,itwasamidCovid-19.YouwouldnotbelievehowmuchworkandhowmuchgoodwillwastheretoactuallytalktopotentialpartnersinMinnesota. NP:DidyoumakeaMedtronicventilatoratthatfacility? Well,Ithinkyoushouldaskthosetwocompanies. NP:No,Iamaskingyou. Icantellyouwithoutbetrayingtheconfidentialitythatproductsorprototypeshadbeenmade,butbythetimetheventilatorwasupandrunning,andactuallywouldhavebeenshipped,theworldhadfoundouttheydidnotreallyneedventilators. Therearelotsofprojectsandprototypesthatthecompanymakesthatmaynotpanout.Bythesametoken,whethertheservers,thePCboards,oranycommunicationproductsarebuiltandshipped,theywouldnottellyoubecausetheyarenotactuallyinapositiontosharesomeofthisinformation.ThatiswhywewouldnotbeabletotalktoTheVergeorothermediaoutletsunlessthereisabusinessreasonorwehavetheokaywithourpartnersorclienttodoso. NP:Whatclientdoesn’twanttheenormouswinofsaying,“WearetheclientforFoxconninWisconsin?”Weaskedallthepeoplethatweheardabout. No,thatisthequestion.Briggo,asaclientandapartnerofFoxconn,allowsustoactuallymentionthatwearebuildingtheprototypeandthefirstarticlesforthem.Wegotexpressapprovalandagreementfromthatcompanytopublicizethat.TheventilatorwasinaverydifficultsituationbecauseofCovid-19,andourchairmanmadethephonecalltoMinneapolistoactuallytalktotheCEOtheretogettheprojectupandrunning.Wedonotwanttotakecreditforthat.Wedonotactuallythinkitisanythingbeyondwhatacorporatecitizenwoulddo. TheprojectwasmovingalongtobuildaGen6fabandwewouldhaveaddedmoreifithadprogressedfurtherfromthere.ThatiswhatIcantellyouatthispoint.YouarerightthatthereisnoGen6or10.5fab.Ithinktheagreementthattheyamendedlastyear—andactuallysignedintoanewcontract,nullifyingtheoriginalone—probablyputthatintoaperiod,nolongeraquestionmark.Youcansee,fornow,thereisnoGen6or10.5fab.Sowekilledthatone. Youcaneithercallthatawin-winoralose-loseforbothparties.IamnowaresidentinWisconsin;Ipaytaxes,mysongoestoschoolthere,andallthatgoodstuff.Iwouldjustposethequestiontoeverybody,“Wouldyouratheracompanyinvest$10billioninyourstate,orwouldyourathertheyinvestonly$1billion?”Rightnow,wegetthelatter.Ifyoutakethatninebillionandgosomewhereelse,wouldothergovernorsorcountrieswelcomethatwithopenhands? IamhearingthatSaudiArabiaandtheUAEarelookingtotalktoFoxconntocreatea$9billionprojectinthosecountries.IamhearingthatthelikesofOhioandotherstatescontinuetowelcomeFoxconntoputwhateveramountofinvestmentthere.IwouldhopeourpoliticiansandlegislatorsactuallyworktogethertoensurethenextinvestororcompanytocometoWisconsindoesnotgetthesamekindoftreatmentwedidafterwesignedthedealin2017. Iamnotplacinganyblameonanybody.Iwantmoreinvestmenttocome;iftheydonotfeelthecontractwasfair,thentheycanrenegotiate.Keepinmind—Iactuallypointthisouttoeverybodyinmybook—thatitwasabipartisanefforttopassthelegislationtoactuallyapprovethedeal.Bothsidesoftheaislesupporteditandthegovernorsigneditintolaw. JD:Letmestopyouthereforasecond.YouareteasingtheseotherprojectsinSaudiArabia,Ohio,orvariousotherplacesthatmightormightnotbehappening.WhetherornotFoxconnmanufacturedsomesecretproductsthatyoucannottellusabout,Foxconndidannouncealotofstuff.TheirM.O.inWisconsinwastomakethesebigannouncementsaboutinnovationcentersorsmartcitiesorthefactorybuilding,thisandthat. ItalkedtoalotofpeoplewhoreallybelievedthosepromisesandtheyleftgoodjobstobepartofarevivalofUSmanufacturing.Youmentionedpatriotswhenyoustarted;Italkedtoalotofpeoplewhofeltverypatrioticaboutthisidea.Thentheygotthereandsawitwasnothappening.TherewasnoattempttoinvestinanLCDfactory,andnowillingnesstoinvestinreallymuchofanymanufacturingthere.Theyfeltthatitwasalloptics,thattherewasnoplan.cxdwasalljustannouncementsofbigthingsthatweregoingtohappenthatneverdidandtheyfeltbetrayed.Howdoyouanswerthesepeople? “AlotofpeoplereallybelievedthosepromisesandtheyleftgoodjobstobepartofarevivalofUSmanufacturing.“ Thesearegoodbutloadedquestions.Letmeaddressthemonebyone.Ithinkovertheyears,yourreportshavebeenverydetailedandverycomprehensive,butsomeoftheinformationintheremightneedtoberevisitedbecauseitmaynotbeaccurate.Icanpointitoutoffline. NP:Telluswhatisnotaccurate. Okay.WhenyoulookatIndia,whenyoulookatVietnam… NP:No.AnswerthequestionabouttheemployeesinWisconsinwhofeltbetrayed. Okay,Icandothatlater,butIwilldoitnow. NP:Wearerunningoutoftime,soIwantyoutodothatnow. Well,thecompanymakesinvestments—itmakesannouncements—andsometimesitdependsoncertainfactors,includingthecustomersinthemarketplace,thetiming,andthepaceofthathappening.Basedonthemarketwantsandneedsofthecustomer,theycancrankituporitmaytakealittlebitlonger. SomeofyourreportstalkedaboutitneverhappeninginVietnamorIndia,butifyougothererightnow,youcanseetheinvestment—$5billionandmanyjobs—andthetremendousprosperityFoxconnasacompanyhasbrought.WewereveryproudtoworkwithPrimeMinisterModitobringtheinvestmenttoIndianearChennai,andIthinkthatprojectandthesitehaveawaystogo.Fiveyearsago,yourcommentsandnarrativewouldhavebeenverynegative.Iwouldurgeyouandeverybodyelsetoreallylookatthelonger-termhorizon,atwhatwearedoingandwhatthecompanyisdoing. Inolongerspeakfororworkforthecompany,Iwanttomakesureyouunderstandthat.Iamnotdefendingthecompanyperse,butIamsharingafact;justlookatwhatgreatthingsarehappeninginIndiaandVietnam.IthinkitwillhappeninWisconsin. JD:Whataboutthepeoplein2018and2019thatyouhiredtobepartofamanufacturingrenaissance—wholeftgoodjobsbecausetheythoughttheyweregoingtobuildsomething—andthenendedupbeingasked,“MaybeyoushouldfigureoutwhatFoxconnshoulddoinWisconsin?” Iwasonbothsides.Ihaveeveryintentiontoactuallybuildandhelpbringmanufacturing,innovation,technical,andR&Djobs.Ialsoeventuallyleftthecompany.Iwouldpointoutthatwerecruitedthesepeoplewithgoodintentions.Personallyandprofessionally,wemadeagoodfaithefforttoactuallymakethingshappen.Includingrightnow,therearehundredsofpeopleovertheretryingtomakesomethinghappen.Someofthosethings,theyjustcannottellyou. OneofthepeopleIhavethegreatpleasureofworkingwithisMajorGeneralTimothyZadalis.WhenIbroughthiminandheactuallysupportedtheproject,onethinghesaidtomewas,“Youhavesomechallengeshereincludinghumanresources,withvisioningandmakingthingshappen.TheoutcomewiththatwouldinvariablybethatFoxconnwillbecomeatraininggroundforothercompanieswithintheregion.Youaregoingtolosealotoftalentandmanyofthemwithgoodintentions.”Someofthemleftongoodterms,butothersmightnothave.Josh,maybeyouhadtalkedtosomeonethatmighthavebeenalittlebitunhappywhentheydepartedthecompany,maybeeveninvoluntarily. Invariably,Ithinktheygotsomethingoutofit;theygottraining,andthesteppingstonesandexperiencestomoveontootherpositionsinothercompanies.Icanpointtoatleast30to50peoplethathaveactuallymovedontogreatorganizationstotakeongreatresponsibilityandaredoingquitewell.Itakeprideindoingthat.DoIwishtheyhadstayedonatFoxconndoingtheFlyingEagleproject?OfcourseIdo.IwishIhadstayedmyself,andbeenintheprojectbuildingthatGen10.5orGen6fab,butthatdidnothappen.WhydidIleave?IbelievedIcoulddoalotmoreoutsideFoxconnthaninside,anddoitalotfaster,thatincludestheinnovationcenterandspeakingtothetwoofyou. NP:I’mhappyyouarehere.Ihavetotellyou,though,Ireceivedphonecalls—andJoshreceivedmanymoreofthesecalls—frompeopleintearswhohadleftseniorpositionsasexecutivesbecausetheybelievedinthisandfeltbetrayed.Hopefully,theyallgotbetterjobsintheend. Iappreciateit.Iactuallyhadnotgottentothatpoint.Iwillwriteaboutthatinmyfollowingbook,butIdidmentionalittlebitaboutthesacrificesthatpeoplemadeinmakingthisprojecthappen,atleastduring2017andearly2018.OneofthesegroupsofpeoplearethefarmersandresidentswithinthatsiteinMountPleasant.Ifeltwehadbeenfairandwehadbeenabove-boardinworkingwiththelocalandthestategovernmentinmakingtheprojecthappen. Iheardaboutgettingpeopleoutoftheirfarmsandhomes,butitreallyisnotlikethat.Peopleweresellingtheirfarmsat$5,000anacre.Wemadeaconsciousdecisionnottobuyanyofthelandbeforeanannouncementwasmadebecauseitwouldnotbefairtothem.Theyallgotthesamepackageandthesamedeal.Manyofthosepeoplegot$50,000peracreandquiteanumberofthembecamemillionaires.Theywereabletojustgoacrossthewaytobuylandorfarm,buthadmoremoneyintheirpocketandmovedonfromthere.Ifyousay,“Well,itwasinvoluntary,”thatisnottrue.Thepeoplewhochosenottoleaveormove,stayedandarestillthere. JD:Residentswerethreatenedwitheminentdomainandabout80homeswerebulldozed,whetherornottheywerehappywiththehousetheycouldbuywithwhatevercompensationtheyreceived.Ididspeaktohomeownerswhohadbuilthomesthinkingtheywouldspendtherestoftheirlivesthere,onlytofindFoxconnwasmovingin.TheyhadtheirhomedemolishedandlaterfoundoutthatFoxconnneveractuallyneededtheland.Asfortheresidentsbeingabletostay,youareprobablyreferringtoKimMahoney,whodecidedtostaybutisnolongerinaneighborhood,andnowsitsnexttoamysteriousFoxconnglassdome.Iwouldactuallybecuriousifyoucouldtelluswhatisinsideofit. Okay.Well,therewasnoeminentdomainperse.Therearepeoplewhochosetostay. NP:Butpeoplewerethreatenedwitheminentdomain. No,thefactsproveit.Thepeoplewhowantedtostaydidandtheyarestillthere.Thepeoplewhoagreedtoleaveandmoveongotcompensated.IhavesaidbeforethatIamgratefulfortheirsacrifice,contribution,andsupport.Manyofthemactuallybecameverysuccessfulwhentheygot10Xthepriceincreasefrom$5,000to$50,000anacre.Theyremovedthemselvesfromthereandboughtnewfarmsandhomeselsewherebeforethecurrentpriceincreases.Ithinktheyhavedoneverywell.Werespectandcontinuetosupportthosewhodecidednottogo,butontheotherhand,thoseweretheirchoices. Ithinkinthelongterm,whetherFoxconncontinuestoinvest,andforothercompanies—includingacompanylikeIntelcomingin—thissiteisveryattractive.IfyoulookatthecorridorbetweenMilwaukeeandO’HareinChicago,thisisprobablythemostexcitingsitethatonecouldlookat,notjustintheupperMidwestbutalsoelsewhere.PeopleaskmewhyOhiowonoverWisconsinasthefirstrunner-up,andtherearemultiplefactors,someofwhichwealreadytalkedabout. NP:Wearerunningoutoftime,andIneedtoaskyouafewquestionsthatIhavebeendyingtoknowtheanswerto.Joshactuallypivotedtothese.YourbookandFoxconntalkedalotaboutAI8K+5G,butitwasneverdefinedasfarasIcouldtell.Wesearchedandsearched.WhatonearthisAI8K+5G? Thatwillactuallybeinthenextbook. NP:It’sinthisbook. “WhatonearthisAI8K+5G?“ Intheyears2016and2017,Foxconn—andespeciallySharp—heldacommandingleadintermsof8Ktechnology.Iwillactuallyexpandonthisinmynextbook,andourplanwastobuildmorecapacityinNorthAmericatosupportthegrowingbusinessintheUS,andtosupportotherusagesuchasmedical.Therearesomeprototypesthatweworkwith,includingdualuseanddefenseforhands-offdisplays,andevenantennaandotherusagesthatrequirethin-filmtechnology.Thosearethethingsthatwehadtalkedabout,anditwouldgobeyondwhatFoxconnusuallydoesasanEMSprovider.WehaveabrandcalledSharpthathasthecapability,thewill,andtheintendingcommitmenttodothat. Now,AIwouldhavebeenalittlebitlessadvancedthan8K,but5GfocusedonatremendouscapabilityinTaiwanandelsewhere.Theusagefor5Gisbothindoorsandoutdoors;IoTcapabilitybeingusedforlogistics,supplychain,andwarehousemanagementisaprimeexampleofusing5Gindoorsevenbeforeyougooutdoors.SomeofthatworkwasbeingdonebytheFoxconnIndustrialInternet[FII]teamandIthinktheyhavedonesomegoodworkthere.Unfortunately,alotofthecustomersintractionmightnotbeintheUpperMidwestandWisconsin.AIisactuallyatoughnuttocrackbecausemostofusdonotknowenoughaboutdeeplearningorbigdata.IfyoulookathowtoactuallymonetizeAI,mostofthatisinautonomousvehiclesandotherhotareas,notwithinthefactoryfloor.ThebestexamplewouldbeGEDigital,whichinvested10to15yearsintothatbusinessbeforegrossingmaybe$1billioninrevenue. NP:Ijustwanttobeclear,thepitchwasthattherewouldbeanAI8K+5Gecosystem.Thatwasthephrasewekepthearing:“Thisisanecosystem.”Youaretellingmethe8KpartwasSharpdisplaysfordefenseapplicationsandmedicalapplications.The5Gstuffwasputtingsensorsandcontrolunitsonmanufacturingindoors,andpotentiallyautonomousvehicles.ThentheAIpartwasstilltobedetermined.Howisthatanecosystem? Well,no,Ididnotsaythat.TheareaofartificialintelligencewithinFoxconnwasnotasadvancedastheothertwo,butitdoesnotmeanwedonothaveinvestmentthere. NP:Sure,buthowisthatanecosystem? Thosearethethreeareasthatwewouldinvestinandtheytieinwitheachother,justusing5GandAIisanexample.Youwroteextensivelyaboutmyautonomousvehicleprojectthatdidnotquitehappen,buttheUWMadisonengineeringteamdidworkwithRacinetotakeittothenextstep.Allthecreditgoestothem. NP:IinterviewalotofcarCEOsonthisshow,man.Noneofthemcanmakethecarsdrivethemselves.WhycanFoxconndoit? Theideaisthatsomeofthedriving,theequipment,orthesensingshouldnotresideinthevehicle,right? NP:Sure. Ifyouputinthe$10,000lidar—backthenitwas$50,000—andalltheequipment,youbasicallyhaveaserversittinginthetrunkofa$100,000vehicle. NP:Again,ifyounameanautonomousdrivingCEO,Ihavetalkedtothemonthisshow. Right.Ifyoumovesomeofthatcomputationandsensingcapabilityfromthevehicletotheroadside… NP:SotheAI8K+5Gecosystemwasautonomouscars? No,thatisanexample.Youhaveaclientservermodelbetweenthevehicleandtheroadsidesoyourvehicleequipmentcostwillbedowntofourdigits,asopposedtosixdigits.Yoursensors,yourlidars,andyourcommunicationcouldbecome5G. NP:Ijustwanttopush—thatrequiresa5Gnetwork.WasFoxconngoingtobuilda5Gnetwork? Foxconnactuallyprovidessomeoftheequipmentandcomponentsintothatindustry.Icannotgetintowhetheritisactuallyservingdifferentcustomers,butwewerenotgoingtoputup5Gtowers,ifthatwasyourquestion. NP:Sothatwasnotgoingtobeanetwork. The5Gtowerindoorswaspartoftheplan,butwhetherthathappenedornotIcannotsaybecauseIleftthecompany.EvenifIdidknow,Iprobablywouldnotbeinapositiontotellyou.Youwouldhavetogobackandaskthemifanybodywouldspeakwithyou. Idowanttosayonethingtothetwoofyou.Iactuallyamverythankfulforyourreporting.Byandlarge,itisprettycomprehensiveandaccurate,butIhopeyouwillgobackandcorrecttheareasthatneedit. NP:Well,thatiswhywe’reaskingyou. Iwouldurgeyoutobeabitmorepositiveandfuturistic;don’tbesonegativeallthetime.Ithinkweshouldlookpastpolitics,andIwillsupportthat.Iwillcomebackandspeakwithyoumore. NP:Wewouldlovetohearfromyou. JD:ThedomeinMountPleasant,theglassorbthatFoxconnbuilt,whatisinsideofit? Ithinktherearedatacentercapabilities,includingequipmentandservers. NP:Inthedome? Oh,you’veneverbeenthere?Therearealotofpeoplewhohaveactuallygonethroughthetour. NP:Okay,butwhatisintheactualglassdome? Icannottellyouwhatitisnow,buttothebestofmyknowledgefrombackthen,itistheirdatacentercapabilities.EverythingthatFoxconndidthereoncampusinsidethedomeispioneeringwork.AsourchairmanYoungLiusaid,wedidallthisbasedonbusiness,notpolitics.Ifthescaleforthedatacenterequipmentandsomeoftheworkthattheywoulddoispioneering,theyprobablywouldnottellyou.AlotofthatisactuallyinpartnershipwithsomeofthebiggestnameswithinthedatacenterworldandtheymaynotcarrytheFoxconnlabelwhenitbecomescommercialized.Icanassureyouthatthedomeisneeded. NP:Thedomeisneededtodopioneeringdatacenterwork? Thedomeshouldhavebeenbetterandbigger.Okay? “Thedomeshouldhavebeenbetterandbigger.” NP:Iagree.Ifanyonesaystomethatadomeshouldbebigger,Ialwaysagreewiththem.Thatistrue. Thedomerightnowislimitedinscale.IftheymakeitslightlybiggerIthinkitwouldscalebetter,butwhenyouhavethatkindofnegativeenvironmenttheydonotwanttoinvestthatbig. NP:Ijustwanttobeclear.Isthedomeitselfrequiredforpioneeringdatacenterwork? YouwouldhavetogobacktoFIIandaskthemwhetherthearchitectureofthedomeisneeded.IthinktheyjustwantedtomakeastatementfortheFoxconninvestmentforthecampusthere,beyondjustatinroofandgraywalls. NP:Sothedomeitself,whatisinsideofit? Datacenterequipment. NP:Thereisadatacenterinsidethedome? ThatiswhatIjusttoldyouthreetimes. NP:Okay.Ibelieveyou.Ihaveseenalotofdatacenters,butIhaveneverheardanyonetellmethebestshapeforadatacenterisadome. Whethertheshape,sizeorscaleofthatdomeisrelevant,appropriate,andoptimizedforadatacenter,Icannotsay.TheFIIteambelievedthatitwasoptimalandtherightthingtodoforsomeofthepioneeringworkanddevelopmentprojectstheyhad.Iftheywouldspeakwithyouonrecord,Ithinkyoucangettheanswer.Otherthanthat,speaktothepeoplewhohavegonethroughthetourandseeiftheycantellyoumore. Iwouldnotspeculateastowhetheritisrightorwrongbecausesomeofthereportsyouhadgotsomeofthefactsright,buttheconclusionisnotadvisable.Icanhelpyouovertimetoactuallyputsomereallypositive,butalsofairinterpretationonthat.YouguyshavedonewellovertheyearsandIcongratulateyou,andImentionedseeingyouquiteafewtimesonCNBC.Iwouldencourageyoutolookatthingsfrombothsides.Ifthereisnobodyelsetospeakwithyou,Iwilldothattothebestofmyknowledge. NP:Iappreciatethat. Iamnotdoingthemafavor.Iamjusttellingyouthefacts,data,andinformationthatyoushouldprobablyhave.Itisunfortunatethatthereisonlyoneside,becausetheothersidewouldn’tspeakwithyou. NP:Iagree. Ithinkweagreeonthat. NP:Iwilltellyou,wetriedveryhard. Yeah,youdid.Iverymuchwantedtospeakwithyouonrecord,butduetothecircumstancesandsomeofthepoliticalsensitivity,itisprobablybestthatIwasnotabletodothat.Yousawwhathappenedtomytweet;itjustgotwayoutofhandbecausepeoplegottooexcitedaboutit. NP:That’strue.Twitterisbadforeverybody,andIthinkwecanconfidentlyagreeonthat.Iknowyou’vegottorun,butmyonegentlepushbackto“thepresswastoonegative”—Ihavebeendoingthisalongtime.TheeasiestwaytogetgoodpressoutofTheVergeistosayyouaregoingtodosomethingandthendoit.Alloftheperceivednegativityhereisbecauseweheardaboutalotofthingsthatweregoingtohappenthatdidnothappen. Letmeanswerthatasaclosinghere.Isaidthiswhiletalkingwithothermediaoutlets:thereare100thingsthatFoxconnsaidtheywoulddo.Ifyoudon’taimhigh,noneofthe100thingsareworthdoing.Andintheprocessoftryingyourbest,puttinginallyourresourcesandmakingacommitmenttodoit,yougettwoorthreethingsdone.Theoutcomeisa$185billioncompanythat’sspendingaroundtheworldandthatOEMbrandnameswillworkwithanydayifyouaskthem. JD:ButalotofpeopleinWisconsinheardaboutthehundredthingsyoupromisedtodoandbelievedthattheywerereal.WhetherornotFoxconndidtwoorthreeisupfordebate,buttheycertainlyfeltthattheyweremisledinwhatFoxconnpromisedtodo. Whethertheyweremisledbysomeoneorbysomeorganization,Icannotsayunlesstheygoonrecordtospeakonit.Iwouldlookbackandsayitwasstillapositiveexperience.Thatwasover$1billioninvestmentfromthecompany,andanothersixhundredmillion-plustocome.Ifyoulookatthecontract,theyaregettinglessthan5percenttaxcredit.Thiscompanycontinuestoinvesthere,buttheywilllookelsewhereiftheygetbadtreatmentandawfultaxcredits.Thereisothercompetitionoutthere. AsaWisconsinite,Iwouldjusturgeeverybodytotakealookforwardandsay,“HowcanwewinthenextIntelproject?HowcanweactuallymakesurepeoplelookatWisconsinasareallygoodbusinessenvironmentforinvestment?”Notjustbecauseofachangeofgovernorship,orbecausethepressisalwaysnegative,orbecausewehaveafewpeoplewhoactuallydecidednottomove.Thosewereourchoices.Iunderstandit,andIamempatheticaboutthat.Let’smoveforwardandactuallydosomethingpositive.IwouldsupportTheVergetodothesame.Ifyoufindthreepositivethingsforme,Iwillactuallysharethatwithyou.Ifyouactuallywanttoconfirmonthingsthatarenegative,I’lldothesame. NP:Iappreciatethat.Ipromiseyou,wearegoingtotrackIntelinOhiojustascloseaswetrackedFoxconninWisconsin. Goodforyou.IntelisagreatcompanyandIcongratulatethem,andalsoOhioforthatdeal.Itwillbegoodforthem. NP:Allright.Well,Alan,youhavegivenusalotoftime.Ihave10millionmorequestions,butitsoundslikeyouhavetoputoutthisnextbookforustogetanyoftheanswers.Whenisthenextbookcomingout? Itwillbethisyear,andagain,itisgoingtobecalledWisconnValley.Iwillsharealotmorefactsbeyond2017. NP:Thenwewillhaveyoubackandwewilltalkaboutit. Thankyou. NP:Thankssomuch,Alan. DecoderwithNilayPatel ApodcastfromTheVergeaboutbigideasandotherproblems. Subscribenow! InThisStream EverythingyouneedtoknowaboutFoxconninWisconsin AformerFoxconnexecutivetriestoexplainwhatwentwronginWisconsin FoxconnisdanglingashinynewEVplantinfrontofWisconsin Viewall39stories Policy Virginiajudgeshutsdowndemandtobanbooksalestominors Policy TruthSocialisstrappedforcashandstrugglingtofindnewusers Policy ThesecurityflawsthatmakeTwitter’sinsiderthreatsoscary ViewallstoriesinPolicy Sharethisstory Twitter Facebook