Wisconsin’s drive to win Foxconn

It began routinely, in early March:

A consultant for an unidentified company looking for a factory site sent a somewhat vague email to the Milwaukee 7 regional economic development group.

It included a few details – enough to pique interest – but nothing that would set off the all-hands-on-deck alarms. In fact, it seemed like nothing out of the ordinary.

 “We get these all the time,” said Jim Paetsch, vice president of corporate relocation, expansion and attraction for the Milwaukee 7. “…I wouldn’t say that this one stood out necessarily.”

Little more than four months later, the routine has turned extraordinary.

The unnamed firm that put out feelers here and many other places, of course, was Foxconn Technology Group, the Taiwanese electronics giant that on Wednesday unveiled plans for a $10 billion manufacturing complex that ultimately could employ 13,000 people, represent the largest single investment the state has ever seen and, advocates say, transform Wisconsin’s economy.

Parking lot meeting

Routine or not, the M7 team took the blind solicitation seriously. They responded six days later, he said, with particulars on the seven-county slice of southeastern Wisconsin the organization represents.

Such responses are an important first impression, so M7 put together a thorough one, Paetsch said. Then they waited and heard … nothing.

But nearly seven weeks later came some interesting news, not from the company but during a conversation in a parking lot in Illinois. 

That was on May 1. Paetsch and colleagues had traveled south of the state line to meet with executives of another firm they were trying to convince to come to Wisconsin, a prospect many Illinois companies have found attractive.

A senior staffer with the Wisconsin Economic Development Corp., the agency that works to spur economic growth statewide, was on the mission too, and as the group walked out of the offices, the staffer buttonholed Paetsch.

“WEDC pulled us aside,” he recalled, “and said, ‘Hey, FYI, are you familiar with Foxconn?”

Unbeknownst to Paetsch and his colleagues, the state had begun talks aimed at bringing Foxconn and the high-tech liquid crystal display manufacturing complex it envisioned to Wisconsin.

And, the staffer told them, Foxconn was “looking pretty hard” at the southeastern corner of the state.

Get Walker to Washington

As it happened, the parking-lot conversation between the M7 and WEDC staffers occurred three days after another meeting, this one on Friday, April 28 in Washington, D.C., in the office of White House chief of staff Reince Priebus.

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Like the initial email to M7, the gravity of the invitation to that meeting didn’t immediately register.

As Tricia Braun, deputy secretary of WEDC, recalls it, the invitation had been extended two days earlier. A White House staffer called and spoke with Coleman Peiffer, WEDC’s business and investment attraction director.

Terry Gou, chairman of Foxconn, is going to be in Washington on Friday and wants to meet with your governor, Peiffer was told.

At first, Braun said, she and her colleagues doubted that they could get Gov. Scott Walker there on such short notice. But WEDC Secretary Mark Hogan was going to be in Washington on a personal visit. He could take the meeting.

Then Peiffer heard from one of his contacts. Brian Smith, a partner with consulting firm Ernst & Young who was already working with Foxconn, gave him a heads-up: This thing could be big; you might want to get Walker to Washington.

‘Huge waves’ of Foxconn people

Walker did go. So did his chief of staff, Rich Zipperer, and Hogan. They knew of Gou’s statements earlier in the year that Foxconn was considering spending billions on new factories in the United States, but Wisconsin hadn’t been mentioned in connection with those plans, Hogan said.

That changed with the meeting in Priebus’ office, and Walker’s administration got to work.

Braun and Pfeiffer met with Smith, the Ernst & Young partner consulting with Foxconn, a few days later in Chicago. Later that week, two or three of Foxconn’s leaders of its effort to find sites for factories in the U.S. came to Madison to hear a pitch for Wisconsin from WEDC, local economic development representatives and utility executives.

Then, on May 17th and 18th, some 35 Foxconn people spent two days touring Wisconsin in a coach rented by WEDC. Braun said they visited multiple sites in multiple counties – “less than 50 but more than 10.”

But Foxconn had its eye on southeastern Wisconsin from the beginning. “Huge waves” of people from the company began to roll through the corner of the state, Paetsch said.

“I mean, there have been hundreds of Foxconn personnel that have been in southeastern Wisconsin,” he said. “…Some of them are here indefinitely.”

Many were tasked with evaluating potential plant sites, the assembly of which has been the chief mission of M7 and the local groups with which it is working.

“The kink in the garden hose in any economic development deal is real estate,” Paetsch said. “If you get everything else right – they like your business climate, they like your tax structure, they like your work force, they like everything else about you – but if you can’t find a piece of real estate on which they can execute, none of the rest of that matters.”

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Stitching together many smaller parcels into the 1,000-acre blocs Foxconn needs is something that hasn’t been done here before, but Paetsch said “multiple” sites in M7’s region have been assembled. Foxconn will choose from among them. Asked how confident he is that a site will be available, Paetsch said, “100%.”

Whirlwind trip to Osaka

Amid the land hunt, Walker made his now-famous whirlwind jet trip to Osaka, Japan on the first weekend in June. Paetsch was on board too, clearly showing that if Foxconn was coming to Wisconsin, it would be coming to one of the southeastern counties.

Gou wanted Walker to see first-hand Foxconn’s LCD panel manufacturing facility in Osaka. Foxconn acquired the plant with its purchase of Sharp Corp. last year, and it is similar to what is planned for Wisconsin.

Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce, secured a plane, a Northwestern Mutual Life Insurance Co. jet. The Milwaukee 7 paid for its use and later was reimbursed by WEDC, Sheehy said.

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Besides Walker and Paetsch, passengers included Braun, Wisconsin Secretary of Administration Scott Neitzel, and two Milwaukee-area business executives – Rockwell Automation CEO Blake Moret, and Gale Klappa, the recently retired CEO of WEC Energy Group.

The flight took 15 hours, most of which the group spent working on its planned presentation to Foxconn. The jet left Mitchell International Airport in Milwaukee about 11 a.m. on Friday, June 2, and landed in Japan mid-afternoon Saturday, local time.

The itinerary called for the group to be shuttled to the Imperial Hotel in downtown Osaka, rest and freshen up for a few hours, then join Gou and other Foxconn executives for dinner.

That didn’t happen. Instead, Gou met them at the airport, where they got into vans still wearing comfortable traveling clothes – Walker had on blue jeans and a UW – Madison polo shirt – and were whisked off to Foxconn’s factory.

For the next three hours, company executives demonstrated the advanced technologies Foxconn is working with – display panels with resolution so precise that doctors can use them to do surgery remotely, panels that eventually could be deployed in driverless cars, and others.

It seemed like a window to the future.

“The whole thing was intoxicating,” Paetsch said. “You couldn’t help but get excited about the possibilities for our state.”

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Meanwhile, Walker and Gou, who was impressed by what he saw as the governor’s commitment and energy, were getting along well. Braun watched as the bond tightened.

“We felt like just right there alone that relationship was incredibly valuable to Wisconsin,” she said. “And so I think that was a key. It put us over the top, I think.”

The next day, Sunday, Foxconn fetched the group members at the hotel at 7:30 a.m. and took them back to the factory for more meetings and a tour of the production area. During lunch, Walker spoke broadly about Wisconsin’s advantages, Klappa outlined the state’s electrical power resources, and Moret talked about Rockwell’s experience as a technology company doing business in Wisconsin.

Then it was back to the airport by mid-afternoon and the return leg of a three-day trip that involved more time on the jet than on the ground. This time, though, they got some real sleep.

Walker seen as the key

It’s always a good sign when a company invites you to visit them at their home, Paetsch said. But the Walker-led group wasn’t counting itself a winner yet.

“We didn’t walk out of there thinking we had anything in the bag,” Paetsch said.

Still, after the visit to Osaka, Wisconsin’s chances had advanced far beyond where they had stood little more than a month earlier.

They kept advancing, as negotiations continued and President Donald Trump hinted at the state’s likely success during a visit to Waukesha in mid-June.

By the time Gou came to Wisconsin the second week of July, flying in on his Gulfstream 650 jet and, among other stops, visiting the governor’s mansion for barbecue, Braun at least was confident that the state’s efforts had succeeded. She was right.

And like Paetsch, she pointed to Walker as the key.

“When a company is looking at making that significant of an investment and taking that much risk in a location, to feel like you can trust the leadership and trust the team and know that they are going to work as hard as their own company on making that project successful, it’scritical,” Braun said. “And I think that alone can probably get more deals done than anything.”

 

 

 

 

 

 

 

 

 

 

 

 

 

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