Minnesota’s Economic News — W/E 1/28/22
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In recent years, Wisconsin’s job growth has rapidly outpaced Minnesota’s. And that was before the announcement of one of the biggest development projects in years, Foxconn’s first-ever expansion into the United States. The Foxconn project will be huge:
The proposed manufacturing campus is expected to occupy some 20 million square feet — larger than the Pentagon, and equivalent (as Governor Walker noted during the announcement) to 11 Lambeau Fields in area. This will be the first factory of its kind in the United States, and the only one not presently located in Asia (the others are located in China, Japan, South Korea, and Taiwan). The plant is expected, over the next fifteen years, to employ some 13,000 people in all capacities. Its construction will generate some 10,000 construction jobs, as well as 6,000 additional jobs in companies supplying goods and services for the construction contractors. It is expected that as many as 150 suppliers of goods and services in the area will generate as many as another 22,000 jobs in southern Wisconsin and northern Illinois. The company claims that the average salary for employees will be about $54,000 per year with full benefits.
The Foxconn project is so significant that it was announced at the White House. It has been described as a $10 billion project, but the ultimate cost is likely to be considerably more than that.
Seven states reportedly were considered for the project: Ohio, Pennsylvania, Michigan, Illinois, Wisconsin, Indiana and Texas. My question: why wasn’t Minnesota in the running? Is Minnesota simply unable to house a project of this magnitude? Was the Dayton administration uninterested in creating thousands of jobs and billions of dollars in economic activity? Or is there some other reason why Minnesota wasn’t considered?
If Wisconsin can win a project like Foxconn, why can’t Minnesota even compete for it? One analyst identifies some of the factors in Wisconsin’s favor:
* Wisconsin already has a very large manufacturing base. Though the state’s motto is “America’s Dairyland,” Wisconsin has the second-largest manufacturing base of any state in the union (Indiana is first). Among other things, this means that Wisconsin has the technical schools and university system to train the numerous technicians, engineers, and so forth who will be in demand by the new plant (and the technical colleges and local university campuses are already making plans for the expected expansions).
* Since the Walker Revolution of 2010 — when the Republicans took over nearly all state-wide offices as well as control of both houses of the state legislature — a number of reforms have made Wisconsin a far more attractive state in which to do business than was the case previously. These include reductions in income and property taxes, balancing of the state budget by curtailing public employee unions and restricting spending, the passage of a “right to work” law, and a much friendlier regulatory climate than was the case previously. Prior to the Republican takeover in 2010, Wisconsin had been ranked near the bottom of states in which one might want to do business, and numerous companies were considering leaving the state or curtailing their operations there. Now, it is considered in some rankings to be among the top five.
* MLCD manufacture requires access to plentiful supplies of water, and Lake Michigan fills the bill very nicely.
* Location, location, location: Located near the geographical center of the country, shipments to and from the plant to destinations throughout North America can be made in a very cost-effective and economic manner. Proximity to both Mitchell International Airport in Milwaukee and O’Hare in Chicago, as well as smaller regional airports in Racine and Kenosha Counties (where sites for the plant are being considered) are certainly a plus as well.
There was a time when Minnesota could have competed with Wisconsin, Indiana, Texas and other states for major industrial projects. Are those days gone?
In order to get the Foxconn project, Wisconsin had to contribute value. The contributions that have been identified include refundable tax credits and expansion of Highway 94:
As an inducement to settle in Wisconsin, the state is offering an incentive package totaling some $3B, to be paid out over 15 years as the company ramps up. These include capital improvements in the region, such as the widening of I-94, the highway which connects the Milwaukee area to Chicago, to four lands from the present three.
There may be subsidies in the Wisconsin package, but reduced tax rates, if that is what we are talking about, are not a subsidy. Nor is expanding a highway in response to anticipated demand. It is also not something that is likely to happen in Minnesota. In Minnesota, the responsible authorities are more likely to shrink roadways to add bicycle lanes than to add traffic capacity.
Is Minnesota still able to compete for major industrial projects? In the Foxconn instance, did Minnesota even try? If not, why not? These are questions that one might expect Minnesota journalists to ask, but so far we have seen only silence from Minnesota’s press.