As the Wisconsin legislature works its way toward approving the $3 billion subsidy deal for a $10 billion Foxconn LCD Manufacturing complex, I had an opportunity this week to get some first-hand perspective on southeast Wisconsin, the area which seems likely to be chosen by Foxconn as the site of the first LCD manufacturing outside Asia. After dropping my youngest son off for his freshman year at DePaul University in Chicago, I headed north for about an hour into US House Speaker Paul Ryan’s congressional district in Wisconsin. If this Foxconn deal goes through and the investment is made, southeast Wisconsin will become the most important area for the display industry in the US, so I figured I ought to get to know something about the area and relate that to our blog readers.
Before I relate my visit, first let me update readers on developments in the Foxconn deal. The Wisconsin legislature’s Joint Finance Committee scheduled a vote for Tuesday, September 6th, on the incentive package. If approved, the package would move to the state Senate for a vote. The MOU signed by Foxconn Chairman Terry Gou and Wisconsin Governor Scott Walker requires the incentive package to pass by the end of September, and it appears to be well on track to do so.
Assuming the subsidy packages passes, it will fall to Foxconn to select a specific site. Local newspapers have indicated that farmers in Mount Pleasant have been approached about selling their land, with the price for such a deal 10x the typical rate of $5000 per acre. The most likely site has been related as the area of route 11 near Interstate 94, designated with a star on in the figure below.
The area has two small lakefront cities, Kenosha and Racine, each the county seat of a county with the same name. Both cities have long industrial pasts, but like many other cities in the northern “rust belt” have seen most of the manufacturing and industry go away. Of the two cities, Kenosha is a bit larger at about 100,000 residents to 80,000 for Racine, and as it is the last stop on the commuter rail line from Chicago Kenosha serves as a bedroom community for Chicago.
While some in Wisconsin have expressed concern that workers in Illinois would benefit from the subsidies, the pattern of work between the two states suggests that this is not a major threat. A study by the Wisconsin Department of Workforce Development showed that the number of residents of Kenosha County working in Illinois outnumbered Illinois workers in Kenosha by 22,000 to 5,000.
For the most part, a drive through Kenosha seems like a drive through any town in the US. Major retailers like Wal-Mart, Target and the like, along with fast food and fast-casual chain restaurants line the major routes into the city center, and the side streets hold single-family homes that appear solidly middle-class.
If you ask a random American what they think of when they hear the word Wisconsin, the most likely answer you will hear is “cheese”. From the Cheesehead gear of its Green Bay Packer fans to the “Wisconsin Dairyland” on its license plates, the state is known for cheese, and this was borne out this weekend in Kenosha, which held a “Cheese-a-palooza” festival of local bands in a lakefront park.
Cheese-a-palooza in Kenosha, Wisconsin: Some Sharp Cheddar for Foxconn?
On Sunday, there was fair weather and enough wind to encourage sailboats out to Lake Michigan. For those readers unfamiliar with the Great Lakes, from the shore they resemble the ocean: from Kenosha the lake is 70 miles (112km) across to the east, you can’t even come close to seeing the other side. As mentioned in last week’s DSCM (“Foxconn Could Start with Assembly Plants”, DSCM 08.28.2017), it is expected that Foxconn would tap water from Lake Michigan for use in the manufacturing processes. Prominent along the lakefront in Kenosha is the water treatment plant.
Perhaps even more than its larger sister city, Racine has made an effort to develop its harbor for boating enthusiasts, and several hundred pleasure craft settle in their marina, see Figure #. Some residents I spoke to said that Racine allowed great access to the lake at a fraction of the cost of having a boat in Chicago.
Marina at Harbor in Racine, WI
While the harbor area was filled with upscale apartment buildings highlighting a lake view, a few blocks inland Racine seemed far less attractive, with many empty storefronts and other signs of a city in economic distress.
Residents of the area that I spoke to were generally pleased at the news of the Foxconn deal, although one said that “for most people, their opinion of the deal goes with their political opinion, the Republicans like it and the Democrats don’t”. Many of the residents were pleased at the promise of thousands of jobs, and at the prospect that the likely influx of new residents would increase real estate values in the area. None that I spoke with had any special understanding of displays.
Outside Racine, along Route 11 towards I-94 (about 7 miles or 11 km) there was an abundance of farmland that could be made available for a large manufacturing site, mostly planted with corn but also some cabbage and soybeans. Along I-94 between Racine and Kenosha there is some evidence that the area is well positioned for efficient logistics, as there is a large Amazon Fulfillment Center just east of the highway. An hour drive south on I-94 takes you to Chicago’s O’Hare Airport, where it’s likely that engineers and managers from Japan and Taiwan will be arriving in a few years to work on the US’s first flat panel display plant.