Foxconn to open new plant in Michigan
The announcement comes on the heels of the manufacturing giant’s decision to invest in Wisconsin.
Foxconn is expected to open a research and development plant in Michigan, CNBC reports.
This plant will be the second facility the electronics manufacturer will open in the U.S. In July, Foxconn announced it would build a production plant in southeastern Wisconsin. Work at the Michigan plant will revolve around autonomous vehicles.
Details of the investment and jobs numbers have yet to be released. The Wisconsin plant is expected to create at least 3,000 and as many as 13,000 jobs.
“We had a very productive dialogue about the importance of talent in manufacturing and the future of autonomous driving in addition to a tour of Foxconn’s world class products and manufacturing facility,” Michigan Gov. Rick Snyder said in a statement reported by Crain’s Detroit Business following a visit to Foxconn in Shenzhen, Taiwan.
Illinois tried to persuade Foxconn to invest in the Land of Lincoln, but the state has struck out twice. Illinois frequently misses out on new business opportunities due to high taxes and regulations. From 2012-2016, Illinois was the only state in the region with a net loss of manufacturing jobs.
Compared to Illinois, Michigan offers lower combined state and local tax rates, lower property taxes, and lower workers’ compensation costs for a wide variety of blue-collar jobs.
Additionally, Michigan is a Right-to-Work state. Right-to-Work laws ban workers from being forced into a union or being forced to resign from a union as a condition of employment.
From March 2013, when Michigan enacted Right to Work, to May 2017, Michigan nonfarm payroll jobs increased to 4,383,300 from 4,097,000, a jump of 7 percent. In comparison, Illinois nonfarm payroll jobs rose to 6,040,500 from 5,791,700, an increase of 4.3 percent.
Over the same period, Michigan manufacturing jobs grew to 608,700 from 543,200, a 12.1 percent increase, whereas Illinois manufacturing jobs shrunk to 573,400 from 581,800, a 1.4 percent decrease.
Illinois does not have statewide Right to Work, and the Illinois General Assembly has passed a bill to ban local governments from passing Right to Work and sent it to Gov. Rauner’s desk.
Combined with the restructuring of the auto industry, Michigan’s economic policies promoted business growth and curbed out-migration.
Unfortunately, lower taxes and fewer regulations were not the only factors influencing Foxconn about where to build its facilities. Wisconsin offered Foxconn an incentives package worth $3 billion. A report from the non-partisan Legislative Fiscal Bureau shows that it will take the Badger State 25 years to break even, according to Reuters. And Reuters notes that the report stated that if 10 percent of the job openings at the Foxconn plant were filled by Illinoisans, Wisconsin would not break even until 2044. This possibility may not be entirely unfounded, given southeastern Wisconsin’s close proximity to Illinois.
Likewise, Michigan recently passed a tax incentives law that would allow employers to keep 100 percent of its employees’ state income taxes for up to 10 years if employees were paid above the national average, according to Crain’s Detroit Business.
Not only are incentives packages like these expensive, but they also unfairly burden taxpayers and other businesses by forcing them to essentially subsidize private entities.
While utilizing targeted incentives is unfair and expensive, Wisconsin and Michigan’s pro-growth policies make it a prime candidate for business investment. Businesses need a healthy environment in which they can grow. Illinois cannot expect jobs growth when employers are stifled by high taxes and excessive regulations.