The Vergecast - What Foxconn’s really doing in Wisconsin, with Reply All’s Sruthi Pinnamaneni

Episode Date: December 11, 2018

Nilay Patel interviews Sruthi Pinnamaneni on The Vergecast Learn more about your ad choices. Visit podcastchoices.com/adchoices

This episode of The Vergecast is brought to you by Glenn Fiddick. Tis a season to celebrate. Treat yourself in the ones you love to a whiskey that delivers the perfect union of smoky and sweet. Try Glenfidic Fire and Cain. Whether serve neat or on the rocks, fire and cane challenges convention, packing equal parts citrus and sizzle in every sick. Learn more about the newest experimental whiskey for the masters at Glenfiddick. Visit glenphidic.com slash U.S. That's glenphidic.com slash U.S. Drinking involves risk. Please drink responsibly. Hey, everybody, it's Neil from the Vergecast. On this week's interview episode of the show, I interviewed Shruti Pinnam-Mennanee,

who is an incredibly talented producer and reporter over Reply All. Reply All's episode last week was called Negative Mount Pleasant. It's an episode about Foxconn and Wisconsin. Foxxon, of course, is the huge Taiwanese manufacturing company that makes iPhones and TVs and every other piece of consumer electronics that you can think of. They're building a gigantic factory in Wisconsin. And Mount Pleasant is where I am from. It is where I'm from.

I personally grew up. It's where my family's home still is. And so it is wild that this huge company is building one of the biggest factories in the world in my hometown. It is extremely controversial. We've published some stuff on it, but Shruti went. She dug deep into what's happening with Foxxon and Wisconsin. She talked to the village president, this guy named Dave de Groot. Dave was just a guy who took some classes, basically a boot camp on how to be a politician from some right-wing groups. He became the village president of Mount Pleasant. And his first week in office, he got the Fox Sun. So there's just characters galore in her story. We talked about all of them. We talked about my conspiracy theory that all of this is a plot to capture the United States ginseng production, which is maybe true, maybe not true. And we talked about toxic sludge, basically all the stuff that Shrithy wasn't able to get to in her great episode of Reply All.

So check this out. Truthy's an incredible reporter. And frankly, for me, it was. super weird to be talking about my hometown on the verge cast with somebody from a pliol. Here we go. Shruthi. Pinnam-Manani. I got it right.

You did. I'm super excited. Shrithi, you are a reporter or a pli-all. Yes. And you did something to me is amazing. You went to my hometown. Not Pleasant, Wisconsin. And you just produced, and what I will tell you is an absolutely wild episode about the small town politics of Foxconn just

dropping in the middle of recine in Mount Pleasant. Yeah. So I want to start with like the very, very basics, which when I talked to you before and when I was listening to this episode, and I really encourage everyone to go listen to this episode of Reply-O. It's so, so good. You were already looking into Foxcon, and then they landed in Wisconsin, and you're like, I should look at that. And then you fell down a rabbit hole of village board meeting archive videos.

And then somehow you pulled the story. Just walk me through that, because that is already crazy. Yeah. So so much of the story, first off, is just purely an accident. So after Trump won the election, I was really, there were like specific things that I was really drawn to, which felt like issues where from the Democrat side, I mean, they believe things that I would expect them to believe a different thing. And ditto for Republicans, right? And so manufacturing was one of those things for me because traditionally you would think Democrats. would be the ones that are really gung-ho about bringing jobs back and really focusing on that.

And it was surprising to me so how much of the news coverage was like, jobs that can't be brought back. I mean, this is sort of like foregone conclusion feeling to things. And I really wanted to question that. And so I was taking a bit of a contrarian approach and being like, okay, everybody says the iPhone can't be made in the U.S., right? They're saying it's going to be too expensive or it's just like there's no. way to get all these components back into this country. And so I was looking for people who were trying to do crazy things like that, like sort of make a thing soup to nuts like in the U.S., a thing that people said couldn't be made here. And so somehow I wandered off from that path to Foxcon,

because I was looking at Foxcon's attempt to build this huge factory in Brazil. And then while I was doing that, just bam in July of last year, there was this Trump announcement saying, hey, we're bringing this huge Foxcon factory to Wisconsin. This is a great day for American workers and manufacturing, and for everyone who believes in the concept and the label made in the USA. And so right away, I thought, okay, I should look into that. And I had a certain set of assumptions coming in, having already looked at Foxconn in Brazil and India.

And that was they're going to come in big. You're going to make a bunch of promises, and then the project is going to be stalled. And that is not what happened. What happened was they moved incredibly quickly. The Trump announcement was in July, and within, I believe, eight months, they were already breaking ground. Yeah. Which I don't think anybody expected. And so I started to really look at the local level to see, like, how were they pulling this off?

How were they doing it this fast? And that's how I found the village board meeting takes. I come before the board today to talk about the same subject everyone has been for the last three months, Foxcon. As you can tell by my address, I am one of those who are probably going to lose my house. But then again, no one knows where this is going, right? After having done a ton of reporting, it's hard to imagine that this project is going to play out in the way that the most optimistic people think that it will. and a lot of people that I spoke to who moved out of their homes and said to me, you know, I did it because this is important. We need this.

I don't know if they're going to get what they want. Yeah. So let me just back up and just kind of levels. So Foxconn is a huge manufacturing concern. They're headquartered in Taiwan. They have facilities in China. They make the iPhone. They make the Xbox.

They work for every big tech company. They decided to drop into Wisconsin. Scott Walker and President Trump said, we'll give you, depending on who you ask. somewhere between $3 and $5 billion worth of tax subsidies, and in exchange for promising $10 billion investment, they promised a bunch of $50,000 jobs, average $50,000. If you do the math, the state is going to pay Foxcon $200,000 per $50,000 job, that doesn't pay back for like 30 or 40 years, or never, depending on who you ask.

And then the plant was designed to make, what, 75-inch TVs? That was what they promised. That's already been scaled back to making, like, Android, tablet, or something, and it could get further scaled up. Yeah. And so you're saying, this is Fox Guns history. They come in big, they ask for whatever they're going to get, and then they scale it down and scale it down.

And the people in Wisconsin, who are saying, we've got to just try, you think they're going to end up disappointed. I think so. And I think that sucks because, again, I'm not a manufacturing job skeptic. Like, I did speak to people who are like, you know, the thing that people want to do,

bring back tech jobs or manufacturing jobs, it can be done. You just have to be smart about it. But there was a feeling of, hey, it can't be done. And so why are we doing this thing, which seems like the odds are really stacked against it? This is so weird for me. This is home. Like, I was just there for Thanksgiving.

And to get to my parents' house, you have to drive down KR, that little local highway, which is a total mess. And that's where Foxcon is. Yeah. Like, I just drove by. I was like, well, there it is. It's a huge crater in the ground. And it's impossible to really imagine until you're there how large it is. The PR person told me it's, he said it'll be one of the largest manufacturing campuses in the world.

That's crazy. Yeah, it's crazy. So it's four and a half square miles. Just the Foxconn project. There's all these side areas as well. So imagine like four and a half miles one way, four and a half miles another way. And yeah, it's just right now, obviously, just like, fly. lap. You know how you spend the longer you spend away from where you're from there? I'm very much in

that mode now. I'm the most from Wisconsin now that I've not been there for over a decade. I caught this in your story too when I was listening to it. Wisconsin's full of very optimistic, good-natured people. I like being from there. I like being from the Midwest in that way. And Foxconn is going to take advantage to that better nature. You can just feel it that they're not being 100% honest. They weren't already not 100% honest with what they were promising, what they were saying they're going to do. The kind of side deals they're making, the verge has reported on. So they put $100 million in the University of Wisconsin. Yeah.

In exchange for that, they have this extremely ambiguous, like, patent sharing agreement that has all the grad students freaked out, that they're going to do engineering research and it's going to get turned over to Foxcon. And they're not going to be really responsible or accountable for that. Yeah. You can already see that playing out. Yeah. And everyone is saying things to me, or, you're going to be.

or things to our reporters of The Verge, like, well, it's not every day $100 million shows up. So we should try, which is the same thing they're saying to you. Totally. And it's interesting when you look at Foxcon specifically, it's either like a boogeyman or savior. It's like everybody's, it's such a vacuum of actual information about how, what the company wants. They wouldn't talk to you, right? No. And they sent me the best response I've ever gotten where they said, listen, we can't talk to you because it's our policy not to talk about any ongoing projects or,

any clients. So it's really, it's like we just don't talk. Yeah, they haven't spoken to us either. Yeah. So don't take it personally, I know because they don't talk to anyone. It's because there's a vacuum of information about Foxcon's motives, it's interesting how much the optimism has filled that. Like, of course they want to come here because this is just, like, who wouldn't?

But the issue is, like, Foxconn, weirdly, even more so than, like, the American businessman, They're like super smart and strategic. They're like proper capitalists. You know what I mean? Like they're coming in with a real plan for how can we do the thing that we actually want to do. But by the way, just to be, what we set this? There's Racine, Wisconsin. Over time, Racine has gotten bigger.

And the little like suburb neighborhood that I grew up in, Mount Pleasant became a village of like 20,000 people. So the first time I talked to you was like, Mount Pleasant's not a place. Oh, so you're from Mount Pleasant proper. Yeah. Oh, damn. Okay. Yeah, I'm out there. I'm in the six.

So my parents' house is now technically in Mount Pleasant, Wisconsin, which when I was growing up in, like, the 80s and 90s, like, was just part of Racine. Yeah. So Wisconsin's getting bigger. So we keep talking about Mount Pleasant. It's just right next to Racine. They're on top of each other.

It's a suburb that doesn't even have the feeling of being an actual village. It's not like there's a center to it with a main street. It's just a sort of neighborhood sprinkled around between just big fields or, or sort of like strip malls. Anyhow. So the village president of Mount Pleasins, guy Dave DeGroot, tell me his story because I think it's kind of amazing. Okay.

So Dave DeGroot, who really did not appear in any of the reporting that I have seen about this Foxconn project. But once you start listening to these village hall recordings, and again, village hall is just the place where the residents of Mount Pleasant, they go to listen to their village government, which is the village president, Dave de Groot, and his six village trustees, it's almost like a business meeting where they're talking about whatever local important thing from a softball game to sort of certain yards that are overgrown right now and need to be dealt with. So the residents go there to listen to the public meetings and also there's a chance

for them to go up and just speak their mind about anything for three minutes. So that's Village Hall. And so as I was listening to these recordings, it quickly becomes clear that President Dave de Groot is really one person said to me, he runs the place as if he were the mayor, right? And he, it is really, I think he has a set of priorities. And it was clear that Foxcon was a thing that he personally was invested in. Before I met him, I knew that he was very much in the party of Scott Walker, his Facebook banner. It was a picture of him shaking hands with Scott Walker. And so the whole thing started when Foxconn put out this anonymous RFPs for a number of places. Wisconsin, one of them.

I'm assuming that, no, I'm not assuming, I know this. The state of Wisconsin immediately was interested, and they had a team of people, negotiators who were mostly, my understanding is Scott Walker, who is a politician with no business experience, a few banker types, like finance guys, and they immediately said, okay, we need to get this. And then when it trickled down to the local level, you have someone like Dave DeGroote, who is suddenly in touch with his hero, Scott Walker. Like, he said that Scott Walker's office was calling his office almost every day just to say, you know, constantly like, what do you need?

How can we make this happen? Like really giving, you know, in his eyes, support. Yeah. I think the other way to see that is maybe they really wanted it. You could say cynically for political reasons or generously they wanted the political benefits but also the jobs. But for him, you know, they were like on the same team and also he's on the same team with President Trump. So I think for him, this is like a big moment for him. And this is like his first week in office.

Exactly. And so that was the other very surprising thing to me. He had just won the village presidency, like the local village elections. So this was April of 2017. He said within a week on the job, he first saw that letter. And so it's almost like he's catapulted right to the state slash White House level. And I think that was very intoxicating. How did you become a politician?

It's a little shadowy. I really scraped the internet to find all the information I can on Dave DeGroot. When I did interview him, I tried as hard as I could, and I think I'm generally pretty good at getting people to open up about their background. But he was very careful about what information he was going to give. There was a PR person there who's very careful. But here's what I know about Dave DeGroote. There's a group called American Majority that likes to take people who are of a Tea Party bent and really, train them in politics, like teach them about fundraising, teach them of what it takes to get

into local politics, kind of refine their views and just their talking points. And so he was part of this, I'll call it a boot camp. I think they selected about eight people. And he was one of them. Wow. Yeah. And so he was a village trustee in another small town, Elmwood Park, I think. Elmwood Park is right next to Mount Pleasant. So that was his first entry point into village politics. And then... I used to get my hair cut in Emwood Park. That's like, that's where I'm at it. And then in 2015, he became a trustee in Mount Pleasant. And then last year he won the village presidency. And he did really well.

I just want to be clear. And this was after his boot camp. And so the thinking is he came out of that boot camp, like really having the backing of local tea party slash conservative folks. And so they really helped propel him into power. Wow. The thing I didn't know, but really blew my mind, is none of the people on the village board, this is not their job. They're elected, but they're all part-time.

So Dave DeGroot, it's a little unknown exactly what he does, but he seems to be loosely like a landlord with some apartments. And so, yeah, it's not as if he's coming into this with any real business or government experience. So here's this landlord from Racineur Mount Pleasant. He goes to boot camp to become a politician. He ends up as the village president of like a 20,000 person community with sex to a much larger community.

It's about $26,000, yes. And then $10 billion a foxcon, it's a dropped on his lap. Is he in charge? In charge would be overstating it because I would say very much the people at the state level are in charge. But they found in Dave de Groot a person who was very, very receptive. And I do believe that there were neighboring towns who were also part of this competition to bring Foxcon there. And they dropped out because, especially Kenosha, which I'm sure you know, Kenosha dropped out because they said, hey, this doesn't make any sense for us.

This is just, Foxcon is asking for way too much. And so the mayor didn't think that it was good for his residence. Yeah. And so really at the end, it was just Mount Pleasant. There was nobody else. So now he's got leverage, but he doesn't use it. He just gives everything away. Yeah.

So my point is that I do think that Dave DeGroot had power in that, if he was very much against the deal, I don't know if he would have been the ideal partner for Scott Walker's team. So you have all this tape from these board meetings. They're like fighting. There's like other people who are against it and he's kicking them out. This is enough. You're out of order. You're out of order.

You're out of order once more and you're gone. These are residents of our community. If I hit this gavel one more time, you're gone for the rest of this meeting. How did the, like, opposition to this in this community, like, develop? It's so much more complex than that. And I find it so fascinating in that it's more complex than I expected. They're not even debating it with him, right? There's no moment where Dave de Groot said to the residents,

hey, you have all these questions about Foxconn. And I just want to say they might be coming. We don't know yet. Here's my opinion. He never said the word Foxconn until the deal. was done and signed. Wow. Right?

And so what was actually happening is residents heard rumors that there's, first, it was just something big is coming. They assumed it was a development. And I think a lot of people were excited because, like I say in the story, everybody I spoke to agrees that people want development there. It's not an anti-development community or like an anti-sort community. But they didn't know who was coming. And the other main character in the story, Kelly Galaher, who's this local activist, she said she started to get worried because they were hearing so little information.

And so she was trying to get her friends at local government to tell her what's going on. There were whispers. Maybe it's Foxcon. And then there's the Trump announcement where he's saying Foxcon is coming to Wisconsin. People put two and two together and they say, oh, they're probably coming to Mount Pleasant. And so they start going to these Village Hall meetings and saying, tell us what's happening. Like, is this going to affect my home? Are my taxes going to go up?

Who's going to get these jobs? Just really basic questions. But the village board, the president and his trustees, would just sit there and watch. They never responded. And so the reason things started getting tense is because people were having real emotional reactions but getting nothing in return. And so, yeah, you can just hear nerves fray, you know? That's enough, sir. Can I respond to that?

No, sir. You responded to me. sir. Let me respond back to you. Go sit down. Now, you're going to respond to your taxpaying citizens. Do you want to be called out of order? We can't respond back to you. No, sir. That is totally wrong. Go sit down. Who are you talking to, man? You're out of order. And then you have to apologize to everybody. It's so, it's so hard to listen to every single time I've heard it maybe 25 times at this point. And they're not even fighting about Foxcon. They're just fighting about whether or not a person can speak.

Yeah. That's it. It's the most basic kind of fight about what it means to be in a place that has some kind of democratic process. And so I just felt like there were a lot of ideas and tensions and kind of weirdnesses in there. Yeah. The other one that got me, and I want to actually talk about Foxconn, was that they're moving people out of their homes. And they're paying a lot of money. They're paying $30,000 an acre, like some 10x number of what you would normally get for this land.

But they're asking people to leave. they're paying the money, and then they're moving people into houses. Maybe there was one gentleman, I think he was in a wheelchair, and he needs to make his house successful. They won't give him the extra money to make his new house successful. And I thought that, just listening to that, I was like heartbroken. Yeah. It's so hard to imagine why the village decided to do it this way.

Because in the negotiations with Foxcon, the parcel of land that they needed to get ready for Foxcon right away. So they gave themselves a deadline of August 1st. And so by August 1st, they had to get about 60 homeowners off of this very large. We're talking like almost two square mile area of land. And the way they did it was the village said, Foxcon, you don't need to go individually and do the buyouts and buy the land. We will do it for you. In fact, the village is also paying for that land. Like they took out, I believe it was over $100 million in loans just to pay for the land.

So the village, your village, now Pleasant, is paying. a mortgage on land that they collected from their own residents and gave, not sold, not rented, gave to Foxcon. That's insane. It is odd. It's not what you expect a village to do. And just to get to Sean, they're not set up to do this kind of operation. Like the Board of Trustees, they're not real estate brokers, right? And so everybody I spoke to, even people who were for the deal, who lived on that land and had to move out, said,

The process was so chaotic. So many things fell through the cracks. There was all this confusion about what money, who was going to get, how, like, just getting the relocation fees. And I think most of the people took the deal that the village was offering because they know the village is doing this. And so the threat of eminent domain was always hanging above the whole process, right? So there wasn't room for negotiation. So a lot of them took the deal. And then the few people that didn't, yeah, that's really where it gets super contentious. But Sean is one of those people who took the deal, but still kind of fell through the cracks because he ended up in this house with four children and he's in a wheelchair. And the village argues that they already gave his mother the money. His mother owned the house that he lived in. But on some level, I don't know, even standing there, I was like, there is a lot of money in this project. And it's strange that this is the way they're cutting the corners. It's hard to swallow.

Yeah. And it just seems like what you want to do is make everybody excited. and $20,000 against $10 billion or $4 billion of subsidy should just probably get rounded away. Because they're spending so much money. I can't, like if you look at the breakdown of the numbers, so they've taken out all these loans, right? And so you've got hundreds of thousands of dollars that they're paying. The village is paying right now for all kinds of, they call it other services. But just to give you an example, every time I interviewed Dave DeGrethe, the village president,

there was a fancy PR person from Milwaukee who drove from Milwaukee to be. be there. Wow. You know, so they're spending a lot more money than they're saving on a person in a wheelchair living in a really shitty house with his four very young children. Yeah. Every time I mean, you know, we cover tech companies. We were very used to fancy PR people.

And every time I reach out to these folks, I'm like, hey, I'm going to be in town. I'd love to meet some of y'all. And I get these emails back. I'm like, this is pro PR. Absolutely pro PR. This episode of The Divergast is brought to you by Dell Cinema. Listen to this advertiser content from Del Cinema about how binge watching has changed everything. Kayla loves TV.

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Thanks to our sponsor Dell. Learn more about Dell Cinema's amazing color and Intel Core I7 processor at Dell.com slash XPS13. That's Dell.com slash XPS13. So let's talk about Foxxon. And I want to transition to it by just referencing this thing that Dave G. Grute told you. That's what drives the technology market is new whizbang stuff for, you know, for kids as

they're getting through school and getting into their income earning years. I listened to that, and I was like, you all got played. Like, you straight up got played. This isn't how it works. What Foxcon makes here is not what the kids are going to buy and best buy. The local engineering talent, like, there are engineering schools in Wisconsin. The University of Wisconsin has some good engineering schools. So Foxxon, like, doesn't make a ton of consumer products.

They have three brands. They have Belkin, which makes, like, iPhone cases and cables, Apple. Loves them actually. They have Wemo, which is like the smart plugs home stuff, and they have lynxys, which is the router company, and they own like a majority show Sharp, which is not the world's most popular TV company. If you're expecting Foxcon to show up and invent stuff, that is almost certainly not going to happen in this area. What struck me right away when I was talking to Dave DeGroot, and basically everybody else on the state side, the village side, who were working on this. deal was this real disconnect between what I understood Foxcon to be and what they were saying it was. So in my mind, Foxcon is a very practical, smart company that manages to make money in a sector that's

very difficult to make money. They operate on very skinny margins, right? And that's why they have these big operations, like a lot of people working on a thing that is expensive, but it works out. They can make it for less. And like you said, I always think of them as a company that puts together things, like they don't invent things. Did you know that they make, like, more than half of the world's gadgets? Like, more than half of the world's electronic stuff is just put together by Foxcom. That blew my mind. But when you talk to somebody like Dave DeGroot, and he's just spinning these ideas of, like, it's not even Silicon Valley.

It's like beyond Silicon Valley, right? Like, this is the company that's going to do sort of flying autonomous cars and health care. Do they say the phrase? My favorite phrase. Which one? AI 8K plus 5G. Oh, Foxcon did. I talked to this Foxcon analyst.

His name is Alberta MOL. He's in the story. But he told me when he was into the announcement, the Foxcon announcement, where you have the chairman standing next to President Trump and saying what they're going to make in Wisconsin. My first thought was vaporware. I mean, this is just nonsense.

What are they talking about? But anybody who talked to in Wisconsin, who was, you know, working on this deal, did not know that. And I just couldn't understand how, how do you not know that? I mean, just pick up the phone and call a tech consultant. It's not that hard. Yeah.

I spoke to this investigative reporter, Larry Tabak, who was in Madison. So he was really closely following the negotiation process. And he said, I called several flat screen consultants. There was not that many. And he said nobody had talked. Nobody was on the negotiating team. They didn't have any Asia consultants either. And so it was really, you know, they're not going into this negotiation.

negotiating room prepared. Because on the other side, you have people, the Foxcon folks, who are extremely prepared. Yeah. Right? This is what they do. And so, yeah, I mean, the ideas of what Foxcon is going to make and this WizCon Valley and what it's going to be, it really is out of, I don't even know what kind of movie. I mean, it's funny that they think it's going to be beyond Silicon Valley. Silicon Valley doesn't even make. Yeah, I know. Right. They make software. There's a really popular TV show in HBO that you could watch and be like, what actually happens here? and it's obviously a comedy, but it's closer to what happens in reality than some dream of a huge manufacturing facility. I didn't understand what was propelling this thing forward. I really didn't.

I didn't, when I started reporting the story, I didn't understand what Foxcon was getting out of it. I mean, obviously there's a lot of subsidies, but I thought, but still, does the math really work out in their favor? And I didn't understand what Wisconsin thought they were getting out of it. And when I really started speaking to people like Dave DeGroot, it takes your point. breath away, really, because you're like, oh, wow, you really think of technology in a way that I do not. You see it. It's not just a thing of the future that is coming now.

It is also a thing that lasts forever. You're shaking your head. I know that. It's just like I'm having like a visceral physical reaction to this because it's hot. Like they could have just asked. They could have just asked. And it's, I know, because that's the part. It's like, I don't want to be the skeptical person who goes into.

a small town and says like, this is stupid. But it's just like there are people who know these things and look at these things for a living. Just pick up the phone. Yeah. So the thing about that is even the history of the tech industry as we understand it is not very long. Even just now, Intel. If Intel was coming to Wisconsin, and I bring up Intel for a very specific reason I'll get to. If Intel was coming to Wisconsin, would people be excited? We're going to build all our chips in Wisconsin. Well, maybe, right? It's a big company. Yeah. Yeah.

Intel is in a moment of complete disarray. They're looking for a CEO. They can't compete on chips. And this company is not that old. So if you're making some permanent bet that's going to pay off in 50 years, the idea that any tech company, even the ones that we think are permanent, it's kind of scary. It is extremely scary. And a lot of the people who are making these bets don't know that. I mean, I can't blame them for not thinking through what's going to happen to this factory

because I honestly didn't really grapple with it until I spoke to this historian of factories. That is a job. It's a wild. You have a cool job. And he told me this thing at the end of the interview that I was like, I've never thought of that. He said, you know, when you look at the lifespan of a factory, it's coming down, right? So a factory like the Ford factory, the T-Model factory in Detroit, that lasted about 60 years. And he said, that's a very old factory. But factories now don't last that long.

Anecdotally, he was saying he thought it was about 10 years. Canada has some data that says that factories there last about nine years. That's nothing. And we're talking about building giant places. Like factories are not small, right? And so it's kind of like saying let's build big stadiums for sports that won't exist in eight years. And also to make a thing, like display technologies come and go. Yeah.

Right? So this is an LCD plant. My phone right now has an OLED screen in it. My TV is an OLED screen. I think LCDs are going to be around for a long, long time. Yeah. But you can buy a 75-inch LCD TV for like 500 bucks. And so it's like not even the most expensive or best thing.

And the closest I can get to understanding AI AK plus 5G. I can't even say it. It's so embarrassing. is that we're all going to roll around in self-driving cars powered by AI watching 8K TVs that are delivered over 5G. And like Foxcon makes one part of that value chain. Yeah. Right? They don't make the Waymo car.

We just did a big report on Google's Waymo taxi service in Arizona. That's made by Chrysler and it's full of a bunch of Google stuff. Yeah, yeah. Right? And like they don't make Qualcomm has all the patents on 5G. That's why they're demoing it in Hawaii right now. Yeah. that's their stuff.

So, like, the part of it that is Foxcon, it's like you didn't even like look at, they gave you this alphabet soup of letters and you even look at like who owns the letters. They just have a different view of Foxcon and I'm not sure what it's based on, honestly. It's like this is a company that is make so many different things and it's a multi-billion dollar company which is one of the biggest employers in the world. So I'm sure those things are what they chose to focus on. And even when Foxcon said that they wouldn't talk to me, they did send me their standard response to all questions related to Wisconsin. And it was basically we're committed to doing the thing that we said we were going to do.

It is going to be $10 billion in investment. It is going to be 13,000 jobs. And we really believe in Wisconsin. Like, they're going with the party line. Yeah. There is pressure that the governments at every level can put back on them. Right. Like tariffs on iPhones are real that will hurt their business.

They don't keep these promises or stuff. There's penalties that they will face. Yeah. But that's over a very long timeline. Have you seen the actual, the fine print of the deal with Foxcon? I've known. I know. I know.

The actual financial agreement. It's really that moment that the whole thing crystallized for me where I was like, oh, Foxcon's going to be fine. Like, this is, I'm sure they're doing it to hedge against tariffs. And I'm sure there was some political pressure. But when you look at what they're getting, there's just no reason they wouldn't have said no. Yeah. So basically once the factory is up and running, they've agreed to pay the village of Mount Pleasant $30 million in property taxes, which is nothing to sneeze at. But the village of Mount Pleasant is going to spend $18 million of that just to pay off its loans.

Like just to pay off the interest of its loans. And then they're going to give $10 million back to Foxconn. It's amazing. And then the rest of it just goes into expenses. So they actually don't make any money off the deal. when I talked to the consultant who worked on the finances of the deal. So he's actually, you could say he's like one of the architects of the incentive package, both at the state level and at the local level.

He said the reason I think it's conservative is because we're just banking on the Foxcon factory, just this factory. But we imagine we're going to get way more in property taxes, more than 30 million, because there's going to mushroom around this factory all these other parts of the supply chain. Like, it's going to be this booming manufacturing hub. But when I asked him, like, but what is that Foxcon factory around which all these other things are going to mushroom up? What is that factory going to make? He doesn't know.

Yeah. Nobody knows. You just assume you're going to bring in all these jobs and then they're going to need, I don't know, restaurants. Right. I spoke to this person who studies economic development packages and he said – he's in the story, actually, David Swenson. He's a sort of grumpy gnome of an economist you hear. He was like, you know, the thing that they're trying to do in Wisconsin, it's never worked. It's never worked for a government to say, we're going to create this huge tech hub.

And he said, the few people who have tried that, he pointed me to a town called Normal, Illinois. Do you know the story of the Mitsubishi plant? It's a little similar in that Mitsubishi said, we're going to put this factory in Normal, Illinois. Even though nothing related to car manufacturing is close to there, we're just going to assume that people will come, like sort of come up. organically and it'll just flourish because, because, and it didn't. Yeah, that's basically the story of small town America all over the place. So one of the reasons we were told that Foxxon had to be where it is is because LCD manufacturing takes a lot of water.

Yes. And they need to just, like, siphon water from the Great Lakes. So when I was driving through this area in November, just at home, I'm like, wow, they're digging up everything and there's just massive conduits everywhere. and that's because they need all this water. Yeah. Are they going to get it? Because the new governor kind of doesn't want to give it to him, right?

No. They were told they were going to get it. There's a pipeline already that is being built from racing to the factory site. But there's a lawsuit against it. So there's people who are saying that you cannot use the Great Lakes Water for a private corporation that's sitting, like, not even fully within the basin. Yeah. So that's, I think they're arguing it in a couple months. And they're going to presumably create a bunch of, like, toxic sludge.

So much toxic sludge. Like LCD plants create like several, several, several tons of sludge a day. And this Foxcon factory sits on wetlands. A lot of the environmental regulations were waived. They don't have to actually like be careful about what they do with the wetlands as they build the factory. And they haven't yet said what they're going to do with the toxic sludge. That's an amazing thing to have not yet discussed. Yeah.

And it seems like that's the new governor's primary point of leverage. It is. but let's see. I mean, yeah, he still has to contend with all the local politicians who are not so, who might have a different feeling about the environment than he does. When I spoke to someone in her scene, they said, you know, where we're seen in there, I'm not pleasant. It's just like a very like, okay.

I heard that a lot. I did hear that a few times. Okay, so here's my conspiracy theory. And this has been reported out a little bit. Yeah. Foxxon is, they're in Wisconsin. Mm-hmm. They also own like a premium ginseng business in China.

which is amazing. There's an amazing sentence that I love. And they are buying and partnering and investing in ginseng farms all over Wisconsin. And so my theory is that this factory is like a ruse. And before you know, the people of Wisconsin are going to wake up and realize they all work for ginseng farms. Wow. And it's all been terraformed into like ginseng central. And it's been like a sneaky diversion.

Totally. The thing that you should add, which I think gives some weight to your conspiracy theory. is that 95% of American ginseng is grown in Wisconsin. And do you know who loves American ginseng? Chairman Terry go. See? It's there. That's like the vergiest verge story I can come up with is Foxxon swooped in and bought up all the ginseng in America.

There is one other conspiracy theory, which is sort of, I think, much more sinister. Yeah. Water. They're there for the water. The Great Lakes last remaining, the largest source of freshwater remaining. And they're coming from a part of the world where water isn't easily accessible. Yeah. To me, having looked at the numbers, I think they're coming because they were given enough subsidies to come.

But yeah, there are a lot of resources that are being spent from ginseng to water on a company where we're not sure exactly what their plan is. Yeah. I think that's the piece of it where it's you've got the people in Wisconsin who run Wisconsin and they're not talking to Terry Gow. Right. They're talking to Foxcon functionaries who are just there to hit their numbers and move on. And that disconnect, I think no one is particularly happy about. Whoever Dave DeGroot is talking to at Foxcon, they're going to get promoted in a year and leave. And there will be some other executive in charge of just a factory.

And I don't think anybody has given that disconnect enough credit. I don't think anybody has thought about who am I going to hold accountable. It's just this company and they're going to pay the money and do whatever they want to do. At the same time, I do share, like, that. slight optimism. You know, the Verge published a big piece about Foxcon right before the elections. I sent it to my parents. I'm like, my dad's a Republican.

My mom's a Democrat. They're like wildly different responses to this. Yeah. But they're like, don't you hope it works out? Yeah. And that to me is like I'm still from the Midwest, right? Yeah. That feeling is still there.

So what is the best case scenario? Oh, gosh. Honestly, I think a best case scenario is Foxconn builds something and, maybe it's close to what they say it's going to be, just LCD screens, it's going to create a lot of jobs, and they do actually pay people what they say they're going to pay. Right now, they promise to pay an average of $50,000, but if you look at the fine print, they can actually pay people far less. But if they actually turn out to be a good partner, and they do create good jobs, like family supporting jobs, I don't know. It just seems like, even as I say it out

loud. We just shouldn't be hoping for the best. I think I think the way to do it, if you're in government, is go for the thing that you can get. You know, there are things in Wisconsin where you can make stuff like robotics is a really, it's a flourishing sector in Wisconsin. Like, fund people who are doing good things and like, you know, build it from the ground up instead of trying to go after some mysterious sort of... Jensen conglomerate. Yeah. Yeah. But yeah, the best case scenario, is that they build a thing and they do make jobs and they are careful with the environment. Yeah.

You know, it's interesting is there's other huge tech companies in Wisconsin that nobody ever talks about. So, like, Epic is like the world's largest healthcare software provider. It's privately owned. It's just like they're up there in Monaco. They're, like, doing it. And like, why don't you give them $10 billion and see what happens to that? Like, that to me is like the hard part. But we'll see what happens.

Shruti, thank you so much for doing. And we went like, you gave us so much time. I'm so appreciative. Thank you for having me. Yeah, and it's a subject that I'm so deeply fascinated with. So I can talk about it forever. Well, look, I'm going home for Christmas. I'll let you know if there's any updates.

Seriously. And we'll have you back soon. Thank you so much. Okay, great. Thank you. All right. So that was Shruthy Pinnamandani from Reply All. Thank you so much, Shruthy, for coming on the show. If you haven't yet listened to Negative Matt Pleasant, which is Shruthy's episode about

Foxcon and Wisconsin, go listen to that now. It is absolutely wonderful on highly recommend it. We'll be back later later. this week with more the regular Vergecast and every Tuesday with more interview episodes. I love hearing from you on how this is going. Please tweet me. I'm at Reckless. I'd love to hear from you about who we should interview and what we should cover. It's tremendously valuable. We'll see you later this week. And now another word from our sponsor, Dell. The Dell XPS 13 with an eighth-gen Intel Core I-7 processor is the laptop for people who never say no to one more episode. With

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