Negative Mount Pleasant ⇥ gimletmedia.com

Sruthi Pinnamaneni reported for Reply All on the circumstances that led to Foxconn building a new factory in the village of Mount Pleasant, Wisconsin. Josh Dzieza of the Verge also interviewed her about her report:

What’s your sense of the negotiation process? The village is giving them quite a lot of money and promising to buy land for Foxconn. Do you have a sense of how that came about and how the village assessed whether this factory was a good idea, or even feasible?

I think that they were basing a lot of the deal on assumptions. When you ask them, “Hey, the size of this incentive package that you’re offering is so very large, and you have a village whose budget is usually between $18 to $20 million, and you guys are offering an incentive package of $760 million, something you have to change is the state law to allow the village to do because it’s considered beyond the prudent borrowing ratio.” They say it was justified because the size of the deal was so large.

Meaning, Foxconn is offering them $10 billion, which is so much money, and so we obviously had to come back with an equally sweet deal to get them here. I mean, the problem with that is, when you talk to people who study Foxconn, or you just look at the way Foxconn has operated in other countries, is that they often come with a very large deal, and they walk back the deal to a place that seems comfortable for them.

The village now owes lenders hundreds of millions of dollars which, if it cannot meet its payment schedule, will be a debt spread amongst everyone in Wisconsin. Nothing about these incentives makes sense, and the way in which they were used to lure Foxconn to the town is heartbreaking and infuriating. This podcast is absolutely worth an hour of your time. Via Andy Baio.