As the political debate over a Wisconsin-based Foxconn manufacturing plant ramps up, startup leaders are wondering what the development could mean for the state's existing tech economy.
Gov. Scott Walker, President Donald Trump and Foxconn officials announced the decision by the multinational Taiwanese corporation to locate a $10 billion electronics manufacturing campus in southeastern Wisconsin. The Republican chair of the Assembly’s jobs committee, Rep. Adam Neylon, said Tuesday that the group would take up Walker's Foxconn incentives package on Thursday.
White House officials asserted that while the initial campus would provide 3,000 new jobs, it could eventually grow to provide 13,000. The plant would be a sophisticated electronics manufacturing hub, specializing in high-resolution liquid crystal display monitors. The technological aspects of the facility have been a focus of the project’s rollout, with Walker making comparisons to the West Coast tech economy.
“We are calling this development 'Wisconn Valley,' because we believe this will have a transformational effect on Wisconsin, just as Silicon Valley transformed the San Francisco Bay Area,” he said after the announcement.
Max Lynch, the CEO of the Madison software maker Ionic, takes issue with the “Wisconn Valley” branding. This is not Wisconsin’s Silicon Valley moment, he said — there’s no clear link between a manufacturing plant and tech innovation.
“This is like an Amazon warehouse,” he said. “An Amazon warehouse isn’t where Amazon is innovating on stuff like Alexa.”
Others, however, are hopeful that Foxconn will make a difference. Joe Kirgues, the Milwaukee-based leader of the startup accelerator gener8tor, said that a Foxconn plant could stimulate the “knowledge economy” — a term used to describe companies oriented around innovative ideas and information instead of goods production.
He said there could be a greater demand for workers in technical fields like mathematics and engineering. That demand could in turn fuel the knowledge economy through the growth of resources at technical schools and the University of Wisconsin System.
“To me, the moment offers the powerful argument that ‘Hey, we need to add 20 more computer science professors,’” said Kirgues.
Rebecca Blank, the UW-Madison chancellor, has already proposed strategic partnerships with Foxconn that could result in funding for research and development at the university.
Kirgues also said that there’s an entire realm of startups that specialize in manufacturing. He noted that gener8tor is partnering with Wisconsin Manufacturing and Commerce on a conference this fall in Milwaukee that will connect such entrepreneurs with legacy manufacturers. The idea is to foster partnerships between those companies, and maybe even connect ventures with corporate investment dollars.
Chandra Miller Fienen, interim executive director of the planned Madison entrepreneurship center StartingBlock, echoed that there’s potential for Foxconn to help startups. It all depends on “the kind of player Foxconn wants to be.”
“They could help entrepreneurs scale an idea, if it’s in their space,” she said.
Mixed with those hopes are concerns about what Walker’s proposed $3 billion Foxconn incentives package could mean for startup-focused economic development.
John Neis is a managing director of Venture Investors of Wisconsin, one of the state’s major venture capital firms. He’s an outspoken proponent of expanding the state’s Qualified New Business Venture program, which provides tax incentives for both startups and their investors.
He expressed concern that the state’s “bold bet” on Foxconn could end up cannibalizing state funding for the QNBV program.
“I’m just saying, don’t forget about Wisconsin entrepreneurs,” he said.
He posited that while major deals with giant companies like Foxconn make headlines, smaller-scale startup investments can offer more efficient ways of stimulating job creation and economic growth.
“I’m just trying to ask the question of where we’re getting the most bang for our buck,” he said.
Were the Foxconn package to impact funding for the QNBV program, it would be another example of the state shifting economic development funds away from entrepreneurship and toward efforts to attract more established companies.
Lynch is unconvinced that Foxconn could spark entrepreneurial activity in the region. He’s also skeptical that startups and investors are motivated by state tax incentive programs.
However, he is worried that the Foxconn deal could ultimately hurt the tech economy if it helps Walker win re-election in 2018. The governor has hurt the tech sector by endorsing social policies that drive talent away and by cutting funding for the University of Wisconsin System, he said.
“That would be a net negative for the tech scene in Wisconsin,” he said.
Correction: This story has been updated to fix an attribution error. Max Lynch, not Joe Kirgues, is unconvinced that Foxconn could spark entrepreneurial activity in the region, and thinks the deal might help Walker win re-election.