FDI Intelligence - Jacopo Dettoni
Jun 20, 2022
Alan Yeung’s book on Foxconn’s infamous ‘flying eagle’ project takes the prize as the best book ever written on a project that never happened
Alan Yeung’s book on Foxconn’s infamous ‘flying eagle’ project takes the prize as the best book ever written on a project that never happened.
Flying Eagle walks a fine line between the epic and the comedy of errors that led to the project’s failure. Its author, a former Foxconn executive who spearheaded the negotiations between the Taiwanese company and US officials for the reshoring of major electronics manufacturing capacity to Wisconsin, provides a great insight into one of “the craziest runs in site selection history”.
The main character of this epic is Foxconn’s revered founder and leader, Terry Guo — a modern Genghis Khan, according to the author, as “they both enjoyed a fearsome reputation amongst their peers”.
In 2016, Mr Guo tries to seize the opportunity to gain a major production foothold in the US by putting forward Foxconn’s name to the newly elected Donald Trump’s ‘America First’ campaign. What followed is a remarkable example of the kind of crony capitalism and reckless dealmaking of the Trump administration.
The legendary inception of the ‘flying eagle’ is as follows. Softbank president Masayoshi Son is about to meet Mr Trump in December 2016. Out of the blue, Mr Son calls Mr Guo and asks “how many jobs would Foxconn create and how many billions of dollars” he would invest. Through a “faulty phone connection … between two non-native English speakers” an agreement is struck. “Many, many thousands of jobs became 50,000 jobs, and several billion dollars would inadvertently become $7bn,” the author reports.
Mr Trump was undoubtedly ecstatic. A few months later, Mr Guo meets Jared Kushner — Mr Trump’s son-in-law and special advisor — who invites the businessman to meet Mr Trump in person and set the project in motion. The rest is history.
Foxconn’s investment decision simply boiled down to Mr Guo’s personal feelings: “He decided to invest in the US solely because of President Trump.” The decision to pick Wisconsin was “a Terry decision” too. Part of it was based on the state’s close connection to the Washington elite — with then governor Scott Walker being close to Mr Trump, and then house speaker Paul Ryan being a Wisconsin native. Other factors played a role: “Besides talent, speed and cost, we looked at the criteria through the lens of overall investment climate and financial health of the states.”
There were obviously also incentives: “Tax credits were required to help level the playing field between the US and China.” Foxconn pulled out all the stops to get the best deal possible. According to the author, Reed Cordish, then a presidential senior aide, asked Mr Trump about reallocating a portion of the $2bn of funds previously committed to the UN Green Climate Fund to support the project. Louis Woo, Mr Guo’s right hand, went as far as suggesting the US “should seek and receive a favourable trade status from the World Trade Organization as a developing nation” since from an electronics manufacturing perspective, “it was really a developing country”.
Eventually, the company got a multi-billion deal for its $10bn pledge, which would create 13,000 jobs in Mount Pleasant. “You are not offering the most money. But money isn’t everything,” the author himself told Wisconsin’s officials “in a solemn and dignified tone” — after agreeing to a package of incentives worth $3bn — the biggest ever offered to a foreign company.
But it was all for naught. Foxconn never fulfilled its initial ambitions and renegotiated the contract in 2021, massively reducing the investment pledge to $672m and the job creation target to 1454. Incentives were reduced to $80m too. Unfortunately, the author does not mention anything about the reasons why the project eventually turned into one of the biggest busts in site selection history – certainly good material for a follow-up.