Donald Trump, Paul Ryan, Terry Gou
President Donald Trump, waves after he announced last July that Foxconn planned to build a massive plant in Wisconsin. To the left is House Speaker Paul Ryan. To the right is Foxconn CEO Terry Gou.
Alex Brandon, Associated Press

MILWAUKEE — The Foxconn Technology Group manufacturing complex that President Donald Trump helps launch Thursday in Mount Pleasant, Wisconsin will differ significantly, at least initially, from the original plans.

While two economic-impact analyses prepared last year and the state’s contract with Foxconn say the company will build a type of factory that carves display panels out of immense sheets of wafer-thin glass, Foxconn now says it first will erect a plant that uses much smaller sheets of glass.

Such factories typically are much smaller and less-expensive than the sort of plant Foxconn originally planned, industry observers say.

The firm, however, has said “categorically” that it remains committed to investing the full $10 billion in what it has named the Wisconn Valley Science and Technology Park, and to creating 13,000 Wisconsin jobs.

Foxconn says it could build the larger type of factory in a second phase of its project. The company has ample land available for such construction.

Earth-moving work to prepare Foxconn’s factory site in Racine County has been underway since early May, and two weeks ago the company bought a seven-story headquarters building in downtown Milwaukee where it says more than 500 people will work.

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Change of plans

Foxconn’s change in direction on its initial plans for its flat-screen plant has emerged only in the last few weeks.

Last year, as the company was considering Wisconsin as a potential site for a massive new display panel factory, Foxconn’s consultant analyzed the impact of a “Generation 10.5” liquid crystal display plant, and shared the findings with state officials.

A second consulting firm, hired by the Wisconsin Economic Development Corp., also analyzed the impact of a Generation 10.5 plant to review the findings of Foxconn’s consultant.

Contracts Foxconn later signed with both the state and the local governments also refer to the “Generation 10.5” fabrication facility the company will operate.

But Foxconn no longer plans to initially build such a plant. Instead, the company first will build a “Generation 6” factory — Gen 6 in industry shorthand. Such plants are much smaller and much less costly than Gen 10.5 factories, use different machinery and turn out different arrays of products, industry watchers say.

The shift was first reported in May by Japan-based Nikkei Asian Review, in a story citing industry sources, and then by Milwaukee publication BizTimes last week following an interview with Foxconn executive Louis Woo. A Foxconn spokesman confirmed the BizTimes report.

“They are two completely different sets of production technologies, supply chains and markets,” Paul Semenza, a California-based display industry consultant, said of Gen 6 and Gen 10.5 plants.

The jargon about generations refers to the dimensions of the piece of “mother glass,” or substrate, that an LCD plant slices into displays for electronic devices ranging in size from a smartphone to a 75-inch TV.

A Gen 6 plant uses mother glass measuring roughly 5 feet by 6 feet — almost big enough to cover a queen-size bed. The mother glass at a Gen 10.5 plant is more than three times as large. It measures about 9½ feet by 11 feet.

The size difference alone means a Gen 6 plant occupies significantly less space, said Bob O’Brien, president of Display Supply Chain Consultants LLC and a former executive with glass producer Corning Inc.

“The fab is so much smaller,” O’Brien, of Ann Arbor, Michigan, said. “Your line needs to be half as long and half as wide because your substrate is half as long and half as wide.”

Gen 6 factories typically are used to produce smaller display panels — nothing larger than a 39-inch TV, O’Brien said. Gen 10.5 plants are ideal for making 65-inch or 75-inch television screens.

Few plants of that size exist. One is in Japan, operated by Foxconn subsidiary Sharp. Foxconn showed that plant and its operations to a delegation led by Gov. Scott Walker last June amid Wisconsin’s ultimately successful effort to attract the company to the state.

tablet-and-tv_large.jpg
The Foxconn factory is expected to produce displays for a wide range of consumer electronics.
Getty Images

Corning plans factored into decision

A key factor in Foxconn’s decision to begin with a smaller Gen 6 factory may lie with Corning.

The New York State-based company likely will supply glass to Foxconn. With a Gen 6 plant, that glass could be shipped from a Corning factory in Harrodsburg, Ky.

Gen 10.5 glass, however, is so big that it can’t be transported over such distances. The glass-making capacity must be built near the LCD plant, if not on the same site.

Such glass production is expensive. In December 2015, Corning said its glass plant for a Gen 10.5 LCD factory — which opened late last year in China — would cost $1.3 billion.

But Corning has said flatly that it will not pay more than one-third of the cost of any new glass-making capacity for display plants. And Mark Hogan, CEO and secretary of the WEDC, has said Wisconsin, which stands to grant Foxconn up to $3 billion in public money if the company hits jobs and investment targets, will provide no further subsidies to suppliers such as Corning.

A Gen 6 LCD factory avoids the thorny problem of how to finance construction of a pricey new glass plant.

Asked whether Foxconn had communicated with WEDC about its change in plans for Mount Pleasant, Mark Maley, WEDC’s public affairs and communications director, said by email:

“It’s up to Foxconn — and not state government — to determine what the best use of that facility is. Foxconn is one of the largest companies in the world and has a 44-year history of success, so we’re confident it will continue to make decisions to ensure that continued success. It’s not the state’s role to get involved in the business operations of one of the largest and most successful companies in the world.”

In a statement, Hogan, the WEDC leader, said:

“We would not be surprised if the company’s plans for its advanced manufacturing campus change as the facility is being constructed because technology keeps changing. One of the reasons we aligned with Foxconn in the first place is because this is a company that has been at the leading edge of technology for the last 44 years and continues to evolve and lead the way in the industry. They have done it successfully and we expect that success to continue going forward.”