The largest foreign direct investment project in Wisconsin history is having a real estate and economic development ripple effect that’s stretching all the way into Illinois.
While most of the national media attention has focused on Wisconsin’s $3 billion incentives package for Foxconn, thousands of jobs and millions of dollars in capital investment are being created in communities from Milwaukee to Chicago.
Just how extensive is this impact? One firm has run the numbers.
According to a report released recently by JLL, the potential impacts of a new, large manufacturing campus in Racine County – including a 1-million-square-foot LCD screen fabrication plant – are enormous. In many cases, those impacts are already being felt.
“There is immediate impact,” says Chad Buch, research manager for JLL in Chicago. “This is a growing mega-region. Public money is being spent now, and construction of that infrastructure serving Foxconn will benefit the surrounding community and other businesses. They will all benefit from more water supply, improved highway access, etc. These are long-lasting community improvements. Plus, with Foxconn’s partnerships with universities around the state, they’ve purchased or leased real estate in other cities. They have a footprint now in places like Madison, Milwaukee and Mount Pleasant, and it’s being extended statewide.”
An estimated $10-billion FDI project tends to do that. Hon Hai Precision Industry Co. Ltd., trading as Foxconn Technology Group, is a Taiwanese multinational electronics contract manufacturer based in Tucheng, New Taipei, Taiwan. With revenues of $175 billion in 2018, Foxconn ranks as one of the wealthiest firms on the planet.
How much of that wealth ultimately makes it into Wisconsin remains to be seen, but Buch says that real estate developers of all types aren’t waiting to find out. “We’ve already seen signs of speculative property buying and development in Southeast Wisconsin,” notes Buch. “We’ve been tracking this market. There’s been a good amount of construction and development before the project, and there’s even more now. About a million square feet of new product has been delivered in that submarket recently, and there’s about 900,000 square feet under construction. Some existing occupiers are expanding. Haribo of Germany is doing a 500,000-sq.-ft. project, and Fresenius Medical is doing another 500,000 square feet in the region. Amazon is building a second facility in the market, and land is available for larger projects.”
Workers, Suppliers Need Homes
The largest impacts of Foxconn are expected to come in three areas, Buch said: employment, the surrounding supply chain, and housing. Upon full employment, Foxconn could hire as many as 13,000 workers at a 1,200-acre, 21.5-million-sq.-ft. plant in Mount Pleasant.
“We expect many workers to commute back and forth between Wisconsin and Illinois,” he says. “Plenty of people live in Milwaukee and commute to Lake County, Illinois. Many people live in McHenry County, Illinois, and commute to jobs in Kenosha and Racine, Wisconsin. Amtrak has about eight roundtrip trains per day. This will create future demand for housing, retail space and services. Multi-family housing is something these communities could use to support a workforce that’s growing. We’ll see a lot of good benefits go to the North Chicago suburbs.”
The supply chain for Foxconn, meanwhile, could extend far into both states. “We expect the Foxconn supply chain to extend into Northern Illinois,” says Buch. “There are a lot of talented engineering folks and manufacturing workers here. A lot of R&D jobs could come to the Chicagoland area, especially with the universities that are here.”
In the JLL research report authored by Buch and fellow research manager Paul Marsh, vertical construction of Foxconn facilities in Southeast Wisconsin is expected to generate more than 16,000 direct and indirect construction jobs. According to the Milwaukee 7 organization, the economic impact of construction and equipment sourced in Wisconsin is estimated to be $5.7 billion over the planned 4-year construction period.
Tim Sheehy of the Metro Milwaukee Association of Commerce added, “The ripple effect on Foxconn’s $9 billion in capital investment, and the ongoing employment from up to 13,000 jobs, generate a return of $18 in additional state GDP for every $1 in state incentives.”
Supply chain effects are being felt now too. “The area I’m most excited about with this project is the supply chain,” said Matt Moroney, strategic economic initiatives director for the Wisconsin Department of Administration. “That is where it’s going to ripple across the state.”
Housing suppliers will be at the forefront of that ripple. Caledonia has 10,000 housing units, Mount Pleasant has 11,906 units, and Kenosha has 40,660 units. “At this time, individual municipalities have anecdotally seen an uptick in new plats submitted for residential development,” the JLL report states. “SmartAsset.com calculates that in Racine County, a Foxconn employee earning the average annual salary of $53,875, with a $20,000 down payment, can afford a $220,000 home with total monthly payments of $1,601.”
Jobs Statewide Could Swell to 35,000
A separate study commissioned by Foxconn and former Gov. Scott Walker shows that the new plant’s operations would support more than 35,000 jobs statewide – a number that includes the planned 13,000 jobs at the Mount Pleasant campus itself.
But that’s not all, JLL concludes. “The regional impact will be widespread, from increased traffic at O’Hare and General Mitchell, to rising intermodal volumes of imported components, to busier sales at the local supermarket,” the JLL report notes. “Marquette engineering grads could find internships and local hoteliers may see more beds filled. In addition, McHenry County homebuilders could see an uptick in business, tool and die; and CNC manufacturers in Elk Grove Village could see orders headed up to Mount Pleasant, and the Mars Cheese Castle will certainly be busier during the lunch hour.”
In the long run, Buch says he sees a lot of positives springing from Foxconn in both Wisconsin and Illinois. “Nobody knows exactly how many people will be hired over the next 10 to 20 years, but a lot of kids graduate and want to move to Chicago or Milwaukee,” he says. “The cost of living here is quite favorable. We still think that the growth prospects for this project are good. The headlines have changed multiple times, and they are still subject to change. But there will be industrial growth in this region regardless.”