Trump’s manufacturing promises disappoint as economy sours
By Alan Rappeport
At a 2018 groundbreaking ceremony for a Foxconn plant in Wisconsin, President Donald Trump declared that the factory would be the “eighth wonder of the world” — a $10 billion hub that would hire 13,000 workers to make flat-screen televisions in America’s heartland.
This month, Wisconsin denied Foxconn tax subsidies for failing to make good on its investment plans. The company has hired less than a quarter of the 2,080 workers it was expected to employ last year and invested just $300 million, rather than the expected $3.3 billion, according to a report from Wisconsin’s Division of Executive Budget and Finance.
The Foxconn plant, the report said, appears to be primarily used for storage and is “off track to be considered a viable manufacturing facility.” Innovation centers that the Taiwanese company was supposed to open across the state sit empty.
Foxconn’s failure to create the kind of factory powerhouse that Trump described demonstrates how the president’s promise of an American manufacturing renaissance has not always resulted in the pledged jobs or economic investment. Trump has threatened companies like General Motors, Harley-Davidson and Carrier with backbreaking taxes and boycotts if they moved manufacturing abroad, often cajoling job promises out of those firms. But in many cases, those pledges went unfulfilled once Trump’s attention shifted elsewhere and market realities could not be ignored.
At the first presidential debate in September, Trump claimed that he had brought back 700,000 factory jobs after the Obama administration neglected the sector. Jobs did increase during the first three years of his term, though not to the degree he suggested: Manufacturing employment rose by just under 500,000 jobs. Through August, employment in the sector had fallen by more than 200,000 from when Trump took office, as a wave of plant closures and the pandemic recession took a toll.
“The president likes to fly in and make a show of being involved and showing that he got something going,” said Matthew Jewell, a science and engineering professor at the University of Wisconsin-Eau Claire, who was hoping that his students might find jobs at one of Foxconn’s nearby innovation centers that sit vacant. “It was frustrating for us.”
Those unfulfilled promises may matter little to Trump’s supporters, who see the president’s corporate jawboning and manufacturing rhetoric as evidence that he is fighting hard for American workers. Most polls continue to show Trump having an edge over Joe Biden, the Democratic nominee, when it comes to managing the economy.
In some ways, Trump’s efforts to revitalize American manufacturing have been undercut by his own policies. His 2017 tax cuts jump-started investment and led many companies to promise new jobs. But his trade fights with China, Europe, Canada and Mexico proved a drag on the economy, as the United States imposed levies on its biggest trading partners, prompting retaliatory taxes on American goods. Trump’s tariffs on foreign steel and aluminum and $360 billion worth of Chinese goods have weighed particularly hard on the manufacturing sector, which fell into recession last year. The coronavirus pandemic has since upended the economy entirely, erasing the “blue-collar boom” that Trump administration officials had been promoting.
Last month, Trump invited Steve Burns, the chief executive of Lordstown Motors, to the White House to herald the company’s new electric pickup truck. The visit was intended to celebrate Trump’s role as a jobs savior. In 2019, he successfully compelled General Motors to sell a plant in Lordstown, Ohio, that it was planning to shutter to Lordstown Motors, an upstart car manufacturer. The plan was meant to avert about 1,600 layoffs.
The Ohio Tax Credit Authority said it was requiring GM to repay $28 million in tax credits and invest $12 million in the Mahoning Valley because of its decision to close the Lordstown assembly factory. It was awarded the tax credits in 2008 on the condition that it would employ 3,700 workers in the city for 20 years.
After the sale, some of the General Motors employees took jobs at other plants, but the Lordstown Motors factory currently employs only about 50 engineers. Burns has said that he plans to hire 600 more workers next year and then ramp up staffing significantly in 2022.
Trump’s powers of persuasion have at times had only a partial effect. In 2016, before he took office, Trump pressured United Technologies, the parent company of the heating and cooling giant Carrier, to keep an Indianapolis factory open and not move the jobs to Mexico. With a mix of threats and incentives, the company agreed to keep the plant open, saving more than 700 jobs. However, in 2017 and 2018 Carrier cut about 500 jobs from that factory, moving those roles to Mexico.
During the 2020 presidential race, Trump has looked past the unintended consequences of many of his economic policies, boasting instead that he created the strongest economy in history. In the president’s campaign messaging, even some of his advertisements overlook the challenges that he has created for sectors he was trying to save, such as steel.
Trump imposed steep tariffs on global steel imports early on in his term, temporarily raising prices and helping American manufacturers. But as global demand for steel slowed as a result of rising prices, the industry was left with a hangover. A September ad, reported earlier by Vice News, showed an image of Trump wearing a hard hat during a 2018 visit to a U.S. Steel mill in Illinois. The same mill announced plans to furlough about 700 workers this year, and the Pittsburgh-based company said in May that it would reduce its workforce by 2,700 overall as losses mounted.
The president has had some success intervening to project jobs when the government is directly involved. In August, Trump fired board members of the Tennessee Valley Authority, a federally owned corporation that provides electricity across the Southeast, after it announced plans to outsource more than 100 technology jobs to contractors in other countries. The president assailed the authority’s chief executive for being overpaid and warned of more firings before the utility reversed course.
Peter Navarro, the director of the White House’s Office of Trade and Manufacturing Policy, argued that Trump’s threats of tariffs have succeeded in compelling companies to keep jobs in the United States. He also contended that Democratic policies of tightening regulation on the energy industry and potential cuts to spending on the military would hurt the workers these industries support.
“In a Biden world, these jobs will be gone,” Navarro said in an interview.
In an interview with a Milwaukee television station last week, Trump insisted that — if he is reelected — Foxconn would fulfill its promises to the state.
“They will do what I tell them to do,” Trump said. “They will do what’s supposed to be done.”