This post originally appeared at https://www.badgerinstitute.org/microsoft-underpromising-on-what-will-be-massive-development/

Groundwork for Foxconn deal was essential

If everything works out as under-promised, Microsoft will make the biggest single technology investment ever in the state of Wisconsin — a transformative infusion of billions of dollars to develop more than 1,500 acres in Racine County.

The scale and impact of the project is only now becoming apparent, with Microsoft cautiously unspooling its land purchases and plans, well aware of the hype that overwhelmed the original player in the area, Foxconn.

Over the last year the company has made a flurry of land purchases in addition to its initial $50 million, 315-acre purchase next to Foxconn in what is now the Wisconn Valley Science and Technology Park.

Late last month, the company purchased about 200 acres for just under $34 million near the park in Mount Pleasant, according to Racine County records. The company in December 2023 also spent more than $175 million to buy three tracts totaling 1,048 acres.

And it is by no means clear company leaders are finished buying.

The company initially announced its intention to invest $1 billion in the project, one of the largest private investments of any kind ever in the state. They have since revised that estimate to $3.3 billion for as many as four data centers through the end of 2026.

When Paul Englis, Global Director of Community Development for Microsoft Corp. appeared before the Racine County Board in April 2023, a month after the company first announced its intentions, he cautiously under-promised, particularly about the number of people who will ultimately work there.

“It will be in the hundreds, not thousands,” he said. “I can’t get into a lot of specifics in terms of the numbers of jobs and resources that we’ll use until we get to the final design, then we’ll have a little bit better idea.”

But while Microsoft has not discussed anything beyond the first investment, company officials have pointed to a track record in West Des Moines, Iowa and Atlanta of expanding to clusters of several data center campuses. 

Microsoft operates 200 data centers in 34 countries.

The people who have kept a close eye on the development in Racine County since 2017 say expectations of people of Racine County are tempered by the promises made by Foxconn in 2017 of a $10 billion investment and 13,000 jobs.

More than a year ago, before all the additional land purchases and new plans, Peter Barca, the state’s Department of Revenue secretary, told the Racine County Board once, and then repeated it for emphasis, that Microsoft is known worldwide for “under-promising and over-delivering.”

Foxconn deal was essential

Striking that balance in Mount Pleasant would hardly have been possible without the preliminary work done by officials from the local to the federal level to clear the way for Foxconn, said Mark Hogan, who shepherded the Foxconn deal as Secretary of the Wisconsin Economic Development Corporation under Gov. Scott Walker.

Microsoft is the largest landowner in the Tax Increment District created in 2017 to accommodate Foxconn. None of this happens, as the late Racine County Executive Jonathan Delagrave was fond of pointing out, without Foxconn. 

Claude Lois, Mount Pleasant’s project manager for the Microsoft and Foxconn developments, said last year the village spent five years and $1.4 billion clearing the way for Foxconn and creating the Wisconn Valley Science and Technology Park.

“It’s as simple as saying the Microsoft deal doesn’t work without all of the preliminary work, all of the infrastructure, primarily the utilities,” Hogan told the Badger Institute. “It’s important to understand the speed at which these technology companies want to be able to do this. This property was pretty much shovel ready.” 

Largely forgotten in all of the political turmoil stirred by Foxconn was the urgency to complete projects at the state and local level that were long overdue. Recognizing the need to improve the transportation corridor for an international corporation, the rebuilding of I-94 from the Mitchell Interchange to the state border with Illinois suddenly was fast tracked from an eventual completion in 2032 to 2022.

In addition to the $252 million state incentive for the project, including a widening of I-94 to eight lanes for more than half of the 35-mile length, the state found the federal Infrastructure for Rebuilding America program willing to offer a $160 million grant.

“We took Federal Highway Administration officials on a bus trip of the area and right away they could see what was needed,” Matt Moroney, a key state liaison to all of the parties involved in the project, told the Badger Institute.

Moroney, the state Strategic Economic Initiatives Director under Walker at the time, coordinated planning for the infrastructure needed, including a complete rebuilding of 16.5 miles of County Highway KR, which would for the first time give residents in the area a direct artery to I-94.

“The secret sauce was the can-do attitude of the officials there,” Moroney, now CEO of Wangard Partners, a Milwaukee real estate company, said. “My job was cutting through all of the layers of bureaucracy.”

What Moroney and the others were unable to cut through was the reality of the rapid change in the market for liquid-crystal display television screens, the product for which Foxconn had done its ambitious promising in Wisconsin.  

“It was largely a market-based decision,” Tom Still, president of the Wisconsin Technology Council, told the Badger Institute. Overlooked, Still said, is that Foxconn is still there, albeit in a much-reduced capacity, having invested almost $1 billion and employing 1,000 people.

Still is among those who think that Racine County might very well end up doing better in the long run with Microsoft. The company was well-positioned to take advantage of Racine County’s technology park.

Another component

In 2019, Microsoft was instrumental along with the Green Bay Packers in helping create TitletownTech, a venture capital company for technology startups that has flourished in Green Bay.

TitletownTech, Microsoft and the Packers, along with the University of Wisconsin-Milwaukee’s Connected Systems Institute, have now launched a manufacturing-focused AI lab at the university that will connect entrepreneurs, manufacturers  and other established companies with AI experts and developers.

Microsoft has pledged significant money to that effort at UW-Milwaukee but also has plans to train and certify 3,000 AI software developers through Gateway Technical College, which serves students in four counties, including Racine.

Microsoft’s top people — President Brad Smith is a graduate of Appleton West High School and its CEO, Satya Nadella, earned his master’s degree in computer science from the UW-M — think they can show one of the top manufacturing states in the country the advantages of AI, up close, Still said. 

AI can make manufacturers more efficient and productive in every area of their businesses, he said.

Microsoft did not respond to Badger Institute requests for comment. Communications representatives for Microsoft at its headquarters in Redmond, WA and in Milwaukee referred inquiries to a website for aggregated press releases.

“Wisconsin has a rich and storied legacy of innovation and ingenuity in manufacturing,” Smith said in one press release. “We will use the power of AI to help advance the next generation of manufacturing companies, skills and jobs in Wisconsin and across the country. This is what a big company can do to build a strong foundation for every medium, small and start-up company and non-profit everywhere.”

“I would argue that (Racine County) got something better for their economy in the long run,” Moroney said. “Microsoft is on the cutting edge of technology and that bodes well for the future. And when you look at what they’ve done, Microsoft under-promises and over-delivers.”

Mark Lisheron is the Managing Editor of the Badger Institute. Permission to reprint is granted as long as the author and Badger Institute are properly cited.

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