Speaking to the Independent Business Association of Wisconsin (IBAW) Manufacturing Summit in Milwaukee on Friday, Department of Administration Secretary Scott Neitzel took the opportunity to address some of the concerns of the critics of the Foxconn legislation that recently passed the legislature.
Neitzel addressed the question of what happens if Foxconn does not follow through on its promise to create a $10 billion manufacturing facility in southeaster Wisconsin. “The state isn’t just going to issue them a check for $3 billion,” Neitzel said. “The way the $3 billion is given out, it’s over time, over a 15 year period.”
“Part of it is the capital investment, which is $1.35 billion,” Neitzel said. “$1.5 billion is based on employment, about $150 million is just a sales tax exemption for construction materials while they’re building it.”
The tax credits will only be given as Foxconn reaches the capital investment and employment targets in the agreement with Wisconsin.
“It grows as they grow,” Neitzel said.
The project is expected to create 10,000 construction jobs for the project and will create as many as 22,000 “induced jobs” from the economic activity statewide. The facility will hire 3,000 permanent employees to start, with growth of up to 13,000 permanent jobs. One estimate has the state receiving $3.90 for every $1 invested by the state. Once completed, the Foxconn development could have a $7 billion annual impact on Wisconsin’s economy.
Neitzel said from a personal perspective, the people that the Walker Administration dealt with were completely sincere in their dealings with Wisconsin. “They continue to work with the local communities,” Neitzel said. “They are talking to people about how they can integrate themselves into the community. They are making a commitment for the long term.”
In answer to the concern about how long it will take before the state “breaks even” on the investment, ” Neitzel said, “Government doesn’t usually spend money to make money.”
“Under the most, what I would call, conservative estimate, it breaks even the fiscal bureau said in 25 years,” Neitzel said. “What do we get for that from a society perspective?”
Neitzel said the Foxconn deal will create “high-paying, family-supporting jobs.”
“Another thing we want, is we want to give our best and brightest a reason to stay in Wisconsin,” Neitzel said. “We want to attract the best and brightest from around the United States and around the globe to come to Wisconsin.”
The new Foxconn manufacturing campus will also spur entrepreneurial activity and small business growth, according to Neitzel. It will also bring more venture capital to Wisconsin.
“With Foxconn here, the venture capital community now has Wisconsin at closer to the upper tier than we have ever been,” Neitzel said. “That’s a good public policy objective.”
Neitzel praised the legislature for improving the Foxconn bill before they passed it.
“It went to the Assembly. They made changes. They were all improvements,” Neitzel said. “That bill then went to the Senate. They made changes. They were all improvements. The bill that is before the governor, which he will sign soon, is a very, very good bill.”
“[The bill] allows us to accommodate Foxconn and to protect the environment and to make sure that the taxpayers of Wisconsin are protected,” Neitzel said.
Neitzel said that opponents of the Foxconn legislation are treating the development as just another manufacturing facility. “What it really is, is bringing a whole new industry to North America and planting it right here in Wisconsin,” Neitzel said. “So the whole supply chain has to come with Foxconn. They have to create a supply chain in North America and in Wisconsin.”
For example, Neitzel said, wherever the plant is built, there will have to be a glass plant right next door.
Neitzel also praised the Milwaukee 7, or M7, organization for its role in making the Foxconn deal possible. “What this region has done in cooperating together has been great,” Neitzel said, calling the Milwaukee 7 money well spent. The Milwaukee 7 was created in 2005 to foster economic cooperation between the counties of southeastern Wisconsin: Kenosha, Milwaukee, Ozaukee, Racine, Walworth, Washington and Waukesha.
“Between M7, the local communities and the state,” Neitzel said. “What Foxconn saw was a seamless team.”