The state of Wisconsin’s tax-incentive heavy deal with electronics manufacturer Foxconn may be changing.
Wisconsin Gov. Tony Evers said this week that the manufacturer reached out to the state about possibly changing the terms of the agreement in response to “the evolving project and global marketplace.”
Evers already had expressed concern that Foxconn would not be able to meet its stated employment goal of filling 13,000 positions at its new factory in Mount Pleasant. If that’s the case, Evers said that the contract the state has with Foxconn may be “downsized.”
Foxconn entered into an agreement with Wisconsin in 2017. The company said it would build a manufacturing facility that would create at least 13,000 jobs with an average pay of just over $50,000 a year. In return, Foxconn could receive up to $3 billion in tax credits.
For example, if the job creation goals were met, Foxconn would be eligible to receive $1.5 billion in tax credits on top of $1.35 billion in credits the company will receive for the construction of the factory.
In a letter to Foxconn this week, Evers said that in a March conversation, Foxconn suggested it “intends to suggest several changes to the existing agreement to better align the terms with the evolving project and global marketplace.”
Part of the argument that Evers, and others, are making is that the foundation of the initial agreement has shifted. In March, Foxconn announced that their Mount Pleasant facility would be classified as Gen 6. These facilities produce LCD screens for phones and tablets. Critics point out that the initial 2017 contract called for Foxconn to build a Gen 10.5 facility in the state, one that would manufacture television-sized screens.
A statement from Foxconn says the company is working with Evers. “Foxconn remains committed to our contract with the State of Wisconsin, as well as continuing to work with Governor Evers and his team in a forthcoming and transparent manner. While we continue our weekly engagement with the Evers Administration, especially through the Department of Administration and the Wisconsin Economic Development Corporation (WEDC), we are open to further consultation, collaboration and new ideas.”
The original agreement between the state and the company, which is the fourth largest technology company in the world, originated in 2017 when the state legislature authorized the Wisconsin Economic Development Corporation (WEDC) to offer just under three billion dollars in income tax credits. This would be tied to the establishment of an Electronics and Information Technology Manufacturing Zone.
WEDC Secretary and CEO Mark R. Hogan said “DOA Secretary Joel Brennan and I have had frequent conversations with Foxconn officials since they confirmed over two months ago their decision to build a Gen 6 manufacturing facility in the village of Mount Pleasant. These ongoing discussions include consideration of the effect the company’s evolving plans may have on WEDC’s contract and our steadfast commitment to protect the taxpayers of Wisconsin.”
Foxconn said it remains committed to it plans.
“Foxconn’s commitment to job creation in Wisconsin remains long term and will span over the length of the WEDC contract and beyond,” Bossung said. “The first phase of construction on the WVSTP campus is beginning anew after the winter break. Construction on the TFT-LCD manufacturing facility will commence this summer. We look forward to continuing to honor our Wisconsin First promise as we select partners for this next major chapter of our investment.”
Noell Evans is a Watchdog.org contributor.