Electronics manufacturer Foxconn, in talks with state officials last summer, sought a $200 million upfront payment as part of a state incentive package to locate in Wisconsin, newly released public records show.
State officials rebuffed that offer, ultimately agreeing on a $3 billion package that provides state incentives only after facility construction and hiring have occurred.
Records totaling 20,000 pages were released by state agencies Thursday in response to requests from multiple news outlets, including the Wisconsin State Journal. They give the most detailed picture yet of the negotiations that led Foxconn to commit to building a $10 billion display-screen manufacturing plant in Mount Pleasant, just west of Racine.
The records show the contest for Foxconn’s first North American manufacturing facility came down to a battle between Wisconsin and neighboring Michigan. The Taiwanese company also toured sites in Ohio before Wisconsin won out, the documents show, due to a state incentive package — provided by Gov. Scott Walker and the GOP Legislature — that’s the largest ever offered to a foreign company in U.S. history.
The total amount of public funding for Foxconn swells to more than $4 billion when local aid, such as tax-increment financing to pay for infrastructure to serve the facility, is included.
One of the records released Thursday is of a text-message exchange between Foxconn executive Louis Woo and Walker deputy Scott Neitzel, the former Secretary of the state Department of Administration. The two exchanged texts at 1:17 a.m. on July 12, hours before Walker and Foxconn CEO Terry Gou inked a handwritten agreement for a $3 billion state incentive package.
In the exchange, Woo asks Neitzel to name a state point person with whom Foxconn could work on the project.
“We will designate our person soon if we are moving forward,” Neitzel texts.
“Give us 200m upfront then it is a done deal,” Woo responds.
Administration Department Steve Michels said Thursday that the conversation at that point was about the breakdown of what he described as the state’s “final offer” of a $3 billion incentive package.
“We said ‘3 is the number,’ and they said ‘how is that broken down?’ ” Michels said.
Michels added that “the records detail the negotiations and the state’s extensive due diligence.”
“The final deal, as you have seen, includes tax credits that all need to be earned,” Michels said.
Jim Paetsch, vice president of the Milwaukee 7 economic development group, said in a briefing for a May meeting with Foxconn that Wisconsin and Michigan were finalists for the project. In a bid to land the factory, Michigan offered Foxconn a package worth $3.7 billion, including about $3 billion in tax exemptions and $700 million in cash incentives. Some of the newly created incentives were later scaled back by the Legislature, though.
Paetsch also wrote that the most relevant example for an economic-development incentive offer comparable to Foxconn is the Tesla lithium-ion battery “Gigafactory” near Reno, Nev., that got an incentive package that could total nearly $1.3 billion.
Paetsch wrote that a far larger package likely would be needed to land Foxconn — because the project is projected to generate more jobs, and because of the divide between construction and labor costs in East Asia versus the U.S.
“The company’s executives have made clear that an extraordinary government incentive package will be needed to secure the project,” Paetsch wrote.
Walker, a Republican up for re-election this year, has caught criticism from Democrats who argue the incentives Wisconsin offered were too rich. Walker and others have defended the project, noting that Foxconn must hit investment and employment targets to get all of the incentives.
The newly released records shed light on the competition to land the Foxconn project and what steps Wisconsin was doing to out-maneuver its Midwest neighbors.
Wisconsin’s chief economic development officer, Mark Hogan, said in a May message that Foxconn toured locations in Ohio near Cincinnati, Cleveland and Columbus. In Michigan, Hogan said they looked at Detroit, Flint and Battle Creek. Foxconn was also considering locating in Pennsylvania and North Carolina, Hogan said.
Hogan said in the email that Michigan Gov. Rick Snyder was involved with the tours and meetings in Michigan.
“The Foxconn team was generally impressed with what Detroit had to offer (some good locations and the availability of engineers) and appreciated Governor Snyder’s involvement,” Hogan wrote.
In a separate email, Hogan said that Wisconsin needed to play up the fact that Snyder was not able to run for another term this year, creating inconsistency in leadership there. Walker is seeking a third term.
Hogan, in yet another message, stressed that the availability of a skilled workforce was key to Foxconn’s decision.
“I would recommend Governor Walker focus on what we are doing in Wisconsin to address the current, and future, workforce needs of our employers,” Hogan wrote.
Walker has made workforce development one of his signature issues since Foxconn announced plans to come to the state.
Another document shows that more that at least a dozen potential sites across Wisconsin were considered before Foxconn settled on one in Racine County, not far from the Illinois border.
The Milwaukee Journal Sentinel, reporting on the same records, said Hogan told colleagues in a July email that Wisconsin didn’t want to add to its subsidy package by offering the same deal to suppliers.
That could be important as other states look to attract those suppliers by offering their own incentives, the newspaper reported. Walker and Wisconsin officials have been touting the economic development, and jobs, expected to come to the state with suppliers here, an impact that would be lessened if other states lure them away.
State Journal reporter Mark Sommerhauser and Associated Press reporter Scott Bauer contributed to this report.