The state and Foxconn Technology Group appear to be nearing an agreement on amendments to the company's now 3-year-old contract — which could result in Foxconn receiving fewer state tax credits than originally agreed upon.
Records obtained Friday by the Wisconsin State Journal provide additional details on the ongoing efforts between the Taiwan-based company and the Wisconsin Economic Development Corp. to reach an agreement on an amended contract. While Foxconn objected to WEDC's denial of tax credits in October, the company now says it's willing to accept a reduction in subsidies in exchange for a more flexible agreement.
"Foxconn is optimistic that an amendment to the WEDC Agreement is within reach," the company said in a statement Friday. "In response to market conditions that were unforeseeable three years ago, Foxconn formally came to the table with WEDC in August 2020 with a desire to lower taxpayer liability in exchange for flexibility that continues to incentivize future business development and job creation in Wisconsin."
Under Foxconn's original contract, the company would earn incentives totaling as much as $2.8 billion in state credits over 15 years as the company hired upwards of 13,000 employees and made a $10 billion capital investment in the state. State officials have told the company it will not receive state funds until the contract is amended, as the project being built in southeastern Wisconsin no longer matches what was promised in the 2017 agreement.
In a letter to state officials dated Nov. 23, Foxconn attorney Robert Berry detailed the company's disagreement with WEDC's denial of tax credits for jobs created and capital investments made last year, but also expressed a willingness to accept reduced tax credits "in exchange for a flexible business environment in Wisconsin."
Berry also detailed several objectives for an agreement, including an amendment that acknowledges:
- The company as a contract manufacturer "and as such, an appreciation that we react to customer demands and market conditions that at times dictate what we manufacture."
- An "expectation of bipartisan support from other governing entities pursuant to an agreement endorsed by the Governor and Foxconn."
- Coming to an agreement in a timely manner that doesn't deter the company's "immediate opportunities to bring more investment and business to Wisconsin."
In response to Berry's email, WEDC Secretary Melissa Hughes said "fundamental to an initial award is an understanding of the company’s plans."
"Once Foxconn shares its investment projections with WEDC, we will work rapidly to calculate and outline the state’s potential incentive range," she wrote in the email.
On Dec. 2, Berry emailed Hughes indicating that company officials, including vice chairman Jay Lee, were ready to meet to have "an in-depth discussion and come to an understanding on the key terms surrounding an amendment."
"I am confident that after months of discussions we are on the brink of coming to acceptable terms that will lead to an exciting future for our smart manufacturing park in Mount Pleasant, and I believe we should be able to accomplish this objective at our meeting this Friday," Berry wrote.
State and company officials held a video conference two days later on Dec. 4. In an email sent to Berry the following week, WEDC chief legal counsel Jennifer Hagner Campbell described the meeting as "a productive discussion, and allowed WEDC to understand how Foxconn’s plans have evolved and adapted to the marketplace dynamics."
But before a new agreement can be reached, Foxconn will need to provide WEDC with updated details on how many jobs the company plans to create each year, as well as the type and amount of capital investments expected annually, Hagner Campbell said in the Dec. 11 letter.
"We agreed that next steps were for you to provide more detailed information about your plans, so that WEDC can conduct its analysis on available incentives," Hagner Campbell wrote.
A long road
Foxconn and state officials have been discussing potential updates to the company's original contract for well over a year, but so far have failed to reach an agreement.
The company was told late last year it would not receive billions of dollars in state subsidies until a new agreement was reached. In October, WEDC denied Foxconn's application for jobs and capital expenditure tax credits until officials with the company come to the table to draw up a new contract.
At the crux of the matter is Foxconn's 2017 contract, signed by former Gov. Scott Walker. That contract calls for a so-called Generation 10.5 facility that would build larger panels for TV screens, but the project has downsized to Generation 6, which would manufacture small screens for mobile phones, tablets, notebooks and wearable devices.
State officials have repeatedly said that, no matter how many jobs Foxconn creates, the contract is for a specific project that the company has so far failed to deliver.
$237 million cost
Foxconn has yet to receive any state dollars, while the project in Mount Pleasant already has cost the state nearly $237 million in state and local road improvements, sales and use tax exemptions, grants to local governments and for worker training and employment.
Last month, state Department of Administration budget requests and revenue projections for fiscal years 2022 and 2023 noted that WEDC assumes no state payments to Foxconn through June 30, 2023. Based on Foxconn's activities in 2018 and 2019, the company's ineligibility for state funds "will likely continue, as the company also does not appear to be on track for credit eligibility based on its calendar year 2020 activities,” DOA reported.
Keep up with the latest news on Foxconn in Wisconsin
Read more news coverage of Taiwanese electronics manufacturer Foxconn's decision to build a massive plant in Wisconsin.
Foxconn Technology Group has challenged the state's decision earlier this month to refuse the Taiwan-based company's application for state tax subsidies for work taking place on the southeast Wisconsin facility.
A bombshell report from The Verge provides a harsh look into the embattled Foxconn Technology Group project in southeast Wisconsin, which has — so far — failed to live up to promises made by the company nearly three years ago.
As Wisconsin — much like the rest of the nation — continues to navigate the ongoing COVID-19 pandemic, which has forced businesses to shutter and unemployment rates to skyrocket, Trump entered a community all too familiar with economic hardship.
WEDC Secretary Melissa Hughes said "Foxconn’s activities and investments in Wisconsin to date are not eligible for credit" under the contract first signed back in 2017.
President Donald Trump's top trade advisor Peter Navarro praised Wisconsin's controversial Foxconn manufacturing project, despite lingering questions surrounding the Taiwan-based company's contract for billions in state tax credits.
The company's $3 billion contract with Wisconsin remains in question after state officials in December told Foxconn it no longer was eligible for tax subsidies agreed to in the original contract because the project has changed too much.
Gov. Tony Evers' administration has told Foxconn it no longer is eligible for tax subsidies agreed to in the original $3.6 billion deal with Taiwan-based electronics manufacturer.
There is no proof to suggest the Taiwan-based electronics giant has moved employees into the Capitol Square building it purchased from BMO Harris Bank for $9.5 million earlier this year.
The announcement comes a few weeks after UW-Madison reported receiving less than 1% of a $100 million commitment Foxconn made in August 2018.
Foxconn's partnerships with UW campuses have seen mixed success so far, with a UW-Milwaukee program drawing more student participation than announced, but developments appearing to progress slowly at UW-Madison.
Taiwan's main opposition party picked a pro-China populist mayor Monday as its candidate for the 2020 presidential race against an incumbent who often bashes Beijing.
The Taiwanese electronics manufacturer announced in mid-April the pending purchase of the property, which is at the corner of Main Street and Martin Luther King Jr. Boulevard and will be renamed "Foxconn Place Madison."
The meeting comes a day after Gou met with President Donald Trump to discuss updates to the southeast Wisconsin manufacturing project.
CEO Mark Hogan also declined to say if Foxconn officials first approached the state about reopening its deal.
Assembly Speaker Robin Vos on Thursday slammed the governor as "naive" and said it is highly unlikely the board of the WEDC would approve a change to the contract.
“The present contract deals with a situation that no longer exists," Evers said.
Terry Gou said he would make a decision "in a day or two" on a possible presidential bid, according to Taiwan's official Central News Agency.
Foxconn made the announcement Friday morning at Monona Terrace. Representatives from BMO Financial Group and UW-Madison were also in attendance.
A company statement said this marks the next phase of Foxconn's overall blueprint for its campus in Mount Pleasant.
Foxconn representatives did not answer a list of questions related to their partnership with Wisconsin’s flagship university.
"If they can’t work with the university to get the development talent that they need, they can no longer operate and then the entirety of the deal could fall through," a Foxhounds member said.
Bloomberg Businessweek interviewed 49 people familiar with the project, including company executives and former employees of the Racine County facility.
Evers told reporters he discussed the topic with Foxconn officials but doesn't believe the company is concerned.
Foxconn Technology Group reversed itself Friday saying it will construct a liquid-crystal-display manufacturing facility in southeast Wisconsin after President Donald Trump intervened amid news reports that put the future of the project in doubt.
Nikkei Asian Review Thursday reported the Taiwanese iPhone assembler's "$10 billion investment in display production in the state of Wisconsin has been suspended and scaled back as a result of negotiations with new Gov. Tony Evers."
The future of Foxconn Technology Group’s $10 billion high-tech manufacturing campus in southeast Wisconsin was cast into uncertainty Wednesday…
The figure falls short of the minimum 260 full-time jobs required under the state's contract with the company, meaning it will not receive any tax incentives this year.
Evers, who has touted his support for a $15 minimum wage in Wisconsin, also said he's open to creating exceptions to a $15 wage in rural areas and for teenage workers.
Foxconn Technology Group intends to invest $100 million in engineering and innovation research at UW-Madison that will help fund an interdisci…
His visit comes as he criticizes Harley-Davidson's decision to move some production overseas and as Foxconn scales back the initial size of its facility.
Foxconn says it's committed to spending $10 billion and creating up to 13,000 jobs.
Gov. Scott Walker says the funds can be absorbed in the existing budget from savings on other projects.
Foxconn CEO Terry Gou has agreed to back 25 percent of the tax credits deal should the company default on deal.
The state would no longer regulate wetlands or air pollutants except when required under federal law.
Gov. Scott Walker has signed a $3 billion incentive package designed to lure a Foxconn Technology Group flat-screen plant to southeastern Wisconsin.
It would be the largest ever subsidy by a U.S. state to a foreign company.
Gov. Scott Walker and Foxconn chairman Terry Gou signed the agreement on July 12.
Health care and education advocates and some Democrats are concerned how state incentives for Foxconn could affect the state budget.
The electronics giant would build TVs and other devices here using imported LCD panels until its Wisconsin LCD plant opened in about 2020.
The package of refundable tax credits and environmental regulation rollbacks now heads to the state Senate.
A liberal campaign watchdog group also is considering filing a complaint alleging Foxconn violated state lobbying rules.
Taxpayers will spend $1 billion more than the state receives in tax revenues for the first 15 years of the project, a state estimate shows.
Lawmakers will hear public testimony Thursday on a bill that gives Foxconn $3 billion in incentives.
Wisconsin taxpayers could be cutting checks to electronics manufacturer Foxconn sooner than 2020 if the company starts hiring scores of employees this year, the state jobs agency chief told the Wisconsin State Journal on Tuesday.
Gov. Scott Walker wants to exempt the firm from laws designed to prevent environmental damage, flooding and harm to drinking water.
Last week's Foxconn news was the rare announcement that won plaudits from both parties at the Wisconsin State Capitol.
The legislation also provides $250 million in bonding for the rebuilding and expansion of I-94.
For every ten jobs created at a massive electronics manufacturing campus planned to be built by Taiwanese tech giant Foxconn in southeastern Wisconsin, 17 more jobs will be created elsewhere in the state, an analysis shows.
Gov. Scott Walker on Thursday assured critics of his deal with Taiwanese tech giant Foxconn that the massive bundle of taxpayer-funded incentives Wisconsin has offered the company to build here will be tied to job creation.
The plant will create liquid-crystal display panels and could eventually employ as many as 13,000 people.
Foxconn CEO and founder Terry Gou and Pres. Donald Trump were joined by Wisconsin Gov. Scott Walker, Speaker of the House Paul Ryan, Vice Pres…
Dane County and much of Wisconsin could get a transformative economic boost if Taiwanese electronics giant Foxconn brings thousands of manufac…
The Wisconsin Senate’s top Republican said Thursday that the Legislature may have to pass a bill to help induce a Taiwanese technology company to bring a plant to Wisconsin.
Assembly GOP leaders, in a memo made public Wednesday, also urge business groups to offer their own ideas to resolve the state budget impasse.
In October, the Wisconsin Economic Development Corp. denied Foxconn's application for jobs and capital expenditure tax credits until officials with the company come to the table to draw up a new contract.