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Foxconn reports meeting jobs threshold for state funds, contract remains in question
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Foxconn reports meeting jobs threshold for state funds, contract remains in question

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Despite lingering questions surrounding Foxconn Technology Group’s contract for billions in state tax credits, the Taiwan-based company reports it created enough jobs in southeast Wisconsin last year to be eligible for state aid.

Foxconn’s jobs report — which was completed by independent, third-party professional services provider Deloitte and Touche LLP — must first be verified by the Wisconsin Economic Development Corp. before any state money is doled out. WEDC will determine how many of the jobs listed by Foxconn meet eligibility requirements laid out in the 2017 contract.

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.

“WEDC and Foxconn continue to discuss aligning the contract with the project as it is now taking shape,” WEDC Secretary Melissa Hughes said in a statement. “We are in regular and active conversations with Foxconn to align the contract with the project. It is WEDC’s objective to do so in order to support the project.”

State officials have said the state cannot unilaterally change the contract without Foxconn’s participation.

Revised payroll forms filed last week by Foxconn with WEDC list nearly 800 employees hired by the company in 2019. Under the contract, Foxconn needs to have hired at least 520 full-time employees in order to qualify for state funds. Employees terminated before the close of 2019 do not count.

In an April letter to WEDC, Foxconn board member and vice chairman Jay Lee said the company directly hired more than 600 people last year, with more than 550 meeting the criteria necessary for state aid.

The third-party report submitted last week also identifies more than $415 million in capital investments — a considerable difference from the $280 million reported by Foxconn in April. Deloitte and Touche states in a July 14 letter the April report only included capital expenditures that occurred in a zone identified in Foxconn’s contract as the project’s area within Racine County.

Foxconn was originally slated to provide an update on jobs created and overall progress to WEDC on April 1, but the deadline was extended due to the COVID-19 pandemic.

The company fell 82 jobs short of the minimum required to claim state tax credits in 2018.

Hughes said in a Wednesday statement that WEDC’s verification process will “likely take several months.”

The state’s 2017 contract with Foxconn would provide incentives totaling as much as $3 billion over 15 years if Foxconn reaches the 13,000-employee benchmark and makes a $10 billion capital investment in the state. President Donald Trump lauded the deal as transformational for the state and national economy.

However, multiple updates to the company’s plans have resulted in a vastly different project altogether, state officials have said.

While originally promised as a Generation 10.5 facility that would build larger panels for TV screens, the project has downsized to Generation 6, which would manufacture small screens for mobile phones, tablets, notebooks and wearable devices.

“Foxconn is free not to request tax credits and therefore has no obligation to submit new applications,” Department of Administration Secretary Joel Brennan wrote in a November letter to Foxconn’s chief business officer, Richard Vinvent. “However, because Foxconn’s present project has not been applied for, evaluated by WEDC, certified for eligibility, and properly contracted for, it presently is ineligible for tax credits under Wisconsin law.”

In December, Evers told the Wisconsin State Journal he was confident Foxconn and the state would reach a new agreement that better reflects the project being built — though not necessarily one that costs taxpayers less.

State Republicans have defended the contract, which provides progress-based financial incentives. Because a state manufacturing tax credit nearly eliminates corporate taxes in the state, almost all of the $3 billion in state tax credits for Foxconn would come from other state taxpayers.

The company said late last year it intends to have its manufacturing facility up and running by the end of 2020.

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