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Foxconn says it's committed to its contract with the state

From the Keep up with the latest news on Foxconn in Wisconsin series
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Foxconn Wisconsin

Taiwanese electronics manufacturer Foxconn Technology Group said Thursday it remains committed to its contract with the state.

Taiwanese electronics manufacturer Foxconn Technology Group said Thursday it is committed to its contract with the state, a day after Democratic Gov. Tony Evers said the deal may need to be “downsized.”

“Foxconn remains committed to our contract with the State of Wisconsin,” the company said in a statement. “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.”

Also Thursday, Assembly Speaker Robin Vos, R-Rochester, called the governor “naive” and said it is highly unlikely the WEDC board would approve a change to the contract with the electronics manufacturer, even after Evers regains the ability to appoint the agency’s CEO in September. As part of a lame-duck session in December, Republicans temporarily took away that ability.

“He is clearly above his pay grade on some of these decisions,” Vos told 1130 WISN radio, adding that Evers’ interest in renegotiating shows “how naive Gov. Evers is to not understand the full ramifications of the words that he says and the actions he is trying to take with his administration.”

Reopening the contract would deter companies from wanting to strike future deals with the state, Vos said.

The so-called Generation 6 facility Foxconn plans to build in southeastern Wisconsin would manufacture small screens for mobile phones, tablets, notebooks and wearable devices. That’s a change from the Generation 10.5 facility that the company originally set out to construct, which would have made larger panels for TV screens.

A typical Gen 10.5 facility is about four times larger than a Gen 6, according to Bob O’Brien, co-founder and president of Display Supply Chain Consultants, a consulting firm in the display screen industry. The difference is linked to the size of the substrate glass panels from which the display screens are cut, with a Gen 10.5 facility using substrate panels about four times larger.

O’Brien previously told the Wisconsin State Journal a Gen 6 factory would likely entail a roughly $2 billion investment, as opposed to Foxconn’s originally proposed $10 billion, and require roughly one-quarter the originally proposed workforce of 13,000.

In its statement Thursday, Foxconn didn’t initially mention its commitment to creating 13,000 jobs in Wisconsin, but the company later affirmed that figure through a spokeswoman.

Evers on Wednesday said Foxconn is unlikely to employ 13,000 workers and that the company’s contract with the state may need to be re-negotiated, but he declined to specify which provisions.

“The present contract deals with a situation that no longer exists, so it’s our goal to make sure the taxpayers are protected and environmental standards are protected,” Evers said. “We believe that we need to take a look at that contract and see if it needs to be downsized as a result.”

Evers spokeswoman Melissa Baldauff on Thursday said Evers’ doubts about the company’s jobs commitments did not stem from any specific knowledge of the company’s plans except for its decision to build a smaller Generation 6 facility. She said the governor’s talk of potentially renegotiating the contract was a result of “a natural outgrowth” of Evers’ conversation with Foxconn.

The contract calls for the state to 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.

WEDC has continued to emphasize the state’s contract with Foxconn only awards tax credits when the company meets annual job creation and capital investment requirements. Evers has not said why a renegotiation of the contract is necessary given those provisions.

Foxconn already fell short of its job-creation quota for 2018 and, as a consequence, did not qualify for state incentives. The company created 178 direct, full-time jobs, short of the minimum 260 full-time jobs required under the contract.

The contract Foxconn signed with the state set a goal of 1,040 jobs for 2018 to be eligible for a maximum $9.5 million in job-creation credits. The company would be able to claim those credits in future years if it exceeds the jobs target for any given verification period.

While Foxconn won’t get tax credits for 2018, it will still be eligible for nearly $1.5 billion in job-creation credits through the year 2032. If the company creates 2,080 jobs in 2019, for example, it would qualify for a maximum of about $19 million in tax credits.

Evers’ comments drew outrage from Republican leaders who argued they confirmed Evers’ desire to undermine the state’s economic development agency, WEDC, and has eroded companies’ faith in the state’s commitments.

Vos on Thursday said Foxconn has always affirmed to him its commitment to creating 13,000 jobs in the state, and that the governor is irresponsibly trying to renege on the deal.

Still, Vos remained open to the possibility the company might arrive at the 13,000 figure differently than originally proposed.

“Might it take longer, might it happen in a different way, might they do it in a way that creates higher-paying jobs?” Vos said. “I mean all of those are potential scenarios, but I certainly have never had them say, ‘We’re going to only have half the jobs we promised.’”

In the radio interview, Vos questioned whether Evers has “some sort of a contact with the Democrats who are running for president” to blame President Donald Trump if the project fails.


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