Foxconn Technology Group would receive up to $80 million — not $3 billion — in state tax dollars under a new deal between Wisconsin and the Taiwan-based company for a downsized manufacturing facility in Racine County once touted by President Donald Trump as "the eighth wonder of the world."
The amended contract would reduce the potential taxpayer subsidy for Foxconn by $2.77 billion, or about 97%, but also result in the creation of only 1,454 jobs, or about a tenth of the 13,000 in the original contract. Foxconn would make a $672 million capital investment by 2026 in the state under the new contract, rather than the $10 billion pledged originally.
So far, Foxconn has not received any state dollars, but the project in Mount Pleasant already has cost the state more than $200 million in state and local road improvements, sales and use tax exemptions, grants to local governments and for worker training and employment. Foxconn officials estimate the company has invested $900 million in the state.
Wisconsin and company officials have been negotiating a new agreement for more than a year after the state told Foxconn it was not eligible for state aid because the ongoing project in Mount Pleasant no longer matches what was originally agreed to in 2017. The Wisconsin Economic Development Corp.'s board of directors approved the new agreement on Tuesday.
“When I ran to be governor, I made a promise to work with Foxconn to cut a better deal for our state — the last deal didn’t work for Wisconsin, and that doesn’t work for me,” Gov. Tony Evers said in a statement.
Evers, who ran in 2018 as a critic of the contract, added the new agreement “treats Foxconn like any other business and will save taxpayers $2.77 billion, protect the hundreds of millions of dollars in infrastructure investments the state and local communities have already made, and ensure there’s accountability for creating the jobs promised.”
While the new deal comes with considerably fewer tax dollars, it also provides Foxconn with more flexibility.
Under the new agreement, which is similar to other performance-based incentive packages provided to companies by the state, Foxconn can earn tax incentives without specific requirements on what the company produces as long as it meets hiring and capital investment targets. The contract also memorializes the potential for future investment and added tax incentives from the state.
"With this flexibility also comes the predictability and stability to know that Foxconn’s material contributions in Wisconsin will be recognized by the State as benchmarks are achieved year-over-year," the company said in a statement.
The new agreement also allows the state to recover 100% of incentives paid to the company in the event of default.
WEDC Secretary Melissa Hughes said the amended contract will also help the state's economy recover from the ongoing COVID-19 pandemic, while providing Foxconn incentives to pursue innovation.
"By right-sizing the contract, our state is in a position where we can ensure that all businesses — everywhere — have the resources they need to grow and prosper," Hughes said.
Assembly Minority Leader Gordon Hintz, D-Oshkosh, and Sen. Dan Feyen, R-Fond du Lac, both members of the WEDC board of directors, described the new contract as beneficial for both the company and state taxpayers.
Hintz, a longtime critic of the state's original deal with Foxconn, said he's encouraged by the new agreement, which aligns with other enterprise zone projects in the state.
“I think there’s, rightly so, a lot of distrust and cynicism around the project and a company that still has vacant buildings around the state and whose past three years have been littered with fraudulent claims and broken promises,” Hintz said. “Hopefully this is a new start."
Under the new agreement, Foxconn will be eligible for up to $29 million in job and capital investment credits if WEDC verifies that the company had 601 full-time employees in 2020. The state has until the end of the year to certify if the company had met its job creation target.
Foxconn's original contract with the state called for 5,200 full-time jobs by the end of last year.
All told, Foxconn would receive about $55,000 for every job created if all targets in the new agreement are met by the company. Under the previous contract, the company would have received around $230,000 per job in subsidies, if all goals had been met.
“Hopefully we can now put the politics surrounding the development behind us and focus on the partnership that continues to benefit all of Wisconsin," Assembly Speaker Robin Vos, R-Rochester, said in a statement.
Original deal scrapped
Under Foxconn's original contract, signed in late 2017 by former Gov. Scott Walker, the company was slated to receive as much as $2.85 billion in state credits over 15 years — along with $150 million in sales tax breaks. Other state and local incentives brought the total to $4 billion. The company planned to produce large-screen panels for TVs among other things.
During a 2018 groundbreaking ceremony in Mount Pleasant, Trump praised the project as a sign of a resurgent American manufacturing economy. But Walker faced questions about the steep price tag and it became a political liability in his 2018 election loss to Evers.
The Mount Pleasant project was later downsized to manufacture small screens for mobile phones, tablets, notebooks and wearable devices.
As a result, state officials told the company more than a year ago it would not be eligible for tax credits because the project had changed drastically from what was agreed to in the existing contract and that a new agreement would be necessary.
The state again told the company last October that it would not receive state tax credits until a new agreement was reached. The company later challenged that decision, while officials continued to negotiate a new contract.
"The agreement approved by the (WEDC board) today will provide a more realistic framework for the Foxconn project, and I hope that this will come with renewed efforts to create the good-paying, family-supporting jobs our community needs," said Rep. Greta Neubauer, D-Racine.
In addition, Foxconn officials last year began hinting at the possibility of building electric vehicles and manufacturer Fisker announced in February a partnership with Foxconn to build vehicles. Last month, company chairman Young Liu said the Wisconsin factory was in the running, along with one in Mexico, to be Foxconn’s North American electric vehicle production hub — although no formal decisions have been made.
According to Foxconn, terms in the amended agreement are based on Foxconn's projections for "digital infrastructure hardware products" through 2025.
"Foxconn is strategically positioned within Mount Pleasant to make Wisconsin one of the — if not the — largest manufacturer of data infrastructure hardware in the United States," according to the company statement.
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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.
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