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Foxconn to receive $80 million, not $3 billion, under new deal with Wisconsin
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FOXCONN | STATE TAX CREDITS

Foxconn to receive $80 million, not $3 billion, under new deal with Wisconsin

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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.

[NFA] Major Apple supplier Foxconn may make electric vehicles at its high-profile but troubled plant in the U.S. state of Wisconsin, though could decide on Mexico, the chairman of the Taiwanese company said on Tuesday. Conway G. Gittens has more.

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.

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.

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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.

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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.

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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.

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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.

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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.

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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.

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Taiwanese electronics manufacturer Foxconn could use its Wisconsin factory to build ventilators needed to treat COVID-19 patients, according to the CEO of a medical hardware company that designs and makes ventilators.

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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.

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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. 

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The announcement comes a few weeks after UW-Madison reported receiving less than 1% of a $100 million commitment Foxconn made in August 2018.

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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.

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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.

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Gov. Tony Evers told CNBC during a June 27 interview posted online Tuesday that he believes the plant will have about 1,500 employees in place when production begins in May 2020.

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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."

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The meeting comes a day after Gou met with President Donald Trump to discuss updates to the southeast Wisconsin manufacturing project.

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CEO Mark Hogan also declined to say if Foxconn officials first approached the state about reopening its deal.

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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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“The present contract deals with a situation that no longer exists," Evers said. 

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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.

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Foxconn made the announcement Friday morning at Monona Terrace. Representatives from BMO Financial Group and UW-Madison were also in attendance.

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A company statement said this marks the next phase of Foxconn's overall blueprint for its campus in Mount Pleasant. 

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Foxconn representatives did not answer a list of questions related to their partnership with Wisconsin’s flagship university.

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"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. 

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The company is possibly interested in space at 1 W. Main St., which is currently owned by BMO Harris Bank.

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Bloomberg Businessweek interviewed 49 people familiar with the project, including company executives and former employees of the Racine County facility.

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Evers told reporters he discussed the topic with Foxconn officials but doesn't believe the company is concerned.

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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.

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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." 

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The future of Foxconn Technology Group’s $10 billion high-tech manufacturing campus in southeast Wisconsin was cast into uncertainty Wednesday…

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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.

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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.

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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.

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Foxconn says it's committed to spending $10 billion and creating up to 13,000 jobs.

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Gov. Scott Walker says the funds can be absorbed in the existing budget from savings on other projects.

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Foxconn CEO Terry Gou has agreed to back 25 percent of the tax credits deal should the company default on deal.

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The state would no longer regulate wetlands or air pollutants except when required under federal law.

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Gov. Scott Walker has signed a $3 billion incentive package designed to lure a Foxconn Technology Group flat-screen plant to southeastern Wisconsin.

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It would be the largest ever subsidy by a U.S. state to a foreign company.

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Gov. Scott Walker and Foxconn chairman Terry Gou signed the agreement on July 12. 

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Health care and education advocates and some Democrats are concerned how state incentives for Foxconn could affect the state budget.

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The electronics giant would build TVs and other devices here using imported LCD panels until its Wisconsin LCD plant opened in about 2020.

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The package of refundable tax credits and environmental regulation rollbacks now heads to the state Senate. 

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A liberal campaign watchdog group also is considering filing a complaint alleging Foxconn violated state lobbying rules. 

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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. 

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Lawmakers will hear public testimony Thursday on a bill that gives Foxconn $3 billion in incentives. 

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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.

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Gov. Scott Walker wants to exempt the firm from laws designed to prevent environmental damage, flooding and harm to drinking water.

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Last week's Foxconn news was the rare announcement that won plaudits from both parties at the Wisconsin State Capitol.

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The legislation also provides $250 million in bonding for the rebuilding and expansion of I-94.

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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.

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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.

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The plant will create liquid-crystal display panels and could eventually employ as many as 13,000 people.

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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…

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Dane County and much of Wisconsin could get a transformative economic boost if Taiwanese electronics giant Foxconn brings thousands of manufac…

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The package would not be included in the next state budget, a top lawmaker says.

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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.

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Assembly GOP leaders, in a memo made public Wednesday, also urge business groups to offer their own ideas to resolve the state budget impasse.

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