The renegotiated contract between Foxconn Technology Group and the state of Wisconsin offers the company up to $80 million in tax credits if the company hits certain hiring and investment targets.
The deal dramatically cuts the potential incentives available to the company under a previous agreement negotiated by former Gov. Scott Walker. That deal offered up to $2.85 billion in tax incentives if the company created 13,000 jobs and invested $10 billion.
Specifically, the new deal requires the company to hire 1,454 qualified workers at an average wage of $53,875 and invest $672 million in capital spending.
Hitting the job targets would earn the company $20.3 million in tax credits while the capital investment targets are worth another $40 million. Another $19.7 million, earned with previous capital investment, would be available if the company created more than the 1,454 jobs included in the contract.
Not only does the new deal set lower job and investment targets, it also offers less of a credit for each dollar the company pays in wages and investment. Under the original deal, Foxconn earned a 17% credit on wages and a 15% credit on capital investments. The new deal drops those figures to 7% and 10% respectively, the same rates available to other companies under Wisconsin’s enterprise zone tax credit program.
In exchange for the smaller incentives, Foxconn is now free to earn credits on any economic investment activities related to operating a technology and manufacturing ecosystem. The previous deal had required the company to build a Gen. 10.5 LCD screen fabrication facility in Mount Pleasant, a plan the company had abandoned by the spring of 2018.
The deal also adds Foxconn Industrial Internet as an eligible tax credit recipient. Fii is a publicly traded company that was spun off from Foxconn’s parent company in recent years. It has already been making investments on the Mount Pleasant site where Foxconn originally planned to build its LCD plant.
Finally, the new contract plays out over a dramatically shorter timeframe. The previous deal ended at the end of 2032 while the new one ends in 2025.
“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 Eves said in a statement, suggesting the deal saves taxpayers $2.77 billion while protecting the hundreds of millions invested in infrastructure around the Foxconn site.
Missy Hughes, secretary and chief executive officer of the Wisconsin Economic Development Corp., said the new deal would help boost Wisconsin’s economic recovery.
“The agreement provides the opportunity to be responsive to the marketplace that a modern, forward-looking company like Foxconn needs to pursue innovation. At the same time, 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.
In a news release, Foxconn said it “thanks the WEDC Board of Directors for endorsing an amendment to (its original deal with the state) that will give Foxconn the flexibility to pursue business opportunities in response to changing global market conditions. 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.
“We are grateful to Governor Evers, Missy Hughes, her team, and our team at Foxconn for finding a solution that works for the State, our local partners, Wisconsin taxpayers, and our shareholders. We are pleased with the clarity and certainty that this agreement provides Foxconn, our affiliates, our joint ventures, and our global business partners. Foxconn is happy to have worked with the Evers administration to significantly lower taxpayer liability. Original projections used during negotiations in 2017 have at this time changed due to unanticipated market fluctuations.
“Our new agreement signals to the United States and international business communities that our Science and Technology Park still benefits from unique advantages that make Wisconsin, and our Park, an attractive place to call home, drive business, and grow jobs. Foxconn looks forward to working with WEDC and our local partners to attract market-driven development to the Park. With elected officials supporting Foxconn’s investments in Wisconsin, and with the right market demand, we are confident other Foxconn affiliates, joint ventures, and non-affiliates will soon also look to Wisconsin.”
Foxconn says it has invested approximately $900 million in Wisconsin in total, including its construction of a nearly 1 million-square-foot “advanced manufacturing facility,” an approximately 300,000-square-foot “smart manufacturing center,” an approximately 120,000-square-foot multipurpose building and an approximately 100-foot tall “high performance computing data center” globe, all at its Mount Pleasant campus. The company says more than 3,500 construction jobs have been created as part of the development of the campus.
