Gov. Scott Walker and Foxconn chairman Terry Gou made it official Friday, signing a contract that commits the state of Wisconsin to giving the company $3 billion in tax credits and breaks if the company builds a $10 billion LCD manufacturing plant and creates 13,000 jobs.
Foxconn officials also upped the projected size of their campus, describing it as a 32 million-square-foot operation that would produce more than 6 million LCD panels annually. It was previously described as a 20 million-square-foot campus.
“People around the world have asked me, why Wisconsin?,” Gou said, crediting the state’s work ethic, manufacturing history, willingness to invest and welcoming community as reasons for making the decision. “We have decided that it is our home.”
Walker described how his grandfather had made a living for 42 years as a machinist and those kind of jobs had left the state and country over the years.
“What makes me prouder than anything else … we are bringing those jobs back,” Walker said.
Ultimately, the signing comes just 108 days after Walker and Gou joined President Donald Trump at the White House to announce Wisconsin had been selected as the site for Project Flying Eagle, the company’s project code name.
During those three and a half months, lawmakers passed legislation clearing the way for the state to offer Foxconn incentives that eclipse anything else the state has awarded many times over.
The company and state also negotiated a contract that says when and how Foxconn will earn its tax credits, which will ultimately take the form of cash payments because the state has almost no tax for manufacturers.
Acting quickly is among the factors state officials have credited for helping land the project that could remake the state’s economy for years to come. Walker and other state officials were quick to fly out to Washington D.C. this spring for an opportunity to meet with Gou at the White House.
A Wisconsin delegation flew to Japan to tour a Foxconn plant that is similar to the one planned in Wisconsin.
As negotiations continued, the project grew in size from a $1.1 billion incentive offer for a $6 billion project that would have created 8,000 jobs to the final $3 billion offer. By July 12, Walker and Gou had both signed a hand-written agreement on the governor’s letterhead establishing the framework of the package.
But that speed has also earned the deal critics who argue the full $3 billion package is too much to give to a single company. Some opponents charged that the letterhead document equated to committing the state to spending $3 billion on a bar napkin.
The special session legislation also exempted Foxconn’s project from certain environmental processes and provides an accelerated court process for any disputes. Those are also frequent targets for critics of the deal along with the speed and size.
The contract outlines exactly how Foxconn will earn those credits, and to max out with the full amount the company will have to hit ambitious hiring timelines that rivals the pace with which the deal came together.
Maxing out would require making a $10 billion capital investment by 2025, hiring 13,000 people by 2022 and maintaining that level of employment through 2032. It is possible the company’s employment could never get beyond 6,500 and it could still earn nearly half of the available tax credits.
The contract signing is the final state action in green-lighting the project. Officials in Mount Pleasant and Racine County are also working to finalize a $764 million tax incremental financing package at the local level. The Racine County Economic Development Corp. still has to take ownership of the land where the factory will be built. The land transfers are expected to take place in early 2018 and groundbreaking is planned in the spring.
