MADISON — In the latest point of contention surrounding Wisconsin’s $3.6 billion deal with Taiwan-based electronics manufacturer Foxconn, Gov. Tony Evers’ administration has told the company it no longer is eligible for tax subsidies agreed to in the original contract.
The
state’s 2017 contract with Foxconn, which included nearly $4
billion in state and local tax incentives, was for a $10 billion,
20-million-square-foot campus and 13,000 jobs over 15 years. However,
multiple updates to the company’s plans have resulted in a vastly
different project altogether, state officials argue.
In a
Nov. 4 letter to Foxconn’s chief business officer Richard Vinvent,
Department of Administration Secretary Joel Brennan said the
company’s current project is “materially different in nature,
type, cost, size and job-creation terms” than the original
Generation 10.5 manufacturing facility for larger panels for TV
screens agreed to in the contract two years ago.
The
project has since downsized to a Generation 6 facility, which would
manufacture small screens for mobile phones, tablets, notebooks and
wearable devices.
“Foxconn
is free not to request tax credits and therefore has no obligation to
submit new applications,” Brennan wrote in the letter. “However,
because Foxconn’s present project has not been applied for,
evaluated by WEDC, certified for eligibility, and properly contracted
for, it presently is ineligible for tax credits under Wisconsin law.”
Foxconn: We are in
compliance
In a
statement, Foxconn Technology Group confirmed that discussions are
taking place with state officials “regarding our commitment to
bring substantial impact to Wisconsin’s economy, workforce and
educational institutions.”
“Foxconn
is in compliance with the terms of the agreement with WEDC and we
will continue to work with the State in good faith,” according to
the statement. “Foxconn is hopeful that we will arrive at a
mutually acceptable resolution so we can continue with a project that
is important to our company and to the development of technology in
Wisconsin.”
Foxconn
is required to provide the WEDC with an update on its progress and
how many jobs have been created by April 1 to determine whether the
company qualifies for state tax credits. The company fell 82 jobs
short of the minimum required to claim state tax credits in 2018.
The
company has said it intends to have its manufacturing facility up and
running by the end of 2020.
Foxconn
Vice Chairman Jay Lee earlier this month told the Milwaukee Journal
Sentinel the company had hired more than 520 employees and would
qualify for state tax credits.
However,
Brennan’s letter indicates the company will not be eligible unless
the contract is amended to reflect the current project.Documents
first published by The Verge detail back and forth communications
between Evers, Brennan, former WEDC secretary Mark Hogan and current
WEDC secretary Melissa Hughes and Foxconn officials over the project.
According to
documents, Louis Woo, an assistant to Foxconn founder Terry Gou,
notified state officials that the project had been downsized and
expressed an interest in a revised plan to reflect the smaller
effort. Hogan agreed that such an amendment was possible.
However,
such an amendment from Foxconn never materialized despite several
recommendations to company leadership from Hogan, Brennan and Evers
over the course of the summer.
Following
a tour of the Foxconn site, Hughes on Nov. 18 wrote company officials
seeking a sit down meeting to have further conversations “to
discuss how best to align Foxconn’s needs and expectations with
those of the State, WEDC, and of course, the citizens of Wisconsin.”
That
same day, Alan Yeung, director of U.S. Strategic Initiatives for
Foxconn, wrote Brennan and Hughes expressing frustration that the
Generation 6 project would not be qualified for tax credits.
“While
Foxconn invests millions of dollars into the State of Wisconsin and
hires job seekers, these efforts are being impeded by the current
administration’s red herrings over the material terms of the
Contract, which are overall capital investment and long-term job
growth,” Yeung said in the letter.
Hintz: Foxconn dishonest
Assembly
Minority Leader Gordon Hintz, D-Oshkosh, who is a member of the
Wisconsin Economic Development Corp. board, described Foxconn as
being “dishonest and nontransparent.”
“There’s no
viable project, there’s nothing happening that’s remotely close
to the contract and we have a company that seems to be setting itself
up for an excuse to potentially back out of the entire project,”
Hintz said. “They appear to be disrespecting both our legal system
and the transparency that comes along with taking taxpayer dollars.”
WEDC
Secretary Melissa Hughes in a statement said she has been pleased
with Foxconn’s development so far, but added it’s expected the
state’s contract with Foxconn will likely evolve over its 15-year
duration.
“As
Foxconn implements its strategic vision, WEDC has a process to work
with them and evaluate the project to ensure it also meets the needs
of Wisconsin’s taxpayers,” Hughes said in the statement. “We
are asking Foxconn to come to the table so we can fully understand
their plans, how they are evolving, how we can assist them, and how
we can do this together in a way that WEDC remains accountable and
transparent to the people of Wisconsin who have invested in this
project.”
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