State, Foxconn working on a new project agreement
Bringing the Foxconn Technology Group to Wisconsin took passing unprecedented legislation in 2017 to provide up to $2.85 billion in tax credits to a foreign company in exchange for a footing in advanced manufacturing.
Three years have passed, and despite a massive construction project in Mount Pleasant, there have been no advanced manufacturing jobs announced, and no word from the company about its plans for the site, touted by former President Donald Trump as the “eighth wonder of the world.”
There’s also been no award of tax credits, and the state and Foxconn are trying to hammer out a new deal.
But will lawmakers have to get involved again? Republican and Democratic elected officials don’t think so.
“To me, the likely outcome to rightsize the project would be to use existing tools that (Wisconsin Economic Development Corp.) has and improve those incentives for a project that still is worthwhile to the state,” Assembly Minority Leader Gordon Hintz, D-Oshkosh, said. “I’m hoping that there’s a worthwhile project that is realistic that can create jobs and, hopefully, spur some future growth.”
For months, WEDC officials and Foxconn executives have been negotiating a new deal to reflect what is planned for its operation in Mount Pleasant.
Hintz said the state has put hundreds of millions of dollars into the project already and believes it is up to Foxconn to make a decision on the project and work with what the state offers the company.
“The state has decent incentives out there to assist and facilitate and incentivize hiring, lowering the cost of getting started, that I think is probably the way we should go in working with Foxconn moving forward,” Hintz said.
“Having the Legislature involved in drafting legislation more reflective of a negotiation is not something that we traditionally do,” he said.
“Even though, from the beginning, I was skeptical, and rightfully so, of a project that has failed to materialize. If you felt that the claims were legitimate, it was understandable that you would have legislation of that scale.”
Missy Hughes, WEDC secretary, said during a recent Milwaukee Press Club event that her office has not had any conversations with elected officials on any proposed legislation regarding the new deal with Foxconn.
State Rep. Greta Neubauer, D-Racine, said she supports jobs in the Racine County community but notes that the project has changed, and said she is interested in what the new deal looks like.
“Wisconsinites, and Racinians specifically, deserve clear expectations and accountability about where this devel
is going, especially when taxpayer money is on the line,” Neubauer said in a statement. “I am monitoring news on the WEDC negotiations closely, and I look forward to seeing further updates on their progress.”
Assembly Speaker Robin Vos, RRochester, said passing legislation is “unlikely to be necessary” for a new deal with Foxconn and the state.
State Sen. Van Wanggaard, R-Racine, agreed.
“Without knowing the parameters of a new contract, I cannot say for certain legislation would be needed, but I would tend to doubt it,” Wanggaard said in a statement.
Where Republicans and Democrats disagree
Wanggaard added: “Foxconn is in substantial compliance with their existing contract, and that, according to a recent legislative audit, WEDC and the (Gov. Tony) Evers Administration is not following existing law.”
That statement about the company’s compliance with the existing contract highlights the differences between Republicans and the administration.
According to the WEDC evaluation,
Foxconn has hired only 281 full-time employees eligible for tax credits, but the company needed to have hired 520 to receive tax credits and thus did not receive subsidies for those hired based on the existing contract.
The administration says there are much bigger problems than the lack of hiring.
The original plan was for Foxconn to build a Generation 10.5 LCD manufacturing facility, but that project has been scaled back to a Gen 6, which the state views as being out of compliance with the agreement.
Also, the Foxconn Industrial Internet (Fii), a subsidiary of Foxconn, has been building facilities on the property in Mount Pleasant but is not part of the original contract.
“The work that is going on with servers, the other work that they’re doing through Fii, I think there’s a lot of excitement, lots of opportunity there, but it’s materially different from where we started three years ago,” said Joel Brennan, secretary of the Department of Administration, in October.
Vos said the state not giving Foxconn any tax credits because of these changes is “a bunch of B.S.”
Vos, who recently appointed himself to the WEDC board, said the agreement was centered around jobs, wages and the company building facilities.
“This is just them looking for a loophole to fulfill the state’s bargain,” Vos said. “Do you care or does the taxpayer care if they’re making a TV or a circuit board? It doesn’t really matter. All that really matters is how many people they employ and what they pay them.”
Vos said the state had an “ironclad deal with Foxconn”
“I understand that the political side of Gov. Evers’ operation did not want to make it appear that this was a win for Wisconsin because they won the election, in some ways, by beating up on Foxconn against Gov. Walker,” Vos said. “Unfortunately, Foxconn is stuck in the middle.”
Britt Cudaback, deputy communications officer for Evers, said in a statement that the governor is focused on assisting Foxconn and making sure the contract reflects what is happening in Wisconsin.
“Wisconsin taxpayers absolutely care about Foxconn keeping their word and upholding their end of the deal, and Gov. Evers believes Wisconsinites deserve leaders who will protect taxpayers and be good stewards of their tax dollars,” Cudaback said. “It’s too bad Speaker Vos doesn’t feel the same, but the governor and the WEDC will continue working with Foxconn to ensure the contract reflects the scope and the nature of their project in Wisconsin.
Vos said he toured Foxconn’s facilities earlier this week and saw employees building “circuit boards.” One line of manufacturing equipment was operatopment ing while another five lines had equipment needing to be installed.
“All the things that they promised are happening, and I guess if the only way that a business is able to have the State of Wisconsin keep their word is by negotiating a new deal, we’ll have to take a look at what the new deal would be,” Vos said. “But I think it’s a bad sign for Wisconsin that somebody does what we asked, and now because a change in administration occurs, the new administration wants to undercut the new deal.”
With the state and local governments funding the expansion of infrastructure to support the Foxconn project, Hintz disagrees with Vos’ assessment that the state is not keeping its side of the deal.
“There’s already been more than a billion dollars of public money into this and, of course, some of that was taken away from other statewide projects,” Hintz said. “Some would say with no incentives, they’ve already got a pretty good deal from the state, and I think that’s something worth considering.”
Hintz said he understands there have been major market changes in the last year with the coronavirus pandemic, but the “lack of transparency” by Foxconn has been an issue.
“Nothing can be done until there is details (on the current project),” Hintz said. “The idea of a blank check for no detailed plan, I don’t think is going to happen with existing programs.”