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Wisconsin Tells Foxconn No Tax Credits Without New Deal

Chuck Quirmbach
One of the buildings still under construction at the Foxconn site in Mount Pleasant on Aug. 24.

Updated Tuesday at 10:31 a.m. CT  

Wisconsin told Foxconn Technology Group on Monday that it won't qualify for billions of dollars in state tax credits unless it strikes a new deal for a scaled-back factory complex.

State officials have told Foxconn since last year that it would not qualify for the tax credits without revisions to its 2017 contract because the scope of the envisioned factory has been reduced. President Donald Trump heralded the original deal as a sign of a revitalized American manufacturing economy, calling the envisioned plant “transformational” and the “eighth wonder of the world.”

The deal with Foxconn, the world's largest electronics manufacturer, was announced by Trump at a White House ceremony and he traveled to Wisconsin in 2018 for the groundbreaking.

Foxconn signed a contract with Wisconsin under then-Gov. Scott Walker in 2017 to earn nearly $4 billion in state and local tax incentives for a $10 billion display screen manufacturing campus and plant that would employ up to 13,000 people. But Walker, a Republican, lost in 2018 to Democrat Tony Evers, who ran as a critic of the project.

After the deal was signed, Foxconn said it was downsizing the factory to what is known as a Generation 6 plant rather than a Generation 10.5 plant. The facility envisioned now would make smaller thin-film transistor liquid crystal display screens for cellphones and other devices, rather than the larger screens that were first proposed.

The letter sent Monday from Wisconsin Economic Development Corp. Secretary Melissa Hughes confirmed that from the state's perspective, Foxconn's new factory can't get state tax credits unless the original contract is changed.

Hughes said in the letter to Jay Lee, the vice chairman of Taiwan-based Foxconn, that “Foxconn’s activities and investments in Wisconsin to date are not eligible for credit."

“As we have discussed numerous times, markets, opportunities and business plans can and often need to change,” Hughes said in the letter. “I have expressed to you my commitment to help negotiate fair terms to support Foxconn’s new and substantially changed vision for the project.”

Credit Chuck Quirmbach
A photo of the largest existing Foxconn building at the Mount Pleasant site on Aug. 24.

The state, in a separate communication, told Foxconn that because the company is not building the factory envisioned in the contract, the state can't calculate job creation or capital investment tax credits.

“Once Foxconn is able to provide more accurate details of the proposed project, such as its size, scope, anticipated capital investment, and job creation, WEDC would be able to offer support for the project with tax incentives as it does for many large and small Wisconsin businesses," Hughes wrote.

State Rep. Gordon Hintz, the Democratic minority leader and a longtime critic of the project, said the announcement “cements Foxconn’s legacy in Wisconsin as one of broken promises, a lack of transparency, and a complete failure to create the jobs and infrastructure the company touted in 2017.”

Foxconn contends it employs more than 520 people in Wisconsin and has invested $750 million here. The firm says it came to the table with WEDC to discuss new terms, and that the "determination of ineligibility during ongoing discussion is a disappointment and a surprise that threatens good faith negotiations."

Is Evers' team worried the latest news will prompt Foxconn to leave Wisconsin? State Administration Secretary Joel Brennan says there are a lot of reasons the company should stay and invest more here.

"Not the least of which is they have a strong partner in WEDC and the state, who have made almost a quarter of a billion dollars of investment in and around their site. The local communities have also invested in this," Brennan said. 

Brennan says there's "nothing magical" about the date of the letter to Foxconn. It comes the same week as Foxconn supporters Vice President Mike Pence and President Donald Trump are scheduled to visit southern Wisconsin. But Brennan says the Evers administration is not trying to send a political message.

"There's no politics associated with this. Unfortunately, politics has shrouded the Foxconn deal since before the contract was even signed," Brennan said.

The state's largest business group, Wisconsin Manufacturers and Commerce declined comment. The Metropolitan Milwaukee Association of Commerce says it will continue to encourage the development of an agreement between Foxconn and Wisconsin that is mutually beneficial.

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