Wisconsin, Foxconn Negotiate Smaller Deal for Electronics Plant

The ongoing push-and-pull between the state and the Taiwanese tech outfit has resulted in an agreement greatly reduced in scale since the initial deal celebrated by former President Donald Trump in 2017.

FILE – In this June 28, 2018 photo, President Donald Trump takes a tour of Foxconn with Foxconn chairman Terry Gou, right, and CEO of SoftBank Masayoshi Son in Mt. Pleasant, Wis., in 2018. (AP Photo/Evan Vucci, File)

MILWAUKEE (CN) — The state of Wisconsin and Foxconn Technology Group announced on Tuesday details of a renegotiated contract for an electronics plant in the southeastern part of the state, arriving more than four years and multiple setbacks after the parties initially agreed to a much larger deal.

In 2017, Foxconn, a Taiwan-based company that supplies parts for Apple’s iPhone and iPad as well as other electronics, minted a deal by which it said it would invest $10 billion in Wisconsin and hire up to 13,000 workers for a massive plant in the village of Mount Pleasant that would manufacture screens for televisions and other devices.

The deal — touted as a business-friendly victory by then-Republican Governor Scott Walker and former President Donald Trump — would have granted Foxconn more than $4 billion in total tax incentives in exchange for building the Gen 10.5 LCD factory, which Trump championed at the time as the “eighth wonder of the world.”

But the deal turned shaky in subsequent years as the tech giant repeatedly pared back its plans and failed to meet hiring requirements to qualify for its tax breaks.

The Racine-area factory was scaled back to a considerably smaller Gen 6 factory in 2018, with Foxconn blaming marketplace factors out of its control. Even that smaller plant was thrown into question shortly thereafter before Trump intervened and apparently smoothed things out with Foxconn executives, who recommitted to a more modest operation they said was reimagined as a hybrid factory-and-regional-tech-hub facility. The company recently floated in February that it may even make electric vehicles at the sprawling 2,500 acre campus.

Most of the original players that sealed and applauded the deal in 2017 — including Walker, Trump and former Foxconn CEO Terry Gou, who stepped down in 2019 — are no longer around. Renegotiating the contract has mostly been left to the Wisconsin Economic Development Corporation, a public-private jobs agency, and current Wisconsin Governor Tony Evers, a Democrat who campaigned in 2018 in part on his skepticism and distaste for the deal.

Now it appears as of Tuesday that Evers, the WEDC and the world’s largest electronics manufacturer have reached a new agreement that Badger State officials say will save taxpayers $2.77 billion compared to the old contract while still holding Foxconn accountable and protecting hundreds of millions in local infrastructure investments, according to a release from the WEDC.

Under the contract amendment approved by WEDC’s board of directors on Tuesday, Foxconn is eligible for up to $80 million in performance-based tax credits for six years if it lives up to its promises for jobs and capital investments.

The latest deal requires that Foxconn hire at least 1,454 qualified workers to receive its tax credits, a nearly 90% drop from the targeted 13,000 workers promised in the original 2017 contract. It also reduces the length of the two sides’ commitment from 15 years to six and allows the state to recover 100% of incentives paid each year in the event of a default, while also giving Foxconn the latitude to rake in its tax credits without specific mandates as to what it produces, so long as it meets employment and capital investment requirements.

“When I ran to be governor, I made a promise to work with Foxconn to cut a better deal for the state — the last deal didn’t work for Wisconsin, and that doesn’t work for me,” Evers said in WEDC’s statement Tuesday. “Today I’m delivering on that promise” while protecting infrastructure investments, saving taxpayers billions and holding Foxconn accountable by treating it like any other business, the governor said.

WEDC Secretary and CEO Missy Hughes said on Tuesday that “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.

State Senator Dan Feyen, a Fond du Lac Republican on the WEDC’s board of directors, said the plant will be used “for the manufacturing of data infrastructure and other operations related to high-performance computing, cloud computing and artificial intelligence,” according to an Associated Press report.

Wisconsin Assembly Speaker Robin Vos, a Rochester Republican whose district includes the Foxconn plant, approved of the amended agreement on Tuesday while expressing hope that the fraught deal will cease to be leveraged as a political flashpoint.

“Despite all of the liberal criticism when the initial agreement was passed, this amendment actually gives the company even more financial incentives than the original did,” Vos said. “Hopefully we can now put the politics surrounding the development behind us and focus on the partnership that continues to benefit all of Wisconsin.”

The Foxconn experiment has had skeptics in Wisconsin from the start, including property owners who sued the village of Mount Pleasant in 2018 over what they said amounted to unlawfully taking their private property for the benefit of a private company. That lawsuit was administratively closed amid mediation in October 2020, according to court records.

Another lawsuit from a local real estate development firm alleging Foxconn breached its contract was filed in February but voluntarily dismissed without prejudice by the plaintiffs a month later.

Foxconn did not immediately respond to a request for comment on the company’s revised deal with Wisconsin on Tuesday.

The tech company so far has received no tax credits because it hasn’t met any employment requirements and has built structures far less substantial and manufacturing-centric than originally planned, according to an October memo from Wisconsin Department of Administration Secretary Joel Brennan.

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