The state struck a deal with Foxconn in 2017 on a large LCD facility called the Gen 10.5 plant, which was to be built in the state and would create 13,000 jobs. In return, Foxconn would receive tax subsidies in tranches totaling about $4 billion. On Monday, the Wisconsin Economic Development Corporation, which oversees the deal, rejected the electronics maker`s request for tax subsidies because its plans are “less significant in scope and economic impact” than the original agreement, according to documents obtained by The Verge. Nor would Foxconn have employed the minimum number of people required to receive subsidies under its original agreement. The company said it hired 550 employees by the end of 2019, but WEDC estimated that only 281 of them qualified under the terms of their agreement, according to The Verge. Wisconsin officials have rejected a request from Foxconn Technology Group for the first $3 billion in government grants for a large tech complex that President Trump has called the “eighth wonder of the world.” State Senator Van Wanggaard, R-Racine, said Foxconn has invested hundreds of millions of dollars and hired hundreds of workers without receiving tax subsidies. “Nevertheless, Foxconn continues to develop a world-class facility at Mt. Pleasant and is quickly becoming a valuable partner in economic rejuvenation in southeastern Wisconsin.” This isn`t the first time Foxconn has failed to meet its hiring goals in Wisconsin. In 2019, it hired 178 full-time employees, 82 fewer than the minimum required for grants at the time. The gap between what Foxconn does and what it said in its contract has only grown since then, putting Wisconsin and the company at an impasse. Documents obtained by The Verge show that attempts to renegotiate that contract have so far failed, and today, the Wisconsin Economic Development Corporation (WEDC), which oversees the deal, rejected Foxconn`s request for tax subsidies on the grounds that Foxconn failed to complete the Gen 10.5 LCD factory project outlined in its original contract.
WEDC also noted that even if what Foxconn is currently doing had been eligible under the contract, it would not have been able to employ the minimum number of people required to receive grants. Foxconn had to employ at least 520 people at the end of 2019 to receive grants and claimed to have hired 550, but WEDC estimated that only 281 would fall under the terms of the contract. Taiwan-based Foxconn is best known for assembling Apple`s iPhone and supplying parts for other tech companies` gadgets. In a 2017 White House announcement, Foxconn and President Donald Trump promoted the Wisconsin plant, saying it would employ up to 13,000 people. Under the original plan, the company would also have been entitled to subsidies of about $3 billion. Foxconn`s plan to build an LCD factory in Wisconsin has continued to change since it was announced in 2017, so much so that state officials reportedly rejected the supplier`s request for tax subsidies. In addition, the scope and pace of Foxconn`s initial promise were incorporated into the contract and would have become an issue for Foxconn even if WEDC had approved this round of grants. By the end of the year, Foxconn is expected to employ at least 1,820 people, a number it is far from reaching.
By 2023, if it doesn`t maintain at least 5,850 employees – more than it said a 6-generation would employ – WEDC would be able to recoup all the subsidies it had previously awarded, a potentially costly and contentious process. The State of Wisconsin has rejected Foxconn`s application for tax subsidies related to the Gen 10.5 LCD Fab project planned for that state. In a letter to foxconn Technology Group`s vice president, Dr. Jay Lee, Wisconsin Economic Development Corporation (WEDC), told Foxconn that it was not eligible for loans under the agreement signed in November 2017. While the crown spent money on infrastructure and other project-related spending, this would be the first installment of the nearly $3 billion in refundable tax credits that made up the bulk of former Governor Scott Walker`s record grant program. The loans, which were to be made in the form of direct payments to Foxconn, were to be released annually after Foxconn had achieved certain employment targets. In 2018, Foxconn had to hire at least 260 eligible employees, and Foxconn missed that goal to the point of not applying for grants. But according to the Wisconsin Economic Development Corporation (WEDC), the company has yet to employ the number of employees Foxconn needs to receive the grants, according to the report. The agreement stipulated that Foxconn must employ at least 520 people by the end of 2019 in order to receive the tax subsidies. Foxconn claimed to have hired 550 people, but according to WEDC, only 281 of them meet the qualifications listed in the contract.
State officials said in a letter Monday that Foxconn had failed to create enough jobs to receive grants in 2019 and that the scope of the project had changed so much that it would have to develop a new contract to receive future grants. Wisconsin has denied Foxconn, Apple`s largest supplier, a tax break after the electronics maker failed to build a factory in the state, The Verge reported Monday. Under the agreement signed in 2017, Foxconn would be entitled to job creation tax credits of up to $19.1 million and additional tax credits of $192.9 million for capital investment for jobs and investments in 2019, a significant portion of the total of $2.85 billion in tax credits outlined in the agreement. To get these maximum tax credits, Foxconn would have had to employ 2,080 workers in Wisconsin and invest $1.3 billion in the state. However, these high numbers have long been ruled out as Foxconn`s project has gone from a Fab Gen 10.5 complex to a Gen 6 plant to a hazardous manufacturing site. As we reported in the DSCC Weekly Review, DSCC was hired by the State of Wisconsin to advise on the Foxconn project. As such, we submitted a report to the Wisconsin Department of Administration earlier this year addressing several questions about the project and how to move from Generation 10.5 to Generation 6. With the latest developments, this report can be made available to the public, and if so, we will be able to share the highlights with our readers. I think most of our readers will understand the big differences in scope and scope between a Gen 10.5 factory and a Gen 6 factory.
President Donald Trump and Foxconn President Terry Gou attend the groundbreaking ceremony for the company`s plant in Mt. Pleasant, Wisconsin, in June 2018. Brennan said talks between the state and Foxconn would continue and he was confident the two sides could reach an agreement. Through the many twists and turns of Foxconn`s problematic project in Wisconsin, one thing has been clear for a long time: the company is not building the promised 20 million square foot LCD Gen 10.5 plant set out in its contract with the state. Even before President Trump laid the groundwork for the alleged plant in June 2018, Foxconn said it would instead build a much smaller plant than it had proposed. Wisconsin Assembly Minority Leader Gordon Hintz, a Democrat from Oshkosh, said the WEDC announcement “cements Foxconn`s legacy in Wisconsin as one of the broken promises, a lack of transparency and a total failure to create the jobs and infrastructure touted by the company in 2017.” In rejecting the tax credits, the Foxconn state said oct. 12 that it would have to rewrite its original 2017 deal with Wisconsin to reflect the company`s reduced plans for investment if it hopes to qualify for tax breaks. “Recipients are not eligible for tax credits because they have not completed the project,” WEDC wrote in its letter to Foxconn, according to The Verge.
“The fact that the receivers have neither built nor begun construction or operation of the required 10.5 generation TFT-LCD manufacturing plant (the `10.5 Fab`) is undisputed.” “Foxconn needs to describe what they do,” Brennan said. “And then we have to balance what it is with the available resources that the state has to provide support.” Brennan acknowledged the work Fii did, but said it was not included in the 2017 agreement. “The state has already made significant investments in the project,” Brennan said. “The state maintained its commitment by spending approximately $250 million on infrastructure and roads, all in preparation for the Generation 10.5 facility that Foxconn had to meet. The State and taxpayers have therefore fulfilled their obligation. Our contacts in Wisconsin suggest that Foxconn itself does not seem clear in its plans for the Wisconsin site. Foxconn representatives who meet with state officials often travel from one meeting to another, and the company has never presented a coherent plan to do business at the Mount Pleasant site. Although Foxconn built a 1 million square foot (93,000 square meter) building on the Wisconn Valley site for a Gen 6 plant, the company received permission to use the Gen 6 building for storage in June.
That`s a “concern” raised with Foxconn, Hughes said. “There`s no clear articulation of what Foxconn`s project is and how many jobs they`ll employ and how much capital spending they`ll invest in,” Hughes said. “And without this information, it`s hard for WEDC to use our tools to support (Foxconn).” The (very lucrative) incentive amounts of the original contract would remain in place, but the payments would be held in trust for the first six years of the project. Employment targets would be cut to reflect the 5,200 people Foxconn had said a 6-generation would employ them, what Hughes called “the real carrot for Foxconn.” A WEDC spokesperson pointed to CNET at its Open Records Request site, but declined to comment further. .