Foxconn Technology Group spent $99 million in Wisconsin between Jan. 1 and Dec. 31, 2018, according to reports it filed in April with the Wisconsin Economic Development Corp.
One of the largest manufacturing projects in U.S. history, the $10 billion Foxconn project has received criticism from Governor Tony Evers. He wants the WEDC to renegotiate the contract that promised Foxconn $2.85 billion in tax credits — $1.35 billion for capital investments and $1.5 billion for job creation.
The reason: Foxconn fell short of employing 260 people in 2018.
Related: Foxconn spending
Related: Foxconn agreement with WEDC
Foxconn falls short on job creation
The $99 million in expenses Foxconn submitted to the state represents 1 percent of the $10 billion three-phase project. Expenses include $93 million in land acquisition costs and $4.4 million in payroll.
The $4.4 million in payroll was paid to 192 people in 2018, but not all of those employees were eligible for the job creation tax credit. Those employees worked in Milwaukee at what is known as the 611 building and at 13315 Globe Drive in Mount Pleasant, a 156,000-square-foot-manufacturing facility where the electronics manufacturer makes televisions.
Foxconn officials indicated earlier this year that it had fallen short of the number of employees it needed to hire to receive the credit. But officials with the electronics manufacturer remained committed to the 13,000 jobs number.
Evers, who criticized the WEDC agreement with Foxconn during his campaign, remains skeptical of the project. He called the job creation requirement “too expansive.” He also pointed to how Foxconn changed its footprint in Wisconsin as the reason why the state needs to “look at how we can all benefit from that,” according to a story by the Journal Sentinel.
Meanwhile, House Speaker Robin Vos (R-Rochester) criticized Evers.
“In all of the comments you hear from Evers, he never said what’s wrong with current contract and what he would change… I would hope he would offer more concrete answers than that,” Vos said.
Construction project moves forward
Foxconn announced a construction timeline in March for its Gen6 LCD plant in the Village of Mount Pleasant, which represents the largest part of the project. Original plans included constructing a Gen 10.5 flat-screen plant. Regardless of the use, the 3 million square-foot-building footprint remains unchanged.
Vos believes Foxconn is living up to the contract. Foxconn broke ground on the project, the multi-purpose building has been built, the public infrastructure projects are happening, and the bid for the vertical construction of the 3 million-square-foot building was released in March. Still, a number of media reports have said that Wisconn Valley was a ghost town, that Foxconn was building a “far smaller factory,” and no one knew what Foxconn was doing.
Vos is baffled by these reports.
“I’ve seen nothing to indicate that they are not going to live up to the contract,” Vos said.
He also defended the contract former Governor Scott Walker (R) and the WEDC negotiated with Foxconn.
“It’s not perfect but they did as good of a job as anyone. With that said, if Evers wants to change the contract, the protections for taxpayers need to remain. Credits should be earned, not given,” Vos said. “If there is a different criterion… a longer period of time built into the contract, I am open to listening. But it should not be any more expensive for the taxpayers in Wisconsin.”
Foxconn jobs numbers miss the mark
In the original agreement with WEDC, Foxconn promised to hire at least 260 people in 2018 to qualify for a portion of the $1.5 billion job creation tax credit.
Dr. Louis Woo, the special assistant to Foxconn CEO Terry Gou, wrote a letter to the WEDC in January stating that the development had created 1,032 jobs, 178 of those positions met the requirements for the investment tax credit and 854 construction jobs. Woo acknowledged that it fell short of the number it needed to seek that credit from the state.
Despite missing the benchmark, Foxconn officials have indicated that they remain committed to hiring 13,000 people in Wisconsin to qualify for up to $1.5 billion in tax credits.
“Foxconn continues to make good progress on all fronts related to the Wisconn Valley Science and Technology Park, as well as our network of Innovation Centers established throughout Wisconsin to support the project and the state’s technology ecosystem,” Woo wrote.
But that may change if Evers and Foxconn agree to a new contract.
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What’s next?
Foxconn also submitted its capital expenditures, which was not due until April 1, 2020, and its supply chain purchases.
An independent auditor will review the April 1 fillings over the next 45 days. The WEDC will also evaluate the data to determine whether Foxconn will qualify for a portion of its $1.35 billion capital investment tax credit.
“WEDC will also be reviewing the capital expenditure information received. While WEDC will not be issuing a verification report for capital expenditures for Calendar Year 2018, WEDC will be working with Foxconn, its related entities, and the independent auditor, to ensure the capital expenditure information reported for 2018, and subsequently for 2019, will comply with the terms of the WEDC contract,” said Kelly Leitz, vice president of marketing and brand strategy.
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