Foxconn Technology Group has already formed an LLC, has some of its employees working on the project, and will begin hiring more people once its contract with the state Department of Administration is signed.
But the final terms of that contract haven’t been finalized and the State Senate has yet to approve the $3 billion incentive package in exchange for Foxconn making a $10 billion capital investment in southeast Wisconsin. The lack of a contract was cause for deep concern for some members of the Joint Finance Committee, which hosted a public hearing Tuesday at the SC Johnson iMet Center.
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The project is rumored to be located in Mount Pleasant, Sturtevant and in Kenosha. The company has not yet formally announced the location, but the Mount Pleasant Village Board hired a project manager for the Foxconn project at its meeting Monday night.
A study by Ernst & Young showed that Foxconn’s project would likely yield 10,000 construction jobs, 6,000 indirect jobs related to construction, and 22,000 indirect and induced jobs throughout the state. Foxconn also expect to make $1.4 billion in supplier purchases in the state annually.
“What makes this project transformational is the multiple ripple effects of this economic investment across our entire state,” said Scott Neitzel, secretary of the Wisconsin Department of Administration. “Suppliers. And suppliers of suppliers. And suppliers of suppliers of suppliers throughout Wisconsin will benefit from the positive impact of investment.”
State Democrats on the Joint Finance Committee questioned state administrators how the incentive project would work, how the bill would protect the state’s investment, and how the area could find skilled workers in an environment that has already in limited supply. Committee members also questioned provisions that would loosen up environmental permitting process.
Is Southeast Wisconsin ready for Foxconn?
Of the 13,000 people Foxconn plans to hire, 10,000 of those jobs will be construction jobs to build the facility and 3,000 people will be needed to run the factory. The bill allows the state to issue Foxconn a refundable tax credit, which it can use to pay for increased employment, retaining employees, employee training, capital investment and purchases from Wisconsin vendors.
The tax credits would only be refundable on wages paid to full-time employees that make $30,000 to $100,000 per year. The average wage for the 3,000 skilled and engineering jobs is expected to be about $54,000 per year and pay benefits.
Sen. Lena C. Taylor (D-Milwaukee) questioned Secretary of the Wisconsin Economic Development Corporation Mark Hogan and Secretary of the Department of Workforce Development Ray Allen whether the region had enough workers to fill those jobs.
“I hear both of you saying that Wisconsin is work ready when I know both of you have come before the finance committee saying that we have a skills gap problem… which is it?” she said.
Hogan didn’t recall having that conversation, but he did recall speaking with Taylor about finding work for people who are unemployed and underemployed in the City of Milwaukee, he said.
“From day one, when I looked at this opportunity I thought this was a game changer relative to finding significant opportunities for people who are unemployed or underemployed,” Hogan said. “That’s what has driven me on a lot of these things. I have great confidence that we are going to be able to find those people and train them.”
Taylor pushed back and asked Hogan what specifically in the bill would help those potential employees get public transportation to those jobs. Hogan replied that there is nothing specifically in the bill to address public transportation, but there is funding for addressing the portion of I-94 that runs through Racine County.
“Foxconn will need to find ways to get those people to the location,” he said.
“Promises, promises, promises… I hear you saying ‘Trust us, we’re negotiating it,'” she said. “But what my constituents talk about is whether there is honesty and fairness. And you are talking about a company that doesn’t necessarily have that track record… I also hear my colleagues question whether or not we have claw backs. You keep saying, ‘Trust me, trust me.’ But what I don’t see is that we have those agreements in writing.”
Track Record Called into Question on Foxconn
The $10 billion multi-building campus will span over 1,000 acres and be five times the size of the Pentagon for Foxconn Technology Group to make LCD screens at the facility.
But with the state still negotiating with Foxconn over a contract, this became a sore spot that Democrats on the Joint Finance Committee continually pressed state administrators on.
They pointed to loose language in the memorandum of understanding regarding the number of employees Foxconn is promising to hire. But Hogan explained that the contract has a provision built into it that would require the company to hire the employees and make the capital investment in order to receive the credits.
Rep. Gordon Hintz (D-Oshkosh) pointed to how Foxconn had promised to build a $5 billion facility in India, $3.65 billion facility and a $8.8 billion plant in China over the past 12 months.
“So including the pledge to Wisconsin, in the last year alone… since January, they have made commitments of $27.5 billion in the past year,” he said. “That would be more than they spent in the past 23 years combined. Is it reasonable to believe that a company with such a long track record of overpromising and underperforming will follow through on their investment pledges?”
“We’re very confident that they will invest $10 billion in the state of Wisconsin,” Hogan said. “What gives me confidence in Foxconn and Terry Gou is that he is committed to the State of Wisconsin. We have seen dozens of their employees in the state… right here in this room.”
Hogan explained that Foxconn wants to be in Wisconsin because North America is their largest market. The package also relies on the manufacturer to meet certain thresholds before any money goes out the door.
Hintz admitted the pledges are exciting, but he was intent on making sure the state was putting together an accountable deal.
“A lot of the economists and business analysts from outside the state say well they will either invest $10 billion or they will hire 13,000 people because clearly $10 billion would involve some level of investment in automation,” Hintz said.
A date has not been set for when the State Senate will vote on the project, but it officials have signaled that it could be as soon as next week or after Labor Day.