Back in August, an Assembly Committee approved a package of incentives to help entice the Taiwanese electronics manufacturer, Foxconn, to build their first U.S. factory in Wisconsin. Today, the state’s economic development board approved key terms of the contract which implements a $3 billion incentive package and also includes a personal guarantee from the company’s leader to protect state taxpayers.
These terms are critical to the success of this initiative. It will ensure that Terry Gou, Foxconn Chairman and CEO to be held personally accountable for one-fourth of any potential payback if the Taiwanese manufacturer doesn’t meet investment and employment benchmarks. This is particularly important because of the fact people were extremely concerned about the promises made by Foxconn. The company stated that they are expected to create up to 13,000 jobs in the area but the tax breaks offered by the state had people up in arms and concerned about if their tax dollars would be used for the right reasons.
Approval from the Wisconsin Economic Development Corporation’s board authorizes agency officials to complete the deal. It has the potential to be an impressive economic stimulator with a guarantee to recoup Wisconsin’s $3 billion investment if they fall short of their goal. “The fine line was to balance the needs of the company and the needs of the state,” WEDC chief executive Mark Hogan stated. http://bit.ly/2yO7jVL
Foxconn’s intention is to build a $10 billion flat-screen manufacturing facility in Mount Pleasant. Employment projections range from 3,000 to 13,000 new hires. If these numbers ring true, it could have an incredible impact on the workforce living in the state. Still, even if Foxconn keeps their ambitious promises, some are still concerned about the astronomical incentive package. However, Foxconn must make at least $9 billion in capital investments and meet annual job creation thresholds between 2019 and 2025 to collect the maximum annual capital investment tax credits. These annual goals could help keep the manufacturer in check and constantly striving to create as many jobs as possible. Since those annual tax credits would be reduced depending on how far Foxconn falls short of their goals, the company will only benefit if they contribute to the U.S. economy.
Wisconsin does have an out if it becomes clear Foxconn supplied false information. The state can demand their money back if they leave Mount Pleasant and even if they halt operations or if Foxconn’s job numbers drop below 6,500. They will be liable for 75% of the payback and Gou would be personally responsible for paying back the other 25%.
It seems as though the state has covered their bases. The deal is aimed at creating a mutually beneficial environment for the company, state and employees. It’s exciting to see more manufacturing operations opening their doors in the U.S. and interesting that foreign entities are ready to take these risks and lay their foundation in the American Manufacturing environment.
Manufacturing Talk Radio will be keeping a close eye on the progress at the new Foxconn plant. Be sure to check back for the latest updates.
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