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Foxconn campus in Mount Pleasant.

WEDC says Foxconn’s changed plans mean no incentives

By Arthur Thomas, staff writer

Foxconn Technology Group cannot receive any tax incentives for its job creation and capital investment last year because it is no longer building the kind of plant described in its contract with the state of Wisconsin.

BY THE NUMBERS

The Wisconsin Economic Development Corp. informed the company of its determination Oct. 12. Earlier this year, Foxconn submitted its annual report to the state claiming it had created more than 550 jobs and invested more

Northwestern Mutual is providing $2 MILLION for the redevelopment of the children’s theater and play area on the Summerfest grounds.

than $280 million. After acknowledging it fell short of its job creation targets in 2018, the company did not seek tax credits last year.

BizTimes’ review of Foxconn’s annual report showed the company could have received $45 million in tax credits. WEDC’s review said the company had created 281 jobs that qualified for incentives, short of the requirement for 2019.

Foxconn called the determination “a disappointment and a surprise.”

That WEDC would take the position it did was not necessarily a surprise. The agency had previously said it wouldn’t verify the company’s eligibility for tax credits under a 2017 contract between the two sides. The contract called for Foxconn to build a Gen 10.5 LCF fabrication facility, designed to produce large television screens.

Instead, Foxconn has opted to build a smaller plant that provides it with more flexibility regarding which products it produces. The company is also building facilities to manufacture server products and provide high-speed computing capabilities.

“I find talking with Foxconn’s leadership, their energy is infectious and I’m really excited about their being here,” said Missy Hughes, secretary and chief executive officer of WEDC. “It’s just we’re faced with the reality that they’re not building a Gen 10.5 facility and that is what our contract is based on.”

She said the change matters because even though Foxconn’s $3 billion incentive package provides fewer tax credits for a smaller project, it was designed with the massive scale of the original plan.

“When that foundation isn’t there, the rest of the meeting of the minds between the two parties goes away,” Hughes said.

The two sides have been discussing a new agreement, including reaching a deal to temporarily shield some communications from disclosure or litigation to allow for more frank conversations. Hughes said the 45-day period agreement that was in place this summer was productive.

But WEDC’s decision to declare that the project is not eligible for tax credits could have consequences for future discussions.

“Foxconn came to the table with WEDC officials in good faith to discuss new terms of agreement which have consequential impacts to Racine County and the Village of Mount Pleasant, third party partners in this development project,” Foxconn said in a statement. “WEDC’s determination of ineligibility during ongoing discussion is a disappointment and a surprise that threatens good faith negotiations.” n