Foxconn Nabs $3 Billion Tax Package to Relocate to Wisconsin

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By Michael J. Bologna

Wisconsin will pay as much as $3 billion in tax credits, training grants, and infrastructure improvements to land a $10 billion investment by Foxconn Technology Group and more than 13,000 jobs, the Wisconsin Economic Development Corporation (WEDC) said July 26.

WEDC released a broad outline of Taiwan-based Foxconn’s plan for a 20 million-square-foot campus in southeastern Wisconsin near the border of Illinois. Details emerged as President Donald Trump and Gov. Scott Walker (R) announced the development deal at the White House with executives from Foxconn, the world’s largest contract electronics manufacturer.

“We are thrilled to build a state-of-the-art display fabrication plant in America’s heartland. As the first in a series of facilities we will build in several U.S. states, this is part of a bigger plan to create a robust 8K+5G ecosystem in the United States,” Terry Gou, Foxconn chairman and CEO, said in a statement.

Foxconn plans to make a $10 billion investment in a manufacturing facility for the production of liquid crystal display panels for televisions, computers, automotive dash boards, and other electronic devices. White House officials said the facility will initially generate 3,000 jobs in Wisconsin—but the number could rise to 13,000 jobs over several years. Foxconn plans for the facility to be operational in 2020.

WEDC said Foxconn would be eligible for up to $3 billion in tax credits over 15 years. That total includes up to $1.5 billion in state income tax credits for job creation, up to $1.35 billion in state income tax credits for capital investment, and $150 million for sales and use tax exemptions.

$300K for Each Job

The details mesh roughly with an analysis by the nonpartisan Wisconsin Technology Council (WTC), which predicted a final price tag of $3 billion over a period of 20 years. On that basis, Wisconsin could be paying as much as $300,000 for each job created by Foxconn. WTC serves as the science and technology advisory agency to the Office of the Governor and the Wisconsin legislature.

WTC president Tom Still said his analysis was based on an examination of Wisconsin’s development programs against similar mega-deals reached in recent years. He specifically examined Nevada’s winning bid for Tesla Motors Inc.’s giga-factory at a cost of $1.3 billion for 6,500 jobs, New York’s winning bid for an Advanced Micro Devices facility at a cost of $1.2 billion for 1,200 jobs, and Alabama’s winning bid for a ThyssenKrupp facility at a cost of $1 billion for 2,000 jobs.

Still acknowledged that Wisconsin’s price tag would be substantial and the incentive package would be controversial. At the same time, Still said the proposed Foxconn campus in southeastern Wisconsin could have a “transformative effect” on the entire regional economy.

“It’s a big number and that’s the cost, but what are the benefits? So the benefits are between 10,000 and 13,000 direct jobs. With indirect jobs, it could be twice that number,” Still told Bloomberg BNA.

WEDC said the Foxconn direct jobs would have an average annual salary of $53,875. The agency predicted the creation of 6000 indirect jobs and 10,000 construction jobs from the Foxconn development.

Manufacturing Milestone

A senior White House official briefed reporters on the Foxconn development deal prior to Trump’s announcement.

“It does represent a milestone in bringing back advanced manufacturing specifically in the electronics sector,” the official said.

The official added the Wisconsin facility would be the “first of many they will be making in the United States.”

Still noted that Wisconsin beat out Illinois, Indiana, Michigan, Ohio, Pennsylvania, and Texas to land the Foxconn project. While the incentive package was important, he said other factors may have been more important, including access to major transportation corridors, skilled labor, large amounts of fresh water, educational institutions, potential customers, and technology hubs in Milwaukee and Chicago.

“I’m pretty convinced, from what I’ve heard anecdotally, that Wisconsin was not the highest bidder,” Still said. “I think other states came up with bigger packages. At the end of the day, I think Wisconsin won on other tangible and intangible qualities that helped set it apart.”

‘Buffalo Hunting’

Greg LeRoy, executive director of economic development research and advocacy organization Good Jobs First, pointed to several troubling features of the state-against-state bidding war over Foxconn and the high price paid by Wisconsin. He said the Trump administration and the states are orchestrating a process that benefits large, politically connected corporations and harms small employers, which form the backbone of the economy.

“President Trump is also blessing the ‘buffalo hunting’ school of economic development, in which a few companies get huge ‘megadeals’ while programs that benefit many employers suffer budget cuts, and small businesses and entrepreneurs get shortchanged,” LeRoy said. “We hope Foxconn creates lots of great jobs, but the ‘war among states’ way in which the United States allows even foreign corporations to extract huge taxpayer subsidies is a troubling reminder of how federalism undermines economic development in America.”

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bna.com

To contact the editor responsible for this story: Jennifer McLoughlin at jmcloughlin@bna.com

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