Wisconsin Tax Credits Offered to Kimberly-Clark to Halt Layoffs

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Michael J. Bologna

Hoping to halt a pattern of job losses in Wisconsin’s fabled paper industry, Gov. Scott Walker (R) Feb. 5 unveiled a plan extending tax credits to Kimberly-Clark Corp., which announced a major corporate restructuring last month.

Walker’s plan would offer Kimberly-Clark the same tax credit benefits awarded in last year’s record-breaking deal for Foxconn Technology Group, which is constructing a $10 billion technology campus in southeastern Wisconsin. Walker hopes the incentives will cause Kimberly-Clark to re-examine its decision to shutter two paper manufacturing facilities in Neenah, Wis., and lay off 600 workers.

Under the state’s Enterprise Zone Program, the Wisconsin Economic Development Corporation can award job retention credits of up to 7 percent of a company’s payroll. Walker said he would propose special legislation permitting retention credits of up to 17 percent for Kimberly-Clark—the same credit scheme created for Foxconn.

“The State of Wisconsin has been working closely with our local and regional economic development partners to get a better understanding of Kimberly-Clark’s decision and make a strong case for the company to retain its operations in the Fox Valley,” Walker said in a statement. “Retaining outstanding Wisconsin companies like Kimberly-Clark is just as important as attracting new companies to our state, which is why I’m proposing we offer larger tax credits to ensure the company keeps those 600 jobs where they belong—in Wisconsin.”

It wasn’t immediately clear how Kimberly-Clark would respond to Walker’s offer. The company announced a restructuring plan Jan. 23 that would trigger job losses of 5,000 to 5,500, approximately 12 percent to 13 percent of its global workforce.

150-Year History

Kimberly-Clark, the maker of Kleenex facial tissues, Cottonelle toilet paper and Huggies diapers, has a long history in Wisconsin. While the company is currently headquartered in Irving, Texas, it was founded in Neenah in 1872.

Kimberly-Clark was one of several paper manufacturers to emerge in Wisconsin and prosper over the last 150 years. According to the state Department of Natural Resources, Wisconsin is the top producer of paper in the country, manufacturing 5.3 million tons of paper and 1.1 million tons of paperboard annually. The industry employs approximately 31,000 workers in Wisconsin.

Despite such success, paper manufacturing has declined across Wisconsin over the last two decades in response to shifts in demand, new manufacturing methods, and competition from low-cost foreign competitors. According to the United Steelworkers Union, at least 34 paper facilities were shuttered between 2000 and 2013, eliminating 17,000 jobs.

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

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

Copyright © 2018 Tax Management Inc. All Rights Reserved.

Request Daily Tax Report: State