Gov. Scott Walker and the CEO of Taiwanese manufacturer Foxconn signed an agreement Thursday that they say could bring as many as 13,000 manufacturing jobs to Wisconsin, as Walker sought to sell taxpayers on an unprecedented state incentive package for the company that could reach $3 billion.
The signing, with Walker and Foxconn CEO Terry Gou, occurred in a public event at the Milwaukee Art Museum. It was billed as the first official step toward what would be the largest economic-development project in state history, if completed.
Foxconn, which makes iPhones and other electronic devices, announced with President Donald Trump at the White House Wednesday that it wants to invest $10 billion to build a 20-million-square-foot campus for making liquid crystal display, or LCD, panels in Wisconsin. It would be the first LCD manufacturing facility in the world outside Asia, state officials say.
The facility would begin operating in 2020, initially with 3,000 workers, Foxconn and state officials say. They say employment would grow to as many as 13,000 in the years following.
The site of the campus is yet to be announced; Walker said the company is eyeing multiple locations in Racine and Kenosha counties.
The agreement signed Thursday, a memorandum of understanding between the state and Foxconn, says public officials in Wisconsin will help the company assemble a construction site of more than 1,000 acres. Such documents often are legally nonbinding but can move the parties closer to a final deal.
Skeptics noted Foxconn has announced plans to build factories elsewhere that haven’t materialized. They also questioned if the multibilllion-dollar incentive package the state could offer the company is the best use of those dollars.
Meanwhile, Walker did a flurry of interviews Thursday to head off potential criticism of the proposed deal with the Taiwanese tech giant. The whopping bundle of taxpayer-funded incentives Wisconsin is offering the company to build here — which remain subject to final negotiation and approval by state lawmakers — will be tied to job creation, Walker vowed.
“We tie it to performance,” Walker said on a syndicated conservative talk radio show Thursday. “They’re not going to get (the incentives) if they don’t provide the jobs and don’t provide the capital investment.”
Walker pledges safeguards for taxpayers
Walker said if Foxconn doesn’t fulfill its promise to invest $10 billion or create 13,000 jobs, the company won’t be eligible for all of the $3 billion — most of which would come through refundable state income tax credits for the company. Walker’s office has said any deal with Foxconn also will include clawbacks allowing the state to recoup the credits “if the jobs and investment are not kept in Wisconsin.”
“It’s good to have (safeguards) as protection ... it certainly is my fiduciary role to protect taxpayers in the state,” Walker said.
Should the project move forward, final terms of a deal between the state and Foxconn would be outlined in a contract between the company and Walker’s jobs agency, Wisconsin Economic Development Corp., or WEDC. The agency then would administer the incentives.
State lawmakers, beginning as soon as next month, also are expected to take up legislation to enable the incentives.
The memorandum signed Thursday says the legislation will modify tax credit programs that will form the foundation of the multibillion-dollar incentive package.
It says the legislation also will modify state tax incremental financing guidelines for the project. State officials have said TIF will be part of the project but haven’t specified how or how much, beyond saying it will be used for “local infrastructure.”
It also says the state will expedite environmental permitting reviews of the project “wherever possible and within the public interest, to align with the timeline needed to implement the project.”
Multiple reports have indicated Foxconn’s interest in southeast Wisconsin, near Lake Michigan, may be because LCD manufacturing requires huge volumes of fresh water.
New WEDC program
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WEDC currently administers the Enterprise Zone tax credit program for businesses that locate or expand in Wisconsin. WEDC spokesman Mark Maley said Thursday that lawmakers and Walker are expected to create a new program for Foxconn in an upcoming special legislative session.
“It’s going to be up to the legislators and the governor to decide the parameters of Foxconn,” Maley said.
Under a Foxconn overview document provided by Walker’s office to reporters Wednesday, the company would be eligible to earn the $3 billion over 15 years.
The company will be eligible for $1.5 billion in state income tax credits for creating jobs, up to $1.35 billion in credits for capital investments and up to $150 million for the sales and use tax exemption for the purchase of construction materials.
Maley said the income tax credits would be refundable, meaning any amount by which they exceed the company’s tax liability would be paid directly to the company.
Elements of the Enterprise Zone program could form the basis for the new program, Maley said. Under the existing program, businesses may claim tax credits for a percentage of wages paid on jobs created — but only for jobs paying at least $30,000 a year, Maley said.
Walker said Wednesday that Foxconn workers in Wisconsin will make an average salary of more than $53,000, plus benefits. Since that figure is an average and not a median amount, it could be significantly affected by a few workers making a very high salary.
Assembly Speaker Robin Vos told the Racine Journal-Times most entry-level jobs will pay about $13 to $15 per hour and up, adding “I think the vast majority will be more than that.”
‘a major victory for me’
Walker planned to fly around the state Friday, to places hundreds of miles away from southeast Wisconsin, to promote the project, which state officials have dubbed “Wisconn Valley.”
Walker appeared on CNBC and a number of conservative talk radio shows Thursday. Walker said the campus will include multiple buildings and construction will begin in 2018.
Walker used his TV and radio appearances to make a case for the deal and responded to critics who point to past splashy announcements Foxconn has made in the U.S. and overseas without following through on their plans.
“WI needs to take a close look at these broken promises before throwing billions of taxpayer dollars at questionable corporate subsidies,” Senate Minority Leader Jennifer Shilling, D-La Crosse, tweeted on Thursday.
In 2013, the company announced plans to build a $30 million plant that would employ 500 workers in central Pennsylvania. That project never materialized.
Walker acknowledged the company’s past broken pledges but said the state has put in place the “safeguards” and “clawbacks” necessary to protect the state.
“They’re just upset because they think this is a major victory for me,” he said about critics of the plan.