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Wisconsin says Foxconn's scaled-back factory won't get tax credits

Wisconsin told Foxconn Technology Group on Monday that it won't qualify for billions of dollars in state tax credits. The message is consistent with a warning state officials issued the company last year, saying the megaproject would not quality for aid without revisions to its 2017 contract because the scope of the factory has been reduced.

President Donald Trump heralded the original deal, announced in 2017, as a sign of a revitalized American manufacturing economy, calling the promised plant "transformational" and the "eighth wonder of the world."  Mr. Trump announced the deal at a White House ceremony and traveled to Wisconsin in 2018 for the groundbreaking.

Foxconn, the world's largest electronics manufacturer, signed a contract with Wisconsin under then-Gov. Scott Walker in 2017 to earn nearly $4 billion in state and local tax incentives for a $10 billion display screen manufacturing campus and plant that would employ up to 13,000 people. But Walker, a Republican, lost in 2018 to Democrat Tony Evers, who ran as a critic of the project.

After the deal was signed, Foxconn said it was downsizing the factory to what is known as a Generation 6 plant rather than a Generation 10.5 plant. The facility envisioned now would make smaller thin-film transistor liquid crystal display screens for cell phones and other devices, rather than the larger screens that were first proposed.

Foxconn changes focus to research and development 00:28

The letter sent Monday from Wisconsin Economic Development Corp. Secretary Melissa Hughes confirmed that, from the state's perspective, Foxconn's new factory can't get state tax credits unless the original contract is changed.

Hughes said in the letter to Jay Lee, the vice chairman of Taiwan-based Foxconn, that "Foxconn's activities and investments in Wisconsin to date are not eligible for credit."

"As we have discussed numerous times, markets, opportunities and business plans can and often need to change," Hughes said in the letter. "I have expressed to you my commitment to help negotiate fair terms to support Foxconn's new and substantially changed vision for the project."

Foxconn spokeswoman Myranda Tanck had no immediate comment.

Under the original terms of the deal, Foxconn had pledged to create 2,080 full-time jobs and invest $3.3 billion in the project in 2019. However, according to a letter from the WECD obtained by Vox, Foxconn created less than 520 jobs last year, the minimum required to be eligible for tax credits, and invested only $300 million in the project.

The state told Foxconn that because the company is not building the factory envisioned in the contract, the state can't calculate job creation or capital investment tax credits.

"Once Foxconn is able to provide more accurate details of the proposed project, such as its size, scope, anticipated capital investment, and job creation, WEDC would be able to offer support for the project with tax incentives as it does for many large and small Wisconsin businesses," Hughes wrote.

State Representative Gordon Hintz, the Democratic minority leader and a longtime critic of the project, said the announcement "cements Foxconn's legacy in Wisconsin as one of broken promises, a lack of transparency, and a complete failure to create the jobs and infrastructure the company touted in 2017."

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