Walker to sign Foxconn contract Friday after board gives approval

Vote held in closed session Wednesday

Gov. Scott Walker will sign a contract with Taiwanese company Foxconn Friday, after the state’s job creation agency voted to move ahead on a nearly $3 billion incentive package Wednesday.

Board members voted 8-2 to approve an agreement in closed session Wednesday that will clear the way for the company to begin construction on a LCD screen manufacturing facility in southeast Wisconsin.

A release from the Governor’s office says Walker will sign the agreement Friday afternoon with Foxconn chairman Terry Gou at SC Johnson in Racine.

Details now disclosed about the deal show that Foxconn will be eligible for tax credits for both capital investment and job creation totaling $2.85 billion until 2032.

The contract the board intends to execute with Foxconn would require the company to meet annual minimums for job creation in each year of construction and operation on the Racine-area campus, as well as minimum wages. The company will also have to maintain minimum levels of staffing until the completion of the contract.

Documents provided by the Wisconsin Economic Development Corp. show that the state will pay Foxconn for 15 percent of its total capital investment in the campus, which is expected to be $9 billion. The incentives would be paid out from 2019-2025, paid at nearly $193 million each year and totaling $1.35 billion. To be eligible for the incentives, the company will have to meet a minimum number of full-time jobs in each year. WEDC officials say if the company does not meet those goals, it will not be paid any of those annual incentives.

Foxconn will also be eligible for separate tax credits for jobs incentives, which would amount to the state paying the company for 17 percent of wages it pays full-time employees over the 15-year contract. Provisions of this incentive include a requirement that employees be paid at least $30,000 annually and that the company pay an average salary of $53,875. The company would also be required to maintain a minimum number of full time employees to get those tax credits, but should it not meet those goals, some of those credits would be allowed to be carried forward and paid out in future years. Should the company meet a maximum of an expected 13,000 jobs by 2022, maintaining that level until 2032, it could receive $1.06 billion in job tax credit incentives from the state of Wisconsin.

The contract also includes “clawback” provisions that WEDC officials say would allow the state to recoup money if the company doesn’t meet jobs goals or other standards. WEDC officials say if the company: supplies false or misleading information, leaves the area to conduct the same business elsewhere, or ends operation and does not resume within 12 months; within the first five years the state would move to recoup 100 percent of the incentives issued. After 2022, the company could also be declared in default if it doesn’t meet a minimum threshold of 6,500 jobs.

WEDC officials would not describe elements of the contract that have changed since the board first delayed a vote on the contract, saying they do not conduct negotiations in public.

The contract itself is largely being guaranteed personally by Foxconn Chairman and CEO Terry Gou, which WEDC officials say is uncommon but they believe shows his personal commitment to creating the major facility in Wisconsin.

WEDC officials noted the contract is complete in 2032, which means they could not clawback any of the state’s investment in the company if it chooses to move to automation in 2033 or later.

Board member Dana Wachs said he voted against the deal, saying that the risk in one industry is too much for taxpayers.

Walker to sign Foxconn contract Friday after board gives approval