Taiwanese electronics manufacturer Foxconn may drop plans to build flat screen panels at a Wisconsin plant for which it was promised $4 billion in state and local tax dollars.
But the company says it is going ahead with developing the Wisconsin property and still expects to hire up to 13,000 workers.
The plant and its expensive incentive package has been controversial from the time it was announced in 2017. It was negotiated during the tenure of former Republican Governor Scott Walker, who lost his re-election bid last year. The incentive package was one of the issues in the campaign.
Although the new Governor, Tony Evers, has been critical of the package, he has not backed away from the promises it made.
A top executive at Foxconn told Reuters that the company determined a US plant “can’t compete” with lower-cost flat panel plants elsewhere in the world.
Louis Woo, special assistant to Foxconn CEO Terry Gou, told Reuters that the company now planned to create a “technology hub” in Wisconsin rather than a factory. That would largely consist of research facilities along with some packaging and assembly operations. Woo said three-quarters of Foxconn’s eventual jobs will be in research and development and design, not blue-collar manufacturing jobs. He said it will not be a factory.
Asked about the comments attributed to Woo, a Foxconn spokesperson did not dispute them.
“We remain committed to the Wisconsin Valley Science and Technology Park project, the creation of 13,000 jobs, and to our long-term investment in Wisconsin,” said the statement from the company. “The global market environment that existed when the project was first announced has changed. As our plans are driven by those of our customers, this has necessitated the adjustment of plans for all projects, including Wisconsin. While the project’s focus will be adjusted to meet these new realities, the Wisconsin project remains a priority for our company.”
The state’s incentive package is poised to give the company up to $3 billion in tax credits and breaks. It is one of the biggest incentive packages ever promised to a company to locate a plant in the United States. And, according to Wisconsin’s estimates, it will take until at least 2043 for the state to recoup that lost tax revenue.
The state incentive package does allow for Foxconn to adjust its plans in response to changing business conditions, said Mark Hogan, the CEO of the state’s independent economic development authority, which negotiated the package. He added that the company’s success depends on its ability to respond to changing customer demand.
Hogan also noted that Foxconn will get the full incentive package only if it hits all the targets for job creation and investment in the state.
“Our ongoing discussions with company officials reflect Foxconn’s continued commitment to the state of Wisconsin,” said Hogan.
But the governor’s office issued a statement saying it was surprised to learn about the change in plans by Foxconn.
“Details about the continuing evolution of this project will require further review and evaluation by our team,” said Joel Brennan, who has been nominated to oversee the state office handling the package. He said the state “will continue to monitor the project to ensure the company delivers on its promises.”
The Village of Mount Pleasant and Racine County, where the plant is to be built, has also agreed to provide $764 million in tax incentives to help get the facility constructed, including buying the land and giving it to Foxconn for free. The state expects to spend about $400 million on road improvements, including adding two lanes to the nearby Interstate 94.
It is not clear if the shift in the focus of the plant would change the incentive package, which is based upon the number of jobs created and the amount of investment. Foxconn had originally planned to invest $10 billion in the plant.
Foxconn is best known for its massive plants in China that make products such as iPhones for other companies.
The plan for a plant in Wisconsin was heralded by both Walker and President Donald Trump as a sign of manufacturing jobs returning to the United States.
“The construction of this facility represents the return of LCD electronics and electronic manufacturing to the United States, the country that we love,” Trump said at the time. “That’s where we want our jobs. To make such an incredible investment, Chairman Gou put his faith and confidence in the future of the American economy – in other words if I didn’t get elected he definitely would not be.”
CNN’s Jeremy Diamond contributed to this report.