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Foxconn falls short of job creation quota for 2018

January 19, 2019 GMT

Taiwanese electronics manufacturer Foxconn, the potential recipient of billions in tax incentives from the state, fell short of its job creation quota in 2018 and failed to qualify for any tax incentives.

In a letter to the Wisconsin Economic Development Corp., which helped broker the tax incentive deal in 2017, Foxconn spokesman Louis Woo wrote the company created 178 direct, full-time jobs.

That figure is short of the minimum 260 full-time jobs required under the state’s contract with the company, meaning it will not receive any tax incentives it could have qualified for this year.

The contract Foxconn signed with the state set a goal of 1,040 jobs for 2018 to be eligible for a maximum $9.5 million in job creation credits. The company would be able to claim those credits in future years if it exceeds the jobs target for any given verification period.

In his letter, Woo wrote the company remains committed to creating 13,000 jobs at the southeastern Wisconsin facility. However, he admitted it has adjusted its hiring and recruitment timeline.

“As a company with operations around the world, we need to have the agility to adapt to a range of factors including global economic conditions,” Woo wrote.

While Foxconn won’t get tax credits for 2018, it will still be eligible for nearly $1.5 billion in job creation credits through the year 2032. If the company creates 2,080 jobs in 2019, for example, it would qualify for a maximum of about $19 million in tax credits.

Those numbers don’t include capital investment tax credits, which Foxconn will be eligible for at the end of 2019. The company could receive up to $1.35 billion in such credits by the end of 2025 under the contract. In total, state tax incentives for capital investment and job creation amount to about $2.85 billion.

The letter from the company detailing the jobs it created comes after national media reports suggesting the company had considered recruiting foreign employees for the project and undertaking a smaller initial investment, prompting critics to suggest the marquee economic development project was a bad deal for taxpayers.

Foxconn had denied those reports.

Gov. Scott Walker and Republican lawmakers in 2017 approved the massive tax incentive program if Foxconn fulfills contractual obligations to create jobs and make capital investments on its factory, which will make liquid-crystal displays.

Hogan offers reassurance

WEDC in a statement downplayed the report, suggesting the company had gone “well beyond” the stipulations in its contract by investing more than $200 million in Wisconsin so far, awarding 95 percent of its contracts to Wisconsin companies and pledging to invest $100 million in UW-Madison, among other things.

“To protect state taxpayers, WEDC’s contract with Foxconn clearly states tax credits will only be awarded when Foxconn meets its annual job creation and capital investment requirements,” WEDC CEO Mark Hogan wrote.

Foxconn in its letter to WEDC also highlighted other investments the manufacturer has made in the state so far, such as establishing its North American headquarters in Milwaukee and creating technology-focused innovation centers in Racine, Green Bay and Eau Claire.

An audit in December found WEDC had intended to award tax credits for employees who did not perform work in Wisconsin.

A WEDC spokesman said Friday the policy remains in place and that WEDC currently does not know how many of Foxconn’s employees are based in Wisconsin. That information will be made available April 1 when Foxconn submits its annual performance report.

Evers skeptical

Gov. Tony Evers on the campaign trail had been critical of both the Foxconn project and WEDC, which he had vowed to dissolve. He backtracked on that promise earlier this week, however, saying he would not include any changes to the agency in his upcoming budget request.

As for Foxconn, Evers said Wednesday he hopes for transparency and success for the project.

An Evers spokeswoman did not return a request for comment on Foxconn’s jobs update.

GOP in its corner

Republican lawmakers have continued to champion WEDC, and in their December lame-duck session passed legislation barring Evers from appointing the agency’s CEO for nine months.

On Wednesday, Vos said Republicans and Evers are united in wanting transparency on the Foxconn project and requiring the company to live up to its commitments.

Also included in the lame-duck legislation was a provision easing scrutiny on companies seeking tax credits from the agency by eliminating the requirement in state law that WEDC annually verify information submitted by tax-credit recipients before the companies can obtain the tax credits.

Hogan at the time said he is confident WEDC can still accurately verify jobs numbers by examining a large enough sample of jobs data.