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Wisconsin Denies Foxconn of Massive Tax Break

Foxconn, Apple’s biggest supplier, broke its promise of building a job-creating factory in the State of Wisconsin this year, resulting in the State denying its application for tax subsidies. 

In 2017, the state had made a deal with the Chinese manufacturer to build a 20 million square foot LCD facility called the Gen 10.5 factory, which was supposed to create 13,000 jobs for Americans. In exchange for building the factory, Foxconn was to receive roughly $4 billion in tax benefits.

The subsidies were to be given in the form of direct payouts, divvied out each year after Foxconn met all the requirements. But after the first year, Foxconn failed to reach the target of hiring at least 260 people, meaning there were no subsidies in 2018.

Then, in 2019, Foxconn again failed to meet the target of at least 520 new employees. They claimed to have at least 550 employed, but when the WEDC investigated, only 281 of them met the qualifications specified in the original deal. It is unclear why exactly the employees were ineligible, but one of the WEDC’s requirements was that the employees had to be making at least $30,000 a year and be based in Wisconsin.

There is no evidence yet of a 20 million square foot factory, nor is there any sign of them beginning to build one, despite the state spending money on various infrastructure for the project.

Ultimately, the WEDC said Foxconn failed to comply with anything in the original deal and would not be receiving any sort of benefits until it did. 

“The Recipients are ineligible for tax credits because of their failure to carry out the Project,” the WEDC reported.

 “The fact that the Recipients have neither built, nor started to build or operate, the required Generation 10.5 TFT-LCD Fabrication Facility (the “10.5 Fab”) is not in dispute. The Recipients have acknowledged that they have no formal or informal business plans to build a 10.5 Fab within the Zone, and WEDC and the State of Wisconsin have corroborated that fact from observation, evaluations, and from industry experts hired to provide consulting services.”

On top of the 13,000 jobs, the factory was supposed to integrate with other industries and supply chains in the surrounding area, indirectly creating more jobs. To achieve this, Foxconn was supposed to invest $3.3 billion by the end of 2019. But by the end of 2019, the company reported an investment of only $280 million, missing the mark by more than 90%.

By 2023, the factory is supposed to employ at least 5,850 people, a target that is virtually impossible to reach at this point. Should that happen, the state of Wisconsin will end up clawing back any benefits they gave to Foxconn up to that point.

According to The Verge, WEDC CEO Melissa Hughes wrote to Foxconn in an open letter expressing an interest to mend the deal, possibly by revising the contract or exploring other avenues. 

“When we met in early June, you personally shared with me Foxconn’s interest in a different type of incentive contract to support Foxconn’s plans in Wisconsin. We have worked with your team to explore those opportunities, and while our efforts have been unsuccessful to date, I want to be clear that my commitment to find a path forward remains steadfast. You and Brand Cheng have asked for our help, and WEDC’s door remains wide open to support your business expansion in Wisconsin.”

In the past, Foxconn has been known for having so many employees commit suicide by jumping out of their office buildings, that the Taiwanese company had to install giant nets outside the windows to prevent deaths. Since then, the company has done things to improve working conditions like raise wages, create support groups, and allow for unions. 

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