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Unable to reach job creation goals, Foxconn fails to qualify for first round of tax credits

Foxconn Technology Group did not create enough Wisconsin jobs in 2018 to immediately claim state tax credits.

Foxconn failed to create enough jobs last year to qualify for the first round of tax credits under a nearly $3 billion package the Walker administration negotiated with the Taiwanese manufacturer to build a plant in southeastern Wisconsin.

The company could still qualify for the first year of credits under its contract if it hits future goals. The company reported on January 17 to Mark Hogan, CEO of the Wisconsin Economic Development Corporation (WEDC), that it created 178 jobs that met the requirements to qualify for tax credits included in the incentive package.

But that was 82 jobs short of the minimum 260 needed to qualify for the credits, and the company had a target of 1,040. The credits are based on the salaries paid to Foxconn employees with a cap of $9.5 million in the first year of the contract.

To recoup the tax credits it missed in year one, Foxconn would have to exceed its target of 2,080 full-time jobs for 2019. The company could then apply for 2018 credits for any additional jobs on the payroll beyond that target. The company eventually could earn $1.5 billion in credits as part of a $4 billion total public incentives package.

Assembly Minority Leader Gordon Hintz, a frequent critic of the incentive package, said the news was the latest sign Foxconn was scaling back from its original plans for the Wisconsin plant. The company acknowledged this summer the Racine County plant, at least initially, would build smaller screens than originally proposed.

The company wrote in the letter to Hogan that it remains committed to creating 13,000 jobs in Wisconsin, though “we have adjusted our recruitment and hiring timeline.”

Hintz questioned if the company’s past pronouncements were indeed indicative of its plans or more geared toward helping Governor Scott Walker in his failed re-election bid. Foxconn originally promised to build a flat-screen plant in Mount Pleasant that could ultimately create 13,000 jobs.

“It’s time we get some transparency on just what is happening and what the public can expect from Foxconn or WEDC,” Hintz said.

In the letter to Hogan, Foxconn’s Dr. Louis Woo, a special assistant to the CEO, highlighted what he wrote were the company’s accomplishments in 2018. That includes investing more than $200 million with 95 percent of all contracts going to Wisconsin companies; buying buildings in Racine, Green Bay and Racine for innovation centers, along with one in Milwaukee for the company’s North American headquarters; and completing a 120,000 square-foot multipurpose building.

“In 2018, we made the strategic decision to broaden the base of our investment within the State of Wisconsin, far beyond what we initially planned, to ensure the company and our workforce will be positioned for long term success,” Woo wrote.

Hogan said the update shows that the company has made “extensive progress” on its Racine County plant and demonstrated a commitment to Wisconsin. He also stressed the company would only see the promised tax credits if it meets job creation and capital investment requirements

“Foxconn remains committed to creating 13, 000 jobs, and we look forward to working with the company as it continues to build out the Wisconn Valley Science and Technology Park and its other investments throughout Wisconsin,” Hogan said.

A spokeswoman for Governor Tony Evers did not have an immediate comment on the company’s letter. Governor Evers was critical of the state’s nearly $3 billion incentive package on the campaign trail and promised to seek more transparency in the deal.

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