Foxconn Deal in Wisconsin Hits Snag Over Guarantees
October 18 2017 - 3:32PM
Dow Jones News
By Shayndi Raice
Wisconsin's efforts to bring a $10 billion Foxconn Technology
Group plant to the state has hit a snag, though supporters of the
deal said they believe it will still come together.
The Wisconsin Economic Development Corp. delayed a vote Tuesday
to give final approval to a contract that would provide the
Taiwanese firm with $3 billion in economic incentives.
On Wednesday, a Democratic state representative who opposed the
deal told a local Wisconsin news organization the delay was over a
"nuclear bomb" in the contract that wouldn't sufficiently protect
taxpayers in the case that Foxconn didn't fulfill its promises,
sparking concerns the deal could be in trouble.
WEDC CEO Mark Hogan said the delay was to ensure the deal was
done right. "WEDC continues to do due diligence on a complex deal,"
said WEDC CEO Mark Hogan in a statement. "We will take the time
necessary to ensure taxpayers are protected and Foxconn is able to
create tens of thousands of family-supporting jobs in
Wisconsin."
But the latest hiccup underscores the political pitfalls of
offering such a large tax-incentive package. The deal had been
criticized by some Democrats in the state legislature because of a
state fiscal analysis that found taxpayers wouldn't recoup their
investment until the 2042-43 fiscal year.
Wisconsin Gov. Scott Walker announced a tentative deal with
Foxconn in a White House ceremony in July, that was positioned as a
victory in President Donald Trump's efforts to revive American
manufacturing. In September, the governor signed legislation that
approved giving the Taiwanese firm -- formally known as Hon Hai
Precision Industry Co. -- the hefty $3 billion incentive
package.
Mr. Walker said in a statement he was "confident" the state will
reach an agreement with Foxconn.
After the legislation was approved, the economic development
group was tasked with negotiating the details of a contract with
Foxconn. Its board was supposed to approve the contract Tuesday,
but was told the day before that negotiations were still ongoing.
On Wednesday, State Sen. Tim Carpenter described to the holdup as a
"nuclear bomb" in an interview with the Wisconsin State Journal. He
didn't respond to a request for comment.
The board next meets Nov. 8. A spokesman for the WEDC wouldn't
say if the final contract would be approved at that time.
Board members were tight-lipped about the details around what
was holding up the deal but it was broadly characterized as a
problem around assurances in the contract that Foxconn would
fulfill its promises.
The company has said it would invest $10 billion to build a
20-million square-foot campus in Racine County that could employ up
to 13,000 workers over a period of six years. The facility would
build liquid-crystal display technology, or LCD screens.
Republican State Rep. Rob Hutton, a member of the WEDC board,
said the issue was over how Foxconn would guarantee the state that
it was reaching its employment and financial investments in
exchange for tax credits.
Mr. Hutton said he was still optimistic that the deal would be
completed. "My sense continues to be that both parties are equally
committed," he said.
Write to Shayndi Raice at shayndi.raice@wsj.com
(END) Dow Jones Newswires
October 18, 2017 15:17 ET (19:17 GMT)
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