Wisconsin Legislature to approve $3B incentive for Foxconn

MADISON, Wis. — The deal to develop a massive Foxconn plant in Wisconsin will be virtually complete Thursday when the state Legislature votes to approve a $3 billion incentive package to lure the Taiwan-based electronics giant to the state — the biggest state subsidy to a foreign company in U.S. history.

The bill would make $2.85 billion available to Foxconn Technology Group in cash payments if it invests $10 billion and hires 13,000 workers. The Senate approved the proposal Tuesday. Final sign-off by the Assembly, which already green-lighted a nearly identical version in August, would send the measure to the project’s lead champion, Republican Gov. Scott Walker.

Walker is this week on a trade mission to Japan and South Korea. He told reporters Wednesday that he looked forward to signing the bill and that the project had been a topic of much discussion with the government and business leaders he has met while travelling in Asia.

“It’s had the desired effect of putting us on the map globally,” Walker said of Foxconn.

Foxconn is the largest contract manufacturer of electronics, best known for making iPhones, but with a long list of customers including Sony Corp., Dell Inc. and BlackBerry Ltd. The Wisconsin plant would construct liquid crystal display panels for televisions, computers and other uses.

The total incentive package is 10 times larger than anything ever approved in Wisconsin and would be the biggest state subsidy to a foreign company in the United States.

Democrats have warned that there aren’t enough protections for taxpayers to recover payments to Foxconn if it automates production and fires workers. They’ve also said more needs to be done to guarantee that Wisconsin workers and businesses get preference during the construction phase of the plant, and once it’s up and running. Foxconn has said it hopes to open the plant in 2020 with 3,000 workers, but that the workforce could grow to 13,000.

Under the bill, the company would have 15 years to access the maximum $2.85 billion in cash payments tied to meeting the investment and hiring numbers. They can also receive $150 million in sales tax exemptions on construction equipment.

The Walker administration is charged with negotiating minimum hiring numbers to trigger the payments in the contract with Foxconn which has not been finalized. Foxconn has also not selected the exact location for the plant, but it has focused on property in Racine County in between Milwaukee and Chicago.

Democrats have also raised alarms about exemptions under the bill that waive requirements for Foxconn to first develop an environmental impact statement before constructing what could be a 20-million-square-foot (1.86-million-square-meter) campus. Foxconn would also be allowed to build in wetland and waterways.

Support for the bill has largely broken down along party lines. Three Democrats in the Assembly and one in the Senate, all of whom represent the southeastern part of the state where Foxconn may build, have joined with majority Republicans in voting for it.

Republicans say the deal could transform the state and region’s economy and presents Wisconsin with a once-in-a-lifetime opportunity.