Wisconsin Gov. Evers: Foxconn wants to revise its huge deal

/ AP

Madison, Wis. – Wisconsin Gov. Tony Evers said in a letter his office released Tuesday that Foxconn Technology Group approached the state last month about wanting to renegotiate its contract for a project that could yield the global electronics giant more than $4 billion in state and local tax credits.

Evers said for the first time last week that the state was renegotiating the deal with Foxconn. That led Republican legislative leaders to accuse Evers, a critic of the project near Racine, of attempting to undermine it.

But in a letter to Foxconn executive Louis Woo, Evers said it was Woo who first raised the idea of renegotiating the contract during a meeting in March. Evers wrote that he wanted to clarify their conversation.

"You indicated that Foxconn intends to suggest several changes to the existing agreement to better align the terms with the evolving project and global marketplace," Evers wrote. "To my knowledge, this was the first time either Foxconn or the State of Wisconsin had mentioned amending or changing the agreement approved in 2017."

What did the leaders discuss?

Evers also wrote that Woo had briefed Republican Senate Majority Leader Scott Fitzgerald and Assembly Speaker Robin Vos on his intention to seek changes to the deal. Both Vos and Fitzgerald last week said Evers was trying to undermine the deal, but neither of them said anything about a conversation with Woo.

"I met with Louis Woo for 30 minutes, and there was no discussion about opening up the contract for renegotiation, just general discussion about Foxconn's expansion and growth," Fitzgerald said. Vos said he's proud of the contract that the Wisconsin Economic Development Corp. and the Scott Walker administration negotiated with Foxconn. He accused Evers of playing to his liberal base.

"If Evers wants to change it, the taxpayer protections need to remain," Vos said. "Credits should be earned and not given away."

Foxconn spokeswoman Myranda Tanck didn't immediately reply to requests for comment.

Evers said in the letter that the state was identifying areas where there could be "greater flexibility and transparency as the project continues to evolve." Evers has not offered details and did not spell out any in the letter.

Earlier Tuesday, Wisconsin Economic Development Corp. Secretary and CEO Mark Hogan defended the original agreement, calling it a "solid contract with the company." He spoke with reporters following a state Senate committee hearing during which he declined to answer a question from a lawmaker about contract renegotiations.

"Eighth wonder of the world"

Under the original deal, Foxconn can receive about $3 billion in state tax credits if it employs 13,000 people and spends about $9 billion on a display screen manufacturing campus near Racine, in southeastern Wisconsin. With local incentives, the value of the deal to Foxconn exceeds $4 billion, the largest government subsidy to a foreign corporation in U.S. history. President Donald Trump has heralded the project as the "eighth wonder of the world" and came to Wisconsin last summer for the groundbreaking.

But Foxconn missed its hiring minimum to receive job tax credits in 2018, and it has scaled back the size of the factory it plans to build. Evers, a Democrat, campaigned against Republican Gov. Scott Walker as a critic of the Foxconn deal, saying taxpayers were on the hook for too much money and the deal needed to be renegotiated.

Evers said last week that it was unrealistic to think Foxconn would employ 13,000 people as it originally promised, given that the size of the factory had been reduced and that the contract may have to be updated to reflect the project's smaller scale of the project. Hogan emphasized that the contract awards most of its credits to Foxconn only after the company meets hiring and capital investment benchmarks.

"The value of the contract is the contract is scalable," Hogan said. "If they spent $6 billion and they employed 6,000 people, 7,000 people, the contract scales to that. … It's a pay-for-performance basis."

Breaking from Evers, Hogan also suggested that Foxconn's 13,000 employment target was still within reach, saying "They continue to make that commitment."

First published on April 24, 2019 / 9:07 AM

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