MILWAUKEE — Every dollar of state incentives for the Foxconn Technology Group project will return $18 in economic impact in Wisconsin within 15 years, according to the Metropolitan Milwaukee Association of Commerce.
MMAC on Friday released its analysis of the projected impact to Wisconsin’s gross domestic product from the $2.85 billion incentive package to entice Foxconn to build an approximately $9 billion manufacturing campus in this state — specifically in Mount Pleasant.
“GDP is the best measure of the value added to the economy,” stated MMAC, which has more than 2,000-member companies supporting more than 300,000 jobs. The analysis is based on the state’s tax credit agreement executed with Foxconn on Nov. 10.
The Foxconn development is projected by MMAC to add $51.5 billion to Wisconsin’s GDP over the 15 years in which the state would pay out $2.85 billion under a fully executed incentive package — assuming Foxconn creates 13,000 jobs.
The impact on GDP is derived from investments in capital, employment during construction, operating payroll from the plant, supply chain expenditures and their combined indirect economic impact.
“This was MMAC’s own analysis … based off of three documents: the final state incentives contract; the (Ernst & Young) economic impact study; and the Baker Tilly study (funded by Wisconsin Economic Development Corp.),” MMAC President Tim Sheehy explained. “We used the most conservative projections from the latter two documents, and the actual language from the incentive contract.
“Data was compiled and reviewed by our chief economist, with 30 years of experience and a master’s degree in economics. As well as a master-degreed economic development specialist, also on our staff.”
‘Priming the pump’
The MMAC analysis recognizes that the incentive package is based on a “pay as you grow” model. Only when capital is expended and payroll is committed does Foxconn qualify for the tax credits.
MMAC’s economic impact analysis applies only to the 15-year window of the state’s incentive package.
“Much like priming a pump, the flow from Foxconn’s spending beyond the 15-year incentive window would significantly increase the state’s return,” Sheehy stated. “We believe this GDP analysis, while conservative, provides the fullest picture of the state’s return on investment.”
He continued: “We should not lose sight that Foxconn’s investment in manufacturing high-resolution panels, combined with a faster telecommunications infrastructure, puts us in play in the digital economy. Bottom line, if you live or work in Wisconsin, the return on the Foxconn investment is real.”
“Much like priming a pump, the flow from Foxconn’s spending beyond the 15-year incentive window would significantly increase the state’s return.” Tim Sheehy, Metropolitan Milwaukee Association of Commerce president