MADISON — Gov. Tony Evers said Wednesday that the state’s deal with electronics maker Foxconn may need to be “downsized” due to its changing plans, and that the company is unlikely to employ 13,000 in Wisconsin as it has said it could.
The comments swiftly rippled through the state Capitol, with Republican legislative leaders accusing Evers of potentially reneging on the state’s commitment to Foxconn.
Evers said he will be working with Foxconn and the state’s economic-development agency, Wisconsin Economic Development Corp., “to figure out how a new set of parameters should be negotiated.”
“The present contract deals with a situation that no longer exists, so it’s our goal to make sure the taxpayers are protected and environmental standards are protected,” Evers said. “We believe that we need to take a look at that contract and see if it needs to be downsized as a result.”
Evers said it’s “premature” to say what changes to the state’s contract with Foxconn might be reached.
The contract calls for the state to provide incentives totaling as much as $3 billion over 15 years if Foxconn reaches the 13,000-employee benchmark and makes a $10 billion capital investment in the state.
Foxconn announced last month that it will start construction this summer at its site in Mount Pleasant on a so-called “Gen 6” facility to manufacture liquid crystal display, or LCD, screens. Such a facility typically produces screens for devices such as mobile phones or tablets, but Foxconn says its screens will also be used in a variety of product applications including vertical solutions for industries such as education, medical and healthcare, entertainment and sports, security, and smart cities.
The state’s contract with Foxconn defines its Wisconsin project as including a “Gen 10.5” facility, or one that typically produces larger, TV-sized screens.
Evers said Foxconn’s changes to its plans for Wisconsin make the 13,000-employee-benchmark an “unrealistic expectation.”
“So 13,000 people as Foxconn employees is probably difficult for me to imagine right now,” Evers said.
Last month, as Foxconn announced the onset of construction in Mount Pleasant, it said it would start production in fourth quarter 2020 with about 1,500 employees, half the number initially expected in the early stage.
At the time, however, Racine County Executive Jonathan Delagrave said, “they never really shied away from the 13,000 jobs (at peak). In fact, they’ve kind of recommitted to that.”
On Wednesday Delagrave released this statement:
“We remain optimistic about the progress we’ve seen and continue to see each day on the ground here in Racine County. The local contract signed between Racine County, the Village of Mount Pleasant and Foxconn Technology Group ensures strong taxpayer protections and minimum valuation guarantees.
“The State of Wisconsin’s contract is separate. If and when the state chooses to renegotiate its contract is a state matter.”
“I reject the notion that the 13,000 jobs won’t be there,” said Mount Pleasant Village President Dave DeGroot, “because we’ve been told at the highest levels that they will be.”
DeGroot added, “How does the number of jobs affect environmental concerns?”
Assembly Speaker Robin Vos, R-Rochester, reacted to reports of Evers’ comments Wednesday with this statement: “Since the election, I have been concerned that Governor Evers would try to undermine the state’s contract with Foxconn. Luckily, WEDC negotiated an ironclad contract with expectations from both sides.
“As Foxconn works to create 13,000 jobs in Wisconsin, I’m open to hearing if any flexibility is needed to achieve that goal, which I hope is the intent of Governor Evers,” Vos concluded.
State Sen. Van Wanggaard, R-Racine, released a statement ripping Evers for his remarks.
“Gov. Evers appears hell bent to kill thousands of direct and indirect Foxconn jobs throughout Wisconsin,” Wanggaard stated.
“First, Gov. Evers hoped that his rhetoric would drive Foxconn away. When it recommitted to Wisconsin, he threatened its air permits. After his political appointees at the (Wisconsin Department of Natural Resources) reaffirmed the air permits, Foxconn recommitted again by buying a building that you can see from Governor Evers’ office. Now Gov. Evers is trying to drive Foxconn out of Wisconsin by unilaterally renegotiating the contract between Foxconn and the state.”
“The contract is simple,” Wanggaard stated. “If Foxconn doesn’t perform to its obligations under its contract with the state, Foxconn it doesn’t receive any incentives from the state. If Foxconn underperforms, it leaves incentives on the table.
“What job creator, what person, would come to a state that goes back on its promises? Evers should keep his campaign promises and respect the deal that was made.”
Senate Majority Leader Scott Fitzgerald, R-Juneau, said in a statement that Evers’ comments complete “the original narrative that the governor has wanted to undermine (WEDC) from day one.”
“If the state is willing to renege on its commitment to Foxconn and open up a contract without agreement by both parties, then what guarantee can Wisconsin make to any other company that wants to expand here?” Fitzgerald said.
However, while Republicans were decrying Evers’ remarks, the progressive state group One Wisconsin Now welcomed them. Executive Director Analiese Eicher released this statement:
“Gov. Evers’ call to reopen the Foxconn deal in light of Foxconn’s backsliding on their Wisconsin jobs and investment promises shows he’s looking out first and foremost for Wisconsin.
“Meanwhile Republican legislative leaders Robin Vos and Scott Fitzgerald, who along with (former Gov.) Scott Walker, conspired to put us on the hook for the largest state subsidy to a foreign corporation in history are more interested in trying to cover their political backsides.”
The state’s contract with Foxconn permits the company to claim as much as $1.35 billion in refundable state tax credits over 15 years, starting this year, for 15 percent of the money it spends on capital investment such as facility construction.
Foxconn also may claim as much as $1.5 billion over 15 years for 17 percent of what it spends on salaries for jobs created in Wisconsin. The credits are not paid to the company unless the capital investment or job creation occurs.
Confusion swirled around the project earlier this year after news reports suggested Foxconn was shifting focus from a blue-collar manufacturing operation to a white-collar research and development facility because it couldn’t competitively manufacture TV screens in the United States.
Then Foxconn said in February that it would build a Gen 6 manufacturing operation in Mount Pleasant after President Donald Trump intervened with a personal phone call to Terry Gou, the company’s chairman and CEO.