- Foxconn claims that for the first time, it has created enough jobs at its controversial Wisconsin facility to qualify for millions of dollars in state subsidies.
- The state’s economic development agency said it will take several months to review Foxconn’s claims.
- The project, once hailed by President Donald Trump as the “eighth wonder of the world,” has been so severely scaled back that state officials have argued it no longer qualifies for subsidies.
Taiwanese electronics manufacturer Foxconn claims that it has created enough jobs in Wisconsin to begin collecting on the multibillion-dollar incentive package the state offered to attract the company's first U.S. manufacturing facility. But the state is not turning over any money just yet for the deeply controversial project, which has consistently fallen short of the wildly ambitious plans described by President Donald Trump when he first announced the deal in 2017.
In a filing with the state's economic development arm obtained by CNBC under Wisconsin's Public Records Law, Foxconn Vice Chairman Jay Lee said that by the end of 2019, the company directly employed more than 600 people in the state, of which he said 550 qualify for subsidies under the company's contract with the Wisconsin Economic Development Corporation. Under that agreement, Foxconn had to hire at least 520 people last year to qualify for any subsidies.
The company also said it has spent more than $280 million on the project to date. If the numbers on jobs and capital spending prove accurate, the company could collect around $50 million in subsidies and tax credits. It would mark the first time the company has met the targets to begin collecting the subsidies.
In 2017, Wisconsin offered a record near-$3 billion in incentives to Foxconn over 10 years to secure the plant. In addition, the state and local governments have already spent tens of millions of dollars for infrastructure improvements and land acquisition at the site in the village of Mount Pleasant, near Racine.
Battle over subsidies
The state is not taking Foxconn's reporting at face value.
In a statement, WEDC Secretary and CEO Missy Hughes said the agency plans to submit the report to an independent auditor as required by the contract. The agency will then launch its own review, "a process that is likely to take months."
Even if the report clears that process, it is not clear the state will be willing to pay. Last year Gov. Tony Evers' administration argued that the project was so vastly scaled back from the original plan that it no longer conformed to the agreement negotiated under his predecessor, Scott Walker, and as a result no longer qualified for the subsidies.
Foxconn originally promised to build a "Generation 10.5" plant, manufacturing giant liquid-crystal video display panels. The company promised to spend $10 billion and create 13,000 jobs at the facility, which Trump announced at a White House ceremony in 2017. At a groundbreaking the following year, Trump hailed the project as "the eighth wonder of the world."
Since then, the company downgraded the plant to "Generation 6" and abandoned plans to build the large displays in favor of smaller panels. Evers told CNBC last year that he expects the facility's initial phase will employ only about 1,500 people. In 2018, the first full year under the contract, the company fell short of the hiring benchmarks in the contract and did not collect any subsidies. An Evers spokesperson did not respond to CNBC's request for a comment about Foxconn's latest report.
For its part, Foxconn said it remains committed to the project.
"To date, Foxconn has invested hundreds of millions of dollars in Wisconsin and made significant strides in the development of the Wisconn Valley Science and Technology Park," Lee said in the filing. "Alongside our local partners, we have built a strong foundation for the Wisconsin project and set the stage for Wisconn Valley to be the center of a high-technology hub for North America."
Even if Foxconn's hiring report proves accurate, the 550 jobs represent about one-quarter of the jobs the company had projected by now.
WEDC said it is continuing to talk with the company.
"Our conversations with Foxconn about aligning the contract with the project continue — it is WEDC's objective to do so in order to support the project," Hughes' statement said.
Separately, Medtronic CEO Omar Ishrak announced on CNBC this week that the company is partnering with Foxconn to produce ventilators at the Wisconsin facility in the coming weeks, but he said he did not know yet how many ventilators the plant would produce.