An affiliate of Foxconn Technology Group is seeking to have its Mount Pleasant assembly facility designated as a foreign-trade zone, allowing it to delay or avoid duty costs on certain imported goods.
AFE Inc., the subsidiary responsible for television assembly in Wisconsin, is seeking the designation for the facility it is leasing at 13315 Globe Drive, from the Foreign-Trade Zones Board. The designation would allow Foxconn to delay or avoid duty payments on imported goods for interactive whiteboards and televisions.
The board has provided notice of the application in the Federal Register and is taking public comment on it through the end of January.
While the designation initially would apply to the Globe Drive facility, the company would be able to apply for additional sites in the future, according to Jazmine Jurkiewicz, Port Milwaukee trade development representative and administrator of Foreign-Trade Zone #41.
Ramping up employment at the Globe Drive facility is a key part of how Foxconn can earn the early portions of the $3 billion in tax credits offered by the state of Wisconsin. The company needs to have 1,040 employees to earn the $9.5 million in credits available next year.
Assembly operations also are a major early revenue source for Foxconn’s Wisconsin operations. The company told the Wisconsin Economic Development Corp. that it projects $233 million in revenue next year from the operations and $3.33 billion through the end of 2020.
The company is planning an assembly facility that would be at least 1.5 million square feet as the first building on its Mount Pleasant campus, but that won’t be done until at least 2019.
The FTZ designation would exempt Foxconn from customs duty payments on components used in products that are eventually exported, according to the Federal Register notice. The company would be able to choose the duty rate that applies to the final product on components for domestic distribution. Duties on imported production equipment could also be deferred or reduced.
The components that would be included in the designation range from printed wire boards, LCD modules, power supplies and films used for screens to packaging supplies, AAA batteries, screws and plastic parts for TVs.
A number of Foxconn suppliers are expected to eventually follow the company to Wisconsin and the company has projected it will make $1.4 billion in annual supplier purchases in the state. While the company’s contract with WEDC requires it to report annually on in-state buying, the contract also notes the company is not required to hit any specific target.
Bob O’Brien, president of Display Supply Chain Consultants, told BizTimes earlier this year that some of the suppliers will eventually follow Foxconn to Wisconsin, but it may still be more economical to source some components from Asia.
Jurkiewicz said the FTZ program is intended to help boost economic development in the U.S., especially when companies have to look overseas for certain components.
“This is a way to incentivize keeping the jobs here in America,” she said.
The Port of Milwaukee took over as the grantee for the Milwaukee-area foreign-trade zone in 2011 and has steadily added one or two operators per year, Jurkiewicz said. Other area companies with the designation include Mercury Marine, Generac, CNH Industrial and Broan-NuTone.
