With 178 jobs, Foxconn falls short of 2018 hiring requirements for state incentives

Company needed at least 260 hires to earn tax credits

Foxconn Technology Group created 178 jobs in Wisconsin during 2018 that met the requirements for state incentives, falling short of the 260 required for the company to receive any state tax credits for the year.

In a letter to the Wisconsin Economic Development Corp., one of Foxconn’s top executives said the company remained committed to creating 13,000 jobs in the state, but had adjusted its recruiting and hiring timeline.

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“As a company with operations around the world, we need to have the agility to adapt to a range of factors, including global economic conditions,” wrote Louis Woo, special assistant to Foxconn CEO Terry Gou.

Woo did not specify how much the company is changing its hiring timeline.

He did say the company would be holding information sessions for contractors in the coming months as it prepares to begin construction of “facilities to house cutting-edge display development, advanced manufacturing, and 8K+5G research and development capabilities in the spring.”

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Foxconn is building a $10 billion LCD manufacturing campus in Mount Pleasant and plans to create 13,000 jobs in the state. To secure the investment, Wisconsin offered the company $3 billion in incentives. Another $764 million in support for the project came from the village of Mount Pleasant. Hundreds of millions of dollars are also being invested in improvements to local roads and I-94 along with the power grid.

Mark Hogan, secretary and CEO of WEDC, said in a statement that the update from Woo showed the company has “made extensive progress” and the protections the agency included for taxpayers are working.

Woo and Hogan both touted the other investments the company has made in the state, including a $100 million gift to the University of Wisconsin-Madison, the creation of a $1 million Smart Cities, Smart Futures contest and the formation of a venture capital fund with Northwestern Mutual, Aurora Health Care and Johnson Controls International.

“Foxconn remains committed to creating 13,000 jobs and we look forward to working with the company as it continues to build out the Wisconn Valley Science and Technology Park and its other investments throughout Wisconsin,” Hogan said.

Foxconn’s contract with the state of Wisconsin makes the company eligible for $1.5 billion in payroll tax credits and $1.35 billion in tax credits tied to capital investment. Another $150 million is also available to the company through a sales tax exemption on construction materials.

Woo said Foxconn invested $200 million in the state and 854 workers had been involved in the construction of its campus. It was not clear from Woo’s letter if the investment figure included Foxconn’s purchase of real estate around the state.

Foxconn spent more than $37 million on buildings for innovation centers in Milwaukee, Green Bay, Eau Claire and Racine. Those purchases are not eligible for capital investment tax credits but hiring to support those centers would count.

“We made the strategic decision to broaden the base of our investment within the State of Wisconsin, far beyond what we initially planned, to ensure the company and our workforce will be positioned for long term success,” Woo wrote.

The capital investment credits do not start until after 2019, but the company was eligible to start earning up to $9.5 million in payroll tax credits in 2018.

To earn all of the available credits for 2018, Foxconn needed to create 1,040 jobs with an average salary of $53,875. To receive any credits, Foxconn needed to reach at least 260 jobs.

Falling short of the hiring target does not put Foxconn it default on its contract with the state. The company has until the end of 2023 before falling short would cause a default. In that year, Foxconn would need at least 5,850 jobs in the state.

Foxconn’s contract does allow the company to carry forward unearned tax credits and Mark Maley, a spokesman for WEDC, confirmed the company could earn the available $9.5 million in the future.

Despite Foxconn changing its timeline for hiring, Maley said the company had not sought an amendment to its contract.

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