Check out a view from a drone of the Foxconn Technology Group’s manufacturing complex in Mount Pleasant. Milwaukee Journal Sentinel
After striking out on state tax credits last year, the Foxconn Technology Group believes it hired enough people in 2019 to qualify this time around, according to a letter sent by the company to the Wisconsin Economic Development Corp.
“Foxconn directly employed over 600 individuals, with more than 550 meeting the criteria for qualification as full-time employees under the WEDC pay-for-performance agreement, based on internal estimates,” Jay Lee, Foxconn board member and vice chairman, wrote in the letter.
According to the development agreement between the state and the company, Foxconn needs to have hired a minimum of 520 full-time workers subject to certain eligibility requirements in 2019 to receive $4.7 million in state tax credits.
Had the company hired more than 2,080 full-time eligible workers in 2019, it could have received the maximum $19.1 million in tax credits for the year.
The job numbers must be reviewed by a third-party auditor for verification, according to the agreement.
Full coverage: Foxconn in Wisconsin
Missy Hughes, secretary of the WEDC, confirmed Foxconn has submitted its annual project report and supporting documents, including payroll reports and documentation of significant capital expenditures to WEDC.
“WEDC will then review the company’s project performance report, supporting workbooks and other documents and the independent auditor’s report, a process that is likely to take several months,” Hughes said. “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.”
Issues over tax credits
Foxconn has been confident that it had hired enough people to receive some job credits. However, in the past, the company and the state have not agreed to what qualifies for tax credits in the agreement.
Throughout 2019, Foxconn and state officials bickered over the agreement and the possibility to amend it.
The state has argued that because the manufacturing facility changed from a Generation 10.5 plant, which was in the agreement, to a Generation 6, which is much smaller, and there is work being done by the Foxconn Industrial Internet, which is a subsidiary of Foxconn but is not included in the agreement, that the development agreement should be amended to reflect those changes.
Secretary of Administration Joel Brennan last year wrote a letter to Foxconn executive Alan Yeung stating that the company’s plans to build a facility in Mount Pleasant had changed so much that it risked losing financial help from the state.
He urged the company to modify its agreement with the state and “recognize that there are consequences arising from its unilateral decision to change projects well after the contract was in place.”
“Unless we work together to ‘right size’ the contract through the amendment process to fit the new project, there will be minimum job cutoffs, investment deadlines and claw-back risks that disadvantage Foxconn,” Brennan wrote.
“It comes with great surprise and disappointment that (state agencies) have reaffirmed to us verbally and in writing that Gen 6 is NOT certified and is thus not qualified for tax credits,” Yeung wrote Brennan on Nov. 18. “We strongly disagree with this opinion.”
The state has warned Foxconn that if the agreement is not amended, it’s possible the company will not receive tax credits.
In the letter sent last week, Lee reinforces Foxconn’s commitment to the state saying:
“We have built a strong foundation for the Wisconsin project and set the state for Wisconn Valley to be the center of a high-technology hub for North America. We look forward to continuing to work with the State of Wisconsin and our local partners toward the joint success of this important venture. The Foxconn team remains committed to the success of Wisconn Valley Science and Technology Park and the company’s significant investment in the State of Wisconsin.”
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