Taiwanese electronics maker Foxconn (2317.TW) is drastically reducing a planned $ 10 billion Wisconsin plant, confirming its withdrawal from a project that former US President Donald Trump once called “the eighth wonder of the world.”
Under an agreement with the state of Wisconsin announced on Tuesday, Foxconn will reduce its planned investment to $ 672 million from $ 10 billion and reduce the number of new jobs to 1,454 from 13,000.
The Foxconn-Wisconsin deal was first announced with great fanfare in the White House in July 2017, with Trump boasting of it as an example of how his “America first” agenda could revive U.S. technology production.
For Foxconn, the investment pledge was an opportunity for its charismatic founder and president, Terry Gou, to build goodwill at a time when Trump’s commercial policies threatened the company’s cash cow: building Apple iPhones Inc. (AAPL .O) In China For Export To America.
Foxconn, the world’s largest contract maker of electronic devices, has proposed a 20-million-square-foot production campus in Wisconsin that would be the largest investment in U.S. history for a new location by a company based in Wisconsin. abroad.
He had to build state-of-the-art flat-screen screens for televisions and other devices and instantly establish Wisconsin as a destination for tech companies.
But industry executives, including some at Foxconn, have been very skeptical of the plan from the start, pointing out that none of the crucial vendors needed to produce flat-panel displays have been located anywhere near Wisconsin.
The plan also met with local opposition, with critics denouncing a taxpayer to a foreign company and the provisions of the agreement that granted extended water rights and allowed the purchase and demolition of houses through eminent domain.
As of 2019, the village where the factory is located has paid just over $ 152 million for 132 properties to make room for Foxconn, plus $ 7.9 million in relocation costs, according to village records obtained by Wisconsin Public Radio and analyzed by the Wisconsin Watch.
Foxconn, officially named Hon Hai Precision Industry Co Ltd, said the new agreement gave it “flexibility to look for business opportunities in response to changing global market conditions”. The company said that “the original projections used during the 2017 negotiations have changed at this time due to unforeseen market fluctuations”.
After abandoning plans for advanced displays, Foxconn later said it would build smaller, next-generation displays in Wisconsin, but that plan didn’t materialize either. (https://www.reuters.com/article/us-foxconn-wisconsin-exclusive/exclusive-foxconn-reconsidering-plans-to-make-lcd-panels-at-wisconsin-plant-idUSKCN1PO0FV)
Ahead of Tuesday’s announcement, Foxconn President Liu Young-way told reporters in Taipei that the company is currently manufacturing servers, communications technology products and medical devices in Wisconsin, adding that electric vehicles (EVs) have a “promising future.” there. He did not elaborate.
Liu previously said the infrastructure is there in Wisconsin to produce electric vehicles due to its proximity to the traditional center of American car manufacturing, but the company could also decide on Mexico. Read more
Shares of Hon Hai fell to 1.6% on Wednesday morning, underperforming the wider Taiwanese market (.TWII), which fell 0.7%.
INCENTIVES
Wisconsin Governor Tony Evers said the new agreement will save Wisconsin taxpayers “a total of $ 2.77 billion compared to the previous contract, maintain accountability measures that require job creation to receive incentives, and will protect hundreds of millions of dollars in local and state infrastructure investments made by the project. “
Evers said that under the agreement negotiated between Wisconsin Economic Development Corporation and Foxconn, the Taiwanese company is eligible to receive up to $ 80 million in performance-based tax credits over six years if it meets its employment goals. labor and capital investment. He stressed that the incentives are in line with those available to any company.
The state will reduce project-authorized tax credits to $ 80 million from $ 2.85 billion.
The initial Wisconsin package also included local tax incentives and investments in roads and highways by state and local governments, which brought total taxpayer-funded subsidies to more than $ 4 billion.
Foxconn noted that since 2017, it has invested $ 900 million in Wisconsin, including several different facilities in the state.
The state has already spent more than $ 200 million on road improvements, tax exemptions and subsidies to local authorities for training and employment, according to Wisconsin Public Radio records.
Our standards: Thomson Reuters’ principles of trust.