Marisa Wojcik:
In 2018, it was advertised by the Scott Walker administration as a transformative and innovative business enterprise. Bringing Taiwan-based Foxconn to Wisconsin promised a new era of manufacturing in the field of electronics and a desire to position Wisconsin as the Silicon Valley of the Midwest. Today the state’s contract with the tech giant has just been dramatically scaled back, renegotiated by the Wisconsin Economic Development Corporation from a historic $2.85 billion in state taxpayer dollars to more modest $80 million. For what’s next with the state’s new business arrangement, we’re joined by the CEO and secretary of the WEDC, Missy Hughes. Thank you so much for joining us.
Missy Hughes:
Good morning. Thank you for having me.
Marisa Wojcik:
So what is in the new contract and how does it differ from the jobs and investment promises originally made by Foxconn?
Missy Hughes:
So the original contract was an agreement between the state and Foxconn to incentivize Foxconn to build a massive factory, $10 billion worth of investment, creating 13,000 jobs. And it was actually a very prescriptive contract in that it required Foxconn to build these large LCD screens. And when it came time for Foxconn to do that, the market had changed, it was much less competitive and it didn’t make sense for Foxconn to build those in the United States. And so what we’ve done is worked with Foxconn to right-size the contract, to make it make sense for Foxconn’s business, but more importantly to make it make sense for the Wisconsin taxpayers.
Marisa Wojcik:
The original contract did incorporate clawbacks for that purpose despite that Foxconn was still trying to get payments from the state for some time and wouldn’t renegotiate and blaming market forces for these deficiencies. So what changed?
Missy Hughes:
Well, we were able to continue to work with Foxconn to, you know, demonstrate to them that the contract was based on this massive facility. You’re not building this massive facility. We need to do something different. I think ultimately WEDC’s decision to tell Foxconn that they were not eligible for tax credits last fall really helped to kind of say, okay, you know, it’s time to get to the table and it’s time get to work on right-sizing this contract.
Marisa Wojcik:
So what exactly is Foxconn going to make or do on the Mount Pleasant campus?
Missy Hughes:
Well, Foxconn’s expertise is in what’s called contract manufacturing. They’re really good at building things for other people. So what they’re doing right now, what I’ve been able to see firsthand, is building high-tech data servers, and they have put in assembly lines to do that. They are building those for a number of different companies. And they will continue to be able to be flexible and build other types of products for other companies and really use their expertise. So what we’ve done is given them the opportunity to respond to market forces and really scale back the exposure for Wisconsin taxpayers.
Marisa Wojcik:
Now, the last numbers that we saw of employment data showed that Foxconn was short of what the 2020 tax credits are going to require. Is Foxconn going to find itself over-promising over and over?
Missy Hughes:
You know, we’ve worked — one of the things we really worked with Foxconn was to find — you know, let’s find what’s a conservative estimate of what you’re going to be doing so we can get some winds, move past the old contract. So I’m confident that Foxconn is going to meet the performance requirements. When we get their report, which is now due on July 1, we will go through the process of verifying that the way we do with all of our contracts. And then I’m confident that we’ll be able to award Foxconn some tax credits for their work.
Marisa Wojcik:
Some economists say incentives like this just don’t work. So is this something the WEDC is going to continue as a practice going forward?
Missy Hughes:
Well, I think what’s really important to keep in mind is businesses are looking for many complicated things when they’re making a decision where to expand or locate their business. They’re looking at workforce. They’re looking at education of that workforce. They want to make sure that the community is friendly to the business and the state is friendly to the business. And then they are interested in incentives. You know, some of our work shows that, you know, it’s maybe a 10% decision-maker for them. So we want to make sure at WEDC that we’re covering the 90% that we’ve got the workforce for the companies who want to come here. That we’re educating that workforce. That we’ve got the infrastructure for them to land here. So there’s a whole lot of decisions to be making. We’ll continue to offer incentives to businesses that want to come here but we’re also going to make sure we’re doing the work to make sure this is the right place for them.
Marisa Wojcik:
On Wednesday night President Biden laid out ambitions for investments in tech research and development. Despite Foxconn’s setbacks, does Wisconsin still have potential to grow its footprint in big tech overall?
Missy Hughes:
I’m so excited about Wisconsin’s opportunity given the new conversations about infrastructure, the new energy economy. We are a powerhouse of manufacturing. So with the addition of companies like Foxconn, but we’ve also got powerhouses like Johnson Controls and Rockwell. We’re ready to take advantage of all of this energy that’s coming into the economy and I’m so excited for the new opportunities, whether it’s building batteries or solar panels, electric vehicles. There’s just all sorts of conversations right now, and Wisconsin’s poised to jump on those opportunities.
Marisa Wojcik:
All right. We need to leave it there. Secretary Missy Hughes of the WEDC. Thank you so much for joining us.
Missy Hughes:
Thank you.
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