Renewed deal with Wisconsin to help business flexibility: Hon Hai
Taipei, April 21 (CNA) Taiwan-based Hon Hai Precision Industry Co., known globally as Foxconn, has had its colossal investment in the American state of Wisconsin scaled back, a change it said will provide more flexibility and clarity for the enterprise's renewed investments in the Wisconn Valley Science and Technology Park.
Wisconsin State Governor Tony Evers announced the new agreement on Monday, under which Foxconn's planned US$10 billion investment in the state is downsized to US$672 million, with reduced tax breaks.
Hon Hai said in a statement that the agreement on the amendment to the 2017 deal it signed with Wisconsin Economic Development Corp., the state's top business agency, will give Foxconn "the flexibility to pursue business opportunities in response to changing global market conditions."
"With this flexibility also comes the predictability and stability to know that Foxconn's material contributions in Wisconsin will be recognized by the State as benchmarks are achieved year-over-year," Hon Hai said.
It explained that the original projections used during the negotiations in 2017 "have at this time changed due to unanticipated market fluctuations."
Under the new deal, Foxconn will be offered US$80 million in performance-based tax incentives once the company achieves its goal of creating 1,454 jobs with an average wage of US$53,875 and the target capital expenditure investment of US$672 million by 2026.
The state government of Wisconsin also agreed to use a broader project definition, which will allow Foxconn, like other manufacturers in Wisconsin, to earn tax incentives based on the number of jobs it creates and the amount of capital investment, regardless of the type of products and goods manufactured, according to Hon Hai's statement.
It said the amended terms of the agreement are based on Foxconn's current projections for digital infrastructure hardware products through 2025. The US$672 million projected investment is still one of WEDC's largest economic development projects, the statement added.
Hon Hai, the world's largest contract manufacturer of electronic devices and a key Apple supplier, signed the original agreement in 2017 with then-Wisconsin Governor Scott Walker to build a 10.5-generation 8K LCD factory in Racine County, at a cost of US$10 billion.
Based on its promise to create 13,000 jobs over a six-year period, the company obtained US$3 billion-worth of tax breaks and subsidies.
Since then, however, Hon Hai has scaled back its investment and has built a smaller 6th-generation facility that, according to news reports, remains largely empty.
On Monday, Hon Hai Chairman Young Liu (劉揚偉) said in Taipei that the company is considering the inclusion of medical care and the production of electric cars in its Wisconsin investments, in addition to the existing plan of producing internet communication equipment and servers there.
Hon Hai "is soon to decide" whether or not to operate a production line for electric cars in the U.S. state, Liu told the press.
Hon Hai said in its Monday statement that since the inception of the project, Foxconn has invested approximately US$900 million dollars in Wisconsin, inclusive of all expenditures.
Part of this investment has been the construction of Foxconn's nearly 1 million-square-foot Advanced Manufacturing Facility, a 300,000-square-foot Smart Manufacturing Center, a 120,000-square-foot Multipurpose Building, and a 100-foot tall High Performance Computing Data Center Globe.
Over 3,500 construction jobs have been created as part of the park's development, representing some 300 Wisconsin businesses that have received approximately 90 percent of all the construction contract value, the Hon Hai statement said.
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