The Evers Admin actually wants to enforce contract with Foxconn, and Foxconn doesn't like that

Josh Dzieza of Vox-related publication "The Verge" has been all over the Foxconn story in Wisconsin for the past couple of years, giving insights and information that much of our state's media has been unable (or unwilling) to get. And on Friday, Dzieza wrote this amazing summary of how bad things have gotten between an Evers Administration that wants to improve the deal with Foxconn for both sides, and a company that originally made noises about doing the same, but in reality is still hiding information and dealing in bad faith.

Documents reveal that for months Wisconsin officials have been urging Foxconn to revise its contract with the state to reflect the far-smaller factory it's actually building. Foxconn has refused to do so. https://t.co/jMGx9Jot1G

— Josh Dzieza (@joshdzieza) December 13, 2019

Documents obtained by The Verge show that Wisconsin officials have repeatedly — and with growing urgency — warned Foxconn that its current project has veered far from what was described in the original deal and that the contract must be amended if the company is to receive subsidies. Foxconn, however, has declined to amend the contract, and it indicated that it nevertheless intends to apply for tax credits.

Foxconn has “refused by inaction” to amend the deal, says Wisconsin Department of Administration Secretary Joel Brennan. “They were continuously encouraged. It’s a relatively recent development, where they have said, ‘No, we don’t want to do anything with the contract.’ Our expectation has been, and continues to be, that they should want to come back and have discussions about this.”

Dzieza's story includes several source documents from officials of both Wisconsin and Foxconn that traces the concerns state officials had, and how Foxconn first welcomed a deal, and then pushed back against it.

As early as July, Evers was telling then-WEDC CEO Mark Hogan that the contract should be amended because the Foxconn project had changed, and that WEDC and DOA officials should take up Foxconn’s offer from earlier in the year to review plans and renegotiate the deal.

Foxconn’s present plans offer details through the end of 2020 and reflect a substantially smaller footprint, less capital investment, and fewer manufacturing workers than its original plans. The unprecedented incentive package offered to Foxconn under the original contract was justified by the project’s promise of new manufacturing jobs in Racine County and the massive scale of a Generation 10.5 Facility. Because the project has evolved substantially from what was originally proposed, evaluated, and contracted for, it is necessary to review the revised aspects of the project and evaluate how changes can most fairly benefit both the company and our state.

But Foxconn has ignored the state’s request to change the contract to fit what the actual Foxconn building might be, and instead Dzieza notes that the company has plowed ahead with construction of…something.

But by late August, Foxconn still hadn’t sent any proposed changes to the contract, even though the company had begun erecting concrete walls on the Gen 6 factory. On August 23rd, Brennan wrote another letter to Foxconn outlining the administration’s three goals, which all amounted to Foxconn revising the contract: that the Foxconn project should succeed, that Foxconn recognized the current plans were outside the terms of the 2017 contract, and that the administration wanted to help Foxconn succeed and earn subsidies by working with Foxconn to amend the contract.

Evers Administration officials and Foxconn executives finally met in Wisconsin in early October to go over plans, at which point Brennan sent Foxconn’s Wisconsin offices a letter verifying that the facility in Racine County would be a Gen 6 facility as well as a few other buildings, and therefore would NOT get the 15% tax credits for construction. In fact, Brennan said Foxconn wasn't even planning to ask for them because they downsized the plans for their own business reasons.

Dzieza then tells us that Foxconn told the State “That’s not what we said,” and that Foxconn still planned to do the Gen 10.5 facility, 13,000 jobs, blah, blah blah….. You know, the same BS they’ve said for the last 2+ years that we know isn’t going to be close to true.

Dzieza reports that Brennan reiterated in November that Foxconn was ineligible for tax credits, but was glad to renegotiate to better fit the reality of whatever the Foxconn project will be. As part of that effort, WEDC CEO Missy Hughes met with Foxconn US exec Alan Yeung later that month in Madison, later toured the site in Racine County, and said the state was willing to work with Foxconn to give incentives that were appropriate to Foxconn's future plans.

Now that I have seen the construction underway, and more fully understand the current facility and the next phases anticipated, I believe we should sit down and have further conversations. As the previous correspondence from Governor Evers, Secretary Hogan and Secretary Brennan indicate, along with my November 13th letter, the State wants to continue to champion Foxconn’s investments in Wisconsin. To help make your new project in Mt. Pleasant as successful as possible, I hope we can take the time soon to meet to discuss how best to align Foxconn's needs and expectations with those of the State, WEDC, and of course, the citizens of Wisconsin. I do not doubt our ability to find and create that alignment, and indeed, I am excited to be able to take our mutual vision to the Governor and the rest of the State.

Dzieza then says that Yeung changed his tone, saying Foxconn should get the 15% payback even if the facility was a Gen 6, and complaining to Brennan that the Evers Administration was being ungrateful for all that Foxconn was providing to the state.

Since the onset of our engagement with the State of Wisconsin, the primary focus of the Contract is to drive capital investment and job growth. While Foxconn invests millions of dollars into the State of Wisconsin and hires job seekers, these efforts are being impeded by the current administration’s red herrings over the material terms of the Contract, which are overall capital investment and long-term job growth,” Yeung wrote.

“Discussions regarding immaterial matters are a misappropriation of our collective time and energy as we endeavor to bring significant investments and create jobs for decades to come. Distractions like these leave job creators and job seekers wondering if doing business in our great state is welcomed by Governor Evers’ Administration.

Foxconn will continue to play an important and constructive role in the State of Wisconsin; however, at this point we shall be evaluating all available options relating to the WEDC Contract.

It's breathtaking arrogance after what the Wisconsin's state and local governments have provided toward the Foxconn project, and the many changes in environmental law to try to fit Foxconn's needs. It's reminisicent of Foxconn exec Louis Woo saying in June 2018 that Wisconsinites should be telling him "Thank you Mr. Foxconn."

"Thank you, Mr. Foxconn? How about ____k you?

The Evers Administration was still trying to keep this contentiousness from the public, so Brennan responded with another letter in late November that reminded Foxconn of the hundreds of millions of dollars of infrastructure and training dollars to tech schools that state taxpayers had already paid for in connection to the Fox-con. In addition, Brennan said that the Evers Administration didn’t want taxpayers to be left on the hook for a lot more money while getting a lot less than the project they were promised.

The amendment process encouraged by WEDC Secretaries Hogan and Hughes, and this Administration, should be viewed by Foxconn as a positive path. 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. Additionally, the cost to the state of incenting Foxconn to create the new jobs will likely be so much higher for the new project than for the one specified in the contract that there would never be a net benefit to the State, exposing both sides to valid criticism by the State’s taxpayers.

Oh, this taxpayer already has plenty of criticism for the Fox-con, Secretary Brennan. And I am far from alone.

You can’t deal in good faith with these grifters. CUT THE CORD and see them in Court at this point. Especially because what we would be on the hook for if Foxconn has 520 people working for them in Wisconsin by the end of the year (as an company exec claimed they would this week) will likely be a lot more costly than giving Foxconn a $50 million check and telling them to get the hell out of our state.

I’m just glad that Dzieza got this out in the open, because I was starting to seriously worry that the Evers Administration was trying to muddle through the Foxconn mess and would inevitably be left holding the bag when this white elephant would end up producing next to nothing. It’s comforting to know that the Evers Admin sees through Foxconn’s BS, and are at trying to hold them to the contract.

The Evers Admin should take their added oversight efforts to the public, because I bet they’d find a lot of support throughout the state for cutting Foxconn off of its welfare plan. Likely more of us would support that "welfare reform" vs the Trump Administration’s plan to cut off tens of thousands of poor Wisconsinites from food stamps for not filling out a form correctly.

Again, the rundown by Dzieza, now that the rest of Wisconsin media has picked it up. It's worth your time.