Foxconn still scheming to get tax dollars, and still isn't adding much to our economy

2 1/2 years after the project was first announced, the Foxconn project continues to be somewhere between a joke of a white elephant, and a continued drain on taxpayer resources.

On the first topic, Josh Dzieza of the Verge is back to look at whether Foxconn's "innovation centers" have advanced at all in the last year. In April 2019, Foxconn's Alan Yeung claimed that Dzieza and The Verge were wrong when they said the innovation centers were going nowhere and seemed to be nothing more than Foxconn PR over being any kind of development.

Dzieza came back to those Foxconn centers this week to see if anything had come of those developments outside of Racine County. And in a non-shocker, the answer is "No."

Foxconn originally promised to turn two buildings in Eau Claire into office space and research facilities. It never purchased one of the buildings and has taken out no substantive building permits for the other, the glass-fronted downtown building pictured above.

Matt Jewell, an engineering professor at the nearby University of Wisconsin-Eau Claire, from which Foxconn was supposed to recruit, said there has been “no visible activity whatsoever” at the property. Foxconn was also absent at the school’s career fair this February.

The Green Bay innovation center has also made no progress. In October 2019, WPR reported that the projects appeared to be on hold. Several days later, Foxconn said it still planned to develop the innovation centers, and the company appeared to restart at least some of the projects, selecting contractors to renovate a floor of its Green Bay building. At the time, the company said it planned to renovate 4,800 square feet of office space to host company events and recruitment drives. It had originally planned to have 200 employees working in a 16,000-square-foot space.

According to Kevin Vonck, the development director for Green Bay, Foxconn submitted plans toward the end of 2019 for an even smaller space: 3,500 square feet of office space for 49 people. But no permits have been taken out, and construction has yet to begin.

“I have not heard anything from the Foxconn team recently,” said Wendy Townsend, project manager at the Green Bay Department of Community and Economic Development. “They tend to be on the quieter side.”

Dzieza adds that the alleged innovation center on the Capitol Square in Madison is going nowhere, as the building was housing a BMO Harris Bank branch before the coronavirus shut the bank branch down.

As for the "drain on taxpayer resources", we're going to find out in the next few weeks whether state taxpayers will have to pay something in the neighborhood of $45 million in exchange for Foxconn meeting its contracted minimum of 520 jobs at the end of 2019. But as Bruce Murphy notes in Urban Milwaukee, that number of jobs Foxconn gaming the contract it signed with Scott Walker more than it is any kind of legitimate, permanent growth.

But the contract has a huge loophole I’ve reported on, one which Foxconn and Republican leaders, Assembly Speaker Robin Vos and Senate Majority Leader Scott Fitzgerald, declined to discuss. There is nothing to stop Foxconn from hiring people toward the end of the year, collect all the capital investment tax credits and then lay off the employees.

Biz Times reporter Arthur Thomas, the only other member of the local media offering some skepticism of the Foxconn deal, has reported that “Nearly 70% of the 580 employees working in Wisconsin for Foxconn and its subsidiaries at the end of 2019 started their current positions in the fourth quarter of last year,” with 246 hired in December.

Moreover, 36 of the employees listed by Foxconn were working outside the state. Another loophole in the contract allows Foxconn to claim tax credits for non-Wisconsin employees. A 2018 Legislative Audit Bureau report noted the problem, yet another loophole a revised contract would need to address.

Thomas estimates that Foxconn could collect $2.84 million in tax credits for job creation, which is chump change. The real gold is the tax credit for capital investment. “The company also said it invested more than $280 million in its Mount Pleasant campus over the last two years, potentially making it eligible for $42 million in capital expenditure tax credits,” Thomas reported.

Those credits, however, can’t be awarded under the contract unless Foxconn has met the required jobs target. Which makes it worth the money, indeed, quite profitable, for the company to hire hundreds of employees for a few months or less and then lay them off once the $42 million is collected.

We will find out in the coming months whether Foxconn actually did have 520 employees doing work for the Holiday season (they overestimated the number in 2018, and fell short of their minimum goals), and if the Evers Administration will turn down Foxconn anyway since the project is different than the contract. Evers Administration officials indicated they would do so last Fall, and now we'll see if Foxconn gets held to account.

But even if the Evers Administration rejects Foxconn's request to have $45 million - $50 million kicked back to them for this year, we are still out hundreds of millions of state tax dollars for upgraded roads for a Foxconn project that has added very few jobs, and given the recession that we are now in, state finances are going to be a whole lot tighter in coming years. We won't be able to afford to hand out money to this boondoggle while so many will be in need, and it is yet another reason we need to remind Wisconsinites of this multi-year failure.