Global Leader in Electronics Manufacturing Coming to Wisconsin
Last Wednesday, Foxconn Technology Group – a Taiwanese-based electronics manufacturer – announced their intention to produce liquid crystal display (LCD) panels for a variety of industries from automotive to health care to entertainment in Wisconsin.
In its Memorandum of Understanding (MOU) with the State of Wisconsin, Foxconn intends to invest up to $10 billion to construct manufacturing facilities at a yet to be determined location (most likely Racine or Kenosha County). Facility construction is expected to begin next year and be completed in two phases over a six-year period. Manufacturing of the LCD panels is scheduled to begin in 2020. Foxconn plans to create up to 13,000 jobs with an estimated average salary of $53,875 during this six-year period.
The State of Wisconsin pledges to provide up to $3 billion in performance-based tax incentives, expedite permitting reviews in various state government agencies and expand tax incremental financing (TIF) limits for the community or communities where the Foxconn facilities are located.
On Friday, Governor Walker called a Special Session of the Wisconsin State Legislature to consider legislation that implements the state’s portion of the MOU. The Special Session began on Tuesday and we expect final approval of this legislation by the end of the month.
Of particular interest to WIB are the performance-based tax incentives.
Under this legislation, Foxconn would be eligible to claim up to $1.5 billion in refundable state income tax credits equal to 17% of wages paid and up to $1.35 billion in refundable state income tax credits equal to 15% of capital invested. If Foxconn employs 13,000 full-time workers and makes capital expenditures of at $10 billion, the company would receive the full amount of the tax benefits – $2.85 billion.
A state sales and use tax exemption is created for the purchase of taxable building materials, supplies, equipment and services used in the construction of the Foxconn manufacturing facilities. The estimated value of this exemption is $150 million.
The income tax breaks are structured as “pay-as-you-grow” incentives whereby Foxconn does not receive any tax benefits unless, or until, it makes capital expenditures or hires full-time workers.
The State of Wisconsin may recoup the tax benefits if Foxconn fails to maintain employment levels or capital investments in property required by the MOU; supplies false or misleading information to obtain the tax credits; leaves to conduct substantially the same business elsewhere; or ceases operations and does not renew operation of the business or a similar business within 12 months.
Later today, the Assembly Jobs and the Economy Committee will hold a public hearing on this proposed legislation. We will be there to learn more about this legislation and the Foxconn project.
State of Wisconsin Responds to Flooding Problems
Flooding in southeast and western Wisconsin during the month of July has caused widespread property and infrastructure damage.
Teams comprised of officials with the Federal Emergency Management Agency (FEMA), the Small Business Administration and Wisconsin Emergency Management are conducting preliminary damage assessments in Kenosha, Racine, and Walworth Counties to determine whether federal aid will be available to homeowners, businesses and communities.
Local damage assessments from these counties show three homes destroyed, 92 homes with major damage, and more than 4,000 with minor damage. In addition, ten businesses sustained major flood damage and 26 reported minor damage. Flooding also caused more than $8.4 million in damage to public infrastructure such as roads, bridges, and dams, and emergency protective measures.
Governor Walker has declared a State of Emergency for 17 counties following torrential rains that fell throughout western Wisconsin during the third week of July. The counties in the declaration include Buffalo, Crawford, Dane, Grant, Green, Iowa, Jackson, Juneau, La Crosse, Lafayette, Monroe, Pepin, Richland, Rock, Sauk, Trempealeau, and Vernon.
By Executive Order, the Governor directed state agencies to help those affected by the storms and called the Wisconsin National Guard to state active duty to assist local authorities in the recovery efforts.
Members should contact their County Emergency Management office to report any flooding-related property damage to their business. If you have further questions or need additional information, please contact us toll-free at 1-800-362-9644.
Wisconsin Bankruptcy Filings at Historically Low Level
For the first six months of 2017, 8,921 bankruptcy petitions were filed in federal courts in Wisconsin – the fewest number of filings in more than a decade and down significantly from the first half of 2010 when nearly 16,000 bankruptcy petitions were filed.
Let’s hope this trend continues.