Wisconsin governor says he wants to renegotiate Foxconn contract

(Reuters) – Wisconsin’s governor said on Wednesday he wants to renegotiate the state’s contract with Foxconn Technology Group Ltd because the Taiwanese company is not expected to reach its job creation goals for the state.

Democratic Governor Tony Evers, who took office in January, inherited a deal to give Foxconn around $4 billion in tax breaks and other incentives that was championed by Scott Walker, the state’s former Republican governor.

Announced at a White House ceremony in 2017, Foxconn’s 20-million square foot campus marked the largest greenfield investment by a foreign-based company in U.S. history and was praised by President Donald Trump as proof of his ability to revive American manufacturing.

Foxconn, a major supplier to Apple Inc, has pledged to eventually create 13,000 jobs in Wisconsin, but said earlier this year it had slowed its pace of hiring.

“The present contract deals with a situation that no longer exists so it’s our goal to make sure that the taxpayers are protected and environmental standards are protected and we believe that we need to take a look at that contract,” Evers told reporters.

He said it was premature to discuss specific changes to the contract. Foxconn representatives did not immediately comment.

The company has wavered on its goals for the $10 billion project this year. Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters in January Foxconn was reconsidering plans to make advanced liquid crystal display panels. He said Foxconn would hire mostly engineers and researchers rather than the manufacturing workforce originally promised in Wisconsin.

Days later, the company said it would build the factory after Gou spoke to Trump.

Gou earlier on Wednesday announced he was running for president of Taiwan. He had told Reuters on Monday he planned to step down from Foxconn, the world’s largest contract manufacturer, to pave the way for younger talent to move up the company’s ranks.

Evers said the original footprint of the project is going to be much smaller but the scaled-back project is expected to advance “whether Mr. Gou is part of that enterprise or not.”

Evers had criticized the Foxconn deal during his campaign for governor.

“Since the election, I have been concerned that Governor Evers would try to undermine the state’s contract with Foxconn,” Republican Robin Vos, speaker of the Wisconsin State Assembly, said in a statement. He said the existing contract negotiated by the state’s economic development arm was “ironclad.”

The head of the Wisconsin Economic Development Corporation (WEDC), an organization created by Walker in 2011, said he has frequent discussions with Foxconn.

“These ongoing discussions include consideration of the effect the company’s evolving plans may have on WEDC’s contract and our steadfast commitment to protect the taxpayers of Wisconsin,” WEDC Secretary and Chief Executive Mark Hogan said.

To qualify for tax credits Foxconn must meet certain hiring and capital investment goals under the current contract. It fell short of the employment goal in 2018 – hiring 178 full-time workers rather than the 260 targeted and failed to earn a tax credit of up to $9.5 million.