Foxconn responds to Wisconsin: Never promised to build LCD factory

In October, Wisconsin rejected Foxconn's subsidy application on the grounds that the company failed to build the LCD factory stipulated in the contract signed with the state. However, Foxconn said in its latest filing that it had never promised to build an LCD factory in the contract.

Foxconn has already built a building in Wisconsin, but it is only 1/20 the size of the factory it promised, and has not hired anywhere near the number of employees required by the contract. Despite this, Foxconn publicly objected to Wisconsin's "many reasons" for rejecting the subsidies.

According to a letter to the Wisconsin Economic Development Corporation (WEDC) dated November 23, Foxconn argues that it never formally committed to building an LCD factory and that the factory specified in the contract (a 10.5-generation LCD manufacturing plant) is not a necessary component of the contract.

“As you acknowledged on November 10, 2020, the only reason WEDC determined that we were ineligible for the tax credits was because, in their view, we had not built the ‘Project.’ Therefore, WEDC’s determination of ineligibility was based on its belief that construction of a Gen 10.5 LCD manufacturing facility was a material provision of the Agreement,” Foxconn wrote.

Instead, Foxconn claimed that the company and WEDC had a “mutual understanding” that it would establish something more vaguely defined, “a transformative, sustainable high-tech manufacturing and technology ecosystem in Wisconsin that will generate long-term investment and jobs.” However, Foxconn did express openness to revising the contract to allow for more flexibility in construction projects in exchange for lower subsidies.

Foxconn’s letter was sent in response to repeated requests from WEDC, which asked Foxconn to explain why the company believed WEDC’s refusal to pay subsidies was unreasonable. “You stated in your notice of objection that Foxconn had a number of reasons for objection, but did not elaborate on what those reasons were,” a WEDC lawyer wrote to Foxconn in early November.

WEDC stood firm in its refusal to provide subsidies. In a letter dated December 4, the agency wrote that defining the “project” in the contract as a 10.5-generation LCD factory was in fact the core of the contract, and said Foxconn’s claim that jobs and investment were the only important terms was “incomplete and flawed in several respects.” It also noted that Foxconn had not fulfilled the jobs or investment portions of the contract.

WEDC noted that the contract clearly defines the “project” as a 10.5-generation LCD factory, whose massive size and economic impact are the biggest reasons Foxconn received a record subsidy package, as it has countless times before. “Without a 10.5-generation LCD manufacturing facility, there is no reason or consideration for Wisconsin taxpayers to provide a significant tax credit incentive or expenditure for it,” WEDC wrote.

WEDC ends its letter by reiterating that the agency is open to modifying the contract to reflect Foxconn’s current plans. There are signs that such an agreement may be imminent. After claiming that the details of the projects being built never matter, Foxconn adds that it does want to discuss modifying the contract to “reduce taxpayer liability in exchange for the flexible business environment that Wisconsin offers.”

Foxconn had previously expressed interest in such a contract revision but ultimately insisted on building the LCD factory, but with President Trump leaving the White House, Foxconn may feel less pressure to maintain a project supported by Trump.

But such a revision, as always, is contingent on Foxconn telling Wisconsin what it is actually building. In a Nov. 24 email, WEDC CEO Missy Hughes wrote to Foxconn executives expressing enthusiasm for a revised contract and imploring the company to provide a plan, despite its refusal to do so for more than a year and a half.

Hughes wrote: "WEDC's approach is to understand Foxconn's plans and award based on that plan and its expected impact on Wisconsin's economy. Our investment is based on the company's plans, and WEDC is prepared to modify the contract if those plans change. But the initial award was based on an understanding of the company's plans. Therefore, the next clear step for WEDC and Foxconn is a meeting where Foxconn can outline its plans for the Wisconsin Valley, its planned investments and job creation. By providing specific plans for what Foxconn will build, the type of business, the types of jobs and wages, WEDC will be able to run our analysis of the return on taxpayer investment."

A Foxconn lawyer responded to an email agreeing to a video conference on Dec. 4. He said: “I believe that after several months of discussions, we are close to reaching acceptable terms that will lead to an exciting future for our smart manufacturing campus in Mount Pleasant.”

Neither WEDC nor Foxconn responded to requests for comment on the status of negotiations, or to questions about whether Foxconn has provided the required plans and projections. However, Hughes' comments suggest the project still lacks clarity. She acknowledged that negotiations are ongoing and that "Foxconn is helping WEDC understand their plans and helping us understand their projections so that we can do our analysis and think about how we can support this from the taxpayer side."

But Hughes seemed to acknowledge that Foxconn itself is still figuring out what to do. “For Foxconn, because they’re in the early stages, they have a lot of different ways of thinking about the work that they’re going to do, whether it’s artificial intelligence or smart manufacturing, so understand that,” she said. “But I do think they’re very forward thinking, and I think what Wisconsin could benefit from from Foxconn is forward thinking.”