The Wisconsin Economic Development Corp. board Wednesday approved a $3 billion contract with Taiwanese manufacturer Foxconn, a deal the company’s CEO is personally backing should it fall apart. The board voted 8-2 with member Tom Sylke, an intellectual property lawyer, abstaining.
Under the terms of the 29-page contract, released publicly for the first time Wednesday, the company will be able to collect up to $1.35 billion in construction-related tax credits if it creates a gradually increasing number of manufacturing jobs up to 8,450 through 2025. It will also be able to collect up to $1.5 billion in tax credits if it creates up to 13,000 manufacturing jobs by 2022 and maintains that number through 2032.
The jobs must pay at least $30,000 per year and average $53,875 annually. The job credits pay out 17 percent of the first $100,000 of salary, which is higher than 7 percent for the state’s typical enterprise zone job credits. The construction credits equal 15 percent of capital investment, up from 10 percent in a typical enterprise zone.
The company will be eligible to receive up to $10 million in job credits starting in 2018 if it creates 1,040 jobs in the state. To receive any credits next year, the company must create at least 260 jobs. But if the company doesn’t earn the credits in a given year, they can be carried forward into subsequent years.
Within five years, the state can reclaim any credits it pays out if the company provides false information, leaves the state or ceases operations and doesn’t restart within a year. Those violations could result in the company owing as much as $965 million if they occur in the years after 2022. Also after that point, if the company employs fewer than 6,500 workers the state can reclaim a sliding scale ranging from $500 million in 2023 to $250 million in 2032.
Compliance with the terms will be audited by an independent accountant based on a sample of the company’s workforce at the end of each year.
Gou and his holding company, SIO International, are pledging to pay back 25 percent of the amount that would be refunded to the state should the company default. Publicly traded parent company Hon Hai Precision Products, the 27th largest company in the world, would back the rest.