Wisconsin Department of Administration Secretary Scott Neiztel sat down Wednesday with Media Trackers for a discussion on the recent Foxconn news. Neitzel was able to provide some answers to questions about the proposed $3 billion package in tax credits and subsidies the state promised the Taiwanese company if it creates 13,000 jobs over 15 years.
Foxconn, which itself has pledged a $10 billion investment in the project, hopes to build a 20 million square foot campus along the I-94 corridor in southeast Wisconsin. While no site has been finalized, the company is said to be looking at locations in Racine or Kenosha counties. Foxconn has expressed interest in having its first Wisconsin-based factory operational by 2020.
Recent Pro-Business Actions Helped Seal the Deal
While not the determining factor in helping Wisconsin land the plant, Neiztel believes that a number of recently passed initiatives were critical in making the Badger State more pro-business. Neitzel gave credit to a number of items such as modernizing state regulations, litigation reform, the manufacturing-agricultural tax credit, and right-to-work.
These factors, along with the ability of all forms of government (local, county, state) to work in concert with each other, helped to make Wisconsin an ideal place for Foxconn, say Neiztel.
“One area which really impressed Terry Gou (Foxconn CEO) was the work ethic of Governor Scott Walker displayed in trying to lure the company to Wisconsin,” said Neiztel. “Be it constant communications over the phone, or flying to Taiwan while on an economic trip to Asia and personally lobbying him; Gou was impressed with the extra effort Walker put into selling Wisconsin to him.”
Deal More “Pay As You Grow” than “Pay As You Go”
While much of the legislative debate remains about the economic package the state will give Foxconn, Secretary Neiztel relayed that he was “very proud of the deal,” a deal which could have Wisconsin taxpayers paying out $1.5 billion in job creation tax credits, $1.35 billion in state income tax credits, and $150 million in sales tax credits.
“To steal a line from Tom Still [President of the Wisconsin Technology Council],” said Neitzel. “This incentive package is designed in such a way that Foxconn will only get them if they hold up their end of the bargain. They will receive job credits if they create jobs. They will receive sales tax credits if they buy things sold here in Wisconsin.”
“We realized going into negotiations with Foxconn that the taxpayers of this state are our shareholders,” continued Neitzel. “Our goal going into talks with them was to ensure we got the best deal possible for them, not just a ‘winning deal.’”
Asked about concerns about the proposed legislation when it comes to certain state environmental regulations, Neitzel was quick to point out that while the state is streamlining its process, Foxconn will still have to meet a number of federal regulations overseen by the Environmental Protection Agency (EPA). In addition, he was quick to point to the “2 to 1” ratio the company will have to meet when it comes to replacing wetlands.
Building a Tech Ecosystem for Wisconsin
Neitzel emphasized that Foxconn wants to have more than a factory – they want to have a presence in Wisconsin. What they mean remains unknown, but with rumored corporate offices in Milwaukee and a potential second factory in Dane County, this may only be the beginning of things to come. Others have speculated the company might have not one, but two locations in the Racine-Kenosha area.
“Foxconn wants a U.S. presence as soon as possible to get their products to market,” said Neitzel. “Basically, the company feels that if Wisconsin is good to them, they will be good for Wisconsin. This won’t just mean jobs from them, but jobs from their suppliers as they begin to implement a supply chain for their parts. It’s why we’re including a provision in the financial package which will expand the number of ‘enterprise zones’ in the state by five.”
“We really believe the ‘Wisconn Valley’ can be a game changer for Wisconsin. Not just in increased jobs, but in keeping our best and brightest young people in Wisconsin and not heading off to other states for jobs,” said Neitzel.
“Look at it like [former Wisconsin Badgers football coach and current athletic director] Barry Alvarez used to recruit his players,” continued Neitzel. “He said, ‘We will do all we can do make sure the best in-state talent in Wisconsin, plays for Wisconsin.’ That’s what the possibilities having Foxconn here could allow us.”