FOXCONN SHOWS HOW STATE
OFFICIALS ARE SAYING THEY ARE
INELIGIBLE FOR HEFTY TAX CREDITS
BECAUSE THE SCOPE OF THE PROJECT
HAS CHANGED.
THE REPORTING WAS BASED ON
LETTERS WRITTEN BACK AND FORTH
BETWEEN THE COMPANY AND THE
EVERS' ADMINISTRATION.
"HERE AND NOW'S" MARISA WOJCIK
ALSO OBTAINED THE CORRESPONDENCE
AND HAS THIS REPORT.
>> NEWLY-RELEASED CORRESPONDENCE
DATING BACK TO APRIL BETWEEN
FOXCONN, EVERS AND WEDC SHOWS
GROWING CONFLICT OVER THEIR
ABILITY TO COLLECT TAX
SUBSIDIES.
EVERS' ADMINISTRATION IS ARGUING
THEY ARE INELIGIBLE UNDER
WISCONSIN LAW BECAUSE NEW PLANS
FOR ITS WISCONSIN LCD
MANUFACTURING FACILITY NO LONGER
FIT THE TERMS OF THE ORIGINAL
CONTRACT.
THE STATE IS CALLING ON FOXCONN
TO RENEGOTIATE THE CONTRACT TO
FIT THE CHANGES, A DEMAND WHICH
FOXCONN SAYS COMES WITH GREAT
SURPRISE AND DISAPPOINTMENT N.
JANUARY, FOXCONN'S LOUIS WOO
TOLD REUTERS THAT THE MOUNT
PLEASANT FACILITY WAS NO LONGER
GOING TO BE A MANUFACTURING AS
ORIGINALLY PLANNED.
INSTEAD, FOXCONN WOULD BUILD A
SMALLER GEN 6 PLANT.
MELISSA HUGHES, THE NEW CEO OF
WEDC, TOLD FOXCONN THE PROJECT
WORK AND PLANS DO NOT ALIGN WITH
THE PROJECT AGREED TO BY THE
PARTIES.
THE DEPARTMENT OF ADMINISTRATION
SAYS THE AGREEMENT WAS ONLY FOR
THE GEN 10.5 PROJECT.
THEY SAID THE CHANGES WERE
NECESSARY DUE TO MARKET AND
SUPPLIER CONDITIONS.
BUT THE MATERIAL TERMS OF OUR
CONTRACT WITH THE WEE WEDC JOBS
AND INVESTMENT.
THE ORIGINAL CONTRACT SIGNED BY
FOXCONN UNDER GOVERNOR SCOTT
WALKER SAYS THE STATE WOULD PAY
UP TO $4 BILLION IN TAX CREDITS
TO FOXCONN IF IT INVESTED $10
BILLION FOR A PRODUCTION PLANT
TO CREATE UP TO 13,000 JOBS.
WALKER AND THE WEDC REASSURED
SKEPTICS THAT CLAWBACKS AND
PROVISIONS IN THE CONTRACT WOULD
ENSURE PROPER USE OF THE
TAXPAYERS' INVESTMENT.
A NEW REPORT FROM THE AUDIT
BUREAU SAYS THEY'RE CONCERNED
WITH THE NUMBERS FOXCONN IS
REPORTING ON JOB CREATION AND
CAPITAL INVESTMENTS.
THROUGHOUT THE EIGHT MONTHS OF
LETTERS BETWEEN EVERS AND
FOXCONN, THEY ENSURE ONE ANOTHER
BOTH ARE COMMITTED TO THE
PROJECT.
BUT IN THE LATEST LETTERS, DOA
SECRETARY JOEL BRENNAN SAYS
FOXCONN WAS OPAQUE ABOUT ITS
PROJECT PLANS.
FOXCONN SAID DISTRACTIONS LIKE
THIS LEAVE JOB SEEKERS WONDERING
IF DOING BUSINESS IS WELCOMED BY
GOVERNOR EVERS' ADMINISTRATION.
THEIR LAST WORDS SAY FOXCONN
WILL CONTINUE TO PLAY AN
IMPORTANT AND CONSTRUCTIVE ROLE
IN THE STATE OF WISCONSIN.
HOWEVER, AT THIS POINT, WE SHALL
BE EVALUATING ALL AVAILABLE
OPTIONS RELATING TO THE WEDC
CONTRACT.
>> FOR THE LATEST ON THE STATUS
OF THE FOXCONN CONTRACT WITH
WISCONSIN, WE TURN TO SECRETARY
OF THE WISCONSIN DEPARTMENT OF
ADMINISTRATION, JOEL BRENNAN,
AND THANKS VERY MUCH FOR BEING
HERE.
>> THANKS FOR HAVING ME.
>> WELL, SO WHAT SPECIFICALLY
DOES THE STATE OF WISCONSIN WANT
FROM FOXCONN RIGHT NOW?
>> WELL, I THINK FUNDAMENTALLY
WE WANT FOXCONN TO BE
SUCCESSFUL.
WE WANT THE LOCAL UNITS OF
GOVERNMENT TO BE PROTECTED.
WE WANT THE PEOPLE IN
SOUTHEASTERN WISCONSIN AND
THROUGHOUT THE STATE TO BENEFIT
FROM THIS PROJECT.
BUT WE ALSO WANT TO ENSURE THAT
EVERYBODY UNDERSTANDS THAT
NOBODY GETS A BLANK CHECK IN
THESE THINGS AND THAT
FUNDAMENTALLY THIS PROJECT HAS
CHANGED FROM WHERE IT WAS TWO
YEARS AGO.
THOSE THINGS ARE OKAY, BUT IT
ALSO REQUIRES US THEN TO REVISIT
SOME OF THE FUNDAMENTALS ABOUT
THE TBREAMENT.
>> AND SO YOU'D LIKE TO AMEND
THE CONTRACT.
>> I THINK IT'S IMPORTANT TO
NOTE THAT THE FIRST DISCUSSION
OF AMENDMENT OF THE CONTRACT
ACTUALLY CAME FROM FOXCONN.
THERE HAS BEEN THIS SERIES OF
COMMUNICATIONS THAT HAVE COME
OUT OVER THE LAST FEW WEEKS AND
REALLY GOING BACK TO MARCH OF
THIS YEAR, FOXCONN EXPRESSED
THEIR DISENGS INTENTION TO PROCEED WITH
THE AMENDMENT PROCESS.
WE HE PROCEEDEDWE PROCEEDED UNDER THE
ASSUMPTION THEY WERE GOING TO DO
THAT FOR A LONG PERIOD OF TIME.
>> ARE THEY NOW PROVIDING YOU
THINGS YOU NEED TO MAKE THESE
DECISIONS?
>> THAT'S ONE OF THE THINGS
THAT'S FUNDAMENTAL TO THIS.
JUST A LITTLE BIT ABOUT WHAT THE
JUSTIFICATION OF THIS WAS TWO
YEARS AGO.
SO AT THAT TIME, ERNST & YOUNG
DID DEEP ANALYSIS AND THE
SUBSIDY WAS BASED ON SOME OF THE
EVALUATION THEY HAD DONE.
IN THAT EVALUATION, THEY NOTED
THAT THE PAYOFF FOR THE STATE
WAS BASED ON GETTING TO A POINT
WHERE THEY WERE PRODUCING SIX
MILLION LCD TELEVISIONS IN
RACINE COUNTY.
FOXCONN HAS SAID THEY'RE NO TELEVISIONS.
WHAT WE DON'T KNOW IS WHAT IS
THE MARKET FOR WHAT THEY ARE
GOING TO BE DOING.
I THINK FOXCONN MAY NOT KNOW
THAT EITHER, WHICH IS OKAY,
EXCEPT THAT WE HAVE A CONTRACT
THAT WAS FOR THE LCD SCREENS
FROM TWO YEARS AGO.
SO WE NEED TO MAKE SURE THE
PROJECT IS MARRIED UP WITH WHAT
THE CONTRACT TERMS ARE.
>> DO YOU HAVE ANY IDEA WHAT
EXACTLY FOXCONN PLANS TO BUILD?
>> WE HAVE A GOOD IDEA OF WHAT
THEY'RE DOING THROUGHOUT -- UP
UNTIL ABOUT THE END OF 2020.
THERE ARE THREE BUILDINGS ON THE
SITE, ABOUT 1.4 MILLION SQUARE
FEET OF SPACE AND THERE ARE SOME
EXCITING THINGS HAPPENING THERE.
ONE COMPANY IN PARTICULAR,
FOXCONN INDUSTRIAL INTERNET, IS
DOING TWO OF THOSE THREE
BUILDINGS, SEPARATE FROM THE
TERMS THAT WERE DISCUSSED TWO
YEARS AGO.
THOSE ARE THINGS THAT HAVE
EVOLVED AND CHANGED WITH THIS
PROJECT.
AGAIN, THOSE THINGS ARE GOOD.
THEY'RE EXCITING.
THEY'RE GOING TO EMPLOY PEOPLE.
HOWEVER, THAT'S NOT WHAT THE
CONTRACT WAS SIGNED FOR.
AND THAT'S WHY WE HAVE TO GO
BACK AND REVISIT THOSE THINGS
WITH FOXCONN.
>> AS TO THIS, SPEAKER ROBIN VOS
DESCRIBES THAT CONTRACT AS
IRONCLAD AND HE SAYS HE DOESN'T
WANT TO MATERIALLY CHANGE IT,
SAYING IF YOU WANT TO REDUCE
INCENTIVES, IT COULD RESULT IN
LESS HIRING.
WHAT ABOUT THAT?
>> WELL, I THINK THAT FOR ANYONE
TO ARGUE THAT THERE HAVEN'T BEEN
MATERIAL CHANGES IN WHAT FOXCONN
SAID THEY WERE GOING TO DO AND
CONTRACTED FOR TWO YEARS AGO
VERSUS NOW, THEY HAVEN'T BEEN
FOLLOWING FOXCONN'S OWN
COMMUNICATIONS.
SO IT JUST KIND OF GOES TO THE
FUNDAMENTALS OF THIS.
THE STATE HAD THE OPTION IN 2017
TO CHOOSE PROJECT A OR PROJECT
B, WHAT THEY CALL THE AGAIN
RATION 10.5 OR GENERATION 6.
THERE WAS A LIST OF THINGS THAT
CAME ALONG WITH THAT.
SO THAT'S WHAT WAS EVALUATED,
APPLIED FOR AND CONTRACTED FOR
IN 2017.
THERE ARE THINGS THAT ARE FUND
FUNDAMENTALLY DIFFERENT WITH
THIS OTHER PLAN.
I'VE HEARD THE SPEAKER SAY YOU
WOULDN'T TELL SOMEBODY ELSE TO
PRODUCE SCREWDRIVERS INSTEAD OF
HAMMERS FOR A DIFFERENT THING.
WELL, FRANKLY, IF YOU'RE GOING
TO PRODUCE SIX MILLION TVs AND
THAT'S WHAT ALL OF THE
EVALUATION WAS, IF THEY ARE
GOING TO PRODUCE SOMETHING
ADDITIONAL, THERE'S NOTHING
WRONG WITH THAT, BUT ARE THEY
GOING TO PRODUCE 60 OR 6,000?
THOSE ARE THE QUESTIONS WE STILL
HAVE AND WHICH TAXPAYERS
PROBABLY WANT US TO BE ABLE TO
ANSWER, TOO, BEFORE WE CAN SAY
THAT YES A HORSE IS A HORSE IS A
HORSE OR ALL THESE THINGS ARE
THE SAME THINGS.
>> AS IT STANDS, YOUR POSITION
IS THE COMPANY IS NOT ELIGIBLE
FOR SUBSIDIES AT ALL?
>> THE PROJECT THAT THEY'RE
DOING NOW IS NOT WITHIN THE
BOUNDS OF THE CONTRACT THAT WAS
SIGNED IN 2017.
WE MADE THAT PRETTY CLEAR FOR
THEM OVER THE LAST SEVERAL
MONTHS.
AND I THINK IT'S IMPORTANT TO
NOTE, THEY'VE CONTINUED TO DO
WORK AWARE OF THAT.
WE'VE CONTINUED TO HAVE
DISCUSSIONS ABOUT THOSE THINGS.
AND I ANTICIPATE WE WILL OVER
THE COMING WEEKS.
>> WHAT IS YOUR RESPONSE TO
FOXCONN SAYING THAT YOUR
POSITION LEAVES JOB CREATORS
WONDERING IF DOING BUSINESS IN
WISCONSIN IS WELCOME BY THE
EVERS ADMINISTRATION?
>> WELL, I THINK OVER THE FIRST
SEVERAL MONTHS OF THE EVERS
ADMINISTRATION THERE HAVE BEEN
SEVERAL OCCASIONS, HIGH-PROFILE
ANNOUNCEMENTS WITH MILWAUKEE
TOOL OF THE STATE PROVIDING AND
FRANKLY BEING NIMBLE IN BEING
ABLE TO PROVIDE RESOURCES SO
COMPANIES LIKE THAT COULD GROW
HERE AND I THINK THAT
FUNDAMENTALLY THE CONVERSATIONS
WE'VE HAD, THE INVESTMENTS WE'VE
MADE HAVE BEEN IN COMPANIES THAT
ARE HERE, THAT WANT TO GROW
HERE, THAT WANT TO CONTINUE TO
WORK WITH US ON THE ENTIRE
FABRIC OF THE ECONOMY.
SO ALL EVIDENCE IS TO THE
CONTRARY.
EVERY CONVERSATION WITH FOXCONN
IS WE WANT THEM TO BE AS
SUCCESSFUL AS THEY POSSIBLY CAN
BE HERE IN WISCONSIN.
THAT'S WHY TO THEIR BENEFIT
AND IN THEIR BEST INTEREST TO
MAKE SURE THAT WE MARRY WHATEVER
THE CONTRACT TERMS ARE WITH THE
PROJECT THAT THEY ARE DOING NOW.
AND THAT WILL CONTINUE TO EVOLVE
FOR THEM.
I THINK THEY DON'T KNOW HE --
AND THAT'S PART OF HOW THE
PROJECT HAS EVOLVED OVER THE
LAST TWO YEARS IN THAT THINGS
ARE FUNDAMENTALLY DIFFERENT IN
THE WORLD MARKETPLACE THAN THEY
WERE TWO YEARS AGO.
THERE'S NOTHING WRONG WITH THAT.
THEY NEED TO BE ABLE TO EVOLVE
WITH THAT.
BUT YOU CAN'T HAVE A CONTRACT
THAT PUTS THE STATE IN PLAY AND
NOT ALLOW US TO EVALUATE THESE
THINGS MOVING FORWARD.
THAT'S WHAT RATIONAL PEOPLE
WOULD DO AS WE WANT TO MOVE
FORWARD ON THIS.
>> GIVEN THE FRICTION AS
EVIDENCED BY THE CORRESPONDENCE
BETWEEN YOU AND OTHERS IN THE
ADMINISTRATION AND FOXCONN, DOES
THE STATE RUN THE RISK OF
FOXCONN ON SCWUS BAILING ON JUST BAILING ON THIS
PROJECT ALTOGETHER?
>> I THINK THE DECISION, AS HAS
BEEN THE CASE OVER THE PAST TWO
YEARS, FOXCONN IS GOING TO MAKE
BUSINESS DECISIONS, THEY'RE NOT
GOING TO MAKE THOSE DECISIONS
SIMPLY BASED ON TAX CREDITS.
THEY'RE GOING TO MAKE THOSE
BASED ON THE FUNDAMENTALS OF
THEIR BUSINESS, BASED ON THE
WORLD ECONOMIC REALITIES.
SO ANYBODY TRYING TO SAY THAT
THE STATE DOING THIS OR THAT IS
GOING TO DRIVE THEM AWAY,
FOXCONN HAS CONTINUED TO EVOLVE
THEIR BUSINESS DECISION-MAKING
OVER THE LAST TWO YEARS WITH THE
CONTRACT THAT THEY HAD, WITH
CHANGES IN ADMINISTRATION, WITH
CHANGES AT FOXCONN.
SO THOSE DECISIONS ARE GOING TO
BE MADE BASED ON FOXCONN'S
BUSINESS, NOT BASED ON ANYTHING
THAT THE STATE IS DOING.
>> WHAT DO YOU EXPECT ANY KIND
OF RESOLUTION TO THE QUESTIONS
THAT YOU HAVE?
>> I THINK THERE'S URGENCY TO IT
IN THAT THERE ARE REPORTS THAT
FOXCONN HAS TO FILE EARLY IN
2020.
WE WANT TO MAKE SURE THAT WE'RE
ABLE TO DO -- IN OUR BEST WAY,
TO INCENTIVIZE THEM SO THAT THE
WORK THAT THEY ARE DOING CAN BE
REWARDED AND THE WORK THEY'RE
GOING TO BE DOING IN THE FUTURE
IS REWARDED.
WE WANT TO MAKE SURE WE MAKE
THOSE CHANGES WITH ALL THE
APPROPRIATE AMOUNT OF SPEED, BUT
ALSO THE APPROPRIATE AMOUNT OF
EVALUATION AND JUSTIFICATION.
BECAUSE THAT'S REALLY WHAT
PEOPLE NEED OUT OF THIS.
>> ARE YOU IN CURRENT
COMMUNICATION WITH THEM TODAY?
>> I HAVEN'T SPOKE WITH THEM
TODAY, BUT WE HAVE HAD
CONVERSATIONS WITH THEM THIS
WEEK.
WE HAVE CONVERSATIONS ONGOING ON
FOXCONN ON A COUPLE DIFFERENT
LEVELS ABOUT WHAT'S GOING ON THE
GROUND AND HOW CAN THE STATE BE
HELPFUL IN MAKING SURE WE'RE
DOING THAT.
THERE ARE ALSO ON GLENN GROTHMAN
DISCUSSIONS -- ONGOING
DISCUSSIONS ABOUT WHAT FOXCONN
IS DOING ON THE GROUND.
THOSE TWO THINGS CAN MOVE
FORWARD TOGETHER TO MAKE US BOTH