Best known for its affiliation with Apple (NASDAQ:$AAPL), electronics manufacturing giant, Foxconn (TPE:$2354), announced Wednesday afternoon that it plans to invest US $10 billion dollars in new manufacturing initiatives in Wisconsin. The deal comes with expectations, however, that with an initial creation of 3,000 jobs, there are also high hopes for that number to grow to 13,000, the upper estimate of its potential.
The announcement made Wednesday has President Trump proclaiming this as “the largest economic development project in state history” after lacklustre production in the first six months of administration.
“If I didn’t get elected, he definitely would not be spending $10 billion,” Trump said, in reference to Foxconn CEO Terry Gou.
Specifics of the deal have been released Thursday morning, with Governor Scott Walker ensuring the public that there are repercussions and “safeguards” in the deal.
As stated by Walker on Thursday afternoon, Foxconn will receive the full $3 billion in tax incentives over the span of the next 15 years, only if it fulfills its $10 billion investment in Wisconsin, and creates the 13,000 jobs it has the potential to. Anything less would mean a proportional decrease in tax incentives. Of the $3 billion in potential tax exemptions, $1.5 billion is for job creation and $1.35 billion is set aside for capital investments, while the final $150 million in tax exemption can be applied to construction materials.
As Walker explains, “It’s pay to play, meaning you have to perform to get the performance there, so if they make something less than the $10 billion investment or something less than the 13,000 jobs, they don’t get as much of an incentive.”
Walker continued, defining the development as “truly transformational” and describing its potential effects to be comparable to that of Silicon Valley.
“This will help attract talent from across the country and around the world,” Walker commented.
In terms of the expansion, Foxconn wants to begin construction for its 20 million square foot facility in 2018, and commence operations by 2020. Walker has revealed that the construction of a facility this large will require 10,000 constructions workers – so many that the company will need to recruit workers from other areas such as Northern Wisconsin.
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