Rick Romell

Milwaukee Journal Sentinel

Foxconn Technology Group had 178 full-time Wisconsin employees in 2018 — 82 jobs short of the minimum required for the company to immediately claim state job-creation tax credits.

The electronics manufacturer, however, can still earn credits for the 2018 employment by making up for the job-creation shortfall in future years of its long-term contract with the state.

Foxconn ultimately could receive $1.5 billion in job credits as part of an overall public subsidy package totaling about $4 billion.

In a letter to state officials the company released Friday, Foxconn reiterated its pledge to create 13,000 Wisconsin jobs tied to the massive factory and research complex it has begun building in Mount Pleasant.

At the same time, the company said it had changed the timing of its hiring plans.

"While we remain committed to creating 13,000 jobs in Wisconsin, we have adjusted our recruitment and hiring timeline," Foxconn executive Louis Woo said in the letter sent to Mark Hogan, secretary and CEO of the Wisconsin Economic Development Corp., and shared with Gov. Tony Evers. "As a company with operations around the world, we need to have the agility to adapt to a range of factors including global economic conditions.

"We have done so while simultaneously progressing on other aspects of the project and achieving our foremost priority for 2018 — creating a solid foundation upon which the Wisconsin project can continue to grow further."

Foxconn's adjustment to its "recruitment and hiring timeline" is not the first time the company has changed its plans for what advocates have hailed as a development project that will transform Wisconsin's economy but critics have derided as a boondoggle.

Most notably, the company has scaled back its original plans for the liquid crystal display panel factory at the heart of the project, opting to first build a smaller, less costly plant than the "Generation 10.5" facility specified in its contracts with state and local government.

After disclosing the change in plans last June, Foxconn initially said it still planned to build a Generation 10.5 factory, or "fab" — the largest and most expensive type of plant in the display industry — in a subsequent phase.

Two months later, however, the company, when asked, declined to offer assurances that it ultimately would build such a plant. Instead, the firm said that while it still planned to build "an advanced fab facility" in a second construction phase, the nature of that plant would depend on the market and economic situation at the time.

Different workforce vision

Foxconn also now envisions a Wisconsin workforce dramatically different from the profile initially presented to state officials.

In July 2017, a report by a Foxconn consultant using company data projected that about 75 percent of the 13,000 Wisconsin jobs would be held by “hourly operators and techs.” About 18 percent of the employees would be engineers, the report said.

But by late March 2018, Woo said in an interview with the Milwaukee Journal Sentinel that plans had shifted and he expected that about a third of employees “would be more like assembly line workers, but two-thirds would be the knowledge workers.”

Five months later, the workforce ratio shifted still further toward the high-skill end. Speaking to The Journal Times, of Racine, in late August, Woo said that “now it looks like about 10 percent assembly line workers, 90 percent knowledge workers.” That same day, Woo told the Milwaukee Business Journal that “at least 80 percent would be engineers or R&D scientists.”

FULL COVERAGE:Foxconn updates

In its letter Friday, Foxconn said it has invested more than $200 million in Wisconsin so far, and awarded 95 percent of contracts to date to Wisconsin companies. Contracts have gone to 93 companies in 17 state counties, with nearly 16 percent going to businesses owned by minorities, women or veterans, Foxconn said.

The firm said 854 people have been working on construction of the Mount Pleasant complex, which Foxconn has said ultimately will cost $10 billion, and which the company has named the Wisconn Valley Science and Technology Park.

Sites elsewhere in Wisconsin

Foxconn in its letter also pointed to its Wisconsin initiatives outside the factory site, including the purchase of buildings for what will become "technology-focused Innovation Centers" in Green Bay, Eau Claire and Racine; the purchase of a downtown Milwaukee building where the Taiwan-based firm has located its North American headquarters; a veteran-hiring program; a $100 million pledge to the University of Wisconsin-Madison; participation with three other companies in establishing a $100 million venture fund; support of Wisconsin's ginseng industry; and a $1 million "Smart Cities" competition.

Hogan, the WEDC secretary, applauded Foxconn for the initiatives not required by the state contract.

“The update provided today by Foxconn reaffirms the company’s commitment to Wisconsin as evidenced by the significant investments that go well beyond the requirements of its contract with WEDC," Hogan said in a statement. "This transformational project will reshape Wisconsin’s economy, education system and workforce as it brings the next generation of advanced manufacturing to the U.S."

As Hogan noted, the state's contract provides tax credits to Foxconn only after it meets the requirements for job creation and capital investment.

Foxconn was eligible to receive no more than $9.5 million for 2018 job creation — less than 1 percent of the $1.5 billion the company ultimately could claim. Because of "carry forward" provisions in the contract, Foxconn still could recoup the $9.5 million if it exceeds jobs targets for subsequent years of the 15-year agreement.

To get the full $1.5 billion in credits, the company must create 13,000 full-time jobs averaging $53,875 a year. Foxconn could get another $1.35 billion in credits by investing $9 billion in its Mount Pleasant complex.

The tax credits are "refundable," meaning that if Foxconn doesn't owe taxes, it still will receive the money. Because Wisconsin waives almost all taxes on manufacturing profits in the state, it is likely Foxconn's credits will be in the form of cash payments.