July 27, 2017 / 9:47 PM / in 2 months

Wisconsin governor defends $3 billion deal for Foxconn plant

The logo of Foxconn, the trading name of Hon Hai Precision Industry, is seen on top of the company's headquarters in New Taipei City, Taiwan March 29, 2016. REUTERS/Tyrone Siu/File Photo

WASHINGTON (Reuters) - Wisconsin Governor Scott Walker on Thursday defended his plan to give a $3 billion tax break over 15 years to convince Taiwanese electronics manufacturer Foxconn to build a $10 billion LCD flat screen factory.

The 20-million square foot plant will initially employ 3,000 people, but Walker and Foxconn said the company ultimately may employ 13,000 people at the site.

Rival Republican Governor Rick Snyder of Michigan tweaked Walker, saying: “You have to ask what price is Wisconsin paying to get them to come there?” Snyder told WJR Radio on Thursday, adding: “I don’t believe in buying companies into our states.”

“What we’re proposing is not outrageous,” Walker told a local radio station, saying the deal would also create 10,000 construction jobs.

Walker’s office said the incentives are projected to cost between $200 million and $250 million a year, capped at $3 billion. That includes up to $1.5 billion in state income tax credits for job creation, up to $1.35 billion in state income tax credits for capital investment and up to $150 million for the sales and use tax exemption - a sales tax holiday.

The Wisconsin state legislature must approve the incentive package and may take it up in August.

Wisconsin Democratic Party Chair Martha Laning said “while we are all thrilled at the prospect of new jobs coming to the state” she was concerned about “handing over taxpayer funds to foreign investors that could potentially leave Wisconsinites with the bill decades into the future.”

Not all Foxconn investments announced have resulted in new jobs. In 2013, Foxconn said it would invest $30 million and hire 500 workers for a new factory in Pennsylvania. But that facility was never completed.

Foxconn Chairman Terry Gou said the company is “thrilled to build a state-of-the-art display fabrication plant in America’s heartland.”

Syracuse University Professor Jason Dedrick said the main issue is “whether the benefits outweigh the costs of various subsidies likely used to attract Foxconn’s investment” and if “this investment can attract other manufacturers of key components to the U.S., and eventually create a supply chain that can support final assembly of smartphones.”

Foxconn, a major supplier to Apple Inc (AAPL.O) for its iPhones, is formally known as Hon Hai Precision Industry Co Ltd (2317.TW). It said last month it plans to invest more than $10 billion in a display-making factory in the United States.

Foxconn is expected to select a 1,000-acre site in southeast Wisconsin and could be eligible for some additional local incentives, officials said.

Reporting by David Shepardson; Editing by Dan Grebler

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