Wisconsin’s economic development board on Wednesday approved the key terms of a contract implementing a US$3 billion incentive package for a Foxconn Technology Group (富士康) plant in the state, including a personal guarantee from the company’s leader to protect state taxpayers.
The deal calls for Foxconn chairman and CEO Terry Gou (郭台銘) to personally guarantee one-fourth of any potential payback if the company fails to meet investment and employment benchmarks.
Wisconsin Governor Scott Walker and Foxconn officials planned to sign the contract today in Wisconsin.
The deal ties hundreds of millions of US dollars in tax credits to the number of jobs the Taiwanese electronics giant creates at the facility each year.
It also allows the state to recoup the money if the company fails to meet the benchmarks, key provisions sought by critics of the subsidy.
The Wisconsin Economic Development Corp’s (WEDC) board approved a staff summary of the contract on an 8 to 2 vote during a closed-door meeting.
Approval of the summary authorizes agency officials to complete the deal.
EXEMPTIONS
“The fine line was to balance the needs of the company and the needs of the state,” WEDC chief executive Mark Hogan said after the vote.
Foxconn officials want to build a US$10 billion flat-screen manufacturing plant in Mount Pleasant, about 40km south of Milwaukee.
The company has said the facility could employ between 3,000 and 13,000 people.
Walker signed a bill in September providing Foxconn with the unprecedented incentives package.
It provides the company about US$3 billion in refundable tax credits from next year until 2032, including US$1.5 billion in payroll tax credits, up to US$1.35 billion in credits on expenditures for fixed assets such as land and buildings and US$150 million in sales tax exemptions on construction equipment.
It also allows the company to build on wetlands and waterways.
Foxconn would qualify for the full amount of incentives only if it invests US$9 billion and employs 13,000 people, according to the terms the board approved.
SHORT FALLS
Under the terms, Foxconn must make at least US$9 billion in capital investments and meet annual job creation thresholds between 2019 and 2025 to collect the maximum annual capital investment tax credits.
If the company does not meet the job creation benchmarks, the annual tax credits would be reduced according to how far short the company falls.
The contract does not require Foxconn to hire Wisconsin residents, but does establish a maximum annual payroll credit and requires the company to meet minimum annual job creation targets to receive credits.
The jobs must pay at least US$30,000 annually and the company must maintain an average salary of US$53,875.
The state could nix the deal and demand its money back if the company supplies false information, leaves Mount Pleasant or simply closes its doors.
Hogan said the contract generally provides that the state could start the claw-backs if Foxconn’s job numbers drop below 6,500.
The company would be liable for 75 percent of the payback.
Gou would be personally responsible for 25 percent.
Merida Industry Co (美利達) has seen signs of recovery in the US and European markets this year, as customers are gradually depleting their inventories, the bicycle maker told shareholders yesterday. Given robust growth in new orders at its Taiwanese factory, coupled with its subsidiaries’ improving performance, Merida said it remains confident about the bicycle market’s prospects and expects steady growth in its core business this year. CAUTION ON CHINA However, the company must handle the Chinese market with great caution, as sales of road bikes there have declined significantly, affecting its revenue and profitability, Merida said in a statement, adding that it would
Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01
RISING: Strong exports, and life insurance companies’ efforts to manage currency risks indicates the NT dollar would eventually pass the 29 level, an expert said The New Taiwan dollar yesterday rallied to its strongest in three years amid inflows to the nation’s stock market and broad-based weakness in the US dollar. Exporter sales of the US currency and a repatriation of funds from local asset managers also played a role, said two traders, who asked not to be identified as they were not authorized to speak publicly. State-owned banks were seen buying the greenback yesterday, but only at a moderate scale, the traders said. The local currency gained 0.77 percent, outperforming almost all of its Asian peers, to close at NT$29.165 per US dollar in Taipei trading yesterday. The
RECORD LOW: Global firms’ increased inventories, tariff disputes not yet impacting Taiwan and new graduates not yet entering the market contributed to the decrease Taiwan’s unemployment rate last month dropped to 3.3 percent, the lowest for the month in 25 years, as strong exports and resilient domestic demand boosted hiring across various sectors, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. After seasonal adjustments, the jobless rate eased to 3.34 percent, the best performance in 24 years, suggesting a stable labor market, although a mild increase is expected with the graduation season from this month through August, the statistics agency said. “Potential shocks from tariff disputes between the US and China have yet to affect Taiwan’s job market,” Census Department Deputy Director Tan Wen-ling
RSS