What Happened: Wisconsin Governor Tony Evers and Foxconn said they have reached a new deal, under which Foxconn will now receive far smaller tax subsidies in exchange for “flexibility to pursue business opportunities that meet market demand.”
Under the amended deal, Foxconn will be eligible to receive only up to $80 million in performance-based tax credits over six years if the company hires 1,454 workers and invests $672 million by 2026.
Foxconn was eligible to received tax subsidies of $2.85 billion under the previous deal. Evers noted that the new deal will save Wisconsin taxpayers $2.77 billion.
Why It Matters: Foxconn’s $10 billion investment in Wisconsin, first announced in July 2017, would have led to the creation of 13,000 jobs at its site in Mount Pleasant, which involved building a $10 billion, 20 million-square-foot campus.
Foxconn initially planned to manufacture advanced large-screen displays for TVs at the facility, which is under construction. However, the company’s chairman said in March it will finalize what products are manufactured at the Wisconsin plant by July.
It was reported in October last year that Foxconn failed to secure state tax credits for 2019 in Wisconsin after it was unable to reach the slated job creation targets for the second year in a row.
In contrast, Foxconn finished making the first batch of display screens in Vietnam in November last year, something it has not been able to do at its factory in Wisconsin.
Price Action: Hon Hai Precision OTC shares closed almost 0.7% lower on Tuesday at $8.60.
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