State’s break-even point under Foxconn deal one of four ‘weaknesses’ WEDC staff identified in proposal

The state jobs agency pointed to the state’s break-even point under the Foxconn deal as one of the agreement’s “weaknesses,” according to the staff review board members approved last week.

Estimates from the Legislative Fiscal Bureau, as well as separate analyses from Ernst and Young, Baker Tilly and the Wisconsin Economic Development Corp. found it would take some 20 or 25 years before the boost in tax revenues and the jobs the project would create would exceed the state’s $3 billion investment.

Still, the document — which was released to WisPolitics.com on Friday through an open records request after the Foxconn contract’s signing — predicted the Foxconn plant would generate state tax revenues of between $116 million and $157 million when fully operational, as well as $330 million in tax revenue during construction.

Those, as well as the company’s estimated $1.4 billion in annual supply chain spending in Wisconsin and the “strong cash position” and low debt ratio of Hon Hai — also known as Foxconn, were listed among the project’s strengths.

The other weaknesses WEDC identified include: the potential for the project’s start date to be impacted by the timing of property acquisition and negotiations with property owners; Foxconn’s low profit margins compared to industry benchmarks; and a Foxconn subsidiary’s net loss in 2016.

See the staff review:
http://www.wispolitics.com/wp-content/uploads/2017/11/171113StaffReview.pdf

Read more about the Foxconn contract in Monday’s PM Update:
https://www.wispolitics.com/2017/mon-pm-update-states-break-even-point-under-foxconn-deal-one-of-four-weaknesses-wedc-staff-identified-in-proposal/

 

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