Michigan offered Foxconn $3.8 billion for flat-screen plant, still lost to Wisconsin's $3 billion bid

New documents show Michigan made a $3.8 billion bid for a Foxconn Technology Group factory, appearing to outbid the winning offer from Wisconsin. 

But Wisconsin started with extremely favorable tax laws for manufacturers and ultimately won out with a $3 billion offer that was heavy on cash, according to public records released by both states to the Milwaukee Journal Sentinel. The flat-screen display plant in Racine County is expected to employ thousands.

Both states have also bid on and might still receive another multibillion-dollar Foxconn factory, the documents show. 

Michigan's bid on the display plant — known as Project 818 — consisted mainly of waiving taxes on Foxconn's property and operations in that state and included $1.5 billion in tax breaks given automatically to all manufacturers locating there.

But Wisconsin also waives many taxes for manufacturers and Gov. Scott Walker's administration came to the Taiwanese electronics giant with an eye-catching offer of cash. 

Mark Hogan, the head of Wisconsin's lead jobs agency, said Tuesday that he had never seen the Michigan offer before and that it didn't play a role in his state's bid.

"Ultimately, we had to look at it from the state's perspective — the return on investment to the state," said Hogan, the chief executive officer of the Wisconsin Economic Development Corp.

In addition to Wisconsin and Michigan, at least three other states were considered by Foxconn as potential sites for the liquid-crystal display plant: Ohio, Pennsylvania and North Carolina. The company now says the massive plant could cost up to $10 billion to build and equip and could employ up to 13,000 workers in the years to come.

Since August, Walker has insisted that at least one other state had outbid Wisconsin, while his Democratic critics have said that was false.

The new documents tell the full story: Michigan presented Foxconn with a bigger offer on paper, but Wisconsin made a better one. 

The first of the two bids for Project 818 was made in a June 25 letter from an official at the Michigan Economic Development Corp. to Foxconn consultants at Ernst & Young.

The nearly $3.8 billion offer included some incentives that weren't later approved by the Michigan Legislature. The offer also counted in its tally for Foxconn the automatic tax cuts that were already in place for any manufacturer moving into the state, such as a property tax exemption on manufacturing equipment. 

Once these provisions are removed, Michigan's offer drops to $2.3 billion, with a relatively small portion in cash incentives, according to a Michigan Economic Development Corp. summary given to the Journal Sentinel.

Wisconsin also exempts manufacturing equipment from property taxes and in addition waives nearly all corporate and personal income taxes on manufacturing profits. But the state's June 26 letter to Ernst & Young didn't put a dollar value on those benefits to Foxconn since they're available to any manufacturer automatically.

Instead, Hogan, the WEDC head, made a $1.25 billion offer in state and local incentives. 

By July 12, Walker himself had upped the state's bid to $3 billion, signing the offer on a single handwritten sheet. Because Foxconn will very likely have no state liability in Wisconsin, all but $150 million of the state's offer was in so-called refundable tax credits that could end up being paid to the company in cash. 

On July 26, Foxconn chairman Terry Gou, Walker and President Donald Trump announced at the White House that the company would be building the flat-screen plant in southeastern Wisconsin. 

The state is still negotiating a final contract with Foxconn and officials in Racine County are also finalizing $764 million in additional incentives for the company. 

The incentives offered by Michigan and Wisconsin would be awarded to Foxconn over many years and would depend on the company meeting job creation and other targets.

The Associated Press previously reported that North Carolina offered Foxconn more than $570 million in incentives for the flat-screen plant. Officials in Ohio and Pennsylvania haven't released what bids if any their states made on the LCD plant. 

Wisconsin state Sen. Jon Erpenbach (D-Middleton) said he has sought unsuccessfully to get figures showing how much his state's existing tax breaks for manufacturers will save for Foxconn. But Erpenbach, who says the Foxconn deal is a giveaway to a foreign company, said Wisconsin's offer was clearly more generous than Michigan's.

"There's a reason why Foxconn said no to Michigan and the reason is Wisconsin is giving them more cash," he said. 

Walker spokesman Tom Evenson said the administration's offer was "about getting the best deal for Wisconsin and bringing 13,000 good-paying jobs to our state."

"Foxconn's historic U.S. investment is being made here for many reasons including our strong workforce, location, and Governor Walker's leadership," Evenson said. "This also shows Wisconsin was clearly in the ballpark with other states, as the governor has stated."

In a statement, Foxconn executives said they don't discuss their negotiations with partners like states.

"But we can say that our decisions regarding site locations are driven by many factors and the co-investment made by our public-sector partners is certainly one part of that process," the statement reads.

The jobs announcements from Foxconn may not be over, as the offers from Michigan and Wisconsin show.

Both states bid on another potential factory known as Project 868. Little is known about this plant but Michigan expected it to bring a $4.2 billion investment from Foxconn and up to 5,200 jobs. 

In their June letter to Foxconn, Michigan officials offered the company $3.1 billion in incentives for Project 868. That offer amounted to $1.6 billion after subtracting tax breaks in existing Michigan law and incentives not approved by lawmakers there, according to Michigan Economic Development Corp. figures.

Wisconsin officials blacked out the part of their June letter with their offer for Project 868, so it's still unknown.

In their June letter, Michigan officials also offered Foxconn $543 million for a mixed-use project of office and research space in Detroit.

In August, the China Morning Post of Hong Kong and later The Detroit News reported that Foxconn is planning a research and development facility for autonomous vehicle components in Michigan.

In all, Michigan offered more than $7 billion for the three separate projects when including tax breaks in existing law.