Foxconn reportedly to cut $2.9 billion from expenses next year
Foxconn Technology Group, the Taiwanese flat-screen maker that is building a massive manufacturing complex in Racine County, is planning to shave $2.9 billion from its expenses in 2019 in response to fiscal challenges, the business publication Bloomberg has reported.
Bloomberg reported the reduction in costs will likely come in the form of a 10 percent cut to its non-technical staff.
The company is slated to receive $3 billion in tax incentives from Wisconsin for building and maintaining its southeastern Wisconsin factory that it claims will employ up to 13,000 workers.
A spokesman for the company didn’t immediately address an inquiry from the Wisconsin State Journal about how the company’s plans might affect its factory in southeastern Wisconsin.
But Mark Maley, spokesman for the Wisconsin Economic Development Corp., which helped forge the tax incentive deal, said he’s heard nothing from the company that would suggest it’s reconsidering its investment.
“The state of Wisconsin is confident that Foxconn is on track with plans for its advanced manufacturing facility in Racine County, and will carry out its commitment to creating 13,000 jobs and investing $10 billion in the state,” Maley wrote in an email.
Foxconn in a response to the Bloomberg report said the plan to cut costs is to help the company meet long-term goals.
“The review being carried out by our team this year is no different than similar exercises carried out in past years to ensure that we enter into each new year with teams and budgets that are aligned with the current and anticipated needs of our customers, our global operations and the market and economic challenges of the next year or two,” the company said in a statement.
Republican Gov. Scott Walker and Republican leaders in the Legislature championed the Foxconn deal, which they touted in the lead-up to the November midterm elections even as national media reported the company was considering changes to its initial investment plan.
Democratic Gov.-elect Tony Evers has criticized the plan as an unfair deal for taxpayers, although he’s said he would work with the company to ensure it stands by its jobs commitment while respecting the environment.
Evers told reporters Wednesday he understands the challenges businesses face, but wants to ensure Foxconn meets its obligations.
“Right from the beginning there’s always been asterisks next to Foxconn, whether it’s the size of the plant or the size of the piece of glass that they’re making,” Evers said.
On election day, the Wall Street Journal reported Foxconn was considering recruiting Chinese engineers for its Wisconsin facility via internal transfers. The move was reportedly in response to the state’s tight labor market.
The company firmly denied the report, claiming its recruitment priority “remains Wisconsin first.”
A spokesman for the company added Foxconn plans to supplement workers from across the U.S. as well.
In June, media reported Foxconn planned to build a factory that would manufacture smaller sheets of glass than originally planned. Experts at the time suggested such a factory would likely be smaller than a factory built to manufacture larger glass sheets.
At that time, Foxconn said it remained committed to investing the full $10 billion in the plant.