• WisBusiness

Monday, September 15, 2014

Tom Still: Multiple centers for research will help Wisconsin's high-growth economy

By Tom Still
MILWAUKEE – While economists don't often agree on much, it's hard to find much dissent over the notion that major research universities contribute to the prosperity of cities, regions and states around them.

Studies by the Federal Reserve Bank and others have cited the power of academic research and development in the economy, from direct spending tied to such research to the transfer of knowledge to companies of all sizes to the "human capital" that comes with creation of a highly skilled workforce.

The UW-Madison is one of the nation's leading research universities by several measures – dollars invested, patents produced and ideas licensed or otherwise transferred to the market – but it was Wisconsin's only academic R&D center for more than 100 years. However, the past decade or so has brought change.

Other states claim multiple R&D centers that contribute to their economies, and it's not just the mega-states such as California, New York and Texas. The success of the Research Triangle in North Carolina is tied to the combined horsepower of Duke, North Carolina and North Carolina State universities, to cite one familiar example.

Closer to home, Illinois has R&D hubs at the University of Illinois, Northwestern and the University of Chicago; Indiana is home to Indiana University and Purdue; Michigan has Michigan and Michigan State; Pennsylvania boasts Penn State and Pittsburgh; Iowa has the University of Iowa and Iowa State; and Minnesota has the University of Minnesota and the Mayo Clinic, which functions like an academic institution in some ways.

The importance of a second research hub for Wisconsin was part of a message delivered last week in Milwaukee by UW-Madison Chancellor Becky Blank, who spoke to a meeting of the Wisconsin Innovation Network.

Blank outlined existing partnerships between the UW-Madison and companies in the Milwaukee region, including GE Healthcare and Rockwell Automation, and as well as those with emerging research centers such as the UW-Milwaukee. She described such efforts as "absolutely critical to the state's economy," especially in an era when other nations are doubling down in their R&D investments.

Academic research centers "are the ideas factory for this nation," Blank said, and they're most effective if they establish working relationships with companies and other institutions that pull out the best ideas and put them to work in the economy.

The UW-Madison has been a top-five research university in terms of dollars attracted and spent for two decades or more, ranking with Johns Hopkins, Michigan, the University of Washington, Duke and a handful of California campuses.

The problem with academic R&D is that it doesn't always result in company creation – much is basic research with long-term value – and when it does transfer, it's often close to home. The apple doesn't fall far from the tree, which is why the Madison area has benefited the most from UW-Madison's R&D depth.

The same phenomenon is slowly taking shape in Milwaukee, where the UW-Milwaukee, the Medical College of Wisconsin, Marquette University, the BloodCenter of Wisconsin and the Milwaukee School of Engineering form a combined R&D base for the region and the state.

Collectively, those institutions spend about $300 million on R&D, which is about a quarter of the UW-Madison's total but still substantial. The UW-Milwaukee and MSOE, in particular, have been focused on developing industry partnerships, which have allowed them to ramp up their R&D activities more quickly.

The latest example of such a partnership is the new School of Freshwater Sciences at UW-Milwaukee, unveiled through an open house Friday and Saturday. Although linked to UW-Milwaukee water research that dates to the 1960s, the school became the nation's first graduate school devoted to freshwater research in 2009. Its latest $53-million facility includes 94,000 square feet of new space and will support the work of Milwaukee's Water Council, the Global Water Center and water-based industries in the region.

Many universities have struggled to transfer technology from the lab to the marketplace, Blank told the Milwaukee crowd, so academic leaders must think differently about how to commercialize campus innovations. Other nations' governments are investing more in research, yet "we're shrinking as a nation (in federal research dollars) —and that's a problem," Blank said. The consequences will be visible 10 or 15 years from now, she warned, when American businesses are less competitive.

Wisconsin can hope to stay competitive by leveraging R&D assets in its two largest cities, and finding ways to tap into research ideas elsewhere in the state. The more that effort involves partnerships with businesses that know how to build products, jobs and value, the better.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.


Friday, September 12, 2014

MaryBeth Matzek: Program helps businesses fast track exporting program

By MaryBeth Matzek
Exports are big business for Wisconsin companies. Whether it's heavy-duty equipment from CNH and lawnmowers from Ariens Co. to Harley-Davidson motorcycles and specialty foods, products from Wisconsin go around the world.

The U.S. Department of Commerce recently reported that exports supported 126,147 jobs in Wisconsin during 2013. It's those kinds of numbers that sparked the Wisconsin Manufacturing Extension Partnership to launch its ExporTech program in 2010 to encourage businesses to not only look outside of Wisconsin, but the United States for potential customers.

ExporTech features three training sessions where companies receive targeted training for their specific needs, individual support from export specialists and how to increase a product's speed to market time. It's designed for manufacturers with less than 500 employees.

"The program fast tracks Wisconsin manufacturers to the best export markets for their products, provides personal coaching to build their value proposition and their export expansion strategy, introduces them to a whole international resource community, vets their export expansion plan with experts, and stays with them to remove roadblocks should you get stuck in implementation," says Roxanne Baumann, WMEP's director of global engagement.

ExporTech graduates average $900,000 in global export sales in just six to nine months, Baumann says. "It's not just for newbies to exporting, but we can also work with more established manufacturers to help them increase their exports," she says.

Baumann says many companies become exporters by accident when they pick up a client in Canada or Mexico. They then struggle trying to figure out all the necessary steps and procedures.

"Now companies need to fast track their exporting strategies. For the ExporTech classes, we bring in eight non-competing businesses and each of them crafts a strategic exporting plan for their business," Baumann says. "It's really a lot of fun to watch businesses see their overseas sales go bonkers after being in the program."

Top export categories in Wisconsin include machinery except electrical, computer and electronic products; transportation equipment; food products and chemicals. Wisconsin companies most frequently do business with clients in Canada, Mexico, Japan and Germany, Baumann says.

Lingering benefits

Higher water levels on Lake Michigan thanks to more precipitation and a cooler-than-normal summer means vessels on the Great Lakes are able to carry more cargo.

"That's good news for the Port of Green Bay and other ports on the Great Lakes system," says Dean Haen, director for the Brown County Port & Resource Recovery Department. "When water levels increase, ships are able to carry additional cargo and gain increased efficiencies."

The U.S. Army Corps of Engineers recently reported Lake Michigan water levels are 15 inches above where they were a year ago. Climate plays a big role in water levels and the snowy and cold winter – which led to near record levels of ice coverage on the lakes – combined with lower summer temperatures (which means less evaporation) means increased water levels.

"Once the winter ice conditions ended, the season took off and we've had excellent results," Haen says.

Oshkosh grant program expands

The East Central Wisconsin Regional Planning Commission has received another $1 million from the U.S. Department of Defense for its efforts to diversify the region's economy following job cuts at Oshkosh Truck.

In 2013, the Department of Defense awarded $837,000 to the planning commission. The funds were used to map the defense industry's supply chain, invest in aviation and aerospace industry marketing and development projects and help businesses affected by the Defense Department cuts to find new customers.

Some of the new funds will help support the new airport business park in Oshkosh, a business accelerator run by the University of Wisconsin-Oshkosh and help the planning commission as it works to foster collaboration with regional economic groups and help find new markets for companies affected by cuts in Defense Department spending in the region.

-- Matzek, a freelance writer and editor, is the owner of 1Bizzy Writer. She has worked in the past as a news editor at Insight Publications and as business editor at the Appleton Post-Crescent.

Thursday, September 11, 2014

Reggie Newson: During Manufacturing Month, take opportunity to see industry firsthand

By Reggie Newson
Much has been written about the misconceptions that surround working within the manufacturing sector of our economy. Images of dirty factories and munitions work continue to persist despite efforts to convey more realistic images of today's manufacturing careers: These are high-tech, rewarding and challenging jobs that offer good pay with opportunities to advance.

We are committed to dispelling the myths and introduce Wisconsin workers – both the workforce of today and future generations – to opportunities in manufacturing, including careers they may not have considered in the past.

Since 2012, Governor Walker has proclaimed October as Manufacturing Month in Wisconsin in conjunction with Manufacturing Day, which is the first Friday in October and is celebrated nationally. Wisconsin manufacturing businesses, technical colleges, and other partners open their doors to students and members of the public. This may include tours, open houses, and other events designed to show the great career opportunities that are available to individuals in manufacturing.

As the month approaches, I would like to take the opportunity to address three common misconceptions surrounding Wisconsin's manufacturing sector.

Myth #1: Manufacturing jobs are unchallenging, and only for those who do not pursue education beyond high school.

The truth is, these jobs are for extremely talented and capable individuals, problem solvers who are full of creative and innovative ideas. For any number of current workers, it's not that the traditional, four-year college degree was not an option. In fact, a good number likely are 4-year college graduates. Rather, they chose a challenging and rewarding career in manufacturing.

What makes manufacturing appealing for many is that the path to rewarding careers can begin with a variety of training and education options. Rather than a four-year degree from a liberal arts college or university, an individual can earn a two-year degree from a technical college, or a certificate with short-term training.

Myth #2: Manufacturing facilities are dirty, dark and dangerous.

Visit a manufacturing company today and what you invariably will find are clean, safe, high-tech production facilities with workers operating sophisticated, computer controlled equipment. These are family-supporting jobs, positions that offer good pay, benefits, and the satisfaction that comes from work that is engaging, challenging, requiring a team approach to problem solving and success. And there are jobs available for individuals who either have necessary skills or are taking steps to gain them.

Myth #3: There is no future in Wisconsin's manufacturing industry.

Manufacturing in Wisconsin today is a robust and dynamic industry, driving the creation of family-supporting jobs, inspiring innovation, and advancing the state's economy.

Manufacturing contributes more than $53 billion to Wisconsin’s economic output. Over 16 percent of our state's workforce is directly employed in manufacturing, outpacing the national average of 9 percent. The average pay for a manufacturing worker in Wisconsin is $53,000 per year, more than $10,000 per year higher than the average pay for all Wisconsin private-sector workers.

Manufacturers have expressed their frustration with the skills gap. The major contributing factor is the loss of older, skilled workers as baby boomers retire. The need for skilled production workers is constant as manufacturers add jobs and try to fill vacancies.

Under Governor Walker's leadership, more than $100 million is being invested during the current state biennial budget in workforce training initiatives throughout the state and in a variety of sectors, including manufacturing.

As we fulfill our commitment to develop Wisconsin's workforce, we are urging parents, students and educators to visit a local manufacturing facility and see firsthand what today's manufacturing industry offers.

Visit https://www.wmc.org/programs/manufacturing-month/ for more details or to arrange a tour with a participating manufacturer or organization. Talk to workers and managers about what led them to their current careers and what a normal work day is like for them.

Manufacturing Month provides a forum to explore this industry and the opportunities it offers Wisconsin's workforce today and in the years to come.

-- Newson is secretary of the Department of Workforce Development.


Monday, September 8, 2014

Tom Still: Foreign direct investment plays growing role in Wisconsin's economy

By Tom Still
Waupaca Foundry can trace its roots in Wisconsin to 1871, when the Rosche family opened the company on the banks of the Waupaca River. Today, the firm still operates three foundries in Waupaca and another in Marinette, but its ownership has turned to the east ... the Far East.

The $1.3 billion purchase of Waupaca Foundry by Japan's Hitachi Metals Ltd., part of a larger global conglomerate, will likely mean even more growth for a company that already describes itself as the world's largest supplier of iron castings.

Last month's announced deal is the latest example of how foreign direct investment is globalizing Wisconsin's state's economy in ways that create jobs, expand supply chains, open the doors to new markets and provide needed investment dollars.

Foreign direct investment is investment by foreign-owned companies in Wisconsin companies, often for the purpose of cracking into North American markets. Between 2010 and 2012, 37 foreign direct investment deals were reported in Wisconsin, a figure that lagged most Midwest states but nonetheless contributed significantly to the state's economy.

Exports and foreign direct investments are flip sides of the same coin. They represent Wisconsin's ability to build, produce and grow what the world needs – and to attract investment from other markets that understand Wisconsin's strengths.

A surprising number of Wisconsin companies have foreign ownership, including many in manufacturing, food services, paper and packaging. According to a recent report to the Wisconsin Economic Development Corporation by a special University of Wisconsin task force on foreign direct investment, the leading nations are Canada, Germany, Finland, the United Kingdom, Italy, Brazil and France, which collectively represent ownership in about 80 companies. The full list would run well into the hundreds of companies, large and small.

Some companies have boasted foreign ownership for decades, such as Kikkoman Foods in Walworth. But others are more recent additions, reflecting trends in currency exchange rates, trade patterns and more.

Marinette Marine, which is building a new class of combat ships for the U.S. Navy, is owned by Fincantieri, an Italian firm. Other recent examples include Ingeteam, a Spanish company that selected Milwaukee for a wind generator and solar inverter plant, and SEDA, an Italian cup and packaging manufacturer that selected Racine County. Bostik Products, Milwaukee Electric Tool, Talgo, Schwartz Pharma, Packerland Packing Co. and McCain Foods are among other examples.

Experts say foreign direct investment shouldn't be looked as just being about the money – but as an opportunity to expand supply chains, establish markets, improve warehousing and distribution and more. It short, it can help companies grow.

Waupaca Foundry is a ready example. It hasn't been owned by its founding family or anyone in Wisconsin for decades. It was first purchased by the Michigan-based Budd Co. in 1968, followed by Germany's Thyssen group and later KPS Capital Partners LP, which sold it to Hitachi. The company has grown more or less throughout those transitions to 3,900 workers, including 2,300 in Waupaca and Marinette.

A 2011 study by NorthStar Economics for the UW System International Economic Development Task Force showed that manufacturing and food processing has attracted a "critical mass" of foreign investment – and that northeast Wisconsin is a particular hot spot.

Earlier this year, a first-ever report by the Brookings Institution noted that since 1991, there has been an increase of more than 23,000 jobs from foreign-owned establishments in Wisconsin, bringing the total to 86,440. The majority were created in the manufacturing industry, making up 54 percent of the total jobs created by foreign companies in 2011.

In Milwaukee, jobs from foreign-owned establishments totaled 27,320, an increase of about 4,500. Manufacturing also was the leading category, with 42 percent of the total jobs created by foreign firms in 2011.

Madison experienced less growth with a total of 7,560 jobs from foreign companies, an increase of about 3,300 since 1991. Its financial and insurance industry was most affected, making up 30 percent of all jobs from foreign companies in 2011.

There are some risks inherent in foreign direct investment, such as the loss of Wisconsin-based corporate headquarters. But for those who worry about Wisconsin jobs moving overseas, foreign direct investment counters that trend by retaining and creating jobs here.

As the political debate continues about the advantages and drawbacks of outsourcing and trade, foreign direct investment shouldn't be overlooked as a part of the equation. Wisconsin's reputation as a place to do business can mean attracting investment dollars from far beyond its borders – and the borders of the nation.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.


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