• WisBusiness

Tuesday, November 30, 2010

GreenBiz: Solar manufacturing jobs boost Wisconsin ranking


By Gregg Hoffmann
A recent report by The Solar Foundation ranked Wisconsin fifth in the nation in solar jobs.

Many of those estimated 6,000 jobs are in manufacturing of solar components, which seems to fit the state’s emphasis, according to the foundation's director.

“Manufacturing always has been an important part of Wisconsin’s economy,” said Andrea Luecke, who is well acquainted with the state. She is a native of Dodgeville and was with Milwaukee Shines, the city of Milwaukee solar initiative, before she took the Washington D.C.-based Solar Foundation job.

“Since Wisconsin is not in the Sun Belt, it ranks near the top of the study because of companies involved in solar manufacturing. Those products can be sent anywhere.

“Meanwhile, the awareness of solar in Wisconsin is high. There are two Solar America cities (Madison and Milwaukee) there, so they are demonstrating that solar energy can work in places where the sun doesn’t shine all the time.”

California ranked first in the study with an estimated 36,000 solar jobs and 1,072 solar firms. Pennsylvania was second with 6,700 and 282 respectively, followed by Texas, Michigan and Wisconsin, which had an estimated 6,000 jobs and 89 firms involved in solar energy.

The Solar Foundation cooperated with Green LMI Consulting, Cornell University and others in the study called The National Solar Jobs Census 2010. It is the first attempt to quantify the current employment and projected growth of the U.S. solar industry and is based on a “statistically valid” sampling of employers throughout the nation.

“This is about business and jobs,” Luecke said. “We have always discussed solar in terms of environmental improvement and other issues, but this shows that it also can be a growth industry.”

As of August, according to the study, an estimated 93,000 workers were involved in the solar industry in the nation. Fifty percent of the firms that responded to the study survey said they expected to add jobs in the next 12 months, while only two percent said they expected to cut workers.

The West has the largest percentage of solar jobs, but such jobs exist in all 50 states. The average solar manufacturing firm employs 24 workers. The average installation firm employs eight workers and average wholesale trade company has four solar workers.

According to the study, the average utility that generates solar electric power employs four solar workers.

Luecke said the average response rate from employers in the study was 29 percent. In Wisconsin, 50 percent of the employers contacted responded.

“That’s another statistic that shows Wisconsin is very aware of solar,” Luecke said. “It also might demonstrate that some of the employers had worked with Milwaukee Shines and knew me.”

One of the emerging shining stars in Wisconsin solar is Helios USA, located in the Menomonee Valley in Milwaukee. CEO Steve Ostrenga and his staff used a $1 million grant from the state to start manufacturing photovoltaic modules.

The modules have a variety of applications from helping provide electricity to buildings to providing “heat under your feet” with systems that melt snow on walks and driveways.

The company expects to employ more than 100 people within five years in advanced manufacturing jobs, using robotics.

“We are looking for people who want to begin a career in solar,” Ostrenga said. “To deliver a quality product and have a sustainable enterprise, it started with a vested, motivated team.

“The key success factors will be to drive operational efficiencies and to produce highly efficient modules. This will make solar mainstream and ultimately expand the solar market not only in Wisconsin but globally.”

An Italian-based company, Caleffi Hydronic Solutions, established its North American office by opening a 35,000 square-foot facility in the Menomonee Valley in 2007. The company produces pre-engineered solar water heaters, solar components and other products.

Rex Gillespie, a vice-president at Caleffi, recently was elected the first president of the Wisconsin Solar Energy Industries Association. WISEIA was founded this year and supports all types of solar energy, including photovoltaic, solar thermal, concentrating solar power and solar lighting.

Members include manufacturers, distributors, installers, contractors, project developers, consultants, educators, financiers and others interested in the industry.

By no means does the Milwaukee area have a monopoly on solar companies, SolarCompanies.com, which publishes a national directory of solar services, lists companies ranging from Sturgeon Bay to Middleton.

Companies involved in solar include startup companies and well-established firms such as Johnson Controls and others.

WISEIA was created to serve those in the solar industry and also promote the industry with the public and government officials. “The employers who belong to WISEIA want to help lawmakers understand the tremendous benefits of solar energy for our state, especially the economic benefits,” Gillespie said at the time of his election. “We have the opportunity to keep our energy dollars at home while creating real jobs.”

Luecke said the 2010 election results, with Republicans taking over the House on the national level and the Legislature and governor’s office in Wisconsin, could add to the challenge of continuing the growth in solar industries.

“There’s always a challenge in promoting solar,” she said. “Solar gets $1 of subsidies from government for every $5 that goes to fossil fuels. The challenge might be greater. Some of the incoming legislators have talked about scaling back what already are very modest goals for percentage of solar power.

“We want to work with both parties though and believe these job statistics show that solar is a growing industry that can provide jobs. I think people have come to realize the importance of alternative energy overall on a variety of fronts, so we hope the progress in solar continues.”

-- Hoffmann has written many columns and features for WisPolitics.com and WisBusiness.com over the years. He writes the GreenBiz column periodically.

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Tuesday, November 23, 2010

Some reasons to be thankful this week, even in uncertain times


By Tom Still
Before the Christmas lights are strung across the front fence and the shopping malls get crowded, let’s reflect on a few reasons to be thankful during Thanksgiving Week 2010.

* We live in a country where regular elections take place, political power seamlessly changes hands, and not a shot is fired in anger – unless you count potshots on talk radio.
* We live in a country that (depending on your state or community) still allows right turns on red lights, mobile phone calls in cars, potato chips without warning labels, sports utility vehicles, snowmobiles, energy drinks and a bunch of other things the “nanny state” insists are bad for you.
* We live in a country where political crooks are occasionally elected, but they usually don’t stay that way for long.
* We live in a nation where corporate crooks are caught, although not always soon enough.
* We live in a country that has a Constitution that matters. How did those guys get so much right nearly 225 years ago?
* We live in a country where journalists can feel free to write about almost any topic, including religious freedom, without fear of having their offices burned by a theocratic mob.
* We live in a state that is proud of its traditional “brands” – beer, brats and cheese – but which is beginning to understand the importance of adding biotech, nanotech and “cleantech” to its national image.
* We live in a country where those who try to slow the advances of science and technology rarely succeed in doing so.
* We live in a country that has the military power to be the world’s bully, but which grudgingly accepts the job of being the world’s cop.
* We live in a country that values vocations, vacations and even “stay-cations,” depending on your budget.
* We live in a society where friends can be real and virtual – sometimes at the same time!
* We live in a state where hundreds of thousands of hunters – deer, bear, turkey, duck and more – take to the woods and fields each year, and all but a handful come back alive. By the way, a study by the UW-Madison Department of Life Sciences Communication estimates hunters spend nearly $1.4 billion in the state, which supports 25,000 jobs and contributes $197 million in state and local taxes.
* We live in a state in which the two most-revered football teams, the University of Wisconsin Badgers and the Green Bay Packers, could both be playing well after the regular season is over.
* We live during a time when entrepreneurs and other risk-takers are valued, not viewed as automatic credit risks.
* We live in a society in which Twitter, Facebook, Skype, Linked In, Plaxo and other social media make it possible to never be disconnected. Unless, of course, we prefer to be disconnected.
* We live in a nation whose armed services personnel volunteer to be where the rest of us hope we never need to go.
* We live in a world that is far from perfect, but which aspires to be better.

Happy Thanksgiving!

-- 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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Monday, November 22, 2010

Small business: Returning something long missing from Washington


By Dan Danner
When the 112th Congress convenes in January, there will be lots of new faces in the crowd, many of which belong to entrepreneurs who have traded the day-to-day management of their small businesses to tackle one of the toughest tasks imaginable: rescuing a federal government that is daily rushing deeper into trouble.

Many small-business owners heeded the urgent call for mid-term election candidates issued by the National Federation of Independent Business, the nation’s leading small business association, which campaigned for and financially aided 290 pro-business leaders, 83 percent of whom won. Twenty-four of those are NFIB members.

The very traits and instincts that distinguish small business risk-takers from others compelled these entrepreneurs to step forward and volunteer to help find solutions to this impending tragedy. Like a parent who sees a child in danger, they could no longer stand by as the nation’s economy continued to sink beneath misguided federal policies fueled by wasteful spending.

These Main Streeters aren’t exactly eager to trade the excitement of entrepreneurship for the plodding and often punishing process of legislative politics, but they are determined to offer something unique to Capitol Hill: the much-needed perspective of those who have what it takes to start and run a job-creating small business.

They are skilled at operating with limited resources, driving productivity and returning profits back to their businesses to foster growth—and they know for sure that you can’t stay in business if you spend more than you take in. These are all concepts that have virtually disappeared from Washington. And while these citizen-volunteers are greatly needed in Congress now, they know there will be a price to pay for leaving their enterprises.

This January, they will leave their businesses in the capable hands of employees or family members and work for the taxpayers instead for a while. They will quickly be put to work seeking solutions to counter such failure-prone ideas as employer-mandated healthcare, stimulus and bailout programs that increasingly divert money to government sinkholes, and pro-labor laws that are assured to thwart job creation.

Without government help or oversight, many of these future members of Congress once created enterprises out of nothing more than an idea--enterprises that offer meaningful jobs for families and serve to stabilize the foundation of the economy. Now they see opportunities to share their entrepreneurial experiences in a desperately needed overhaul.

Professional politicians they are not. Small-business owners have a long-standing reputation as a source of innovation, involvement and inspiration, as achievers who find solutions where others see only obstacles. The arrival of this optimistic group will help return something to Washington that has long been missing: sensible management and fiscal integrity.

Once they have proved the value of the benefits of free enterprise, helped steer the economy back on course and demonstrated to non-believers that government can be a tool to help America grow and prosper, many will return to their businesses and resume their roles as job creators and community leaders, yet keeping a close eye on Washington in case they’re needed again.

-- Danner is president and CEO of the National Federation of Independent Business in Washington, D.C.

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Wednesday, November 17, 2010

Six rookie mistakes in health care business intelligence



By Tom Burzinski
We often make rookie mistakes when we try something new. The first time my wife and I went to Paris, we thought it would be fun to avoid the tourist restaurants and eat where the locals ate. So one Friday night we wondered into a very crowded and very hot out of the way bistro where we attempted to order dinner armed only with a rudimentary French vocabulary. I can still hear the non-English speaking waitress screaming at me as I frantically tried to order a meal by pointing at various words on the incomprehensible menu. To this day I don’t know what the exasperated waitress served me but I’m pretty sure it wasn’t the lamb that I had intended to order.

If you're undertaking your first health care Business Intelligence (BI) project, you may feel similarly overwhelmed as you struggle to turn the massive amounts of data that your health care technology systems are collecting into the information needed to control costs, increase revenue, and improve patient care. Obtaining quality requirements from people across your organization is a critical success factor in the deployment of any health care business intelligence application.

Here are six mistakes I see rookies make when it comes to performing this critical activity, along with some tips that will help you avoid these mistakes so you can maximize the value of your health care information assets.

1. Only asking business and clinical users what data they want instead of asking them how they plan to use the data in their day-to-day work.

Just asking a potential business or clinical BI user to list the data elements that they’ll require on a daily basis is like cataloging tree species and assuming you understand the complex ecosystem of an old growth forest. Data without its surrounding clinical or business context is of little or no use to anyone.

You need to understand what the user does (or will do) with the data, what business processes or clinical workflows it supports, and how, when, where, and why he/she makes decisions to ensure that the new BI system will support the needs of the enterprise. A good technique to help you understand how BI data will be used is to employ “user stories” and interactive process flow charting during your requirements gathering sessions. This way you’ll not only understand the data, but also what value the data brings to the various BI constituents in your organization.

I would definitely try and avoid sending out surveys or questionnaires asking users to list their data needs. Most users (especially clinicians and executives) won’t respond and the users that do respond usually supply incomplete, inaccurate, or narrowly focused answers that could lead you down the wrong path in your requirements efforts. If you must use these tools - because the organization is large or geographically dispersed - then try and enlist a senior clinician or executive who sees the value of BI to help you prioritize and champion this effort throughout the organization.

2. Just analyzing reports without holding requirements meetings.

While you will need to review existing reports and data sources as part of the health care BI requirement gathering process, you should not take reports at face value without also performing in depth business and clinical user interviews.

Reports in many organizations are incomplete, contradictory, or outright wrong. Other reports are used simply because that is all there is, not because that is what the user of the report really needs or wants. Still other reports are transactional in nature and only answer yesterday’s questions; few of these reports will serve tomorrow’s sophisticated health care analytical needs.

3. Not interviewing business and clinical users cross functionally and at all levels in the organization.

Interviewing future business intelligence users from only one department or at one organizational level (for example, just the executive, clinical, or operational groups) may well provide you with a distorted view of your BI requirements causing you to develop an overlapping and redundant BI environment that fails to obtain the value from BI for the time and money you put into the project.

The preferred method when gathering BI requirements is to start at the middle management level of the organization and then work up and down the organization chart.

By interviewing users at all levels, you are more likely to obtain a balanced and complete view of requirements, thus allowing the BI system to serve a wide and deep enterprise audience.

4. Not educating your organization on BI concepts and terms.

One of the enduring myths still propagated by some in the BI world states that you should never talk to users about BI concepts or terms (i.e., data marts, facts and dimensions, how data is moved, etc.) before or while gathering requirements.

Anyone who still believes this hasn’t interacted with 21st century business and clinical users, most of whom navigate the Internet with ease, use PDAs and smart phones to communicate, and build complex spreadsheets at will. These folks understand business and clinical technology – even if they won’t always admit it to you.

If presented without a lot of IT jargon and with a business or clinical focus, most engaged and savvy users will understand the difference between fact and dimension data, will sit still for a simple graphic describing why and how data moves from source systems to business intelligence environment, and will understand the concept of a clinical dashboard or how BI tools can be used to improve marketing or manage hospital service utilization.

Exposing users to BI concepts moves the project forward by allowing them to become familiar with what the organization is trying to build, why they should be engaged in helping to build it, and how it will improve their lives once it is up and running. BI education also helps develop a common language and fosters a collaborative working environment that will contribute to the project’s success.

Furthermore, having users understand how a BI environment works, facilitates “the art of the possible” thinking when it comes to their future information needs.

5. Being unprepared for the requirements sessions is death.

Wasting the time of an in demand and often harried business manager or health care provider due to a lack of preparedness on your part is one sure way to sink any BI effort. Planning and preparing before you start a BI requirements gathering session with one of these overworked folks is critical to achieving a positive outcome.

Before starting a BI requirements effort, the project team should plan for each requirements session by:

* Determining the purpose for each session,

* Deciding and formalizing the appropriate requirements gathering methods and techniques,

* Defining roles and responsibilities for each team member,

* Defining who and how many business or clinical users should participate,

* Developing a set of questions that need to be addressed,

* Preparing the room and the logistics so that whiteboards, etc. are ready, and

* Locating a room that is appropriate in size for the number of participants (not too large so that people get lost and not too small so that people can’t move around).

It is important to assign a facilitator and a backup facilitator. The facilitator can direct the interview session while the backup facilitator listens, takes notes, and identifies holes in the information. These information gaps can be shared with the facilitator during breaks. The facilitator can then address items that need re-visiting at an appropriate time.

6. Assuming you will gather all of the BI requirements at one time at the beginning of a project.

Trying to gather all requirements before building the initial BI system is a Sisyphean task. Few, if any, users are able to supply you with all of their information needs until they have actually used the BI system. Unlike a transaction system, a BI system is never frozen and always evolves with use and people begin to experience value of a well-designed BI application. In addition, given the multitude of health care data sources, the sheer volume of data, the wide diversity of users, and the ever changing health care landscape, building out your BI capability in logical, value based, incremental steps is the only way to achieve lasting BI project success. It is important to set user expectations up front about these points to avoid confusion and misunderstanding.

Let users know that you will be back for additional requirements after they have had time to use the initial BI implementation. When developing business requirements focus them around one or two business processes, gather enough requirements so the users feel their initial needs will be met, then build the first phase of the project.

Following implementation, build time into future project phases to gather new BI requirements once the users have had a chance to experience the BI system.

There are, of course, many other pitfalls to watch out for when building a health care BI capability at your organization. These include, developing a solid BI strategy while deploying your EHR and other health care IT systems and not afterwards, partnering with people who’ve done this sort of work before to help show you the way, and engaging and maintaining executive support and funding for a project that may go on for some time.

All health care organizations need a complete view of their business and clinical data. This data provides valuable intelligence, which, if available across the organization, can be used to:

* Increase clinical quality and service quality,

* Improve patient satisfaction,

* Increase revenues while controlling costs,

* Support capital investment decisions,

* Support pay-for-performance programs,

* Improve access to health care services and facilities,

* Facilitate accurate staffing,

* Improve marketing and customer information programs,

* Meet special market challenges,

* Increase the value of special initiatives, such as Lean or Six Sigma, and

* Lead the development of regional health information networks.

“Bon Chance!”

-- Burzinski is a an IT executive and senior consultant specializing in business intelligence and IT/business alignment. In his 25-year career he has worked for several Fortune 500 companies headquartered in Wisconsin. Burzinski and his family live in Green Bay.

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Tuesday, November 16, 2010

Other states offer models for Wisconsin’s next steps in attracting capital


By Tom Still
While Wisconsin has done well of late in nurturing angel capital investments, it still lags in another vital component of its innovation economy – building and attracting venture capital.

That was the conclusion of a panel of investors who spoke last week at the Wisconsin Early Stage Symposium in Madison, where 500 people – including 75 investors of all descriptions – gathered over two days to hear about trends in the high-growth economy.

From Ohio to New Mexico, and from Kansas to Pennsylvania, states have embraced different approaches to attracting venture capital. Venture capital is money invested in early stage companies in return for a share of the company itself – called equity. Venture capital is often the next investment step beyond angel capital, which also qualifies as private equity, but which often comes in the form of investments from individuals or networks. Venture capital firms are regulated funds typically backed by much larger institutional investors.

While most venture capital is clustered in California, Massachusetts and a few other coastal states, Wisconsin historically ranks no better than middle of the 50-state pack in attracting that class of investment dollars. That, according to investors who have tracked what’s happening in other states, needs to change.

Toni Sikes, an entrepreneur-turned-investor, told the conference that Wisconsin has all of the ingredients needed to become a Midwest version of the Silicon Valley – research, entrepreneurs and angel investors – but it lacks enough venture capital. In fact, Sikes noted, Wisconsin attracts less than 1 percent of all venture capital invested in the United States.

Sikes said that often means angel investors, who make the initial investments in early stage companies, are “left holding the bag for companies that can’t get past the first stage.” She and other partners are trying to change that through the launch of Calumet Venture Fund, which is based in Wisconsin and will focus on deals in the Upper Midwest.

Robert Okabe, a veteran angel investor from Chicago who is now a partner in the RPX Group, likened the need for venture capital as a “relay race” with higher stakes at each turn. “Angels run the first lap and then look to pass the baton” to venture capitalists, Okabe said.

Okabe noted that a number of states are trying to create a faster track through funds that help move the most promising deals closer to an “exit,” which usually means acquisition by a larger company or merger with a company of similar size. Typically, those state strategies involve some sort of public support for a fund that attracts much more private capital – and eventually pays back the public investment.

Three models for such funds have emerged. States can create a fund that invests in established venture capital funds, encourage state-led investments in high-growth businesses, or encourage public pension funds to invest in state-based businesses.

One idea that has gained traction is tapping into $200 million in unused bonding authority belonging to the Wisconsin Housing and Economic Development Authority. That money would be used essentially as bait to attract other private investors, a strategy that has worked in states such as Ohio.

The Ohio program, twice approved by voters in that state, was set up in a way that prevents political raids on the fund. Professional fund managers work to identify the best investment targets within identified industry sectors. It’s an approach that has enhanced Ohio’s supply of homegrown and outside venture capital – and created thousands of jobs.

“Nobody loves venture capitalists,” joked Tom Hefty, a retired Wisconsin executive and angel investor, “but they do love jobs and economic development.”

Brian Birk of Sun Mountain Capital in New Mexico said many states learned their lessons when start-up companies moved away in search of venture capital. That happened in New Mexico when a little company called Microsoft pulled up stakes in Albuquerque and moved to Redmond, Wash.

New Mexico started a program to restart its “job growth engine” through a $250-million investment that has since attracted $1.7 billion in private equity, creating 4,000 jobs in the process. New Mexico has less than half the population of Wisconsin but three times the number of venture capital firms or funds.

Reports from the Wisconsin Technology Council, Competitive Wisconsin and the Wisconsin Economic Summit have all pointed to venture capital creation as a top priority. So has Gov.-elect Scott Walker, who addressed the Early Stage Symposium, calling for a fund that creates a “public-private partnership.”

Wisconsin’s innovation economy boasts many assets, from ideas to people to seed capital. All that’s missing now are the next rounds of capital to turn little companies into bigger ones.

-- Still is president of the Wisconsin Technology Council, which hosted the Wisconsin Early Stage Symposium in Madison.

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Wednesday, November 10, 2010

Book review: "The Mom & Pop Store"


By Terri Schlichenmeyer
“The Mom & Pop Store” by Robert Spector
c.2009, Bloomsbury $26.00 / $32.50 Canada 304 pages

You had something specific in mind to give as a gift this year, but you couldn’t find what you were looking for.

You could picture the item in your mind. You looked in all the big stores and the usual places around town but you had no luck. Then – just as you were about to give up – you saw exactly what you wanted in a small shop tucked off the beaten path. And you got personal service when you bought it.

Where would we be without local, independent retailers? Author Robert Spector says we need those merchants now more than ever, and in “The Mom & Pop Store”, he explains why.

When he was a child growing up in Perth Amboy, New Jersey, Robert Spector’s father owned a meat market. Every Friday morning, Fred Spector rose before dawn to open a store in a nearby town; Saturday mornings were spent closer to home in an open building where women in babushkas bought food for the week.

Starting after his bar mitzvah, Spector says he was forced to work at Spector’s Meat Market alongside his father, uncles, and cousins. He hated it. He couldn’t wait to get away.

But as an adult, Spector says he began noticing independent retailers and “mom & pop stores”, so-called because they’re generally family-owned. This not only brought forth pleasant memories, but it made him want to explore that which had suddenly become important to him.

As they have been for centuries, mom & pop stores are important parts of their neighborhoods and our economy. They’re a foot in the door for immigrants who want to start a new life in their adopted country. They serve as models of customer service. And because they’re locally owned, they’re usually run by a family with strong ties to the community. In fact, says Spector, “Ninety percent of all U.S. businesses are family owned or controlled.”

So what if you want to become an independent retailer? Own your customers, and do everything possible to make them happy, Spector says. Be known for “insane” customer service. Be willing to work harder than you’ve ever worked in your life. Be flexible and able to change with your clientele and your neighborhood.

“The Mom & Pop Store” is an odd duck of a book. About the first third is biographical, in which author Robert Spector muses nostalgically about Perth Amboy and the way it was fifty years ago. He recalls small details of his family’s business, his forebears’ lives and their immigration to America, and his own childhood. That’s interesting, but it’s not why you’d want to read this book.

Where Spector shines is in his interviews with independent retailers from many different kinds of businesses and walks of life, including a third-generation Japanese jeweler, fourth-generation meat marketers, and long-time bookstore owners with no prior retail experience.

If you’re a big supporter of small shops and stores, or if you’re pondering your own retail endeavor, check this book out. “The Mom & Pop Store” is one to find ... locally.

-- Schlichenmeyer has been reading since she was three years old and she never goes anywhere without a book. She lives on a hill in Wisconsin with two dogs and 11,000 books.

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Tuesday, November 9, 2010

The mathematics of job creation in Wisconsin calls for quantity and quality


By Tom Still
The challenge facing Gov.-elect Scott Walker isn’t to create 250,000 jobs over the next four years, as the numbers suggest that’s possible. The real challenge is to create the high-quality, well-paying jobs Wisconsin needs.

During his campaign for governor, which culminated with a five-point victory Tuesday, Walker promised to create 250,000 jobs and 10,000 businesses by 2015, the end of his four-year term.

Wisconsin has about 2.7 million non-farm workers today, so growing that total by 250,000 represents an increase of about 9 percent spread over four years. That may be possible given recent history and some basic workforce math.

First, Wisconsin’s workforce continues to grow even though many people are still out of work. Economist David Ward of Madison-based NorthStar Economics pegs that growth at roughly 1 percent per year, so that modest expansion alone could produce 105,000 jobs over four years.

Second, Wisconsin reported about 236,000 people unemployed in September 2010, when the jobless rate was 7.8 percent. If that rate fell to 5 percent over four years, that’s another 85,000 people back on the payroll. With luck and the right state government policies, it’s not hard to imagine another 60,000 jobs being created during Walker One.

However, the new jobs may not look like the ones they replace.

Here’s why: In early 2000, Wisconsin had more than 2.7 million non-farm workers, with a smaller population base. Unemployment was under 3 percent. The state actually added 125,000 jobs in one year alone, from early 1999 to early 2000.

But that was a time when manufacturing employment in Wisconsin was still very much on the rise. There were 611,000 manufacturing jobs in the state in early 2000, according to state records, compared to 422,000 today.

Most of those manufacturing jobs are lost forever to global competition and industry trends. Manufacturing is still a vibrant part of Wisconsin’s economy, but it has changed dramatically, in part because of technology and other efficiencies.

Some incremental increases in manufacturing can be expected over time, but the halcyon days of 600,000-plus jobs will remain a hazy memory. So, where will new jobs be produced? Sectors such as care for the aging, education, food processing and safety, information technology sectors, transportation, trade, bioproducts and alternative fuels hold potential.

“Raw numbers of jobs is not our problem. We need high-quality jobs,” said Todd Berry, president of the Wisconsin Taxpayers Alliance and author of new report titled “Wisconsin Jobs and Wages: A Wake-Up Call?”

Berry believes the number that will drive 250,000 new jobs is 10,000 new businesses, given that small businesses create virtually all jobs in the U.S. economy. As the Kauffman Foundation reported recently, “start-ups and young companies dominate job creation in the United States – and have done so for the past 30 years.”

Launching start-ups is precisely where Wisconsin has lagged since the early 1990s. In the 17 years ending in 2009, new companies as a percentage of all firms averaged 5.4 percent nationally, while in Wisconsin the “firm creation rate” was 4.5 percent. Wisconsin ranked 42nd among the 50 states and scored behind most of its neighbors.

Berry noted that attracting and retaining larger firms gets most of the political attention, and a disproportionate amount of state financial support, even though creating new businesses from within is the real game.

“If young firms are creating all of the new jobs, as the data show, then we’re having the wrong conversation,” Berry said.

Changing that conversation means creating a culture of entrepreneurism and removing obstacles that prevent young firms from getting a running start. Those obstacles can include local ordinances, state regulations and licensing requirements. Unemployment payroll taxes hurt young firms because it’s a tax not tied to profitability. The relative lack of venture capital also contributes to less-than-average firm creation.

“In the end, we’ve got to decide what kind of culture we want,” Berry said. “We should have a culture that rewards risk – a culture that allows entrepreneurs to keep money in their pockets and to keep pounding away in their garages.”

While that cultural shift is underway in Wisconsin, much work remains. Creating 250,000 jobs is laudable and attainable -- and launching 10,000 new companies with the potential to create high-wage jobs is even better.

-- 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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Friday, November 5, 2010

Recession has widened gap between cities with tech assets and those without


By Tom Still
Many American economists insist there’s no such thing as a “state economy.” The economic strengths and challenges in Racine or Kenosha may be remarkably different from those in Eau Claire and Chippewa Falls; the factors driving the Milwaukee economy may bear no resemblance to those in La Crosse or Green Bay.

The gap between high-growth cities and metro areas that are struggling to recover from the recession was all-too-apparent in the Milken Institute’s 2010 report, “Best-Performing Cities.” It paints a picture of cities that are slowly but surely diversifying their economic base to include more technology jobs and businesses – and those that were caught flat-footed when manufacturing, real estate and retail took a tumble.

The report, which annually ranks the best-performing “large” and “small” cities in the United States, examines which U.S. metropolitan areas are must successful in terms of job creation and retention, the quality of jobs being produced, and overall economic performance. Specifically, it pinpoints where jobs are being created and maintained, where wages and salaries are increasing, and where economies and businesses are growing.

Among the metrics used by the California-based Milken Institute are four measures tied to technology output and technology wages and salaries. In the case of Wisconsin, those cities that scored well on the tech economy factors ranked higher overall – and those that did not fell in the rankings.

Madison was the top-ranked city in the Milken index, rising from 63rd in 2009 to 31st in 2010 among the 200 largest cities. While its job growth ranking was a middle-of-the-road 110th, it scored between 13th and 42nd in the tech-based categories.

Green Bay rose from 171st in 2009 to 102nd in 2010, in part because of high rankings in two categories that measured high-tech economic output.

Few major cities have been hit harder by the Great Recession than Milwaukee and Waukesha County, but that metro area climbed from a ranking of 151st in 2009 to 139th in 2010 – largely on the strength of above-average rankings in tech productivity. Kenosha and Lake County, Ill., which count as a single metro area, fell from 95th to 152nd, largely due to significant job losses.

The rankings for Wisconsin’s small cities on the Milken index reflect how hard the recession hit in cities with more concentrated economies. Oshkosh-Neenah was the only one of nine Wisconsin cities to show improvement from 2009 to 2010 (65th to 58th), while Appleton, Eau Claire, La Crosse, Sheboygan, Janesville, Racine and Wausau all lost ground.

“Many small cities in the upper Midwest, particularly those in Michigan and Wisconsin, did not fare well, placing in the bottom ranks,” the report noted.

Conversely, some of the best-performing small cities in the nation are found elsewhere in the Upper Midwest. No. 1 was Fargo, N.D., which the Milken report noted as benefiting from increased global demand for agricultural commodities “and a growing presence in the technology sector, and biosciences in particular.”

Bismarck, N.D; Iowa City, Iowa; Sioux Falls, S.D.; Bloomington, Ind.; Grand Forks, N.D.; Bloomington-Normal, Ill.; Champaign-Urbana, Ill.; and Rapid City, S.D., all cracked the top 50 list of best-performing small cities for similar reasons.

In addition to tech-based economies, those cities with large government economies such as military bases and aerospace industries fared somewhat better. So did cities with service economies such as health care.

The Milken Institute study is only one snapshot of economic well-being, but it’s important in the sense that it avoids economic input measurements such as business costs, cost-of-living, commute times, crime rates and quality of life. It simply measures economic output.

It also points to those cities, large and small, where the contributions of the “knowledge economy” can be measured in terms of jobs and productivity. As Wisconsin weighs what happens next in a world where regions and metropolitan areas matter as much as states, those lessons cannot be overlooked.

-- 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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