• WisBusiness

Wednesday, July 27, 2011

Keeping an old friend: Why Wisconsin should value GE Healthcare


By Tom Still
It's hard to fault GE Healthcare for wanting to expand its reach into China, where more than 1.3 billion people account for nearly one of every five human beings on the planet. There's no bigger emerging market for medical equipment in the world.

But it's also hard not to lament the news that GE Healthcare, one of Wisconsin's largest private employers and a shining example of the state's expertise in building medical equipment, will move its X-ray headquarters from Waukesha to Beijing, China.

At first blush, the move of GE's X-ray headquarters to China might not seem all that troubling. The company's production unit in Waukesha won't lose jobs, a company vice president said Monday, and only a "handful" of key executives will move to Beijing. The company's stated goal is to further penetrate the vast Chinese market, so it will hire 65 more engineers and support staff there while simultaneously boosting research.

It's true that X-ray technology is a mature field and GE's Waukesha operations are more focused on cutting-edge equipment in magnetic resonance imaging, computed technology (CT) scans and beyond. Still, losing a corporate headquarters is rarely a good thing: Wisconsin should to do more to convince GE it's possible to grow at home and still do business globally.

GE's X-ray unit has called the Milwaukee area home since 1947, when the company left Chicago for a 43-acre site that had been used to build turbochargers during World War II. In short order, a renewed era of growth and innovation for GE began. Milwaukee became a hub for a host of electro-medical products, including patient monitoring equipment, cardio-surgical products and MRI technology.

In time, electro-medical equipment became one of Wisconsin's biggest exports thanks to companies such as GE, Marquette Medical Systems (later acquired by GE) and new entries such as Madison-based TomoTherapy, recently acquired by Accuray. Only California and Minnesota can claim larger "clusters" of electro-medical equipment manufacturers and researchers.

Innovative companies rarely stand still, however, and GE has lately looked elsewhere to expand. In 2004, GE Medical Systems acquired Amersham PLC, a pharmaceutical company in the United Kingdom with expertise in other life science products. Within a year, GE moved its health care headquarters from Waukesha to Buckinghamshire, England, becoming the first GE business unit to be based outside the United States.

Long-time observers of Wisconsin's business climate note GE Healthcare has bypassed other opportunities to expand here – in part because the state hasn't fully appreciated the importance of the company to the state's overall economy. Corporate taxation issues, disputes over highway access to a new building and other issues involving state and local government haven't helped.

Mending those fences and highlighting the advantages of growing in Wisconsin is a worthy project for Gov. Scott Walker, his administration and the Legislature.

One solid building block is GE Healthcare's relationship with the UW-Madison and the Wisconsin Alumni Research Foundation, the non-profit patenting and licensing arm for the university. Ten years ago, the university, WARF and UW Hospitals launched intellectual property agreements that have allowed UW and company researchers to work side-by-side in Waukesha and Madison.

The agreements have produced hundreds of patent disclosures and the commercialization of multiple products, especially in medical imaging. It has led to licensing agreements for WARF and market leads for GE, as well as enhanced federal grant prospects and access to state-of-the-art equipment for the university.

"It is a relationship that really works," said Carl Gulbrandsen, WARF's managing director. "I would like to see more of these master agreements evolve with other Wisconsin companies."

The rise of biomedical research at UW-Milwaukee, the Medical College of Wisconsin, Marquette University, the BloodCenter of Wisconsin and the Milwaukee School of Engineering should offer GE Healthcare yet another source of homegrown talent and research.

Wisconsin's annual export figures reveal that medical equipment is one of the sectors driving the state's economy, especially at the intersection of technology and manufacturing. It's no surprise that GE Healthcare is pursuing mega-markets in China and beyond, but shame on Wisconsin if it fails to make the case why the company should continue to grow in its historic backyard.

-- 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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