• WisBusiness

Monday, September 30, 2013

Tom Still: Creating more jobs in Wisconsin is more than a political flap; it's hard work


By Tom Still
As much as some Wisconsin politicians would like to blame their partisan opponents, the reasons why the state continues to lag the nation in job creation don't begin or end with the last election.

Trends set years and even decades ago have much more to do with why Wisconsin under-performs in the latest jobs count by the U.S. Bureau of Labor Statistics. That means the path to more job creation won't be traversed in a day-long hike, either.

Wisconsin gained 24,305 private-sector jobs in the 12 months from March 2012 to March 2013, according to the federal jobs count. That's a 1.1 percent increase that ranks Wisconsin 34th among the 50 states in the pace of job creation over that period. Wisconsin's latest ranking is little changed from the previous comparison (36th), which covered the period ending December 2012.

Wisconsin's job growth was higher in percentage terms than in Midwest states Ohio and Illinois, but lower than growth rates in Michigan (2.78 percent), Minnesota (2.13 percent), Indiana (1.44 percent) and Iowa (1.19 percent).

Assuming national issues such as interest rates, the advent of health-care reform and uncertainty in Washington and abroad affect all states more or less evenly, what are the factors holding Wisconsin back? Here are four possibilities:

* We're heavily invested in some low-growth sectors. The decline in manufacturing jobs in Wisconsin began in early 2000, when the state peaked out at 600,000 jobs, and stands at roughly 450,000 today. While the decline has been stemmed, and today's manufacturers are far more tech-savvy, it will take a while to regain lost ground. Agriculture is growing slowly for the time being, especially in jobs growth, although emerging world markets could change that. Tourism creates jobs – but most don't pay much.

* We're not heavily invested in all high-growth sectors. Federal predictions for job growth through 2018 are led by sectors such as health care; professional, scientific and technical services; software, Internet publishing and telecom; computer and information technology; life, physical and social science; business and financial operations; finance and insurance; arts and design; and architecture and engineering. Wisconsin has some distinct advantages in some of those sectors – but you wouldn't always know it by which ones get public policy attention.

* Demographics work against us. Wisconsin is aging slightly faster than most states, our proportion of adults with four-year degrees trails the U.S. average, and our workforce participation rate has declined. Employers need skilled workers, and it should be easier to find, train and retain them.

* We're not as "global" as some other states. Although export rates and foreign direct investment are increasing, many Wisconsin businesses have yet to seize the advantage of doing business in other countries, where consumption patterns and incomes are on the rise.

Given that mega-trends cannot be changed overnight, what are possible ways forward?

* Invest in Wisconsin's future. In many cases, that future is still embodied by manufacturing and agriculture, but it also includes other emerging clusters – information technology, health care technologies, water technologies and more. Wisconsin got off to an important but small start with the creation of a $25-million, privately matched "fund of funds" to invest in emerging companies, and there are other ideas emerging on how to push the growth of the state's "knowledge economy."

* Invest in people. One study after another links jobs and income growth to the availability of skilled workers. Not everyone needs to be a four-year college graduate, of course, but some kind of post-secondary education is vital today. Finding novel ways to commercialize academic research is critical, as company creation rates around major R&D campuses nationally has demonstrated.

* Think globally, act locally. Wisconsin companies offer products and intellectual property with enormous appeal in emerging economies and to foreign investors, but only if they know about them. Recent efforts by the Wisconsin Economic Development Corp. to increase the state's global footprint should be encouraged and expanded. (By the way, the state's dairy industry has long been a leader in globalization, as the upcoming World Dairy Expo in Madison attests.)

* Become more entrepreneurial. It's been slow coming, but the state's business culture is much more accepting today of entrepreneurs and startup companies. The critical mass of such companies and people in Madison, Milwaukee, the Chippewa Valley and elsewhere should be nurtured.

Trends that began long ago have crimped Wisconsin's ability to create companies and jobs, and other movements underway will help improve the state's standing. Just don't expect it to be resolved tomorrow by a shouting match between political opposites.

-- 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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Thursday, September 19, 2013

Tom Still: Water technology becoming a part of Wisconsin’s global innovation brand


By Tom Still
When first lady Michelle Obama dropped by the southern Wisconsin city of Watertown to urge Americans to drink more water, the original healthy alternative to sugary drinks, it seemed like a good gimmick. She “dropped” into Watertown... get it?

The first lady’s visit was welcome, of course, but there’s a lot more happening under the surface of Wisconsin’s water technology economy than even the White House might know.

Within a few hours of Mrs. Obama’s visit, Gov. Scott Walker, Milwaukee Mayor Tom Barrett and a host of business leaders dedicated a seven-story, $22 million water technology and business incubator just south of downtown Milwaukee.

The idea behind the Global Water Center is to create a shared space for established water-engineering companies from the Milwaukee region, which will set up labs alongside university scientists, grad students and a new generation of startups. The UW-Milwaukee’s School of Freshwater Science is a major tenant in the 100,000-square-foot incubator, which attracted state and city support, as well as the backing of the Milwaukee Water Council.

Many in Milwaukee are bullish on the region’s ability to penetrate global markets for technologies that test, treat, monitor, conserve and transport water. Its business and research communities have aggressively staked out the water technology space in recent years, and the strategy appears to be paying off with 25 companies – large and small – sharing space in the incubator so far.

Major companies in the region include Badger Meter, Veolia North America, A.O. Smith, Advanced Chemical Systems, CH2M Hill, Siemens, Pentair and the Kohler Company. Each company works in a different sector – from metering to heating to purification to engineering to plumbing fixtures. But their collective R&D needs and investment areas illustrate why the region is among a relative handful of cities that are positioned to deal with the world’s growing shortages of clean water.

Of course, water tech isn’t confined to the Milwaukee area. Water research programs exist at other academic institutions in Wisconsin, including the UW-Madison’s Sea Grant Institute and its Center for Limnology, as well as campuses in Stevens Point, Superior and Whitewater.

Water technology companies are also emerging in Madison and the Fox Valley as well as Milwaukee. Some examples:

* AquaMost, which has developed technologies to treat water used in the hydraulic fracturing process used in mining for oil and natural gas.

* WellIntel, which uses a low-power, water-level sensor to collect highly accurate information about groundwater levels.

* BioIonix, which has deployed technology that disinfects and oxidizes contaminants in liquid streams. It has applications in the food industry, manufacturing and wastewater treatment.

* Microbe Detectives, which identifies and quantifies nearly all bacteria in microbial communities, including those that can thrive in water.

* H2O Score, which uses real-time electronic dashboards to connect consumers to their own water use habits and patterns.

By the way: Wisconsin has plenty of competition. At the University of Minnesota, for example, the Minnesota Trade Office and the university are holding a Water Technology Export Roundtable this month to explore opportunities in the global marketplace.

While people often take water for granted in Wisconsin, a state with ample surface and underground supplies of fresh water, that’s not the case in much of the world – or even the rest of the United States.

More than 3.4 million people die each year from water, sanitation and hygiene-related causes. Lack of access to clean water and sanitation kills children at a rate equal to a jumbo jet crashing every four hours. One-fifth of the world’s population lacks access to clean water, and by 2025, 1.8 billion people will be living in areas where water is scarce.

Technologies and processes developed in Wisconsin can help solve one of the world’s most pressing problems. Wisconsin not only has plenty of fresh water, but a combination of research, engineering and manufacturing skills tied to its safe and efficient use. Milwaukee’s Global Water Center promises not only to send ripples throughout the state economy, but the world.

-- 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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Thursday, September 5, 2013

Tom Still: Health-care reform is 'jump ball,' but Wisconsin's Medicaid computers primed and ready


By Tom Still
If you meet someone who claims to know how health care reform is going to play out over the next year, hold on to your wallet. You're probably talking to a con artist.

The advent of the Affordable Care Act means many states are scrambling to set up insurance exchanges, which are online marketplaces to shop for private insurance, while other states will rely on a federal exchange. This shuffle is taking place just as rules covering Medicaid eligibility are changing for millions of families, including about 92,000 in Wisconsin.

Meanwhile, most private health providers are falling into one of two categories – predator or prey – and the entire U.S. system is figuring out how to absorb tens of millions of uninsured people just as legions of doctors are retiring.

Confused? Don't worry. You have plenty of company, from the architects of "Obamacare" on down to the medical professionals at your hometown clinic.

In Wisconsin, the transition may go smoother than in most states thanks to cutting-edge technology embedded in the state's Medicaid Management Information System. It's a network that should give providers and consumers alike the kind of flexibility needed in changing times.

The "interChange" system in Wisconsin is one of 13 certified nationwide by the federal Centers for Medicare and Medicaid Services. Designed over time by the former Electronic Data Systems and its successor company, HP Enterprise Systems, interChange is the platform through which Wisconsin manages BadgerCare and Medicaid. It processes 41 million claims per year for doctors and hospitals, enrolls and communicates with 70,000 providers, verifies patient eligibility for about 1.3 million people, authorizes a range of services and generates reports essential to system accountability.

It replaced a legacy system that had been in operation for more than 30 years, and it has provided much-needed speed and flexibility just when health care needs precisely that. Change orders related to rules that once took months to carry out are now done in a matter of days or less.

"interChange will be a system that can bridge the gaps and be flexible enough to manage the changes that are coming, whether they are changes in existing policies or programs, or adding additional programs and transitions that take place in Wisconsin or nationally," said Rich Johnson, HP's account executive in Wisconsin.

Most states hire companies to crunch health-care data and process claims because they lack the technology and expertise. Wisconsin is no exception. Tech companies such as HP, Xerox and Computer Science Corp. are usually invisible to Medicaid recipients and even most providers, but they're the platform through which the state-federal partnership on Medicaid works.

Such systems cost tens if not hundreds of millions of dollars, but the federal government believes the savings more than cover the cost over time in faster, more efficient delivery of health care while minimizing fraud and abuse. That's why the feds reimburse states for much of the costs of replacing or modernizing out-of-date systems.

That doesn't mean such transitions always go smoothly. In Wisconsin, once the decision was made to quit tinkering with the old mainframe system, it took a while to get interChange on track. During the build-out phase, it fell behind schedule and costs ran higher than expected, in part because of a series of change orders related to Medicaid and in part because of mission creep. The state stuck with the project, however, and in 2008 implemented the system. Today, the state boasts a "multi-payer" system that can adapt to whatever rules state and federal policymakers throw at it.

While it's too early to know for sure, data collected by the system may also lead to improved quality of care through analytics. Data collected about vaccines and immunizations, Type 2 diabetes and other diseases and conditions may help epidemiologists predict and treat outbreaks faster, for example.

It will take time to sort through all the coming changes in health care, no matter what. In Wisconsin, however, it's fortunate the state stuck with its plans and built a data system that can roll with the digital punches.

-- 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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Tuesday, September 3, 2013

Tom Still: States and metros to watch: Examples from which Wisconsin can learn


By Tom Still
If there's a flaw in Wisconsin's cultural DNA that should be targeted for knock-out genetic treatments in one of our leading laboratories, it would be our reluctance to occasionally learn from others.

Our inbred insularity may stem from the fact we're off the nation's beaten paths on the East and West coasts, or that so many of us come from northern European "don't-ask-for-help" stock, or that a populist political tradition means people react poorly to things like public officials taking legitimate trips outside the state – events invariably described in news accounts as "junkets."

Whatever the reasons, the same parochialism that makes most of us loyal Packers and Badgers fans sometimes closes our eyes to the possibility that people living elsewhere can also be smart, productive and inventive. We can love it here and still admit we don't know everything.

An example of looking beyond Wisconsin for best practices took place Aug. 27 when the Greater Madison Chamber of Commerce organized a leadership bus trip to Chicago – a metropolis that influences the Wisconsin economy in major ways – to tour the "1871" digital co-working space. Opened less than two years ago in the Merchandise Mart with support from a major private donor and state government, it's a place for designers, coders and entrepreneurs to build companies.

There are similar, albeit much smaller, spaces and accelerators in Wisconsin, so the purpose of the trip wasn't to expose participants to something entirely new. Rather, it was aimed at learning how others have approached an issue – company formation and entrepreneurship – that is top of mind in most states and cities.

What are other states and metros worth watching? Many people know about the Silicon Valley, Boston I-28 Corridor and Austin, Texas, as well as major states such as California, Pennsylvania and New York. However, it may also be instructive for Wisconsin to track best practices in states of similar size. Here are a few examples from our experience at the Wisconsin Technology Council and related national groups.

Colorado is a hotbed of activity for reasons that range from its enduring frontier mentality, its pro-growth political culture (the governor is an entrepreneur) and its approach to young businesses. In the latest report by the Ewing Marion Kauffman Foundation on high-tech starts, five Colorado cities made the list of the nation's top 25 startup hubs. Not only was metro Denver on the list, but Boulder, Fort Collins-Loveland, Colorado Springs and Grand Junction.

Other Rocky Mountain or western states with similar activity include Utah (Salt Lake City and Provo-Orem), Idaho (Boise City-Nampa), Montana (Missoula), Oregon (Portland-Beaverton and Corvallis) and even Wyoming (Cheyenne). The reasons can't all be explained by ski slopes and mountains.

Minnesota has long been a leader in medical device companies and remains so, but recent political changes there have some businesses rethinking the state's allure. The Research Triangle of North Carolina remains a historic example of what can happen when public and private interests intersect, although that state has also taken some curious steps backwards of late.

Maryland is home to a number of technology and life sciences companies, with proximity to Washington, D.C., and Baltimore's Johns Hopkins University being major drivers. Among other less-known places that show up in many rankings are Huntsville, Ala., Trenton, N.J., Columbus, Ohio, and Ann Arbor, Mich., Wilmington, Del., and Des Moines, Iowa.

What do they have in common? Many are homes to major research universities or federal laboratories, which spin out ideas. Others are health-care hubs. Almost all have strong information technology infrastructures, including broadband but also high-speed networks.

They're also places where public and private differences are overcome, entrepreneurs are encouraged and common regional interests are stressed, whether within a metro area or across state lines. Yes, tax structures and incentives help, but those often work hand-in-hand with other non-government factors.

Wisconsin has much of what it takes to compete, but it won't necessarily find all of the answers within its borders. Sometimes, it pays to learn from others.

-- 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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