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BizTimes Milwaukee (ISSN 1095-936X & USPS # 017813) Volume 24, Number 8, July 23, 2018 – August 5, 2018. BizTimes Milwaukee is published bi-weekly, except monthly in January, July and December by BizTimes Media LLC at 126 N. Jefferson St., Suite 403, Milwaukee, WI 53202-6120, USA. Basic annual subscription rate is $42. Single copy price is $3.25. Back issues are $5 each. Periodicals postage paid at Milwaukee, WI and additional mailing offices. POSTMASTER: Send all UAA to CFS. NON-POSTAL AND MILITARY FACILITIES: Send address corrections to BizTimes Milwaukee, 126 N. Jefferson St., Suite 403, Milwaukee, WI 53202-6120. Entire contents copyright 2018 by BizTimes Media LLC. All rights reserved.

Contents

4 Leading Edge 4 NOW

BY THE NUMBERS 5 BEHIND THE SCENES 6 GETTING THERE 7 JUMP START 8 IN THE NEIGHBORHOOD BIZ POLL 9 INNOVATIONS 10 BIZ COMPASS 12 BIZ LUNCH

14 News 14 HOW TO AVOID A RANSOMWARE ATTACK 16 MADE IN MILWAUKEE

18 Real Estate 42 Business of Nonprofits

COVER STORY

20

53 Strategies

Trump rocks the boat Mid-year economic forecast

Special Report

20 Mid-year economic forecast In addition to the cover story, coverage includes a look at how tariffs are impacting manufacturers, the MMAC and WMC forecasts for the third quarter, a report on local stock performance, an update on the residential real estate market, an accounting of some major health care developments, an analysis of wage growth by industry, insight on restaurant closures and wealth management tips in light of the tariffs.

53 HUMAN RESOURCES Joe Weitzer 54 LEADERSHIP John Howman 55 TIP SHEET

57 Biz Connections 57 PAY IT FORWARD 58 PERSONNEL FILE 59 SBA LOANS 60 GLANCE AT YESTERYEAR COMMENTARY 61 AROUND TOWN 62 FIVE MINUTES WITH…

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BIZTIMES DAILY – The day’s most significant news → biztimes.com/subscribe

NOW

Ascension Columbia St. Mary’s working to become tertiary care hospital

By Lauren Anderson, staff writer Ascension Columbia St. Mary’s Hospital Milwaukee is seeking to become a tertiary care hospital, a designation given to major hospitals capable of handling the most advanced and specialized medical cases.

By doing so, the Milwaukee

hospital would join the ranks of other large hospitals with established reputations for their sub-specialty services. Existing tertiary centers in the region include Aurora St. Luke’s Medical Center, Froedtert Hospital and ProHealth Waukesha Memorial Hospital.

BY THE NUMBERS After residents objected, Mandel Group Inc. reduced the size of its proposed River Hills development to

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apartments.

4 / BizTimes Milwaukee JULY 23, 2018

For Ascension Wisconsin, the designation will mean patients being treated at the system’s 24 hospital campuses for advanced and complex cases will be able to transfer to the Milwaukee campus when necessary. It will allow them to stay within Ascension’s network, rather than having to be referred to another health system.

“At Ascension, we believe health care should be local and community hospitals should be able to provide 90 to 95 percent of anything you might need,” said Kelly Elkins, president of Ascension Columbia St. Mary’s Milwaukee and Ozaukee. “But for that 5 percent, you want to be at a center where they have the physician specialties and nursing resources and technology and equipment to handle that level of care. That’s what (Ascension CSM Hospital Milwaukee) is becoming for Ascension Wisconsin.”

Elkins said it’s important for Ascension Wisconsin to be able to retain patients within the system.

“It’s really necessary to make sure that individuals at Ozaukee or even as far north as Howard Young Medical Center (in Woodruff), if they need that high level of care, to be able to keep them within the system so their physicians can stay connected to what’s happening with them to keep them within one integrated system of care.

“There are other wonderful health care organizations in this community, but I think it’s always great when we can continue to build upon that and particularly within the Ascension network,” she added.

“Columbia St. Mary’s has been in this community for many, many years and has evolved. This is just yet another evolution in our legacy.”

The hospital has been working to become a tertiary center since last year and the process will likely continue over the next several years, Elkins said. The process has involved recruiting new physicians and sub-specialists; creating specialized nursing units; capital investments in surgical services and upgrading operating room equipment and imaging equipment; and positioning the facility for increased bed capacity.

The campus is licensed for about 400 beds and operates roughly 250 on any given day.

Hospital leaders plan to renovate existing space at the hospital to increase bed capacity.

Elkins said the effort to become a tertiary center is a “transformation” that won’t have a defined end point.

“You just become it,” she said.

“We start becoming a receiving facility. We have brought on and hired new physicians to our network.

We ramp up some of the tertiary programs. It’s an evolution.” n

1

BEHIND THE SCENES

LILA ARYAN PHOTOGRAPHY

BEHIND THE SCENES The Pabst Mansion

By Lauren Anderson, staff writer

T

he Pabst Mansion, a late 19th century architectural landmark on West Wisconsin Avenue in Milwaukee, recently opened its doors for a behind-the-scenes look at areas that are typically roped off to the public. The mansion, built in 1890 as a home for Pabst Brewing Co. founder Capt. Frederick Pabst, includes original fixtures and technology of the era, including machinery for an elevator that was installed in 1903, original gas lighting fixtures in the home’s attic, and 16 thermostats that once regulated two boilers – one of the only remaining examples of Johnson Controls’ early central heating systems. The mansion cost $254,000 to build 125 years ago. In today’s dollar, it would amount to $7 million. n

1

A large wine cellar on the mansion’s lowest level stores all 30 of the mansion’s Christmas trees, which are put on display annually for the public to get a glimpse of what the holiday would have looked like during the Victorian era.

2

An up-close look at the skylight from the mansion’s attic.

3

The woodwork detail on the staircase. The wood is from Wisconsin and all of the woodwork was completed by local craftsmen.

2

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A telephone that was installed when the house was built in 1892, about 15 years after the telephone was first invented. A luxury for the time, the telephone is located across from the study and was typically used for business.

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An electrical lighting fixture and ornate ceiling details in the mansion’s dining room.

biztimes.com / 5

Leading Edge

the

Good LIFE

Reid Holzworth with his 1964 Chevelle Malibu.

Speed racer

By Corrinne Hess, staff writer

W

hen Reid Holzworth moved his company from Glendale to downtown Milwaukee earlier this year, he did so to be closer to the action.

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And he wanted to find a space large enough for his race cars.

Holzworth, founder and chief executive officer of TechCanary, a fast-growing technology firm located at 1322 N. Eighth St., competes in at least three road races a year.

The longest and most storied is the Baja 1000, a 1,100-mile off-road race that takes place in Mexico’s Baja California Peninsula from Ensenada to Cabo San Lucas.

In 2017, the Baja 1000 celebrated 50 years and it’s not for the faint of heart. The winners of the race typically finish in about 27-and-a-half hours.

With TechCanary co-founder Chris Phillips riding in the passenger seat to navigate the turns, Holzworth drives the entire way.

“I’ve been wrenching on cars since I was a kid and this has always been a passion of mine,” he said. “I love cars and I love fast things.”

During the race, several other TechCanary employees head down to Mexico with Phillips and Holzworth to watch the race and help out with the car if needed.

Phillips said the two are friends because they both love adrenaline.

Phillips and Holzworth will climb Mount Kilimanjaro together in September. Last year, they tackled Machu Picchu in the Andes Mountains in Peru.

Holzworth drives a 1964 Chevelle Malibu that he built about 15 years ago during his races.

He recently purchased a second car, a 2018 GT 350 Shelby, which he says is amazing, but won’t replace his beloved Chevelle.

“My new car is super, super fast,” Holzworth said. “But my old car is beautiful. There is nothing like this. It’s a piece of art.” n

FLYBLOOMS LOCATION: Milwaukee FOUNDER: Tiffany Miller FOUNDED: June 2012 PRODUCT: Fashion accessories, including flower hair clips.

WEBSITE: flyblooms.com EMPLOYEES: 1

EXPERIENCE: Walker is a special education teacher at Milwaukee College Prep. She previously taught at South Division High School, and holds a master’s in urban special education from Cardinal Stritch University.

FlyBlooms founder fashions bold accessories

By Molly Dill, staff writer

LILA ARYAN PHOTOGRAPHY

GOAL: Expand online presence and create internship program

TIFFANY MILLER wears a big, colorful flower in her hair every day. Not a real flower – a fashion piece made of fabric attached to a hair clip.

“I got tired of wearing the retail flowers that were one color or tore apart really quickly,” Walker said.

So she decided to make her own flower hair clips, mixing bold patterned petals and buttons to express her own style. One clip features blue denim, white silk and spotted animal print petals joined together by an antique button in the middle. In another, black silk petals surround a unique black-and-white-striped button. Miller eventually formed a business, called FlyBlooms, to sell the clips.

After a while, she expanded into headbands, scarves, clutches, earrings, lapel pins and other handmade adornments.

Miller, 38, currently makes all of FlyBlooms’ products out of her home, and sells them online and at craft fairs and events around Milwaukee. As a full-time special education teacher at Milwaukee College Prep, Miller does most of her work for FlyBlooms in the summer, and planned to be at Bastille Days, Locust Street Festival and other outdoor events this summer. From Aug. 16 to Sept. 16, Miller will also have her own

retail space at 339 W. North Ave. through the Pop-Up MKE initiative to fill vacant city storefronts.

“Managing (teaching) with this creative business and regular life, I’m a mom as well, it can be challenging. But creativity has always been my outlet for stress relief,” she said.

Clutch purses have become FlyBlooms’ most popular product, since Miller includes straps and inside pockets on her clutches – which can be rare and are very appreciated by customers who need slots for credit cards, lip gloss or other small items.

Miller is creative and has a passion for guiding young people, so she’s found a way to do both.

“I do see myself expanding to offer internships to young people who have an interest in fashion design or sewing or just want to launch new products themselves,” Miller said.

Any profits Miller makes on her products, she invests back into the business. She’s working on expanding her online presence by using e-commerce tools like Shopify.

“There’s a lot of things that you kind of learn and figure out along the way,” she said. “It’s one big creative experiment that is working out for me.” n biztimes.com / 7

Leading Edge

BIZTIMES MEDIA – Like us

IN THE NEIGHBORHOOD

FARM GIRL ARTS & ANTIQUES 803 S. Fifth St., Milwaukee NEIGHBORHOOD: Walker’s Point FOUNDED: 2011 OWNER: Lisa Goldner EMPLOYEES: 1 PRODUCT: Artwork, antiques

How did you decide to open the store?

“It was during the recession and I had nothing to lose. My son was starting school and I had stuff to sell, so I figured this is the perfect time to open up a shop. I always wanted to.”

(the business) with me, selling their things. We started with taking in consignment.

Today, it’s still consignment, but we have people bring in their own stuff and sell in their own sections of the store.”

What was it like opening a store during the recession?

“Since I had nothing to lose, and something to sell, and it was inexpensive stuff, I think it was a good fit at that time. A couple of friends started

What do you sell?

“It’s very eclectic.

Things people have made and really, really old items.

Furniture, cookware, gardening supplies.

What I really like to do is find neat (vintage) holiday stuff. It’s a shop where you can come

BIZ POLL

and actually buy things. And my goal is that someone comes to the shop, sees something and says, ‘I have that at home. I could do something like that with it.’ Get people thinking creatively.”

What is it like being in Walker’s Point these days?

“When I first started, people asked, ‘Are you sure you want to go there?’ And I said, ‘It’s the only place I’ve got.’ But this area has really come around. It’s so nice.” n

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INN Quad/Graphics technology adds personalized cover messages for ELLE subscribers

Quad/Graphics Inc. Sussex

INNOVATION: Personalized magazine covers FOUNDER: Harry Quadracci QG.com

VAT I WHEN SUBSCRIBERS TO ELLE received their April issue, some of them were treated to a personalized message from cover star Kim Kardashian West.

A “handwritten” note scrawled across the cover included individual social media handles and differing messages for 50,000 subscribers.

Sussex-based Quad/Graphics Inc., which prints ELLE on behalf of Hearst Communications, used its variable printing technology on a high-speed digital printing press to add the message for some of the magazine’s 1.1 million subscribers, said Joel Quadracci, chairman, president and chief executive officer of Quad/Graphics.

Personalization is a service Quad has offered for some time, but this is the first time it has been deployed on a national scale on the cover of a magazine. The April ELLE issue served as a test of the personalization strategy for Hearst, since it gets more expensive the greater the number of magazines on which it is deployed, he said.

“Where a lot of this technology’s being used is in direct mail and catalogs,” Quadracci said. “Now we do direct mail pieces where half of it is printed on a traditional printing press and in line on that press would be these digital heads.”

And the personalization can go beyond words into images, as well, he said.

“We’ll leave a place on the printed piece vacant so when your name comes up, maybe you’re getting shoes and I’m getting sandals or something,” Quadracci said.

“People react very quickly to imagery, so it becomes very important for response rates.”

Retailers gather that data from customers’ online behavior, such as leaving an item of clothing in a cart instead of buying it. That could generate a 10 percent off coupon in a printed magazine or mailer to convince the customer to buy, he said.

“Whenever you use the data to

NS

be more specific to what the consumer wants or likes, the chances for them to buy something goes significantly up,” Quadracci said. “Print can act just like a digital device now with data, so we can vary the messaging, we can vary the product.”

According to Quad’s Customer Focus Research Study, 68 percent of U.S. adults are more likely to respond to personalization when offers are related to things they are interested in.

Variable digital printing technology has been around for some time, but the quality has improved rapidly over the past five years, at the same time big data has opened up new possibilities for advertisers to more effectively market to the consumer one-on-one, Quadracci said. And the printing speed isn’t slowed by the personalization.

“There’s logarithms that are driving this and the technology, everything can be different at high speed,” he said. “It’s like clicking on your tablet to a different page.

Everything’s refreshed with different content.”

A makeup advertiser, for example, could show a subscriber of one ethnicity one shade of foundation, but show another subscriber a foundation that better matches her skin. Advertisers invest in the technology if it is demonstrably more effective in converting to customer sales, he said.

“Sometimes we have people spending more on just a couple pages of variable digital print than on the entire printed product,” Quadracci said. “If you just had a

page that was traditional versus one that has all sorts of imagery on it that’s variable, that could be a 50 percent increase in cost.”

Quad/Graphics keeps its equipment current so it can add features like a personalized note to its printed products, he said.

“It’s the consistent investment that we keep making in the platform as the technology changes,” Quadracci said. “We’re always upgrading” n

MOLLY DILL

Managing Editor P / 414-336-7144 E / molly.dill@biztimes.com T / @BizMolly

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Leading Edge

@BIZTIMESMEDIA – Real-time news

BIZ COMPASS

What kinds of

AC T I V I T I E S OUTSIDE OF WORK FOSTER A BETTER

COMPANY CULTURE? POWELL

1 TAMALYN

senior vice president and head of the “People Committee,” BVK

“At BVK, we offer activities that are fun, engaging and give employees the ability to interact with each other in a casual environment. One example is our free weekly workout classes offered by our wellness expert. BVK also organizes monthly volunteer opportunities, a softball team and various events at the office, like a cooking competition or lunch and learns, to keep employees inspired to do great work!”

2 KEITH EVERSON

chief executive officer, Sussex IM

1 3

“Our companywide commitment to a family-oriented culture is based on mutual respect, honesty and open communication. …

At Sussex IM, we build this culture with off-campus team-building getaways, family days at ballgames and parks, and careful review of our policies, procedures and HR practices. Encourage a sense of community, and foster innovation and diversity. That’s the Holy Grail. Without that culture, vision, mission statements, strategies and tactics can all be thrown out the window.”

3 JAMIE PRATT

co-founder, Spano Pratt Executive Search

“Skills-based volunteerism helps embed employees in the community, which is a retention factor. And allowing employees to take a day off to volunteer or participate in a positive community enhancement activity of their choice also honors the diversity aspects of the workforce. Plus, employees want to work for companies that do good.”

2

COPES 4 ROD

president, Royal Enfield North America

“Outside activities that foster team-building and learning more about the competition’s/company’s products are best. For example: at Royal Enfield, an employee motorcycle ride can be a great activity to not only have fun, but it can also be educational as we compare our motorcycles to the competition’s.”

4

5 CARRIE BRISTOLL-GROLL

principal civil engineer and CEO, Stormwater Solutions Engineering

5 10 / BizTimes Milwaukee JULY 23, 2018

“We spend more time in our lives involved in work-related actives than we do with family and friends. We need to enjoy work and those we are with. We organize activities to nurture health and wellbeing, such as teams for running and stair climbs. We also host kayak nights, yoga sessions and other fun outings.” n

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1

BIZTIMES MEDIA – Connect

BIZ LUNCH

Lunch

PHOTOS CONTRIBUTED

Biz MOXIE

3

A D D R E S S: 501 E. Silver Spring Drive, Whitefish Bay CUISINE: Modern Italian-American C H E F: Carlos Escorcia M O O D: Intimate upscale-casual PRICING: Lunch entrees $12-15; dinner entrees $18-45; brunch entrees $12-15 Moxie Food + Drink, an Italian-American bistro that serves lunch, dinner and weekend brunch, is located in the heart of Whitefish Bay. “Moxie is a popular destination for business lunches because of its excellent service and creative and inspirational atmosphere,” said co-owner Tamela Greene.

Greene and her wife Anne Marie Arroyo opened the restaurant in 2016 after transitioning out of careers at Milwaukee-based Harley-Davidson Inc. Moxie serves a selection of steaks, seafood and pasta, but Greene said the salmon is the most popular item on the menu, with a different preparation almost daily. Moxie’s bar menu features craft cocktails, beer and an international wine list with several by-the-glass options.

As the dinner hour has proven to be the restaurant’s busiest time, Greene suggests evening diners make a reservation. Moxie is open Tuesday to Saturday from 11 a.m. to 10 p.m., and on Sunday from 10 a.m. to 2 p.m. 

12 / BizTimes Milwaukee JULY 23, 2018

12 3

2

3

The wild-caught salmon entrée is served with potatoes and a vegetable medley.

Moxie’s 1,400-square-foot indoor space offers seating for 42 people.

The steak sandwich, a char-grilled filet medallion with mushroom demi and peppercorn aioli.

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BizNews FEATURE STORY

How to make sure your business isn’t held hostage by ransomware

By Molly Dill, staff writer SITUATED UNOBTRUSIVELY in a CFSC Currency Exchange on Milwaukee’s East Side is a Bitcoin ATM where users can buy and sell the cryptocurrency using cash.

In some instances, business owners have been known to use the DigitalMint ATM, 1407 E. Brady St., when they become the subjects of ransomware attacks, which in many instances lock down a whole business’ important files and demand a ransom for the business to regain access. These criminals’ currency of choice is often cryptocurrencies like Bitcoin because of the relative anonymity of the transactions.

Dan Placek, senior systems engineer at Swick Technologies LLC in New Berlin, helps business customers prevent and address these types of attacks. He’s really good at it, because he used to be on the other side of the proverbial coin.

Placek was previously a black hat developer who helped create Darkode, a marketplace for hack14 / BizTimes Milwaukee JULY 23, 2018

ers to buy and sell malware and other malicious online tools. He was busted by the FBI in 2010 and in 2015 was sentenced to two years of probation.

His experience with breaching security gave Placek a unique skillset that helps him fight the hackers now that he’s back on the up and up. At Swick, Placek is responsible for designing, engineering and implementing networking and server security solutions for business clients.

Ransomware attacks have become more common as the cryptocurrency market has taken off in recent years and criminals have been emboldened about their ability to get away with ransomware attacks, he said. And the more frequently companies pay ransoms, the larger the industry gets.

“On any given day, I guarantee you there’s at least one business here in Wisconsin that’s dealing with (a ransomware attack),”

Placek said. “We have avoided paying (a ransom). I definitely have encountered people who have paid it, though.”

The key to not paying the ransom is being prepared for an attack.

“The No. 1 piece of advice that I could give, oddly enough, is not really around security so much, but about backups,” Placek said. “Usually the businesses that ransomware is most damaging to are ones that do not have working or current backups in place.”

Critical business data should be backed up at least once every 24 hours so if files are encrypted during a malware attack, most of the data can be recovered.

Chris Hippensteel, network system administrator for a 200-user network at information technology consulting firm New Resources Consulting in Milwaukee, said he recommends keeping some backups offline and some backups offsite for added security.

Backups are most important, but businesses should also check the other security boxes: installing antivirus software on all computers and at the network level, educating employees about potential malware entry points, and monitoring for suspicious activity, they said.

Placek said he frequently encounters businesses that have installed antivirus software but haven’t kept up with it.

“We regularly find businesses that their antivirus has expired or they’ve got a few computers that it wasn’t installed on,” he said, pointing out even broken or unused computers could be an access point to the network.

A next generation firewall, such as Cisco’s Open DNS, can be used to scan network traffic for the business and alert leaders when there’s a work station trying to connect to a malicious server.

“One of the biggest things is to educate your employees about ransomware, how it attacks, letting them know about phishing emails, random websites they might be opening,” Hippensteel said.

At NRC, Hippensteel locks down which programs can write

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The Bitcoin ATM at CFSC Currency Exchange in Milwaukee.

"On any given day, I guarantee you there's at least one business here in Wisconsin that's dealing with (a ransomware attack)."

— Dan Placek, Swick Technologies LLC

files to the temporary and data folders on each computer, limits which users have administrator and system access, and maintains and updates software and operating systems frequently.

“If you can prevent it, absolutely that’s what we look to do, but 100 percent prevention is pretty difficult to achieve,” Placek said.

“We run daily, weekly and monthly backups of our important data, and even then it can be hard,” Hippensteel said. “Your company might be hit by ransomware and ransomware could be installed on your server for three months before it even starts attacking any files.”

In the instance a company is attacked by ransomware, both Placek and Hippensteel strongly advised not paying the ransom.

“We’d certainly never recommend paying the ransom unless

you truly have to,” Placek said.

“This has become a multibillion-dollar ‘industry,’ ransomware and all the things related to it.”

The first thing to do is unplug the machine impacted by the ransomware attack to stop the spread of the virus across the company’s network.

“At that point, alert the team and management that there’s been an attack, that we’re working on it, that some data might not be accessed,” Hippensteel said.

Then the arduous process of restoring data and files can begin, while scanning through files that sometimes number into the tens of thousands for any malicious files that may be hiding there.

“You’ve got to go through with a fine tooth comb and make sure you’ve found all the sources of infection and remove them,” Placek said. n

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BizNews

Twin Disc manages through the ups and downs IT IS NO SECRET cyclical markets like oil and gas present major challenges for businesses. One year business is good and the next the new orders have dried up.

Racine-based Twin Disc Inc. lived that reality, going more than two years without a new order for a transmission used in the oil and gas industry. As the price of oil plunged from more than $100 per barrel in mid-2014 to less than $30 in early 2016, net sales plummeted as well, down to $166 million, a level Twin Disc had not seen since the late ’90s.

“Eventually you know the markets will come back,” said John Batten, president and chief executive officer of Twin Disc. “You try to go out and get every piece of business you can.”

Today, however, things have changed and the company is setting records for the number of transmission units shipped in a month. Revenue increased 46 percent in the first three quarters of fiscal 2018, and Twin Disc nearly topped its fiscal 2017 sales in just nine months.

The boom in sales creates new problems, though, as cost-cutting actions taken to survive the downturn, like consolidating warehousing activity in other states to its Racine operations, limit the available space to meet increased demand.

“The oil and gas business is a blessing and a curse,” Batten said.

Twin Disc has been in business for a century and got its start making clutches for farm tractors. It eventually transitioned to parts for Great Lakes fishing boats and transmissions for landing craft in World War II. Today, the company makes a 16 / BizTimes Milwaukee JULY 23, 2018

variety of marine and heavy-duty off-highway power transmission products, including marine transmissions, surface drives, propellers, hydraulic torque converters, power take-offs and industrial clutches.

Part of the challenge, Batten said, is the up and down of the oil and gas business captures so much attention within the company. When things are going well, the loss of some marine or industrial business may go unnoticed, only to leave a smaller remaining business when oil and gas hits an inevitable downturn.

“You can’t take your eye off the ball on the other markets,” Batten said.

Remaining focused on the entire business is a point of emphasis in the most recent upturn in oil and gas.

Paying attention to other markets is not just a cultural thing this time around; Twin Disc just completed the nearly $61 million acquisition of Veth Propulsion, a Dutch firm with no oil and gas exposure. The deal will make Twin Disc’s business more global, increase the focus on marine markets and help with the development of new technology.

“It hyper accelerates our exposure and technologies for hybrid,” Batten said. “It makes all of our products potentially much better.”

Closer to home, Twin Disc is also working to improve its Racine operations, emphasizing continuous improvement efforts and investing in new machinery. The company started with a daily management meeting to review and act on performance metrics in January 2017.

“We went through some struggles, especially initially,” said Mitch Sosnowski, general manager for

Parts in production at Twin Disc’s Racine manufacturing plant.

TWIN DISC INC. N1328 Racine St., Racine 4600 21st St., Racine

INDUSTRY: Power transmission EMPLOYEES: 830 (nearly 400 in Racine) twindisc.com

Twinco operations, of the implementation.

But as the oil and gas market has rebounded, the meetings have allowed Twin Disc to adapt to the increased demand.

“Things have gotten easier just because there’s more communication,” Sosnowski said.

Batten pointed out Twin Disc is now setting shipping records with 65 to 75 percent of the workforce it had in Racine before the latest downturn.

A seemingly ever-tightening labor market is only making the company’s workforce challenges more difficult, and the retirement of longtime employees is another compounding factor. In some cases, Twin Disc is forced to retire certain machinery as those with the experience to run it retire.

“We have a huge capex budget the next few years because the guys that are retiring are taking all of that experience with them,” Batten said.

To make room for additional investments, Sosnowski said the

company will work to streamline its assembly and manufacturing areas.

Batten said Twin Disc is also actively working to move warehousing work, consolidated from Jacksonville, Florida during the downturn, back outside of the facility. n

ARTHUR THOMAS Reporter

P / 414-336-7123 E / arthur.thomas@biztimes.com T / @arthur8823

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For too long, PBMs have succeeded in extracting obscene profits from businesses, workers, and taxpayers, and have failed to adequately control prescription and health benefit costs. The three largest PBMs (Express Scripts, CVS Caremark, and UnitedHealth Group’s OptumRx) are all Fortune 25 companies, either alone or through their parent companies. Together they control 78 percent of the country’s PBM market and earned a combined $13.2 billion last year. Even though these three PBMs have an incredible amount of leverage, drug spending is still increasing at an unsustainable rate. Between 2014 and 2015, U.S. drug spending increased by 20 percent.

If the PBM industry doesn’t clean up its act, I believe it is only a matter of time before we see more government regulation in this space. In most other developed countries, the government plays a large role in determining which drugs will be covered and how much they will cost. PBMs play this role in the U.S., but their practices are notoriously opaque and self-serving.

For example, a major PBM was caught a few years ago colluding with a drug manufacturer to steer patients towards its high-cost drug, rather than a rival’s less expensive alternative, in exchange for illegal kickbacks from the manufacturer.

Another PBM that is integrated with a pharmacy chain has been accused of pressuring independent pharmacies to accept lower reimbursement rates, demanding special “play-to-pay” fees, and kicking independent pharmacies out of their network if they refuse. What’s more, PBMs routinely collect manufacturer rebates that are supposed to lower drug prices for consumers, and then fail to pass them along to patients or plan sponsors. Brokers, pharmacy consultants, carriers, and third-party administrators have also been caught taking per-script fees, usually without the client’s knowledge.

All of this makes it nearly impossible for a plan sponsor or consumer to determine the true cost of prescription medications. And without transparent pricing information, the market fails to function efficiently. The manufacturers, pharmacies, and PBMs with the most clout and connections are rewarded, while competition withers and consumers pay ever-higher prices.

Although I am personally not in favor of more government intervention in our healthcare system, the case is already being made. A 2017 study by The Commonwealth Fund found that U.S. pharmacy spending is 30-190 percent higher than in other developed countries that don’t rely on PBMs to control prices. In addition, the two government agencies that are allowed to negotiate drug prices, the Veterans Health Administration and Department of Defense, already pay prices that are about 50 percent lower than retail.

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I believe that a free market with transparent pricing will always produce better outcomes than government control.

Perhaps government can play a role in getting us there, such as through Health and Human Services Secretary Azar’s recent proposal to eliminate the rebate system and require PBMs to negotiate fixed-price contracts. Until we realize this goal, however, benefit purchasers need to be educated, vigilant, and working with advisors and pharmacy partners who are committed to true transparency. biztimes.com / 17

Real Estate

REAL ESTATE WEEKLY – The week’s most significant real estate news → biztimes.com/subscribe

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WHO OWNS THE BLOCK? THE BREWERY COMPLEX

1124 N. 11th St. Property owner: City of Milwaukee c/o Milwaukee Public Schools Tenant: MPS Division of Facilities and Maintenance Services

5 1037 W. McKinley Ave. Property owner: Jonja Holdings LLC Tenant: Milwaukee Film 18 / BizTimes Milwaukee JULY 23, 2018

2 1037 W. Juneau Ave. Property owner: Blue Ribbon Redevelopment, Fund V LLC Tenant: Pabst Milwaukee Brewery & Taproom

6 1215 N. 10th St. Property owner: Brewery House LLC, registered to Gary Gorman Tenant: The Brewhouse Inn & Suites

3

4

1036 W. Juneau Ave. 1220 N. 11th St. Property owner: Blue Ribbon Redevelopment, Property owner: Brewer Silo LLC Fund III, Blue Ribbon Management LLC Tenant: None Tenants: Pabst Professional Center: Klement’s Sausage Co., SafeNet Milwaukee

7 1125 N. Ninth St. Property owner: Blue Ribbon Management LLC Tenant: Eleven25 at Pabst

8 1003 W. Winnebago St. Property owner: Milhaus Development Tenant: Future home of Vim and Vigor apartments

CORRINNE HESS

1

JON ELLIOTT OF MKE DRONES LLC

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Leaders are Made, Not Born.

7SEVENTY7 Milwaukee’s first residential newtower since 2012 is open.

Northwestern Mutual’s 7Seventy7, a 35-story apartment building located at 777 N. Van Buren St., is 10 percent occupied and 30 percent leased since it began accepting residents in June.

Construction work on the 310-unit building will be completed in August. The property features studio and one-, two- and three-bedroom apartments with rents ranging from $1,415 a month for a 548-square-foot studio apartment to $7,485 a month for a three-bedroom, two-and-a-half-bath unit.

The building includes 14 penthouses and 10 stories of parking.

OWNER: Northwestern Mutual Life Insurance Co. SIZE: Solomon Cordwell Buenz COST: $100 million

UGLY BUILDING: W E E N E R G I E S S U B S TAT I O N For the past two years, the Park East corridor has undergone tremendous changes led by the Milwaukee Bucks and their $524 million arena.

But one building has no hope of major alteration: We Energies’ Haymarket Substation is a necessary evil of the neighborhood.

There are no plans to remove it.

Although the substation’s address is 435 W. Vliet St., it can be seen most clearly while driving down West McKinley Avenue, or while standing near the new Bucks arena.

Built in the early 1970s, the building is in the style of the time.

A recent project included repainting and adding a new black wrought iron fence facing West McKinley Avenue, said We Energies spokeswoman Cathy Schulze.

The substation serves an important purpose, providing energy to roughly 20,000 commercial and residential customers.

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STORY COVER

MID-YEAR ECONOMIC FORECAST

TRUMP ROCKS THE

s Use

20 / BizTimes Milwaukee JULY 23, 2018

tariffs to chal

lenge U.S. t rad e part

ners

BOAT

A

By Andrew Weiland, staff writer

t the halfway point of President Donald Trump’s second year in office, several metrics show the American economy is performing very well.

The unemployment rate is at 4 percent (even lower in Wisconsin, at 2.8 percent).

The U.S. economy added more than 1.2 million jobs during the first half of the year. An Atlanta Federal Reserve analysis forecasts second quarter gross domestic product growth of 3.9 percent, which would be the best quarter for U.S. GDP growth since 2014.

Trump isn’t shy about taking credit for the state of the American economy. He’s quick to point to the $1.5 trillion tax cut he signed into law in December and reduced regulations under his administration as reasons the economy is in such good shape.

But Trump apparently isn’t satisfied with the state of the nation’s economy. Making good on one of his biggest campaign promises, Trump has taken an aggressive stance on trade issues, confronting what he called “bad deals” that are “unfair” to American businesses, workers and farmers.

The U.S. international trade deficit increased from $504.8 billion in 2016 to $568.4 billion in 2017, according to the U.S. Bureau of Economic Analysis. The largest trade deficit is with China. U.S. imports from China exceeded exports to the country by $335.7 billion in 2017 (see graph).

When he ran for president, Trump said he would “Make America Great Again.” One of his main promises was to bring back jobs from overseas with better trade agreements for the United States.

This year, Trump has instituted steel and aluminum tariffs, plus tariffs on billions of dollars of Chinese goods, in an attempt to put pressure on America’s trading partners.

But those trade partners are striking back with retaliatory tariffs that are already causing problems for American businesses.

Milwaukee-based Harley-Davidson Inc. said it will shift production of motorcycles for Europe to its international facilities to avoid up to $100 million annually in costs from tariffs applied by the European Union. MillerCoors, which brews much of its beer in Milwaukee, said the steel and aluminum tariffs will cut its profits by $40 million. Missouri-based Mid-Continent Nail Corp. laid off 60 employees in June and warned it could go out of business if it didn’t get relief from the steel tariffs (it is seeking an exemption for its supplier). North Carolina-based musical instrument synthesizer manufacturer Moog said it may have to lay off workers and move production overseas because of tariffs imposed by Trump on Chinese goods.

Trump says Americans need to be willing to endure some short-term pain for long-term gain in the trade war. He has said a trade war will be “easy to win” for the U.S. because it has such a large trade deficit that if it puts up trade barriers, such as tariffs, other countries will be forced to negotiate new trade deals that are more favorable for the U.S. He is also using tariffs to retaliate against China for intellectual property theft. biztimes.com / 21

win-win situation for the United States, as well as her trading partners.”

STORY COVER

from a campaign pledge he had made. In contrast, Canada and Mexico were excluded. A case was BIZTIMES: President Trump says he is issuing these “We are demanding from foreign countries, brought to the (World Trade Organization), pri- tariffs because of unfair trade polices by other counfriend and foe, fair and reciprocal trade. We marily by European nations, and the WTO found tries. Does he have a point? What is he talking about? have been very much taken advantage of as a in their favor in 2003. The EU proposed retaliatory Which countries have the most “unfair” trade policies country. We’ve lost our companies, we’ve lost tariffs on a range of goods that would cause partic- (from the U.S. point of view)? our jobs,” Trump said in his recent remarks ular harm to certain sectors, as well as political con- DANIELS: “All countries, including the U.S., have at the Foxconn groundbreaking ceremony in sequences. Because of the potential for an all-out unfair trade policies in certain sectors. From an Mount Pleasant. “I want to level out the playing trade war, the steel tariffs were dropped in 2004, overall viewpoint, the emerging and developing field. The smart people love it. Some people after only 19 months. The potential today is much countries tend to have the most ‘unfair’ policies. don’t understand it. But we’re going to be greater as the tariffs are spread treated fairly.” more widely and the administration However, some are concerned that a trade has threatened to counter-retaliate. war actually will not be easy to win and that it It is this second phase that I find will hurt the U.S. economy, possibly bringing most disturbing/concerning.” the long post-Great Recession expansion periKNETTER: “I don’t know that there is od to an end. a clear line between what is and is To gain insight on the tariffs and the trade not a ‘trade war.’ I do know that the issues, BizTimes Milwaukee surveyed three president is escalating tension with economists: Joseph Daniels, chair of the our trading partners by imposing Economics department at Marquette Univertariffs on many of them. If our tarDANIELS KNETTER CHAKRABARTI sity, Avik Chakrabarti, associate professor of iffs stand and they retaliate, then economics at the University of Wisconsin-Milwe are in a trade war. While the waukee and Michael Knetter, an economist who president has claimed trade wars are easy to win, I Typically, these countries are allowed by the WTO served as an advisor for presidents George don’t know his definition of ‘winning’ on this one. to give domestic sectors preference. Eventually, H.W. Bush and Bill Clinton, and is now president And by taking on so many different trading part- the sectors would become competitive and the inand chief executive officer of the University of ners who are not taking on each other, we run the comes of workers would rise, increasing both livWisconsin Foundation. risk of being an outcast.” ing standards and purchasing power. The problem CHAKRABARTI: “Yes, by all means, we are in a trade here occurs when these practices exist in large, BIZTIMES: Are we in a trade war? If so, what can we war but this time it is different: It is a trade war emerging economies, such as India and Brazil. expect? intended to end all trade wars. In the short run, Outside producers find that they cannot compete DANIELS: “It is certainly looking like that is the we should be prepared to brace for some collater- in the protected sectors in these countries with a direction we are headed. We can look back at the al damage to the extent that short-sighted foreign large population and market. There is some logsteel tariffs imposed by President (George W.) Bush governments will retaliate only to sub-serve their ic behind the policy, but the devil is in the actual in 2002. With striking similarity, these came about political bases, but the long run outcome will be a practice. China is problematic not only because of their trade practices, but also their sheer size both in production capacity and consumption capacity.”

KNETTER: “Many countries have more limitations Noteworthy U.S. trading partners - 2017 on trade than we do. A main reason is that developing economies feel a need to give some indusHong Kong $35.1 billion Surplus Deficit tries a chance to get started. Others protect some Brazil $28.5 billion sectors for political reasons, such as steel and autos in Japan and Europe. That feels unfair to U.S. firms Singapore $20.3 billion in those sectors, of course. They would like unfetUnited Kingdom $15.6 billion tered access. But has it served Japan and Europe well to protect those sectors over the long haul? AlSaudi Arabia $5.3 billion most surely not. By protecting steel and autos, they Canada $2.8 million prevent resources from flowing to higher value uses of capital. You can make a good case that the -$9.3 billion South Korea reason the tech sector has flourished in America -$13.8 billion France and almost nowhere else is because we allow market forces to drive resource allocation. If we had -$14.4 billion Taiwan kept our capital in heavy manufacturing instead, -$27.4 billion India we would not have the leading-edge tech firms.

There is only so much capital to go around.”

-$34.7 billion Italy CHAKRABARTI: “President Trump’s warning is -$56.6 billion Japan credible and his mission is to level the playing field, once and for all. Trump envisions restoring the -$66.7 billion Germany dignity of the American labor force and the role of -$68.8 billion Mexico the United States of America as the world leader promoting not only free, but fair trade for all as -$335.7 billion China well. China tops the list of countries that have been -$300 billion -$200 billion -$100 billion $0 ‘taking advantage of the United States’ through Source: Bureau of Economic Analysis

22 / BizTimes Milwaukee JULY 23, 2018

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STORY COVER ‘unfair’ trade policies. As a member of the World Trade Organization, the U.S. pledges a relatively low 3.5 percent applied tariff rate. The comparable rates are 9.9 percent for China and 5.2 percent for the European Union. For some products, the gap is even wider, e.g. for passenger vehicles, the U.S. levies 2.5 percent tariffs, compared to 25 percent in China and 10 percent in the European Union.”

BIZTIMES: Which companies and industries in Ameri-

ca will be hurt by the tariffs Trump is applying?

DANIELS: “Initially, it will be companies that are big consumers of steel and aluminum. Heavy manufacturing easily comes to mind. We are, however, already hearing reports of rising costs in commercial construction (steel and aluminum) and in residential construction (tariffs on Canadian softwood timber that Trump imposed last year). When other countries retaliate, it will be companies in sectors when there is a domestic competitor and in states where political damage can be inflicted. As an example, Harley-Davidson is an easy target for the EU as they have domestic producers, say BMW, and Wisconsin is a swing state in elections. It inflicts damage on one big producer and in the state of someone like (House Speaker) Paul Ryan. One would think that both the company and the speaker would be lobbying the administration to drop the steel and aluminum tariffs (as was the case with the Bush tariffs).”

KNETTER: “I think that will depend on the form of retaliation others adopt. In general, it will be the sectors in which we have competitive advantage, because that’s where you find American exports.”

CHAKRABARTI: “President Trump’s trade policy, cushioned by his corporate tax reform, is designed not to hurt any American company. Instead, such policies deliver his promise to protect the dignity of the hard-working American labor force. At risk are only the jobs of hardly working, overcompensated, underperforming individuals who are kept on the payroll only to sub-serve the interests of not-working networks across industries; such redundancies have accumulated due to condoned corrupt practices, but cannot be sustained in the long run.”

BIZTIMES: Will any companies and industries in Amer-

ica benefit from the Trump tariffs? If so, which ones?

DANIELS: “Initially, steel and aluminum. So, the states of Pennsylvania, West Virginia and Ohio will benefit. The costs however, will be felt nationally. Another way to put it is that targeted tariffs tend to favor one or only a few companies (recall Trump’s attempt to impose, at Boeing’s request, very high tariffs on Bombardier). Their costs are spread out, though.”

KNETTER: “The ones that get relief from foreign competition due to the tariffs.”

CHAKRABARTI: “Immediate gains will be visible in import competing industries directly benefiting from the most recent tariffs, e.g. steel and aluminum. In the long run, any American company in24 / BizTimes Milwaukee JULY 23, 2018

vesting the cost savings accruing from President Trump’s corporate tax reforms in sharpening its competitive edges by compensating workers based on performance will benefit from a fair trade policy. For instance, a company like Harley-Davidson fears rising costs of steel and aluminum and higher prices of its motorcycles: The same company’s longrun gains will far outweigh any such anticipation of short-term losses if the right choices are made now by responding rationally to the economic incentives built into the corporate tax reforms. Shipping jobs overseas, yielding to threats of retaliation from desperate foreign governments, can erode such long-term gains.”

BIZTIMES: Is the Trump trade policy putting the

American economy and the global economy at risk of a recession?

DANIELS: “I prefer not to answer the question in the context of a recession. It is bad policy, whether it causes a recession or not. We are fortunate that there are very strong tailwinds for both the U.S. economy and for many foreign economies. Of course, everyone wants to credit the tax cut. It is important to recall that tariffs are taxes and Trump has just increased taxes on U.S. companies and consumers. If a tax cut is good, then the logic follows that the introduction of new taxes (tariffs) is bad. When did the GOP start thinking that taxes are good as long as we spread them out over most Americans?”

KNETTER: “Yes it is. The Smoot-Hawley tariffs of the 1930s are considered to be a big factor in the Great Depression. Trade policy changes cause large, disruptive and capricious frictions in resource allocation – what gets produced where. That causes unemployment in the short term and enormous uncertainty for companies considering whether and where to expand. Just ask Harley-Davidson.”

CHAKRABARTI: “No, President Trump’s policies are clearly designed to place the American economy on a track of unprecedented economic growth which will improve the lives of the working people.”

BIZTIMES: The U.S. has a trade surplus with Canada.

Are you surprised Trump has gotten into a spat with its prime minister over trade?

DANIELS: “I am surprised it happened because it is silly. Of course, Canada is not a security threat.

Indeed, just the opposite. We not only share a border, but integrated waterways, energy grids, roadways and supply chains. On average, 25 percent of the products shipped from Canada to the U.S. market consist of U.S. inputs or material. I am not surprised, though, as Trump lost the battle on Bombardier tariffs and Canadian Prime Minister (Justin) Trudeau was not only the host and focus of the G7 summit, he and the other leaders did not back down to Trump. Egos became an issue.”

KNETTER: “Nothing the president does can be considered a surprise at this point. He is sufficiently unpredictable that the one thing we know is we don’t know what might be coming next.”

CHAKRABARTI: “No. Whether a foreign country

runs a trade deficit or a surplus with the United States of America, negotiations over any distribution of the gains from trade credibly signals President Trump’s commitment to put the American economy first.”

BIZTIMES: How is Wisconsin’s economy going to be

affected by the tariffs?

DANIELS: “Being very reliant on manufacturing and agriculture, this is a real threat to our state economy. Manufacturing will be better off than agriculture as the state tax system is favorable to manufacturers and Foxconn construction will give the sector a boost (evident by all the earth moving and construction equipment headed that way).”

KNETTER: “It depends on how others retaliate against U.S. actions.”

CHAKRABARTI: “In the short run, the export markets of some local companies will be affected by retaliations from foreign governments. In the long run, Wisconsin’s economy is poised to gain significantly from President Trump’s trade policies and corporate tax reforms while the state’s leadership continues to remain business- and worker-friendly. Wisconsin’s unemployment rate is at a record low 2.8 percent. Recent pledges by Foxconn to hire 13,000 workers, place its North American corporate headquarters in nearby Milwaukee, and spend up to $10 billion on the plant, are early signs of an even stronger outlook for the local economy.”

BIZTIMES: Trade policy aside, how do you think the

U.S. economy is doing in general right now? What impact is the federal tax cut having?

DANIELS: “The U.S. economy is doing well. Reducing regulations and lowering taxes on corporations generated a great deal of optimism. U.S. companies repatriated a large amount of money, but also increased investment abroad. Of course, stock buybacks reached new levels, as well. The impact on the real economy was not felt in the first quarter, but should be in the second. The negatives are that the tax cuts factor into Fed interest rate increases and we are looking at a massive fiscal deficit.

Spending has to be brought under control or else the long-run consequence will be negative.”

KNETTER: “The economy has great momentum, due at least in part to reduced regulatory burdens (although trade actions are a form of increased regulatory burden), corporate and personal tax cuts, expectations of greater infrastructure spending, and broad-based global growth. Consumers and producers have higher confidence, which is good for consumption and investment. Escalating trade actions can undermine all of that by raising prices, increasing uncertainty and creating geopolitical tensions that may have other unintended consequences.”

CHAKRABARTI: “The United States economy is well positioned to experience unprecedented growth.

The federal tax cut is fueling the American economy, now in the ninth year of its expansion. Business sentiment and consumer confidence are at their peaks, while the proportion of Americans in their prime working years (25 to 54) who are working is at its highest level since 2008.” n

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State, area business leaders remain optimistic heading into Q3

By Andrew Weiland, staff writer

26 / BizTimes Milwaukee JULY 23, 2018

WISCONSIN AND MILWAUKEE-AREA business leaders remain optimistic about the economy and their businesses, according to recent surveys from Wisconsin Manufacturers & Commerce and the Metropolitan Milwaukee Association of Commerce.

In the WMC survey, with 203 respondents, 81 percent said the U.S. economy is “strong” or “very strong,” up from 58 percent who said so at the start of the year. Eighty percent said the Wisconsin economy is “strong” or “very strong,” up from 70 percent at the start of the year.

“The landmark federal tax reform, along with other pro-business actions by the Trump administration, seems to be driving the optimism,” said Kurt Bauer, president and chief executive officer of the WMC. “Reversing the expensive and stifling policies of the previous administration isn’t just creating more optimism, it is also BAUER increasing employment, wages and driving stronger GDP growth.”

The Federal Reserve Bank of Atlanta forecasts second quarter GDP growth of 3.9 percent.

Local executives also remain optimistic, according to a survey of MMAC members.

Optimism levels for the third quarter mostly improved compared to the second quarter outlook, and optimism for all of 2018 remains about the same as at the beginning of the year.

The MMAC’s Business Outlook Survey contains responses from 98 Milwaukee-area firms.

Of the businesses surveyed by the MMAC, 74 percent expect rising sales levels during the third quarter, up from the 71 percent who predicted sales gains in the second quarter.

Sixty-eight percent expect profit increases

in the third quarter, up from the 66 percent who predicted profit increases in the second quarter. Fifty-seven percent plan to increase employment in the third quarter, down from the 61 percent expecting to add jobs during the second quarter.

For all of 2018, 81 percent now expect sales increases, compared to 80 percent who predicted that at the beginning of the year; 72 percent expect profit increases this year, down from 75 percent at the start of the year; and 68 expect to increase employment this year, down from 69 percent at the beginning of the year.

“Solid levels of optimism were expressed by area companies, both for the third quarter and for 2018 as a whole,” said Bret Mayborne, the MMAC’s economic research director.

“Over the course of 2018’s first five months, the area’s overall job trend showed marked improvement, parMAYBORNE ticularly in manufacturing.

Survey results suggest that local businesses expect this trend to continue into the third quarter and beyond.”

Only two percent of those responding to the MMAC survey plan to reduce employment during the third quarter, while 41 percent predict no change. “(The) survey results suggest job gains will continue into 2018’s third quarter,” Mayborne wrote in his report. “While the percentage seeing job increases is down somewhat from second-quarter expectations, it remains at the high end of the range of optimism expressed in the current expansionary period.”

With the unemployment rate in Wisconsin now at 2.8 percent, some employers are strug-

gling to find workers they need, which could put upward pressure on wages. Respondents to the MMAC survey said they plan to increase wages and salaries by an average of 3.5 percent over the next 12 months, which is down slightly from the 3.6 percent increase forecast three

months ago.

In the WMC survey, 55.5 percent of business leaders say they expect wages to grow above 3 percent in the next six months.

Of the WMC survey respondents, 72 percent said the new federal tax law has resulted

in savings for their companies. Of those, 72 percent said they would reinvest the savings in their companies and 33 percent said they would use the tax savings to increase wages and benefits. Twenty-five percent said they would use the tax savings to hire additional workers. n

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Stock market had volatile first half of year

By Andrew Weiland, staff writer STOCK MARKET INVESTORS enjoyed strong gains in 2017, but the market has been much more volatile and posted mixed results during the first half of 2018.

After rising 25 percent in 2017, the Dow Jones Industrial Average dipped 2 percent during the first half of this year. The S&P 500 rose 19 percent in 2017, but then rose just 1.7 percent during the first half of 2018.

The tech-heavy Nasdaq index fared better, growing 8.8 percent in the first half of this year after a 28 percent increase in 2017.

For the publicly traded companies based in southeastern Wisconsin, losers outnumbered gainers by a more than 2-to-1 ratio during the first half of the year. In 2017, local gainers far outnumbered losers.

The biggest local gainer during the first half of 2018 was Racine-based Johnson Outdoors Inc., which saw its stock price rise 36 percent to $84.53 a share.

In May, the company reported a 54 percent increase in second-quarter net income, to $21.6 million, compared to $14 million a year ago, and an 11 percent increase in net sales, to $165.8 million.

Johnson Outdoors is a manufacturer of outdoor recreational products such as watercraft, diving equipment, navigational products and outdoor clothing.

“We continue to benefit from our dedicated focus on consumer-driven innovation that delivers bigger, better marketplace success, most notably in Fishing, our largest and most profitable business,” said Helen Johnson-Leipold, chairman and chief executive officer of Johnson Outdoors. “Excitement for our 2018 product lineup remains strong, giving us a great start to the year and positioning our brands for continued marketplace success.”

The second-best local stock during the 28 / BizTimes Milwaukee JULY 23, 2018

first half of 2018 was Menomonee Falls-based department store chain Kohl’s Corp., which gained 34 percent, to $72.90.

The changing retail landscape, led by the rapid expansion of Amazon, has created major challenges for brick-and-mortar retailers, forcing many to close stores in recent years. But Kohl’s posted strong first-quarter results, with a 14 percent increase in net income and a 3.5 percent increase in revenue.

“We are very pleased with our strong start to the year,” Kohl’s chief executive officer Michelle Gass said during the company’s first quarter earnings call. “Our strategies are gaining traction and we have momentum. I look forward to working with the team as we continue to focus on delivering solid execution, innovating for the future and continuing to enhance our culture of speed and agility in this dynamic retail environment.”

The third-best local stock during the first half was Milwaukee-based Douglas Dynamics Inc., which manufactures truck equipment, including snow plows. Its stock price rose 27 percent, to $48, during the first half of the year.

The company’s first-quarter net sales were up 16 percent, to $84 million. The increase was driven by improved snowfall and overall increased demand compared to the same period a year ago, the company said.

The biggest declining local stock during the first half of the year was Milwaukee-based specialty vehicle manufacturer REV Group Inc., which saw its stock price fall 48 percent, from $32.53 at the start of the year to $17.01 at the end of June.

The company reported $7.4 million in net income for the second quarter, an increase of 9.2 percent from a year ago, and net sales of $608.9 million, up 11.7 percent compared to a year ago. However, REV Group’s second-quar-

ter adjusted EBITDA of $34.1 million was down 9.2 percent from a year ago.

“Our fiscal second-quarter results were below our expectations and were impacted by a number of factors,” said REV Group CEO Tim Sullivan. “In particular, cost inflation across many of the commodities and services we buy was significant in the quarter and due to the length of our backlogs, we were not able to mitigate these increases. We estimate the cost inflation will have an approximate $19 million impact on our current fiscal year. Additionally, production and sales at several of our business units were adversely impacted by the availability of chassis. Finally, margins were impacted by lower-than-expected sales of certain higher-content product categories, including custom fire apparatus, large commercial buses and Class A RVs.” The company in June announced a $1.9 million restructuring effort, expected to generate $20 million in annualized savings. The plan included the closure of REV Group’s Miami office and consolidation of some production operations.

“We have taken mitigating action across our business to drive targeted margin expansion,” Sullivan said. “First, we have implemented price increases and surcharges to offset material and service cost increases for all new orders.

Second, we have implemented a series of significant cost and spending reduction actions, including: supply chain actions, consolidations of certain facilities, and reductions in overhead headcount and spending. Third, we have continued to add talent in several key areas of our business that we believe will help accelerate our long-term growth objectives.”

The other biggest local stock decliners during the first half of 2018 were: Manitowoc Co. Inc., which recently moved its headquarters to Milwaukee, saw its stock price fall 34 percent, to $25.86; Milwaukee-based ManpowerGroup Inc.’s stock fell 32 percent, to $86.06; and Wauwatosa-based Briggs & Stratton Corp.’s stock fell 31 percent, to $17.61. n

Milwaukee-area stock performance TICKER

COMPANY NAME

1/1/18 PRICE

6/30/18 PRICE

% CHANGE

JOUT

Johnson Outdoors Inc.

$62.09

$84.53

36%

KSS

Kohl’s Corp.

$54.23

$72.90

34%

PLOW

Douglas Dynamics Inc.

$37.80

$48.00

27%

WEYS

Weyco Group Inc.

$29.72

$36.40

22%

MCS

Marcus Corp.

$27.35

$32.50

19%

ATU

Actuant Corp.

$25.30

$29.35

16%

FISV

Fiserv Inc.

$65.57

$74.09

13%

RXN

Rexnord Corp.

$26.02

$29.06

12%

ASB

Associated Banc-Corp.

$25.40

$27.30

7%

GNRC

Generac Holdings Inc.

$49.52

$51.73

4%

BRC

Brady Corp.

$37.90

$38.55

2%

WSBF

Waterstone Financial Inc.

$17.05

$17.05

0%

JASN

Jason Industries Inc.

$2.37

$2.32

-2%

SXT

Sensient Technologies Corp.

$73.15

$71.55

-2%

WEC

WEC Energy Group Inc.

$66.43

$64.65

-3%

WBB

Westbury Bancorp Inc.

$23.00

$22.24

-3%

AOS

A.O. Smith Corp.

$61.28

$59.15

-3%

BMI

Badger Meter Inc.

$47.80

$44.70

-6%

TWIN

Twin Disc Inc.

$26.57

$24.82

-7%

SNA

Snap-on Inc.

$174.30

$160.72

-8%

QUAD

Quad/Graphics Inc.

$22.60

$20.83

-8%

ESNC

EnSync Inc.

$0.40

$0.37

-8%

MOD

Modine Manufacturing Co.

$20.20

$18.25

-10%

DOC

Physicians Realty Trust

$17.99

$15.94

-11%

JCI

Johnson Controls International plc

$38.11

$33.45

-12%

GDI

Gardner Denver Holdings Inc.

$33.93

$29.39

-13%

ROK

Rockwell Automation Inc.

$196.35

$166.23

-15%

HOG

Harley-Davidson Inc.

$50.88

$42.08

-17%

APAM

Artisan Partners Asset Management Inc.

$39.50

$30.15

-24%

KOSS

Koss Corp.

$3.09

-$2.35

-24%

MTG

MGIC Investment Corp.

$14.11

$10.72

-24%

STRT

Strattec Security Corp.

$43.55

$30.55

-30%

BGG

Briggs & Stratton Corp.

$25.37

$17.61

-31%

MAN

ManpowerGroup Inc.

$126.11

$86.06

-32%

MTW

Manitowoc Co. Inc.

$39.34

$25.86

-34%

REVG

REV Group Inc.

$32.53

$17.01

-48%

All data gathered by Robert W. Baird & Co. from Factset Research Systems. This information has been obtained from sources we consider reliable, but we cannot guarantee the accuracy.

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Harley riders near the company’s headquarters in Milwaukee.

Trade disputes create uncertainty for manufacturers

By Arthur Thomas, staff writer FOR MILWAUKEE-BASED Harley-Davidson Inc., the back and forth over new tariffs imposed by President Donald Trump and the response from the European Union and other countries has led to some unwanted attention, higher costs and long-term business decisions.

Harley estimated the EU’s decision to increase motorcycle tariffs from 6 to 31 percent would add $2,200 to the cost of each motorcycle it sells there. In the short-run, Harley will absorb those increased costs, believing it cannot be competitive by passing them along to dealers and customers. Harley also plans to move production of European motorcycles to facilities in Brazil, India and Thailand to avoid the tariffs.

Announcing the foreign production plan drew the ire of Trump, who repeatedly attacked the company on Twitter, in interviews and during remarks at the recent Foxconn Technology Group groundbreaking in Mount Pleasant.

Most manufacturers will not face Trump’s wrath as they approach dealing with new tariffs, but that does not mean there is no impact from the escalating conflicts over trade.

“If there’s an opportunity to raise prices of any kind, people take advantage of the situation,” said Tim Sullivan, chief executive officer of Milwaukee-based specialty vehicle maker Rev Group Inc., which saw a $19 million increase 30 / BizTimes Milwaukee JULY 23, 2018

in costs as Trump implemented new steel and aluminum tariffs.

Sullivan acknowledged the increase isn’t huge in the context of $1.8 billion in annual purchases.

“It’s not that bad, but it all came at once,” he said.

The increases did not all come from steel and aluminum products, either. The largest increase was on plywood.

“It’s false inflation driven by the scare and the turmoil,” Sullivan said.

When suppliers begin increasing prices, Sullivan said Rev Group tries to push back and threatens to find other vendors.

“There are alternatives,” he said. “It’s just a matter of doing the heavy lifting to go get them.”

In some cases the company has other pre-qualified suppliers to which it can turn, but in other cases it has to start fresh. Either way, spreading the supply chain over more vendors creates inefficiencies, while also taking focus away from other work.

“It stymies other positive efforts that you could be using to help grow your business,” Sullivan said.

The country’s steel mills and aluminum producers do stand to benefit from the new tariffs, but only a little more than 3 percent

of Wisconsin’s manufacturing workforce is in primary metal manufacturing, with the majority in foundries. The state’s largest manufacturing subsectors include fabricated metal products, food and machinery.

“Having spent 30 years in business, I did not ever run across a tariff I enjoyed,” said Doug Fisher, director of the Marquette University Center for Supply Chain Management.

He said tariffs are either protecting an industry that’s not cost competitive or going after an industry another country is supporting, potentially leading to a back and forth escalation.

Trump’s actions on trade may be more about addressing abuses of intellectual property protections by other countries, Fisher suggested.

“I think that’s the real long game that Trump is playing,” he said. “We’re kind of the big dog and I think he’s using tariffs because he can’t get anyone’s attention otherwise.”

Whatever the end goal, the question for manufacturers is: How long will the trade disputes continue? Will things revert to more normal conditions after the mid-term elections or will the fight drag on for years?

“From a supply chain perspective, I hate uncertainty,” Fisher said. “Right now, it’s pretty messy.”

For businesses heavily dependent on imports for raw materials and components, there are a host of options, from finding new suppliers to redesigning products to absorbing increased costs. George Bureau, vice president of consulting services at Wisconsin Manufacturing Extension Partnership, said businesses

"I think that's the real long game that Trump is playing.

We're kind of the big dog and I think he's using tariffs because he can't get anyone's attention otherwise."

— Doug Fisher, Marquette University Center for Supply Chain Management.

President Donald Trump addressed Harley’s actions during remarks at Foxconn’s groundbreaking in late June.

should also look to improve their operations.

“As people have gotten busy, what we see is there’s a tendency at times for waste factors to increase,” he said. “If you’re running more than 5 percent waste or even 3 percent waste, how do you cut it in half?”

Bureau added businesses should also be proactive and transparent in preparing customers for

potential price increases or shipment delays.

“People often will give you a little bit more latitude if you’ve communicated,” he said.

On the export side, Bureau noted not every country is leveling retaliatory tariffs in the same way, so businesses that are shipping into multiple markets have a better chance of weathering the storm.

“This comes back to classic diversification,” he said, adding exporting is just one way to sell internationally, and companies could explore licensing or producing in other countries.

While the trade disputes present challenges for manufacturers, Bureau said companies should focus on what they can change.

“There’s no sense fretting over stuff you can’t control,” he said.

He pointed to developing strategies for addressing workforce shortages as one area to focus instead. Fisher said businesses could also implement advanced manufacturing technology to offset increased costs.

“Maybe this is a catalyst, a little nudge, for some of these companies to step up,” Fisher said. n

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Wage growth in Wisconsin outpacing U.S.

By Arthur Thomas, staff writer THE SIGNS ARE EVERYWHERE. “Help wanted!” “Now hiring!” “Apply today!”

Employers throughout southeastern Wisconsin do not shy away from discussing how they are having a hard time finding the job candidates they need.

While the lack of available talent has been a common complaint amongst businesses over the past several years, data from the U.S. Bureau of Labor Statistics suggest average wages for private sector employees in Wisconsin have increased faster than the United States as a whole over roughly the past two years.

“Before it was if you wouldn’t pay a competitive wage, you weren’t getting the quality people that you need,” said Mark Milan, marketing

manager at Brookfield-based staffing firm QPS Employment Group.

At this point, he said, not paying competitive wages generally leads to not finding any workers at all.

Even as unemployment rates kept falling statewide, some employers may have been hesitant to raise wages. But Milan said pay is going up across the board.

“I’d say the majority (of employers), though, are coming around to paying more competitively,” he said.

In May, for example, the average weekly private sector wage in Wisconsin increased 6.4 percent from the same time in 2017, to $869.66.

Nationwide, the increase was 3.1 percent, to

$923.98. Account for inflation, and Wisconsin’s average wage was up $29.36 per week while the country’s was up just $2.27 per week.

Wage gains outpacing the national average are not a one-month phenomena for the state, either. Wisconsin averaged a year-over-year increase of 5.7 percent in the first five months of 2018, compared to 2.7 percent for the U.S. For all of 2017, the state averaged an increase of 3.6 percent, while the country averaged 2.8 percent.

Metro Milwaukee has seen a similar trend, with wages increasing 4.9 percent in May compared to the same time last year and averaging a 5.6 percent year-over-year increase in the first five months of 2018. The region also averaged an increase of 4.1 percent in both 2017 and 2016, outpacing U.S. wage growth both years.

The wage growth roughly coincides with when the state’s unemployment rate dipped below 4.5 percent. It has continued to trend downward, reaching a seasonally-adjusted 2.8 percent in April and May. “We’re not anticipating, at least in the near future, that those numbers are going to get any higher,” Milan said. “We’re anticipating it’s still going to be a struggle to find workers.”

Milan said the one area where QPS has been able to find help is from the retail sector, which has been hit by the bankruptcy and subsequent store liquidations of Boston Store parent company Bon-Ton Stores Inc. and JCPenney’s decision to close its Wauwatosa distribution facility.

Monthly wage data is not available for the retail industry at the local level, but quarterly data from 2017 showed a 2.8 percent increase in average retail wages statewide and a 2.9 percent increase in metro Milwaukee. Average retail wages were up 2.7 percent statewide, according to the quarterly data from the Bureau of Labor Statistics.

Milan said QPS has found potential employees coming out of the retail setting can often transition to office work or cleaner manufacturing environments.

For the 12 months ending in May, Wisconsin’s trade, transportation and utilities sector has seen an average year-over-year increase in

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Average year-over-year wage increase 6% 5% 4% 3% 2% 1% 0%

Statewide

Metro Milwaukee

USA

May ‘18

Mar ‘18

Jan ‘18

Nov ‘17

Sep ‘17

Jul ‘17

May ‘17

Mar ‘17

Jan ‘17

Nov ‘16

Sep ‘16

Jul ‘16

May ‘16

Mar ‘16

Jan ‘16

Nov ‘15

Sep ‘15

Jul ‘15

May ‘15

Mar ‘15

Jan ‘15

-1%

*Average for previous 12 months SOURCE: U.S. BUREAU OF LABOR STATISTICS

wages of 7.5 percent. The sector includes retail trade, but also brings in wholesale trade and other industries.

The largest increase statewide has been in financial activities, up an average of 8.1 percent.

Professional and business activities wages increased an average of 3.8 percent, education and health services averaged a 3.1 percent increase, leisure and hospitality improved 2.1 percent, and construction averaged just a 1.9 percent increase.

Statewide, wages in the manufacturing sector increased an average of 4.7 percent, but pay for production workers was up just 2.9 percent.

In metro Milwaukee, however, production wages averaged an 11.9 percent increase and were up 8.5 percent within durable goods manufacturing. Private sector wages for the area, which included Milwaukee, Waukesha, Ozaukee and Washington counties, averaged a 5 percent increase.

“I don’t see wage increases stopping anytime soon,” Milan said, noting that not long ago, wage increases of 25 or 50 cents per hour were enough, but now some companies are adding $2 or $3 to base wages.

Sheboygan County, for example, saw wages increase 9 percent in May and averaged a 5.8

percent increase for the 12 months ending in May. The one area that has seen a decrease in private sector wages is Racine County, which averaged a year-over-year decrease of 2.5 percent and was down 8.9 percent in May. Wages have declined for nine straight months.

The arrival of Foxconn Technology Group in Mount Pleasant could help end that streak, depending on how successful the company is in creating its planned 13,000 jobs in the coming years. Milan acknowledged Foxconn is still an unknown, not just for Racine and Kenosha counties, but for southeastern Wisconsin as a whole. n

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The Kimpton Journeyman Hotel in Milwaukee’s Historic Third Ward was developed with some EB-5 funding.

EB-5 has helped fund development in Milwaukee, but changes loom

By Corrinne Hess, staff writer WHEN IRGENS PARTNERS LLC began working on financing the $132.6 million BMO Harris Financial Center the company is developing in downtown Milwaukee, it found the marketplace did not have a huge appetite to take on a loan of that size.

BMO Harris Bank, which will be the namesake of the 25-story office tower and its anchor tenant, occupying the building’s first and 11th through 16th floors, agreed to provide a loan.

But the loan amount was not enough to cover the entire cost of construction.

So Irgens engaged FirstPathway Partners, a Milwaukee-based regional center that administers the federal government’s EB-5 Immigrant Investor Program.

FirstPathway Partners is now working with Irgens to raise $17 million in EB-5 financing for the project, which will reduce the mortgage term loan and replace $6 million of equity.

Irgens is not getting any city assistance to finance the new office tower. “(FirstPathway is) raising the money now and we have structured it so they have two years to bring it into the project,” said Duane Nolde, executive vice president of real estate 34 / BizTimes Milwaukee JULY 23, 2018

finance at Irgens.

Rob Oldenburg, vice president of development at Irgens, said the more Irgens learned about FirstPathway Partners, the more it became clear that it and the EB-5 program was the best option to fill the funding gap for the BMO tower.

“We loved that this was a local company finding investors for a local project,” Oldenburg said. “So far, we have been very pleased.”

The EB-5 program provides green cards for foreign investors that make an investment that creates jobs in the United States. Under the program, FirstPathway Partners works with investors in 38 countries who invest at least $500,000 in a project in exchange for temporary green cards for themselves and their families (children up to age 21). Their investment has to produce 10 jobs in the United States within two years in order for them to get a permanent green card or citizenship.

EB-5 was created by Congress in 1990 as a way to stimulate the U.S. economy through job creation and capital investment by immigrant investors.

International businessman and entrepre-

neur Robert Kraft established FirstPathway Partners in 2007. It was one of the first 20 EB-5 regional centers. Today, there are more than 900 centers nationwide.

Several real estate development projects in Milwaukee have been financed at least in part by the EB-5 program. But since about 2011, growth in the number of regional EB-5 centers across the country has had an adverse effect on mid- to small-sized cities, such as Milwaukee, as developers in Los Angeles and New York have discovered the program and used it as part of their capital stack.

The problem is there are only 10,000 visas available per year and more than a quarter of them are going to projects in Manhattan, which is not following the original spirit of the law, Kraft said.

The number of visas is not the number of investments being made. Most investors apply for three visas, so there is an average of 3,333 investments per year, totaling $1.6 billion nationwide.

FirstPathway Partners’ work can be seen all over the region. EB-5 funds helped develop the Aloft, Marriott and Kimpton Journeyman hotels in Milwaukee, the Global Water Center in Walker’s Point, the Hampton Inn in West Allis, UWM Innovation Campus in Wauwatosa and DeltaHawk Engines expansion in Racine.

Three of those projects, the Aloft, DeltaHawk and UWM research park, have gone full cycle, with investors already receiving their return.

EB-5 funding is being used to fill a financing gap for the BMO Harris Financial Center.

“There are fewer than 10 centers in the country that have returned money to investors,” Kraft said.

The success of FirstPathway Partners has not gone unnoticed; Kraft was recently elected to serve as board chair of IIUSA, the national membership-based not-for-profit industry trade association for the EB-5 Regional Center Program.

With his role at the national level, Kraft has been able to oversee Congressional changes that have been discussed concerning the EB-5 program.

The United States Senate Judiciary Committee held a hearing in June to discuss programmatic reform, which would include increasing

the immigrant investment from $500,000 to $1.35 million by the end of September.

“Doing so would kill the program,” Kraft said, adding that he would be OK with raising the minimum to $800,000 to keep up with inflation.

Another consideration is to tighten the target employment area. For an investor to be eligible for the EB-5 visa, the project has to be in an area that has an unemployment rate of more than 150 percent of the national average calculated by the Bureau of Labor Statistics.

In Milwaukee, nearly every project meets the target under the current area calculations.

Because of the economic impact the EB-5 program has created, lawmakers from both par-

ties, including Sen. Ron Johnson (R-Oshkosh), Rep. Gwen Moore, (D-Milwaukee), and House Speaker Paul Ryan (R-Janesville) have supported the program, Kraft said.

FirstPathway Partners and all of the regional centers would like to see more visas added, which is unlikely given the current political climate, he said.

Kraft also hopes Congress does not make any changes that will kill a program that has brought so much value to so many cities.

“Increasing the minimum to $1.35 million would not only be devastating to Milwaukee, but it would be devastating to the industry,” Kraft said. n

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Call for Nominations BizTimes Media presents the fourth annual awards program to salute southeastern Wisconsin’s best corporate citizens and most effective nonprofit organizations.

The awards will shine a light on excellence in philanthropy and nonprofit leadership. The recipients of the awards will be saluted at a breakfast program on November 2nd, 2018.

Nominate the people and for-profit organizations who are making a positive difference in the community by donating their time, talent and treasure. Nominate the nonprofit organizations that are making the region a better place to live, work and play. Self-nominations also are encouraged!

36 / BizTimes Milwaukee JULY 23, 2018

Corporate Citizenship Awards • Corporate Citizen of the Year • Next Generation Leadership • In-Kind Supporter • Corporate Volunteer of the Year • Lifetime Achievement Nonprofit Organizations, Leadership & Support Team Awards • Nonprofit organization of the year (Small & Large Categories) • Nonprofit Collaboration of the year award • Nonprofit Executive of the Year • Social Enterprise

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market will slow down.”

The only thing holding back a higher volume of sales is the availability of homes for sale. And there doesn’t appear to be any way to remediate that issue any time soon.

The supply of homes for sale is not close to keeping up with demand, which continues to increase, Ruzicka said.

“We’ve seen an increase in household creation in the last 10 to 12 years, which before was easy to accommodate,” Ruzicka said. “Now, we can’t accommodate them, which is why when kids graduate college they live with their parents or find an apartment; but apartments are expensive.”

There were 2,459 new housing permits in the state from January through April, according to the Wisconsin Builders Association’s most recent data. That is down 2 percent from the same time in 2017.

Of those, Milwaukee County had 44 permits pulled, Racine County had 81, Kenosha County had 62, Waukesha County had 320, Ozaukee County had 58 and Washington County had 105.

Ruzicka said he would love to see more condominiums built but so far, with the exception of a few small condo developments that have been announced, that is not happening.

“Apartments are fine for a few years, but most people want to build equity,” Ruzicka said. “What is interesting is because the first-time market is generally looking under $300,000 and the baby boomers want to downsize, they are competing for the same homes.”

In the four-county metro Milwaukee area, homes under $300,000 accounted for 68 percent of the homes sold in June. Of those, 85 percent sold within 60 days.

During that same time, there were 409 fewer homes listed for sale in the area than June of 2017.

Over the next six months to a year, Ruzicka expects these types of trends to continue.

“If you sell your house, you will probably get in the low single digits (percent) above what you could have gotten last year,” he said.

“Depending on the condition and the school district, it could go up more. And you can probably expect multiple offers.” n

A home for sale in Milwaukee’s Washington Heights neighborhood.

Home sales could slump as inventory continues to remain tight

By Corrinne Hess, staff writer THE SHORTAGE OF HOMES available on the market for millennials looking to purchase their first house, baby boomers hoping to downsize and everyone in between will continue to be tight for the next 18 months to two years, industry experts say.

This has been the trend since the housing market rebounded in 2015 – about six years after the Great Recession – when more homeowners were able to sell their homes for more than what they had paid for them.

The recent frustration, of course, has been on the buyer’s side, as some homes located in good school districts and the hottest neighborhoods sell well above asking price and many have multiple offers.

“It is a really tight market and because of that, things are selling at or over asking,” said Toni Spott, a realtor with Keller Williams Realty. “But still, even in this market, it has to be a decent house and has to appraise out by the bank.”

Spott recently met with a financial advisor who said within the next 18 months to two years, there will be a glut of homes on the market and the prices will begin to go down.

“I do think we’re at a little bit of a bubble again,” Spott said.

Mike Ruzicka, president of the Greater Milwaukee Association of Realtors, said that if the economy hits a lull or interest rates go up within the next 18 months to two years, sales could slow down.

“The pie of listings seems to be getting smaller, and as the number of listings decrease, buyers might go away,” Ruzicka said.

In just the past two months, home sales,

which had been increasing month after month for more than a year, have been down.

In May, home sales fell in the metropolitan Milwaukee market for the first time in 2018, down 2.7 percent. Home sales were down 8.5 percent in June, with 221 fewer homes sold last month than in June of 2017.

Home sales in the metro area for the first half of the year were flat compared to the first half of 2017, with 10,247 homes sold so far in 2018. Still, the totals through the second quarter, for both 2017 and 2018, were the strongest since 2005, when 10,282 units sold.

“Despite a decline in sales over the last two months, and an even second quarter, the building blocks of the local economy and housing market are pretty solid,” Ruzicka said. “Many homes in good school districts, in move-in condition and priced under $300,000 are receiving multiple offers. And there are no signs that the

Southeastern Wisconsin home sales First half of 2018

First half of 2017

Homes sold

Average price

Homes sold

Average price

Milwaukee County

5,886

$184,902

5,715

$175,731

Waukesha County

2,731

$327,182

2,852

$317,570

Washington County

996

$261,931

1,009

$228,794

Ozaukee County

636

$354,452

644

$316,843

Racine County

1,342

$194,040

1,382

$176,610

Kenosha County

1,164

$204,866

1,108

$193,521

Walworth County

843

$312,419

931

$284,256

SOURCE: GREATER MILWAUKEE ASSOCIATION OF REALTORS.

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Tariffs not heavily impacting wealth management strategy—yet

By Molly Dill, staff writer

38 / BizTimes Milwaukee JULY 23, 2018

AS U.S. PRESIDENT Donald Trump and his counterparts across the world place tit for tat tariffs on each other’s goods, the stock market is yo-yoing in response.

Area wealth management advisors are fielding some calls from concerned clients, but say they haven’t made major strategic changes at this point.

“It’s certainly the prominent headline news item that is impacting markets, but at this point in time, we have not done anything in the portfolios that’s defensive,” said Dave Isaacson, chief investment officer of Schenck Investment SoluISAACSON tions in Milwaukee.

Isaacson emphasized that while large numbers like $200 billion are being thrown around, only $34 billion in tariffs have actually been enacted. And comparing the goods that are being discussed relative to the $20 trillion size of the U.S. economy, there’s less of a concern.

The unpredictable nature of a tariff dispute or trade war makes it difficult to change course anyway, said Bob Lawton, president of Lawton Retirement Plan Consultants LLC in Milwaukee.

“Typically, when there is an unknown like there is with tariffs, it weighs negatively on markets,” Lawton said. “To a certain extent, LAWTON that’s happened and we’ve been trading sideways in the markets right now

because this whole tariff thing is overhanging everything, but no one knows what’s going to happen. It’s kind of risky to adjust a wealth management strategy when you really don’t know what’s going to happen.”

Pam Evason, managing director at Windermere EVASON Wealth Advisors in Milwaukee, is less concerned about the immediate impact of tariffs on the stocks of impacted companies, and more focused on the secondary impacts that could result.

“All of those secondary impacts could really impact the length and duration of the expansion and the ongoing bull market,” Evason said.

“There’s all this secondary layer that is more concerning to us than the direct dollar.”

Among those potential second-wave effects are rattled consumer confidence and reduced spending, businesses deciding not to invest in capex projects and manufacturers moving production overseas, she said. The strong labor and housing markets, global growth and corporate earnings the economy is experiencing right now could start to weaken.

“It would depend on the magnitude, obviously, of what happens, but I’d say we’d be looking at six to 12 months before these things would be visible,” Evason said.

If the trade dispute continues to escalate, it’s a headwind that shouldn’t be ignored, she said. But the strength of the economy is outweighing most tariff impacts for now.

“We continue to have an incredibly strong

job market, not only here in Wisconsin, but also across the United States,” Isaacson said.

“There’s a lot of very powerful economic and corporate trends here in the U.S. that have the ability to absorb some of the negative things that come out of trade tariffs.”

Schenck has maintained overweight positions in mid-cap and small-cap strategies in the U.S., which it originally put in place because of federal tax reform and has continued because of the tariffs, Isaacson said.

“The trade tariffs, it’s going to be more industry specific,” he said. “This could potentially have impact on the John Deeres of the world and the Caterpillars of the world, since a lot of their machinery is tied to agriculture.”

Windermere hasn’t reduced its international exposure or made major changes to its investment strategy as a result of the tariffs.

“The good news for our portfolio was we were already overweight to sectors that would fare well in a trade dispute,” Evason said. “We’ve been in financials for a variety of reasons. We’ve been in energy and commodities. We’ve been overweight technology. All the things that we’re in we’ve been in because we like where we are in the economic growth cycle and…all these other factors.”

Lawton deals with retirement plan investments that aren’t impacted by short-term fluctuations in the market, he said. Individuals

should remember not to make drastic changes to retirement plan strategies unless there’s an extenuating circumstance, such as a spouse dying or losing a job.

“401(k) plan participants really shouldn’t make adjustments to what they’re doing unless there’s a change in their life,” he said.

“They should continue on with what they’ve been doing and stick with their allocation strategies.”

Evason pointed out Warren Buffett’s contention that he has made money in the equity markets under virtually all administrations.

There’s no controlling the political environment, so she focuses on finding returns where they’re available.

“We pay far more attention to Twitter than we ever used to,” she said. “But I do also think that some of the rhetoric presents some great opportunities to buy companies at really great prices. We’re trying to treat the volatility as opportunity, not a threat.”

“Long-term, we think trade tariffs are a headwind for economic growth, but in the short-term it could be a bit of a tailwind,” Isaacson said. n

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A rendering of Froedtert’s planned neighborhood hospital in Mequon.

Health care providers continue to build in high-growth areas

By Lauren Anderson, staff writer SOUTHEASTERN WISCONSIN’S health care systems are in expansion mode.

Throughout the first half of 2018, many of the area’s health care providers have announced plans for new building construction and facility expansion projects in an effort to gain more market share throughout the state.

Advocate Aurora Health is seeking to significantly expand its footprint in Kenosha and Racine counties. In its first major development project since merging, Downers Grove, Illinois- and Milwaukee-based Advocate Aurora Health announced in late May plans to build a massive, $250 million health care development in Mount Pleasant, positioning the system near Foxconn Technology Group’s planned campus. The project will include a new hospital, two clinics and a medical office building on a 96-acre site northeast of I-94 and Highway 20.

Advocate Aurora Health and Foxconn also announced recently that they will collaborate to develop new technology-driven health care services and tools.

The Mount Pleasant health care facility project announcement came close on the heels of another: Aurora’s planned $130 million health care development at the northwest corner of I-94 and Highway 165 in nearby Pleasant Prairie. The project, which will include a 100,000-square-foot ambulatory center and a 40 / BizTimes Milwaukee JULY 23, 2018

three-story, 100,000-square-foot medical office building, puts the system near German gummy bear maker Haribo of America, which will also be a tenant of the Prairie Highlands Corporate Park in Pleasant Prairie.

While Advocate Aurora is planning significant brick-and-mortar investments in Racine and Kenosha counties, it isn’t the only health system expanding there. The Froedtert & the Medical College of Wisconsin network recently entered the Kenosha area under a new affiliation with what was formerly United Hospital System, but now operates as Froedtert South.

The network includes Froedtert South’s campuses in Kenosha and Pleasant Prairie.

Foxconn, with its promise of delivering as many as 13,000 jobs, creates major opportunities for health systems in close proximity to the huge manufacturing campus.

“Assuming that Foxconn delivers on the promises it’s made, that creates a significant opportunity,” said Minnesota-based health care analyst Allan Baumgarten. “A lot of the (Foxconn) jobs will be well-paying jobs, presumably with good health benefits, and many of those people will be relocating in those counties. It’s a huge business opportunity.”

In addition to having nearby clinics and hospitals, other health care services will likely be needed for Foxconn, including on-site clinic and occupational health services, said Jim Mueller,

president and chief executive officer of health benefits consulting firm Mueller QAAS LLC. All of that business, Mueller said, will likely not go to just one provider, but rather be spread among several.

“There will be slices of the pie,” Mueller said.

To the north, in growing Ozaukee County, Froedtert Health plans to increase its footprint in Mequon with a new “neighborhood hospital” in the affluent suburb, which leaders say will ease some capacity constraints at the health network’s flagship hospital in Wauwatosa. The development, a 17,000-square-foot hospital with a seven-bed emergency department and eight inpatient beds, is planned for North Port Washington Road, across the street from the health system’s existing clinic.

St. Louis-based Ascension Health, parent of Columbia St. Mary’s and Wheaton Franciscan, has an established presence in that market with its Ascension Columbia St. Mary’s Hospital Ozaukee in Mequon.

“In Wisconsin, there are not that many areas that are experiencing population growth,” Baumgarten said. “But there are some, and all hospital systems want to have a presence in those areas, particularly because a lot of that growth typically includes people with good insurance benefits through their employer. When it comes to locating new facilities, whether it’s inpatient hospitals or urgent care or retail clinics, they are targeting those zip codes that have high or above average household income.”

Waukesha-based ProHealth Care Inc. is growing its presence in southwestern Waukesha County, with plans to build a $55 million hospital at the intersection of Highway 83 and I-43 in Mukwonago.

The project will include additions to its D. N. Greenwald Center campus at 240 Maple Ave. and the remodeling of existing space. It’s the latest of several recent expansion projects at the ProHealth Mukwonago campus. The health system opened a new 66,000-squarefoot emergency department on the campus in 2015, and construction is currently underway on a 31,000-square-foot addition to its existing medical center.

When it comes to building new hospitals and clinics, Baumgarten said employers have reason to be wary of the potential impact on health care costs. While health systems may see some revenue increases thanks to higher patient volumes, increased costs will likely fall on the backs of area employers that may face rising costs for health insurance.

“All this investment has to be paid for,” Baumgarten said. “That’s mostly going to occur with increases in payment rates.”

Other factors that have driven up health care costs include the consolidation of health systems, which gives providers more leverage when negotiating contracts with insurance companies, and rising pharmaceutical costs, Mueller said. n

Hospitality Democracy opened Blue Bat Kitchen in April in the space that formerly housed the group’s restaurant Water Buffalo, which closed in January.

Milwaukee’s restaurant churn A cause for concern or an industry norm?

By Maredithe Meyer, staff writer AT THE START of the year, Milwaukee’s restaurant scene took a hit – three big hits, actually.

In January, longtime French bistro Coquette Café in Milwaukee’s Historic Third Ward unexpectedly shut down after 20 years. The following month, popular farm-to-table restaurant Wolf Peach in Brewer’s Hill shut its doors. And a week later, chef Thomas Hauck announced he would soon close Walker’s Point’s c.1880, one of the city’s top fine dining restaurants.

Of course, each of these establishments closed for its own reasons, but when buzzwords like ‘market saturation’ and ‘restaurant bubble’ started to be tossed around, the sudden closures seemed less coincidental.

Simultaneously, a wave of new restaurants swept in, quickly occupying the high-demand spaces the shuttered restaurants had vacated.

Just three months after Wolf Peach closed, View MKE opened in its place, offering small plates, shareable platters and, true to its name, a view of downtown Milwaukee’s skyline. Coquette Cafe’s former site won’t be empty for long, either, as James Beard Award nominees Dan Jacobs and Dan Van Rite, owners of DanDan and EsterEv in the Third Ward, will soon open French-inspired restaurant Fauntleroy in

its place.

At the root of this restaurant churn is the possibility of an abnormal trend. Does the number of restaurant openings and closings throughout the downtown area simply reflect the nature of the business, or are Milwaukee’s restaurant owners and operators currently navigating foreign territory?

Joe Sorge subscribes to the former. He is the co-founder of Milwaukee-based Hospitality Democracy, a restaurant group that operates seven downtown concepts. He and his wife, Angie, co-founded the group in 2000, and recently announced they will exit the business after 18 years to operate their new company, SideWork Hospitality Consulting.

Sorge believes downtown Milwaukee’s restaurant turnover rate is, in fact, normal – and a good thing for diners. He also thinks its supposed market oversaturation is illusory.

“There are new restaurants opening all over the metro Milwaukee area, especially in new pocket developments like The Mayfair Collection, 84South, Drexel Town Square and the like,” Sorge said. “In our view, it’s that growth that’s making it seem as if downtown is oversaturated. When in reality, it’s just that those that

live in surrounding areas don’t have to make the trip downtown as often to enjoy their favorite locally-owned restaurants.”

Similarly, Jacobs said the number of closings and openings isn’t abnormal for the industry, but perhaps just new or unfamiliar to Milwaukee.

“We’ve had a large expansion of owner-operated restaurants in the last five years, and it just is what it is,” he said. “Old places are going to close, new places are going to open. I think it’s always going to happen, whether the market is saturated or not.”

Other local restaurateurs interpret Milwaukee’s restaurant boom in a different way.

Omar Shaikh, co-owner and president of SURG Restaurant Group LLC, said the city’s lack of population growth is directly tied to the high turnover rate.

“There are a lot of amazing things happening in Milwaukee, but something that people don’t talk about is that there’s really not a lot of population growth, if any at all,” Shaikh said.

“With the emergence of all these new restaurants opening, there’s going to be a shakedown because there’s only so many customers to go around.”

During an interview with Hauck about a month before he closed c.1880, he expressed a similar concern.

“There are more educated diners now and that’s always a good thing, but generally speaking, there are not more diners,” he said. “The pie is only so big, and you can only cut the pie in so many ways.”

Shaikh is also the board chair of VISIT Milwaukee, one of the groups pushing for the $247 million to $277 million project to expand the city’s convention center. He said the project would bring more visitors to Milwaukee and, in turn, boost its restaurant industry – among other sectors of its economy.

“More visitors will come in and spend money at the hotels, transportation and retail,” he said. “That’s why we really need to get (the project) done. I think it will help our industry tremendously and you won’t see as many restaurants closing.”

But in the meantime, Milwaukee’s longtime restaurateurs will attempt to stay relevant – and stay in business – by doing what got them there in the first place.

For Mike Engel, owner of French restaurant Pastiche in downtown Milwaukee and Brown Deer, that means staying the course.

“My area of interest is doing very traditional, very classical food that doesn’t change,” Engel said. “It’s not subject to the various winds that blow in one direction or another.

Basic French food is what it has always been.

That’s the basis of our restaurant – classics never go out of style. People are interested in the bright, new, shiny objects, but at the end of the day, they like that old pair of comfortable slippers.” n biztimes.com / 41

Special Report THE BUSINESS OF NONPROFITS RMHC Eastern Wisconsin in 2014 added 26,400 square feet and 32 additional rooms to its Wauwatosa facility.

Measuring area nonprofits’ performance Ronald McDonald House Charities Eastern Wisconsin highest rated locally

By Maredithe Meyer, staff writer WITH THOUSANDS of registered charities throughout the Milwaukee metropolitan area, donors have an overwhelming choice to make when deciding where to give.

Perhaps their donations are guided by a religious affiliation, political ideology, or just by a vested interest in the nonprofit’s mission. But whatever the cause – whether it’s education, human services, arts, culture, health care or the environment – donors also consider the organization’s fiscal responsibility and governance practices. Donors want to know how efficiently an organization would use their gift to support its cause.

Fortunately for donors, Glen Rock, New Jersey-based watchdog group Charity Navigator cares about the same factors, and keeps track of them so donors don’t have to. A public charity itself, Charity Navigator independently assesses and rates nonprofit organizations throughout the U.S. that are registered as 501(c) (3) public charities.

Using information from an organization’s website, as well as its Form 990 annual tax filings, Charity Navigator evaluates two areas of performance – financial health, and accountability and transparency – and rates nonprofits based on a numbers-driven system.

“Donors are very sophisticated now and they want to make sure that, where they are donating, their money is used in a really good way to further that particular mission,” said Ann Petrie, president and chief executive officer 42 / BizTimes Milwaukee JULY 23, 2018

of Ronald McDonald House Charities Eastern Wisconsin.

The organization, which provides free or low-cost temporary housing and programs to families whose children are receiving medical care at Children’s Hospital of Wisconsin or other area hospitals, is considered by Charity Navigator to be the top-rated large-size nonprofit in Milwaukee.

With an overall rating of four out of four stars and an almost perfect overall score of 99.16 out of 100, RMHC Eastern Wisconsin tops the list of Charity Navigator’s annually published market study of what it deems Milwaukee’s largest nonprofits.

Fifty-two organizations are included in the study, which was updated on July 1. Following RMHC Eastern Wisconsin are the Greater Milwaukee Foundation, COA Youth & Family Centers, United Way of Greater Milwaukee & Waukesha County, and Catholic Charities of the Archdiocese of Milwaukee.

RMHC Eastern Wisconsin’s current rating, which is based on 2016 data, is its third consecutive four-star rating, and for Petrie, it has been something to brag about.

“When I meet people and I give them a tour of the house and talk about our organization, I will say every time that we are a four-star Charity Navigator-rated organization and that means a lot,” she said. “When you’re looking at foundations, individual donors, corporations, they look to that Charity Navigator rating, and

it’s very important to us that we have that rating and we’re very proud of it.”

In 2014, RMHC Eastern Wisconsin completed a multimillion-dollar expansion that added 26,400 square feet and 32 additional rooms to its facility, which is located at 8948 W. Watertown Plank Road in Wauwatosa. The organization last year served more than 2,600 families, almost doubling its pre-expansion reach, Petrie said.

The cost of the project was entirely covered by an $8.5 million capital campaign, along with reserved funds accumulated throughout the organization’s then-30-year life. Because the expansion was completed without the need for a mortgage or a loan, Petrie said, RMHC doesn’t have to depend on programming funds to pay off any debt.

By Charity Navigator’s standards, a major indicator of a nonprofit’s financial health is its program expenses. That’s the portion of the organization’s total expenses spent on its programs and services – not on paying its staff members, putting on its annual gala, or paying off incurred debt.

In 2016, 83.6 percent of RMHC Eastern Wisconsin’s expenses were put toward its programming, which means for every dollar the organization brought in, 84 cents was spent directly on necessities like bedding, furniture, the facility’s electric bill and keeping its guest rooms clean.

This level of financial efficacy wouldn’t be possible without strong governance practices, Petrie said, and a major part of maintaining those practices is a nonprofit’s board of directors. The board holds the organization’s leadership accountable, advising them to make financial decisions that are transparent and mission-focused.

Tom Schneider agrees. He has served as the executive director of COA Youth & Family Centers for almost 18 years. COA offers educational, recreational and social work programs for children and families in the city’s underserved areas.

With an overall score of 96.99 out of 100 and a perfect accountability and transparency score of 100 out of 100, COA holds the highest fourstar rating of any human services organization in the state. Since it was first rated by Charity Navigator in 2004, COA has received a four-star rating every year except 2015.

Schneider said donors have voiced their appreciation for the organization’s Charity Navigator rating, but for COA, that rating tells only

one side of the story. That’s because COA relies on both internal and external evaluations that measure the effectiveness of its programming.

“That’s something that Charity Navigator doesn’t necessarily do,” Schneider said.

For COA and other human services organizations, outcomes-based measurements are essential to receiving funds from large donors such as United Way of Greater Milwaukee & Waukesha County – not to mention for the nonprofit’s own credibility.

“Organizations need to be doing outcomes measurements,” Schneider said. “You can run a wonderful program and you might say it helps, but how do you show that it’s making a difference?”

Charity Navigator’s market study also includes the organizations whose ratings place them toward the bottom of the list. In Milwaukee, those include Partners Advancing Values in Education, Skylight Music Theater, the Endometriosis Association, the Sharon Lynne Wilson Center for the Arts, and Christian Life Resources.

Richfield-based Christian Life Resources is a pro-life organization that advises religious lead-

ers and lay people on the morality of life-related issues such as abortion and euthanasia. It runs several pregnancy care centers throughout the Midwest and Arizona, as well as a housing and resource center for single mothers in Milwaukee called New Beginnings.

Its overall score is 68.13, with a financial rating of 57.50 and an accountability and transparency rating of 85.00. Christian Life Resources has held a one-star rating from Charity Navigator for 10 consecutive years, but in the eyes of the organization’s national director, Rev. Robert Fleischmann, the low rating isn’t a major cause for concern.

In 2011, the organization’s main donor at the time, the Marvin M. Schwan Charitable Foundation, withdrew its funds due to its own financial problems. The loss buried Christian Life Resources in $350,000 of debt, but seven years later, the organization has completed its recovery program and reduced its debt to $148,000, Fleischmann said.

After the 2011 incident, Fleischmann said the organization’s fundraising efforts shifted away from corporate support. Its main funding source is now comprised of a smaller, more

exclusive group of private donors who generally are not concerned with the Charity Navigator rating, he said.

“We have a relationship with most of our donors,” Fleischmann said. “They know us, they know what they’re doing, they get an audit report if they want. You might get a business person who might go on to Charity Navigator to see what our ranking is, but that’s really not where our donors come from.”

Fleischmann said the first time he had even become aware of the low rating was when BizTimes Milwaukee reported on it in 2016.

Since then, he said, the organization has taken steps to update the website according to Charity Navigator’s accountability and transparency requirements. And for what it’s worth, Christian Life Resources’ current overall score is the highest it has received since 2006.

Overall, Milwaukee’s nonprofit sector performs better than the nonprofit sectors of more than half the nation’s largest cities. According to Charity Navigator’s national Metro Market Study, Milwaukee sits at number 12, with an overall score of 88.16 out of 100, topping the national overall score of 87.77. n

Charity Navigator ratings of large southeastern Wisconsin nonprofits 1.

2.

3.

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5.

6.

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9.

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14.

15.

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Ronald McDonald House Charities of Eastern Wisconsin - 99.16 Greater Milwaukee Foundation - 97.13 COA Youth & Family Centers - 96.99 United Way of Greater Milwaukee & Waukesha County - 95.47 Catholic Charities of the Archdiocese of Milwaukee - 94.69 Boys & Girls Clubs of Greater Milwaukee - 94.26 United Performing Arts Fund - 93.92 Midwest Athletes Against Childhood Cancer - 93.17 Paralyzed Veterans of America Wisconsin Chapter - 92.97 Milwaukee Repertory Theater - 92.17 Milwaukee Art Museum - 92.15 Feeding America Eastern Wisconsin - 91.65 Wisconsin Humane Society - 91.02 Zoological Society of Milwaukee - 90.80 Elmbrook Humane Society - 90.64 9to5 National Association of Working Women - 90.51 Milwaukee Jewish Federation - 90.48 Goodwill Industries of Southeastern Wisconsin - 90.44

19. Riveredge Nature Center - 89.98 20. American Lung Association of the Upper Midwest - 89.90 21. Discovery World - 89.56 22. The Women’s Center, Wisconsin - 89.35 23. Radio Milwaukee - 89.33 24. GPS Education Partners - 88.89 25. Junior Achievement of Wisconsin - 88.19 26. Humane Animal Welfare Society - 88.13 27. Kingdom Workers - 88.04 28. Food Pantry of Waukesha County - 88.03 29. Children’s Hospital of Wisconsin Foundation - 87.65 30. Schlitz Audubon Nature Center - 87.21 31. Make-A-Wish Foundation of Wisconsin - 87.03 32. Milwaukee Ballet - 86.65 33. Sojourner Family Peace Center - 85.49 34. Neighborhood House of Milwaukee - 84.94 35. Neighborhood House of Milwaukee - 84.79 36. Time of Grace Ministry - 84.75 37. Living Hope International - 84.33

38. Big Brothers Big Sisters of Metro Milwaukee - 84.09 39. Florentine Opera Company - 83.93 40. Planned Parenthood of Wisconsin - 83.85 41. Federation of Clinical Immunology Societies - 83.79 42. Heart of the Nation Catholic Mass - 82.80 43. Public Allies - 82.80 44. Museum of Wisconsin Art - 82.73 45. Lutheran Indian Ministries - 82.36 46. Family Service Agency of Waukesha - 82.31 47. Ten Chimneys Foundation - 82.29 48. PAVE - 80.82 49. Skylight Music Theatre - 80.39 50. Endometriosis Association - 80.24 51. Sharon Lynne Wilson Center for the Arts - 78.38 52. Christian Life Resources - 68.13

Special Report THE BUSINESS OF NONPROFITS Andy Vitrano, director of partnerships at Schools That Can Milwaukee, leads a summer training program for STCM.

Shared mission prompted Schools That Can Milwaukee, PAVE merger

By Lauren Anderson, staff writer THE FIRST TIME board members of Schools That Can Milwaukee and Partners Advancing Values in Education gathered to discuss merging their nonprofit organizations, the path ahead was pretty clear.

From their initial discussions in mid-February, to when an agreement was reached in March, to the May 1 closing, the effort to merge two major players in Milwaukee’s education scene moved quickly. It reflected conviction among board members that the two organizations, both of which have primarily focused on improving leadership in the city’s schools, would be more effective together than separately.

“I’ve always thought of it as we’re in two separate boats rowing in the same river in the same direction,” said Dave Steele, former STEELE president and chief executive officer of PAVE. To go farther and faster in those boats, he said, it made sense to join forces.

This fall, the now-combined organization will relaunch as a new entity with a new name, to be steered by a brand new leader.

Both STCM and PAVE have been operating in parallel streams for years. Originally founded in the late 1980s as a scholarship program, PAVE shifted gears in the 2000s to focus on leadership development and supporting schools’ expansions.

Around 2011, PAVE again recalibrated, with 44 / BizTimes Milwaukee JULY 23, 2018

a new focus on improving school governance.

It was the same year STCM was founded, with a focus on coaching and retaining school leaders.

Over the years, there has been overlap between the two groups. Prior to the merger, the groups both worked in 18 of the 80 schools they served collectively.

There have been a few differences, too.

STCM has trained leaders within schools, while PAVE has focused on improving school governance and recruiting school board members.

STCM has worked across all of Milwaukee’s education sectors (traditional district, private choice and independent charter), while PAVE has focused on private choice and charter schools.

For Leslie Dixon, former Schools That Can board chair and now co-chair of the combined organization, the epiphany came at the boards’ first merger exploration meeting.

“I was profoundly struck by the missions of the organizations feeling identical,” Dixon said.

Financially, both have relied primarily on philanthropic support, with STCM receiving a small portion of income coming from earned revenue and PAVE receiving additional income from investments. In 2016, the most recent available tax filings, STCM reported total revenue of $2.6 million. PAVE reported revenue of $1.9 million. PAVE’s assets, meanwhile, have historically been more than double that of STCM. “The exciting part of the merger is that it wasn’t a strong and weak organization or two weak organizations that needed to be strengthened,” said Abby Andrietsch, co-founder of

STCM. “It was actually two strong organizations that, in some ways, had strengths in different places.”

But even for a merger that makes as much sense on paper as STCM and PAVE, the effort to comANDRIETSCH bine the organizations has not been simple. Combining human resources departments, office space, boards, staff members, office cultures – all of it takes time and intentionality, leaders said. A new board was formed with representatives from each of the original boards. Work is underway to relocate PAVE employees from their former downtown office on West Wisconsin Avenue to STCM’s office in Schlitz Park. A steering committee of employees from both organizations was formed to guide the transition.

“A merger is really complicated and hard, any way it goes,” Andrietsch said. “In some ways, we had one of the simplest mergers. But the abundance of work that had to happen was real.”

A national search continues for the organization’s new leader. Interviews are currently underway, and there isn’t a set timeline for when that leader will take the helm. Rashida Evans, EVANS chief program officer of STCM, is serving as interim executive director.

John Grogan, co-chair of the combined organization, said the move to merge made sense for STCM and PAVE, and that other organizations might find similar success in combining their resources.

“My guess is there is opportunity elsewhere in the not-for-profit space in Milwaukee for others to be looking at the same analysis,” he said.

“Attracting the right level of leader is not an easy thing to do. Then multiply the number of organizations that need strong, capable leadership and finances, and sometimes are even competing with each other in the same space, it makes sense for organizations to take a step back and look at whether they could harness more opportunity by partnering with others.”

“It’s a question we all should be asking,” Dixon added. “There aren’t enough funds to go around for all we need to do. And we need to make sure that the organizations that are doing good work are doing the best work and having the biggest impact.” n

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Spooked by rising interest rates?

Caution is best action

by Robert J. Makowski, Jr. On June 13, 2018, the Federal Open Market Committee raised the targeted federal funds rate for a second time this year, marking five total increases since the beginning of 2017. In a conference after the meeting, Jerome Powell, chairman of the Federal Reserve, signaled that two additional increases were on the way this year, expressing confidence that the United States economy was strong enough for borrowing costs to rise without choking off economic growth.

After each rate hike, I get a handful of questions from bankers who are anticipating the needs of their business customers.

• “What does this mean for long-term commercial mortgage rates?”

Robert J. Makowski, Jr. Executive Vice President and Chief Financial Officer Park Bank

• “How do I prepare my customers for higher interest rates?”

• “Should I work with my customers to refinance their loans now?”

Here’s how I help them understand the interest-rate environment and impact to local business owners. Let’s start by breaking down short-term versus long-term interest rates.

Short-term rates

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The Fed controls the short-term market rates by setting the federal funds rate, the rate at which banks borrow from each other overnight on an uncollateralized basis. The latest five rate hikes have affected short-term variable rates, such as the prime rate, which immediately impacts the rate of credit card and line of credit borrowing for consumers and businesses alike. However, for installment loans used to purchase business equipment, for example, the impact of higher interest rates is minimal if you plan to pay off the loan fully in three to five years.

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Long-term rates

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The market sets long-term interest rates, not the Fed. For example, 30-year mortgage interest rates have not risen as much as short-term interest rates. Long-term rate changes stem from collective expectations by the market, not by an individual committee or bond trader. As a result of nine years of economic expansion, long-term rates have slowly increased. While most don’t expect long-term rates to spike dramatically, the landscape is getting more complex.

twitter.com/ parkbankonline Contact: BobM@ParkBankOnline. com (414) 616.4491

According to Dr. Mike Knetter, economist and president of the University of Wisconsin Foundation, trade issues are the new wild card. “If cooperation breaks down with allies on trade, this might have implications for monetary policy coordination and create instability in exchange rates. If tariffs increase and the dollar were to weaken due to U.S. isolationist moves, that puts upward pressure on prices and would force the Fed to hike more aggressively.” The long end of the yield curve would respond, too.

How should a business respond to higher interest rates?

For businesses with an existing commercial mortgage loan that is renewing in the next three to six months, it makes sense to talk to your banker and consider early renewal at current market rates. However, if your loan rate is locked in for the next one, two or four years, be very happy because your current rate is below the market rate. It may seem counterintuitive, but chasing rates is not necessarily always the best decision. As you decide the right move for your business, consider factors that contribute to the real cost of refinancing.

• Penalties: Review the terms of your loan to see if there are any pre-payment penalties. Particularly if you decide to refinance with a new bank, there isn’t any incentive for your current bank to waive those fees.

• Other costs: Especially if you refinance at a different bank, you’ll pay for an appraisal, title, documentation and filing activities associated with the loan, along with the additional time it will take. These costs may also apply at your existing bank.

Additionally, I recommend that you factor in the qualitative benefits of working with your existing bank, such as: • The ease of working with your bank and banker.

• The knowledge your banker has about you and your company.

• The trust you have in your banker to lead you in the right direction.

Let your banker be a resource and guide as you plan for your company’s financial needs now and down the road. Ask for your banker’s view on interest rates and the impact on your financial position.

While you grapple with the costs of rising rates, also consider that operating in a higher interest rate environment gives well-run companies the opportunity to shine. From Dr. Knetter’s perspective, firms will need to be more discerning as they approach new projects to meet the higher rate of return, but this means they can also put pressure on marginal competitors. A higher interest rate environment could be a handicap for these firms on a relative basis, giving stronger firms an advantage.

Robert J. Makowski, Jr. is the Executive Vice President and Chief Financial Officer at Park Bank, an independent community bank serving businesses in southeastern Wisconsin for over 100 years.

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State Street Station nears capacity in Wauwatosa

State Street Station 7400 W. State Street Wauwatosa 414-943-7400 info@statestreettosa.com Developer: HSI Properties, LLC www.hsi-properties.com

46 / BizTimes Milwaukee JULY 23, 2018

Residents began leasing units in Wauwatosa’s $43 million State Street Station apartments in June of 2017. Brookfield-based HSI Properties developed the project, which is now at almost 100 percent occupancy. HSI President, Ryan Schultz, talks about the unique project in detail.

First, can you briefly describe State Street Station?

“State Street Station (SSS) is a $43 million market rate, mixed-use multifamily development located in the heart of the Village

of Wauwatosa.

The project includes 148 apartments, over 20,500 square feet of ground floor retail and almost 375 public and private parking stalls.”

Ryan Schultz

This is HSI’s second apartment project in Wauwatosa, correct? What is it about

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the area that appealed to you for a second project?

“Our Enclave project opened in 2012 to much demand. We identified a niche market within Wauwatosa, especially in the downtown Village. The largely built-out neighborhood has high barriers of entry which is a characteristic we seek in all of our development projects.”

What challenges did you encounter in the planning stages of developing the property?

“Like most urban redevelopment projects completed within established communities, the local neighborhood was highly engaged and, understandably, skeptical of the change. The prior use, a two story mostly-vacant and functionally obsolete retail building, was highly underutilized.

We worked very closely with the neighborhood, the elected officials, and the City staff to come up with a plan that best suited the property. We held several community workshop meetings and engaged with community planning and traffic consultants. The Common Council, as a result of the extensive planning discussions, reduced the overall size and density of the project from the original plans to

allow the project to better fit the existing neighborhood. Due to the downsizing of the project, environmental remediation and site preparation, and the requirement of providing public parking, the project required $4 million of “developer funded” Tax Increment Financing (TIF) in the form of an abatement of real estate taxes. The project would not have been built “but for”

the TIF. The ripple effect of State Street Station and the increase in density and property value is undeniable when you look at all of the improvements that have taken place in the Village over the past two years. These include: infrastructure and streetscaping improvements, new development in the Village, and adaptive re-use of existing property including our

biztimes.com / 47

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Jose’s Blue Sombrero project in the prior Chancery building.”

Construction in an area like that must also be challenging, what challenges did you overcome there?

“All urban redevelopment projects are difficult to construct because they are typically very tight sites within existing neighborhoods, however State Street Station was unique in a few aspects. First, the unique geometry of the project site and building design provided logistical challenges. Additionally, access to the existing Chase Bank and existing streets had to be maintained during the entire construction process. Lastly, as a result of the inclusion of public parking, we had to construct two levels of private underground parking for the apartments above which added a 48 / BizTimes Milwaukee JULY 23, 2018

complex earth retention structure and a permanent water management system.”

Wauwatosa has been pretty vocal in its desire to have more projects like State Street Station completed in the City, how was it working with the City on this project?

“The City was wonderful to work with.

The Mayor, the administration team, staff, and elected officials worked hard to get this project approved. The City holds all projects to a high standard which makes Wauwatosa a great community to work,

live and play.”

Can you elaborate more on what Wauwatosa and the Village, specifically, offers for residents, in your opinion?

“The Village of Wauwatosa offers State Street Station residents one of the most walkable, urban communities in Metro Milwaukee with shops, restaurants, recreation and consumer staples feet from their front door. This unique blend makes the Village the best location in Wauwatosa and one of the most desirable communities in Southeastern Wisconsin.”

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room floor plans and ample private parking compared to the typical market-rate apartment project. There’s a club room complete with a gourmet kitchen, game room, first class exercise room including yoga and fitness on demand studio, quiet study area and 15,000 square feet of private greenroof deck. Each apartment is complete with a state-of-the-art technology package, upgraded appliances, ample storage, and upgraded condo-level cabinetry and countertops. The building is equipped with top notch security and resident services including in-home maid service, dry cleaning, and car portering. We are proud to also offer a Bublr bike station on the property.”

What about State Street Station? What floor plans and amenities are offered for residents?

“SSS offers a diverse mix of 1, 2 and 3 bed-

Can you talk about the overall design of the project? What partners did you work with, and why were some of the design choices made?

“The Village of Wauwatosa is one of the most desirable areas to live in Southeastern

Wisconsin and the apartment/community amenities had to respond in kind. We made a significant investment in the apartment finishes at SSS to provide high quality, clean and modern apartment homes that appeal to a broad demographic. We also wanted to avoid creating one large monolithic structure in the neighborhood. I think we pulled that off successfully. Because of the surrounding streets, the building took the shape of a triangle- with three legs of that triangle, coming together to form one building. Our desire was to create three independent ‘buildings,’ each with their own design identity- each with various brick types and colors, window sizes and balcony types, etc.

The building’s mass and scale fits within the context of the neighborhood and surrounding structures.”

Several retail tenants have signed on in the past year, talk about your retail partners and what you’re looking

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for in tenants of the space.

“Our goal all along was to have a mix of retail tenants that live well together and provide embedded amenities to the residents above. Fortunately, we have been successful in doing that. We are in the process of signing our final lease for the building. Residents of SSS and members of the community now have access to a myriad of food, and service providers

including Chase Bank, Roots Salon, MOD Pizza, Bentley’s Pet Stuff, Orange Theory Fitness, Jimmy John’s and Rice & Roll Bistro.”

Are rental units still available at State Street Station?

“I am pleased to report that SSS is 98 percent occupied. We leased-up the building slightly ahead of schedule.”

What other plans does HSI have for State Street Station moving forward?

“Like all of our stabilized properties, we are in the process of refinancing the construction debt into a long term, fixed agency loan. We will continue to work hard and provide our residents with the highest level of finish and service to ensure that SSS is one of the most desirable addresses in Wauwatosa and Metro Milwaukee.” •

Congratulations to HSI Properties!

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Strategies HUMAN RESOURCES

Talent management is mission critical Retention just as important as attraction If your organization’s future success could be predicted by how well you attract, develop and retain talented employees, would you bet on your organization’s future? Talent is, in fact, the strongest predictor of success, and an organization’s ability to attract, develop, engage, and retain talent will continue to be its competitive advantage.

Has your talent management strategy positioned you for future success?

Most business leaders understand the obvious challenges facing them when it comes to talent acquisition. Countless reports have cited the many contributing factors to filling open positions: demographic shifts; fewer post-babyboom workers ready and available to replace the retiring baby boomers; low unemployment, suggesting that those who want a job are able to get a job; and a growing economy likely to further add jobs to the marketplace. Additionally, while the war to attract talent continues, many business leaders have been quietly battling a second front focused on retaining top talent.

ARE YOUR EMPLOYEES TARGETS? It will give you no comfort knowing that your employees are potential targets for your competitors, suppliers, distributors, affiliates, and in some cases, entirely different industries. As the competition for talent continues to grow, active acquisition will be an emphasis of the game plan.

As a business leader, you have an opportunity

to minimize your losses, and in doing so, improve your position to active job seekers. Here are a few things you can do to support your organization’s ability to enhance employee staying power.

1. Make talent management a strategic directive. The best investment an organization can make is in the formulation of a strategic plan to guide the organization’s growth. A critical component of the plan must address talent capacity, knowledge and capability necessary to support existing business and execute on future growth initiatives.

2. Identify short-term and long-range talent-related risks and opportunities. Talent management extends beyond recruitment, development and retention efforts. Conduct a comprehensive assessment of your organization’s talent management approach as a means of identifying immediate actions that will shore up recruitment processes, onboarding, training, development and engagement opportunities.

3. Develop your leaders and emphasize their importance in talent management. To be effective in managing talent, leaders must be more deliberate with their actions. They need to recognize that while they make hiring and firing decisions, their daily actions create the working environment; influence attitudes and behaviors by the example they set; and foster engagement of workers through comments, feedback, evaluation and coaching. Developing your leaders will have a multiplying effect on culture, retention and recruitment efforts.

4. Foster a culture that promotes learning and development. For more than 20 years, research has predicted business growth would outpace availability of a talented workforce. It should now be clear to everyone that the skills shortage is an ever-present challenge. Unless you can afford to pay premium rates for short-term gains, your best long-term bet is to invest in employee development and grow the type of talent you need.

5. Seek to understand and optimize employee

engagement. Different things can influence engagement for different people. Seek to understand what motivates your employees and how to optimize those opportunities to create value for your employees. Employees who feel valued are more likely to be engaged, report being happier, are more content with their work, tend to be more productive and are less likely to change jobs.

When it comes to business performance, there are many factors that predict success, none as critical as the capacity of the right talent to remain actively engaged in executing on mission-critical work. Today, more than ever, mission critical is all about the talent. Without it, you’re not growing…and, as the author William S. Burroughs said, “When you stop growing, you start dying.” n

JOSEPH WEITZER Joseph Weitzer is the executive director of the BizTimes Leadership Academy. For more information, visit biztimesleadershipacademy.com. biztimes.com / 53

Strategies LEADERSHIP

New tricks Leading people is like training dogs Mark Twain once said, “The more I learn about people, the more I like my dog.”

For hundreds of years, people have compared their fellow human beings to man’s best friend.

We just adopted a terrific Miniature Australian Labradoodle named “Harken” from the Labradoodle Corral in Hartford. As the Corral’s owner, Jeff Nienhaus, helped me train Harken, it dawned on me how much dog training and managing people have in common.

I asked Jeff to give me his top five most important things to know about training a dog.

Here’s what he said: 1. Be the alpha.

An alpha does not talk soft or offer choices. An alpha makes swift corrections – then it’s over.

No grudges.

People, like dogs, need a leader and want to be led. Great leaders are great communicators.

Easily understood. Happy to offer praise. Willing to offer criticism when necessary. Then, willing to move on. No resentment and definitely no growling!

2. People don’t like being treated like dogs.

Guess what? Dogs don’t like being treated like people. Dogs don’t understand it. It’s not their world. So, respect their world. Teach in their world.

Meet people on their terms. Many BizTimes readers might be considered “the 1-percenters” (whatever that actually means these days). But they likely spend most of their time with people 54 / BizTimes Milwaukee JULY 23, 2018

who represent the other 99 percent. It’s important for the 100 percent to learn and respect the worlds and lives of others. Make sure you and your leaders walk the floor, both literally and figuratively.

3. Repetition, repetition, repetition.

It used to be that a person needed to hear the same message at least seven times to retain it.

Today’s studies show people may need to hear the same message 12 to 20 times. Unfortunately, politicians know this all too well since we’re bombarded with the same political ads for months ahead of any election.

Yes, it’s often frustrating or even boring to repeat the same message over and over again.

Yes, it sometimes feels like no one gets it. But it really is almost impossible to overcommunicate.

Dogs know this and thrive on communication.

In our strategic planning process, we teach the importance of “cascading communications,” an idea advanced by author Patrick Lencioni. It’s critical that the leadership team speak with one voice, and repeat the important messages of the organization.

Our canine companions watch for the same cues over and over again to tell them what they are doing is good, not bad. They like consistency.

wards don’t always have to be tangible. Often a “good job” accolade is enough for a particular moment of fine accountability.

5. Love unconditionally as they do.

Sleep with them. Let them be your shadow and give them a job. It makes them feel important, gives them purpose and makes them want to continue to do good work.

Well, sleeping with your team will definitely create an HR issue! But I do truly believe in loving my co-workers, mentoring them and learning with them. We all want to work toward a higher purpose — just like our dog friends.

Of course, leading teams isn’t dog training.

But it’s not likely we’ll ever be in a workplace without the need to lead and train accountable teams. Learning about the dog/people connection from Nienhaus does make me ponder whether I should hire a dog trainer as my next director of human resources.

Good boy! n

4. Break training into small segments, and then put the segments back together. »» “Come.” = Treat »» “Come. Sit.” = Treat »» “Come. Sit. Stay.” = Treat Only reward them when they do it right. No participation trophies. It confuses them and tells them mediocre or wrong is good enough.

When we facilitate strategic planning, we take the BHAG (“Big Hairy Audacious Goal”), the three-year initiatives and the one-year objectives and break them down into 90-day priorities. It’s amazing how much more we get done.

And when you have an organization with a culture of accountability, people know they will be rewarded only by being accountable. And re-

JOHN HOWMAN A serial entrepreneur, business and community leader, John Howman has led a variety of businesses, from technology to consumer products companies. He leads two groups for TEC, a professional development group for CEOs, presidents and business owners. He can be reached at JHowman@AlliedCG.com.

Tip Sheet How to navigate difficult work environments

I

t’s not usual for new executives to be challenged with a difficult work environment due to factors such as a controlling CEO, slow decision making, or a team that struggles with change. In a Deloitte Insights article, Ajit Kambil, global research di-

rector for Deloitte LLP’s CFO program, suggests four strategies to combat such challenges.

1. Exit Kambil describes this strategy as the most drastic one an executive could take if he or she is faced with a dysfunctional work environment.

Exiting an executive role is costly for both the employee and the employer, so Kambil describes the exit option as a lose-lose for all parties involved with the decision.

2. Voice Instead of leaving the company, the executive can instead choose to vocalize the challenges he or she is experiencing. However, voicing a problem can sometimes create even more conflict before it creates a resolution to the original problem. Before making this risky decision, Kambil warns, you should determine the outcome as positive or negative, and then plan a

way to frame and time the conversation.

3. Loyalty This strategy takes a more passive approach to conflict than the exit or voice strategies. It requires the executive to refrain from responding to the situation and instead, wait it out. Waiting could help you gather more facts about the situation or clarify it over time. But, Kambil says, loyalty alone will probably not improve the situation in the long run.

4. Optionality The final strategy Kambil recommends basically reframes the situation. It guides your focus to “what is constructively feasible and personally rewarding for you to do in the organization.”

The executive no longer uses the negativity of the situation to deal with conflict. This strategy actually adds more value to the company and it could be positive for peers, board level executives and outside stakeholders. n

SAVE THE DATE

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Thursday, April 25, 2019 at the Pfister Hotel

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BizConnections

LILA ARYAN PHOTOGRAPHY

PAY IT FORWARD

Northwestern Mutual employees volunteer as computer science teachers

EVERY DAY OVER THE PAST SCHOOL YEAR, Thomas Patterson and Jason Machata reported to Tenor High School at 7:45 a.m. to teach computer science curriculum to a class of 30 high school juniors.

When the bell rang at the end of first period, they walked two blocks to Northwestern Mutual Life Insurance Co.’s downtown Milwaukee office to put in a full day at their actual jobs.

Both enterprise architects at the life insurance company, Patterson and Machata spent the school year as volunteer co-teachers at the nearby high school through Microsoft Philanthropies’ Technology Education and Literacy in Schools (TEALS) program.

TEALS works to build computer science programs by pairing computer science professional volunteers with teachers to team-teach computer science, filling a gap in many schools’ curricula. The program is currently offered at 13 Wisconsin schools, three of which are in Milwaukee.

Prior to signing up for TEALS, Machata had been looking for an opportunity to get involved with local schools.

Thomas Patterson and Jason Machata Enterprise architects Northwestern Mutual Life Insurance Co. Nonprofit served: Microsoft TEALS Service: Volunteer teachers

“I had (computer science) education in my high school,” he said. “One of my teachers taught us computer science basically at the college level in high school and that was a great opportunity.

So I saw it as a chance to give back to the community. And now having three young kids, I’m wanting those opportunities for them when they get older.”

Patterson had been exploring the idea of adjunct teaching in a technical school when the opportunity with TEALS arose.

“It seemed like the perfect fit,” Patterson said.

The pair underwent training with other TEALS volunteers for three weekends over the summer to learn about classroom management, engaging students and grading homework.

It prepared them for the school year, during which they

taught the computer science course and helped train the students’ classroom teacher.

Patterson and Machata relied on curriculum developed by Microsoft and the University of California-Berkeley, but often tweaked it to make it work for their students. n

LAUREN ANDERSON Reporter

P / 414-336-7121 E / lauren.anderson@biztimes.com T / @Biz_Lauren

biztimes.com / 57

BizConnections PERSONNEL FILE ADVERTISING

BUILDING & CONSTRUCTION

INSURANCE

Kalmbach Media, Waukesha

Horizon Retail Construction Inc., Sturtevant

Robertson Ryan & Associates, Milwaukee

Kalmbach Media has hired Christine Metcalf as senior vice president, finance. Metcalf joins Kalmbach from Rexnord Corp., a global industrial company where she served as vice president of finance for the process motion and control division.

BANKING & FINANCE

Aspiriant, Milwaukee Aspiriant has named Nate Kublank, a director of investment advisory, as a new principal. New principals, including Kublank, are voted in to the principal group by the existing principals. Aspiriant has 60 principals out of 180 professional advisors. He is a certified financial planner, certified private wealth advisor and accredited estate planner.

Horizon Retail Construction Inc. has hired Dawn Dineen as executive assistant.

In this role, Dineen will be responsible for providing high-level administrative support to Horizon’s president by conducting research, preparing statistical reports, handling information requests and performing clerical functions.

ELECTRICAL SERVICE

Lemberg, Brookfield Lemberg has hired Jeff Olson to head its service division as senior service manager. Olson comes to Lemberg with deep experience in leadership that includes 32 years in the U.S. Marine Corps and 18 years in civilian business operations.

BANKING & FINANCE

ENGINEERING

WaterStone Bank, Wauwatosa

raSmith, Brookfield

WaterStone Bank, Wauwatosa, has hired Shae Maclin to the newly-created position of vice president, sales empowerment officer. She will oversee the bank’s sales culture within its retail network. Maclin comes to the bank with more than 20 years of experience in sales management, sales training, sales coaching and analytics.

raSmith has promoted Tom Mortensen to assistant director of its land development services division.

Mortensen has worked for raSmith since 2004. His career spans more than 30 years in the landscape architecture, planning, design and construction professions.

BUILDING & CONSTRUCTION

BEAR Construction Co., Milwaukee BEAR Construction Co., Rolling Meadows, Illinois, has hired Tim Wiedenbauer as a project executive to manage and expand its Milwaukee office, located at 411 E. Wisconsin Ave. 58 / BizTimes Milwaukee JULY 23, 2018

HEALTH CARE & WELLNESS

Luther Manor, Wauwatosa Luther Manor has hired Jodie Tierney as the new health care center director.

integrated networks, negotiating managed care contracts, and establishing and maintaining clients’ legal compliance.

MANUFACTURING

Generac Power Systems, Waukesha Ward

Becker

Robertson Ryan & Associates has hired Craig Ward, Dan Becker and Andrew Donohoo as agents and vice presidents. Ward Donohoo has more than 30 years of experience providing business insurance solutions, which includes 18 years as an agency owner. Becker started his insurance career with Sentry Insurance in 2008, and will be operating from the RRA Mount Pleasant office. Before joining Robertson Ryan, Donohoo worked with Sentry Insurance in dealer operations for 12 years.

LEGAL SERVICES

Husch Blackwell, Milwaukee Husch Blackwell has hired Derek J. Taylor as a partner in the firm’s financial services and capital markets industry group.

Taylor serves financial institutions, real estate developers and investors in a broad range of financial transactions, including commercial loans, tax credit projects, commercial real estate acquisitions, refinances and dispositions.

LEGAL SERVICES

Quarles & Brady LLP, Milwaukee Quarles & Brady LLP has hired John Hintz as of counsel, in its Milwaukee office and Health & Life Sciences Practice Group. Hintz focuses his practice on health care business transactions, including forming and administering clinically

Generac Power Systems has promoted Greg Wischstadt to senior vice president, connectivity.

Wischstadt has been working at Generac for the past 11 years as senior vice president, engineering.

MANUFACTURING

Jason Industries Inc., Milwaukee Jason Industries Inc., Milwaukee, has hired Sagar Murthy as vice president and chief information officer.

In this role, Murthy will be responsible for leading digital transformation and driving information technology strategy, infrastructure and resources across Jason’s global enterprise, which includes more than 4,400 people in 14 countries.

PROFESSIONAL SERVICES

Stantec, Mequon Stantec has hired Mike McCoy as a senior associate and senior industrial hygienist.

He has more than 15 years of experience as an industrial hygienist and occupational health and safety expert.

Submit new hire and promotion announcements to: biztimes.com/personnel

SBA LOANS: MAY 2018 The U.S. Small Business Administration approved the following loan guarantees in May: JEFFERSON COUNTY

Legacy Auto Sales LLC, 646 Rail Ave., Jefferson, $357,000, State Bank of Cross Plains; RSM Holdings LLC, 420 Generac Way, Jefferson, $2.2 million, WBD Inc.; KENOSHA COUNTY

National Structural Bearing Inc., 6011 29th Ave., Kenosha, $125,000, Wisconsin Women’s Business Initiative Corp.; MILWAUKEE COUNTY

BHD LLC, 11823 W. Janesville Road, Hales Corners, $1.46 million, WBD Inc.; Cloud Recycling LLC, 5325 W. Rogers St., West Allis, $50,000, Associated Bank; Cream City Real Estate Solution LLC, 9233 S. 15th Ave., Oak Creek, $46,500, U.S. Bank; Granville Preparatory Academy Inc., 1401 W. Center St., Milwaukee, $145,000, Waukesha State Bank; Greg Express Inc., 4463 W. Sumac Place, Milwaukee, $50,000, PNC Bank; Grover Corp., 5730 N. Glen Park Road, Glendale, $800,000, Ixonia Bank; Harleen Market LLC, 7911 N. 60th St., Milwaukee, $535,000, Byline Bank; Honest First Personal Care Agency, 2778 S. 35th St., Suite 202, Milwaukee, $51,000, U.S. Bank;

L. F. Pizza LLC, 6558 S. Lovers Lane Road, Franklin, $35,000, Associated Bank; MOMO Mee Inc., 110 E. Greenfield Ave., Milwaukee, $200,000, Wisconsin Women’s Business Initiative Corp.; Multani Food Market LLC, 1951 W. Hampton Ave., Milwaukee, $237,000, Waukesha State Bank; Night Owl Services LLC, 4365 N. 27th St., Milwaukee, $110,000, Newtek Small Business Finance Inc.; Salon Thor LLC, 3128 S. Kinnickinnic Ave., Milwaukee, $50,000, JPMorgan Chase Bank; OZAUKEE COUNTY

The Waterstreet Group Inc., 9240 N. 107th St., Milwaukee, $622,000, Byline Bank; Core Consulting LLC, 107 Buntrock Ave., Thiensville, $50,000, PyraMax Bank; Sandmasters Inc., 140 S. Foster Drive, Saukville, $75,000, U.S. Bank; Sandmasters Inc., 140 S. Foster Drive, Saukville, $864,000, U.S. Bank; Spectrum Investment Center LLC, 6329-6331 W. Mequon Road, Mequon, $434,000, Racine County Business Development; RACINE COUNTY

American Revival LLC, 209 N. Milwaukee St., Waterford, $350,000, Community State Bank; Back in Action Chiropractic S.C., 1524 Green Bay Road, Suite 103, Racine, $45,000,

U.S. Bank; Bear Country Inc., 8425 State Highway 38, Caledonia, $5 million, United Bank; Christman Properties LLC, 26505 Malchine Road, Waterford, $290,000, Community State Bank; D&E Electric LLC, 9825 Durand Ave., Building 8, Sturtevant, $50,000, Educators Credit Union; Eagle Disposal Inc., 21107 Omega Circle, Franksville, $350,000, First Bank Financial Centre; SHEBOYGAN COUNTY

Acme Armature Works Inc., 2727 N. 21st St. Sheboygan , Wells Fargo Bank; Edgar A. Radue Inc., 827 N. 14th St., Sheboygan, $415,000, National Exchange Bank and Trust; Schnettler Properties Holding Co. LLC, Sheboygan Falls, $1.6 million, WBD Inc.; Wisconsin Timber LLC, 2841 Ashby Court, Sheboygan, $5,000, U.S. Bank; WALWORTH COUNTY

Battlecorals LLC, 487 Fellows Road, Genoa City, $20,000, Associated Bank; Bruce A. Sabatka, 150 Elizabeth Lane, Suite A, Genoa City, $20,000, U.S. Bank; Giltech LLC, 120 N. Fraternity Lane, Whitewater, $125,000, Village Bank and Trust; Mighty Small Holdings LLC, 2884 Main St., East Troy, $271,400, BMO Harris Bank; The BBQ Pit LLC, 1880 Main Street, East Troy, $500,000, First Citizens State Bank;

WASHINGTON COUNTY

Duke & Sons Enterprises LLC, 7403 Sleepy Hollow Road, West Bend, $415,000, WBD Inc.; Interstate Sawing Co. Inc., 7403 Sleepy Hollow Road, West Bend, $824,000, WBD, Inc.; WAUKESHA COUNTY

Barre District New Berlin LLC, 14260 W. National Ave., New Berlin, $81,000,Cornerstone Community Bank; Bentley Holdings LLC, 202 Travis Lane, Waukesha,

$647,000, WBD Inc.; Brownell Ernster Properties LLC, N29 W23720 Woodgate Court East, Pewaukee, $1.3 million, WBD Inc.; Horlacher Necci LLC, 327 Lake St., Mukwonago, $250,000, Citizens Bank; Irrigation Works Inc., W224 S8440 Industrial Drive, Big Bend, $25,000, U.S. Bank; Irrigation Works Inc., W224 S8440 Industrial Drive, Big Bend, $274,000, U.S. Bank;

JA Acquisition LLC, W229 N2467 Hwy F, Waukesha, $100,000, The Huntington National Bank JA Acquisition LLC, W229N2467 Hwy F, Waukesha, $3.5 million, The Huntington National Bank; Jerry’s Automotive Holdings LLC, W229 N2467 Redford Blvd., Pewaukee, $412,000, WBD Inc.; Landworks Inc., N69 W25195 Indiangrass Lane, Sussex, $1.1 million, Commerce State Bank.

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BizConnections VOLUME 24, NUMBER 8 | JUL 23, 2018

GLANCE AT YESTERYEAR

126 N. Jefferson St., Suite 403, Milwaukee, WI 53202-6120 PHONE: 414-277-8181 FAX: 414-277-8191 WEBSITE: www.biztimes.com CIRCULATION: 414-336-7100 | circulation@biztimes.com ADVERTISING: 414-336-7112 | ads@biztimes.com EDITORIAL: 414-336-7120 | andrew.weiland@biztimes.com REPRINTS: 414-336-7128 | reprints@biztimes.com PUBLISHER / OWNER Dan Meyer dan.meyer@biztimes.com

SALES & MARKETING

DIRECTOR OF OPERATIONS Mary Ernst mary.ernst@biztimes.com

EDITORIAL EDITOR Andrew Weiland andrew.weiland@biztimes.com MANAGING EDITOR Molly Dill molly.dill@biztimes.com REPORTER Lauren Anderson lauren.anderson@biztimes.com REPORTER Corrinne Hess corri.hess@biztimes.com REPORTER Maredithe Meyer maredithe.meyer@biztimes.com REPORTER Arthur Thomas arthur.thomas@biztimes.com

Water & Buffalo This photo, taken in 1889 by Robert Barnes, shows the intersection of Water and Buffalo streets in Milwaukee. A horse and carriage and an electric streetcar travel next to each other down Water Street, past businesses including J. Dahlman & Co. This photo was a souvenir of the 23rd encampment of the Grand Army of the Republic, a Civil War veterans’ fraternal organization, published by the Milwaukee County Historical Society in 1889.

— This photo is from the Milwaukee Public Museum’s Photo Archives collection.

COMMENTARY

Trump rides Harley HARLEY-DAVIDSON INC. finds itself caught between a rock and a hard place as President Donald Trump begins a trade war seeking more favorable trade deals for the United States.

In retaliation for Trump’s steel and aluminum tariffs, the European Union increased motorcycle tariffs from 6 to 31 percent. Harley estimated that would add $2,200 to the cost of each motorcycle it sells in Europe, a total annual cost of $100 million. The company decided it did not want to pass that cost on to its customers or its dealers and felt doing so would make it noncompetitive in Europe.

So, Milwaukee-based Harley announced that it would move production of motorcycles for Europe to its overseas facilities to avoid the EU tariffs.

Trump, who met with Harley executives (including chief executive officer Matthew Levatich) at the White House in February, was quick to criticize the company’s reaction to the EU tariffs.

60 / BizTimes Milwaukee JULY 23, 2018

“Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag,” Trump said on Twitter.

The next day, Trump was back on the topic with several tweets about Harley. In one, he mentioned the company’s decision earlier this year to close a plant in Kansas City.

“That was long before Tariffs were announced. Hence, they were just using Tariffs/ Trade War as an excuse,” Trump tweeted.

“A Harley-Davidson should never be built in another country-never!” Trump said in another tweet. “Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end – they surrendered, they quit! The Aura will be gone and they will be taxed like never before!”

A few days later, the president was again tweeting about Harley, saying he was in talks with their competitors.

“Now that Harley-Davidson is moving part of its operation out of the U.S., my Administration is working with other Motor Cycle companies who want to move into the U.S.,” the tweet said.

Harley has declined to comment on the president’s statements about the company.

When Trump came to Wisconsin for the Fox-

DIRECTOR OF SALES Linda Crawford linda.crawford@biztimes.com ACCOUNT EXECUTIVE Molly Lawrence molly.lawrence@biztimes.com ACCOUNT EXECUTIVE David Pinkus david.pinkus@biztimes.com ACCOUNT EXECUTIVE Maggie Pinnt maggie.pinnt@biztimes.com ACCOUNT EXECUTIVE Christie Ubl christie.ubl@biztimes.com SALES INTERN Amanda Bruening amanda.bruening@biztimes.com SALES INTERN Tess Romans tess.romans@biztimes.com

ADMINISTRATION ADMINISTRATIVE COORDINATOR Sue Herzog sue.herzog@biztimes.com

PRODUCTION & DESIGN GRAPHIC DESIGNER Alex Schneider alex.schneider@biztimes.com

Independent & Locally Owned

ART DIRECTOR Shelly Tabor shelly.tabor@biztimes.com

— Founded 1995 —

conn groundbreaking ceremony, he brought up Harley again.

“Harley-Davidson, please build those beautiful motorcycles in the U.S.A,” Trump said.

“Don’t get cute with us.”

The tariffs on steel, aluminum and billions of Chinese goods is a negotiating tactic by Trump, who believes he can play hardball and force other countries to negotiate new trade deals more favorable to the U.S. “We want to have a fair and balanced situation,” Trump said during his remarks at the Foxconn groundbreaking. “And it doesn’t have to happen immediately, but it has to be fair.”

In his first tweet about Harley’s reaction to the EU tariffs, Trump said, “ultimately they will not pay tariffs selling to the EU…be patient.”

But some businesses have to do what they feel is necessary to weather the storm while this trade war plays out. n

ANDREW WEILAND EDITOR

P / 414-336-7120 E / andrew.weiland@biztimes.com T / @AndrewWeiland

Celebrate the Promise 2018

AROUND TOWN

Girl Scouts of Wisconsin Southeast recently held its annual Celebrate the Promise fundraising gala at the Milwaukee Public Museum in downtown Milwaukee.

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JEVITA BRISTER of Girl Scouts of Wisconsin Southeast and AUDREY BORLAND of Wisconsin Reading Corps and Wisconsin Math Corps.

2.

NANCY HERNANDEZ of Abrazo Multicultural Marketing & Communication and MARY PAT BEALS of Girl Scouts of Wisconsin Southeast.

3.

MICHEL DELISLE of MATC and ARACELIS SPINDT of Froedtert & the Medical College of Wisconsin.

4.

ANN EUBANKS of Milwaukee Public Schools and BRIAN BULLOCK of Astronautics Corp. of America.

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KEVIN O’LEARY of Anick & Associates and JOANNA MESIROW of Associated Bank.

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CHRISTY BROWN and MARY PAT BEALS of Girl Scouts of Wisconsin Southeast.

7.

GAEL GARBARINO of Plum Media, GINNY FINN of YWCA Southeast Wisconsin and PATRICE NAULT of Plum Media.

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CYNTHIA LACONTE of The F. Dohmen Co. and her husband, THOMAS LACONTE .

9.

KELLIE HAMILTON and LISA GEORGE, both of We Energies.

10. JEANNE HOSSENLOPP, the REV. NICKY SANTOS and RANA ALTENBURG, all of Marquette University.

Mosaic Music Series

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Fuel Milwaukee on July 3 held its monthly Mosaic Music Series event at Denim Park in downtown Milwaukee.

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SAMANTHA MITCHELL and MIMI LAFLIN, both of United Way of Greater Milwaukee.

12. JENEA NOLAN of Froedtert Memorial Lutheran Hospital and KEVIN HEINS of KLH Industries Inc.

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13. SHANNON REED of United Way of Greater Milwaukee and ANGELA ROSE BLACK of Mindfulness for the People LLC. 14. ANGELICA ROCHA, an alumna of City Year Milwaukee, LAVELL , a student at Milwaukee College Prep and LAURA PEREZ of Seton Catholic Schools.

15. KELSEY BRENN of St. Augustine Prep, ELISIO BORGES of DB Schenker, MAURICE THOMAS of Milwaukee Excellence Charter School, NATHAN BRENN of Brady Corp. and JILLY GOKALGANDHI of Rockwell Automation Inc. 16. J. DIETENBERGER of University of WisconsinMilwaukee, SERGIO SOLACHE of Riviera Maya and MORGAN PLAGENZ of Stuck.

17. MICHAEL BEAUPRE of Associated Bank, KELSEY BEAUPRE of Aurora Health Care Inc., JOANNE MICHALSKI of Elmbrook School District and ROB MICHALSKI of Humana Inc. 18. MARIA RAMIREZ of Carroll University, KELSEY BRENN of Augustine Prep and BOB MONNAT of Mandel Group.

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19. MAGGIE SEER of Danceworks and DIANA SEER of Rogers Memorial Hospital.

Photos by Maredithe Meyer biztimes.com / 61

BizConnections

LILA ARYAN PHOTOGRAPHY

5 MINUTES WITH…

5 MINUTES WITH…

JERRY FRANKE

Former Wispark executive discusses his next project.

JERRY FRANKE retired in June from Wispark LLC, the real estate development subsidiary of Milwaukee-based WEC Energy Group where he had spent 30 years, the last 18 of which he was president.

Under Franke’s leadership, Wispark developed LakeView Corporate Park in Pleasant Prairie, Drexel Town Square in Oak Creek and several other projects.

In a recent interview with BizTimes Milwaukee reporter Corrinne Hess, Franke discussed his latest project: working with Racine County to develop enough housing for Foxconn Technology Group employees.

BUILDING FOR THE FUTURE “What we are seeing in Racine and the surrounding villages is there hasn’t been any market rate, multi-family housing built in any year starting with a ‘2.’ And that’s at a time when it has been the hottest sector in southeastern Wisconsin.

“So one of the things we are doing is the Racine County Executive (Jonathan Delagrave) and Jenny Trick (executive director of Racine County Economic Development Corp.) has put together a team looking at areas that can support development. We are also looking at the types of areas that have been developed in suburban Milwaukee and northern Illinois so we can take this to municipalities and show them why multi-family housing 62 / BizTimes Milwaukee JULY 23, 2018

is important and try to debunk some of the myths, like more kids are in apartments, and let them see the value of this type of development. “ TAKING IT ON THE ROAD “We’re going to be going on the road this summer to try to convince the municipalities that they need to embrace these projects. Otherwise, (residents) will go to adjacent areas, such as Somers, Oak Creek, and Jonathan really wants the development to occur in Racine.

“We will work with some local realtors, but right now we are still putting some base maps together to show where development can occur with the least impact on the municipality. If we are not proactive, developers will come in with the least costly site, which often times ends up being the most costly site for the municipality to serve. We are trying to get a balance.”

EDUCATED GUESSES “Because of the highly speculative nature of the (Foxconn) plan right now, it has kind of got to work its way through this Foxconn bubble, as I call it.

“Foxconn announced a very aggressive schedule. It doesn’t really allow a lot of time to talk about the peripheral impacts. And that is something we are trying to get a handle on.” n

2019 EDITION

GIVING GUIDE Reserve your space in the 2019 Giving Guide!

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REGIONAL P HILANTHRO

OF

PIC OPPORTU NIT

IES

2018 EDITIO N

SPONSORED BY

S E T O N C AT H O L I C S C H O O L S

Publication Date: November 12, 2018

MISSION Seton Catholic Schools is a transformational educational system committed to overcoming academic and social challenges, empowering students, families and educators to attain their God-given potential.

3501 S. Lake Drive Milwaukee, WI 53207 (414) 831-8400

setoncatholicschools.org facebook.com/SetonSchoolsMilwaukee/ @SetonSchoolsMKE TOTAL EMPLOYEES: ANNUAL REVENUE:

Your involvement in this annual publication includes an in-depth

390 $27,000,000 2015

YEAR ESTABLISHED:

SERVICE AREA Seton Catholic Schools serves more than 3,000 students across 12 schools in Milwaukee County.

GOALS

FUNDRAISING/EVENTS

Our goal is to prepare all our students to be academically and spiritually prepared for high-quality high schools and beyond. By transforming students and their families, we will strengthen communities helping our communities to be safe, stable, great places to live.

Seton Catholic Schools is a collaborative network growing to 26 K-8 Milwaukee Catholic schools. With over $6 million in investments secured in our inaugural year, Seton is looking for additional investors for its five-year, $25 million capacity-building campaign that will directly impact academic achievement of 9,000 students. The capacity campaign funds are needed to build out: the academic model of instruction, teacher recruitment and professional training, school resources and facility upgrades.

VOLUNTEER OPPORTUNITIES

GIVING OPPORTUNITIES

We have many opportunities to share your gifts of time and talent with our schools and students: • Marketing and legal guidance • Reading to our students • Coaching a sports team • Service learning project leader • Arts and crafts helper • Recess supervisor

Support for Seton Catholic Schools affords many giving opportunities through individual giving, corporate contributions, grants and gifts of securities. Making a gift to Seton ensures that current and future schools have the resources to provide accessible, high achieving education and spiritual formation for faculty, staff and students.

FUNDING SOURCES

n Tuition and Voucher ......................................... 67% n Capacity-Building Campaign ......................... 16% n Fees/Meal Programs ....................................... 10% n Parish Support ...................................................... 7%

EXECUTIVE LEADERSHIP Name (Title) ★ Company

BOARD OF DIRECTORS Most Reverend Jerome E. Listecki ★ Archbishop of Milwaukee

Kristine Rappé (Chair) ★ Retired

Bruce Arnold (Vice Chair) ★ Husch Blackwell

Jay Mack (Treasurer) ★ Donald Drees President

Dr. William Hughes, Ph.D. Chief Academic Officer

Very Reverend Javier Bustos Hispanic Ministry

Kathleen Cepelka

Archdiocese of Milwaukee School Sisters of St. Francis

Joan Shafer (Secretary) ★ WEC Energy Group

Seton Catholic Schools

Rana Altenburg

Rick Schmidt CG Schmidt Inc.

Catholic education changing right before our eyes Catholic education is is changing right before our eyes –– and we’re proud driving this transformation. and we’re proud toto bebe driving this transformation.

Seton Catholic Schools a collaborative network Milwaukee elementary schools built long-standing Seton Catholic Schools is ais collaborative network of of Milwaukee elementary schools built onon thethe long-standing tradition excellence Catholic education.

We’re investing Catholic education ensure students tradition of of excellence in in Catholic education.

We’re investing in in Catholic education to to ensure allall students areare academically and spiritually prepared high-performing high schools. supporting Seton, we’re able make academically and spiritually prepared forfor high-performing high schools.

ByBy supporting Seton, we’re able to to make a significant impact communities, creating safe, stable and connected neighborhoods. a significant impact in in ourour communities, creating safe, stable and connected neighborhoods.

SPONSORED SPONSORED BYBY

Portia Young

Sargento Foods Inc.

Very Reverend Tim Kitzke Urban Ministry

2018 GIVING GUIDE | biztimes.com/giving

www.setoncatholicschools.org www.setoncatholicschools.org

magazine, BizTimes Nonprofit Weekly enewsletter and BizTimes.com. by the Region’s Business and Philanthropic Leaders all year long.

Donald Drees ★

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profile, plus several advertising elements in BizTimes Milwaukee Take advantage of the opportunity for your organization to be seen

Seton students, every makes a difference because multiplied across a network schools growing ForFor Seton students, every giftgift makes a difference because it’sit’s multiplied across a network of of schools growing toto serve 9,000 kids.

With your help, change quality students and families area. serve 9,000 kids.

With your help, wewe cancan change thethe quality of oflifelife forfor students and families in in ourour area.

John Stollenwerk, Jr.

Stollenwerk Family Foundation

Sister Mary Diez

Town Bank

Marquette University

100

★ DENOTES EXECUTIVE LEADERSHIP

Gary Bennetts

Archdiocese of Milwaukee

TRANSFORMING TRANSFORMING CATHOLIC EDUCATION EDUCATION CATHOLIC

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