Wisconsin Business Voice - July 2017 by Wisconsin Manufacturers & Commerce (WMC)

COOLEST THING

LABOR SHORTAGE

SEPTEMBER

BEST STATES

What Do You Make?

Businesses Look for Workers

Chamber of Commerce Month

Wisconsin Makes Top 10

WISCONSIN

July 2017 Issue 25

SELLING

A Comprehensive Look at Wisconsinâ&#x20AC;&#x2122;s Place in the World and Why it Pays to Make Things in the Badger State

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WISCONSIN

July 2017 Issue 25

SELLING 20

F RO M T H E P R E S I D E N T Tech Colleges Necessary for Worker Pipeline X A N D T RA N S P O RTAT I O N P O L I CY 1 0 TA "Dark Store" Legislation = Business Property Tax Hikes E A LT H A N D H U M A N R E S O U R C E S P O L I CY 1 8 HWorker’s Compensation—Negotiations Underway

OV E R STO RY: S E L L I N G W I S C O N S I N 2 0 CWisconsin Makes Things for Here…And Everywhere N T E R N AT I O N A L BU S I N E S S 2 5 ISister-State Relationship Enhances the Economy ONSIN ECONOMY 2 8 WBestI SinC 15 Years CHAMBER OF COMMERCE EXECUTIVES 3 0 WISCONSIN Chamber of Commerce Month O C I A L M E D I A & C O M M U N I CAT I O N S 3 4 SYour Every-Platform Social Media Strategy

W I S C O N S I N E X P O RT S Israel Provides Opportunities for Exporters

T E C H N O LO G Y Accelerating Wisconsin's Place in the New Economy

ECONOMIC RESEARCH Tax Credit Boosts Employment Growth

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July 2017

F RO M T H E E D I TO R

Do You Make the Coolest Thing? By Nick Novak WMC Director of Communications and Marketing Out of nearly 300 nominees, Harley Davidson’s Milwaukee Eight Engine took home the title of Coolest Thing Made In Wisconsin last fall. With the support of Johnson Financial Group, WMC started the Coolest Thing Made In Wisconsin Contest as a way to highlight Wisconsin’s largest economic sector during the run-up to Manufacturing Month in October. We also wanted to promote careers in manufacturing and create local, regional and statewide pride by showing off all the very cool things that are made, assembled and processed in Wisconsin. We had so much fun with the contest in its inaugural year that we are doing it again in 2017, but with a little twist. Instead of three rounds of popular voting, we will determine the Coolest Thing Made In Wisconsin by hosting a “Manufacturing Madness” tournament. Here’s how it will work: Anyone can begin to nominate products starting August 1 at madeinwis.com through September 1 at midnight. The first round of voting to whittle the total list of nominees down to 16 will start on Labor Day and end September 11. Those 16 products will then be placed in a tournament bracket with seeding based on total number of votes received in the first round. The second round of voting will begin on September 18 and end September 25. The third round will be October 2 through October 6. The fourth and all important

final round will begin October 10 and end October 16. People may vote once per day in each round. The 2017 winner of the Coolest Thing Made In Wisconsin Contest will be announced at the State of Wisconsin Business and Industry Luncheon on October 19 at Monona Terrace in Madison. To win the contest, manufacturers will have to get as many votes as possible. Last year, Johnsonville enlisted the help of Green Bay Packer standout Clay Matthews to plug them on social media. The Marinette Menomonie Eagle Herald Newspaper ran an editorial encouraging its readers to vote for the Littoral Combat Ship built by Fincantieri Marinette Marine. Several state lawmakers plugged their hometown favorite in columns. Other nominees did radio interviews and some sent emails asking their employees, customers and vendors to vote. The Coolest Thing Made In Wisconsin is supposed to be a lighthearted popularity contest to highlight manufacturing’s importance to the state’s economy. But WMC, along with Michael Best and Baker Tilly, also conducts a very serious and intensive peer recognition program called Manufacturer of the Year (MOTY). Winners are announced at a prestigious black-tie event in Milwaukee. For more information about the Coolest Thing Made in Wisconsin contest, check out the information on page 12 or visit madeinwis.com.

WISCONSIN

President/Publisher Kurt R. Bauer

Managing Editor Nick Novak

Art Direction/Production Kyle Pankow

Contributing Writers Kurt R. Bauer, Nick Novak, Scott Manley, Jason Culotta, Lucas Vebber, Brittany Rockwell, Chris Reader, S. Mark Tyler, John Koskinen, Kari Hofer, Spencer X. Smith, Katy Sinnott, Joe Kirgues, Noah Williams, Ed Paradowski, Zach Brandon

Advertising Sales Nick Novak, nnovak@wmc.org

Wisconsin Business Voice is published quarterly by Wisconsin Manufacturers & Commerce. WMC is Wisconsin’s chamber of commerce, manufacturers’ association, and safety council representing businesses of all sizes and from every sector of the economy. WMC 501 E. Washington Avenue Madison, WI 53703 tel.: 608.258.3400 Follow us:

WisconsinMC Wisconsin Manufacturers and Commerce WMC501

Looking to advertise in WI Business Voice? Contact Nick at nnovak@wmc.org. @WisconsinMC 4

July 2017

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F RO M T H E P R E S I D E N T

Tech Colleges Necessary for Worker Pipeline By Kurt R. Bauer

or the past several years I have given a lecture at Business World, the WMC Foundation’s unique summer camp that teaches high school students how to start and run a business. The curriculum goes beyond entrepreneurship and covers things like economic systems, ethics, financial literacy, career development, business etiquette and other topics our instructors and advisors think would be helpful to young people heading into the workforce or off to college. My lecture is called “The Graduation Speech I Have Never Been Asked to Give.” In it I attempt to pass on the good advice shared with me by my grandparents, parents and various mentors. I also try to impart a few career and life lessons picked up along the way, like learn from other people's mistakes, but when you inevitably do

July 2017

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make a mistake, own it and–if possible– fix it. This spring, I was asked to give an actual commencement address by Kaylen Betzig (pictured above), the president of Waukesha County Technical College (WCTC). I didn’t immediately accept the offer. Despite the fact I had the Business World lecture already prepared to use

WCTC and Wisconsin’s 15 other technical colleges are doing their part to fill the worker pipeline across multiple industry and business sectors. as a template and that I give scores of speeches to groups large and small each year, I was intimidated by the pros-

pects of standing before a large gathering of graduates and their families and friends trying to say something relevant and meaningful to fit the occasion. I feared I would come across as pretentious and preachy if I used my Business World lecture (apparently, I don’t care about being pretentious and preachy to high school kids). And as a card-carrying pessimist, saying something motivational or inspiring isn’t my forte. But President Betzig offered some calming words of reassurance. “Did you attend your college graduation?” she asked during our phone conversation. “Yes,” I responded. “So did I. Do you remember who the speaker was?” she continued. “No,” I said. “Neither do I and neither will they,” Betzig lightheartedly told me. Good point, I thought, so I agreed to

F RO M T H E P R E S I D E N T give the speech, which largely focused on workforce trends, including how the labor shortage is pushing wages up and driving investment in robotics and artificial intelligence. As it turned out, I got more out of the experience than I ever imagined. It was an inspiring day and helped put many things into perspective, especially given WMC’s strong emphasis in recent years on aligning Wisconsin’s postsecondary education efforts with the careers our economy is creating. I am happy to report that WCTC and Wisconsin’s 15 other technical colleges are doing their part to fill the worker pipeline across multiple industry and business sectors. During the ceremony, WCTC awarded diplomas, certificates and degrees in many of

the professions WMC members tell us are desperately needed, including mechanical engineering, metal fabrication, welding, automotive maintenance, building trades, CNC and machine tool operation, tool and die making, truck driving, electrical, millwright, accounting, business management, graphic design, culinary arts, computer support and network administration, hospitality, human resources, law enforcement and nursing. Not all the WCTC graduates were considered traditional students. One started working toward his degree back in the 1970s, but life intervened and he never graduated until he went back and received his diploma nearly 40 years later. There was also a young woman who used the new dual enroll-

ment to earn her high school diploma and her associate’s degree in the same month. Talk about having a head start in life! I told the graduates that they had just received one of the best deals in postsecondary education that will reap a strong ROI for years to come. I also said that the degree they earned is relevant to today’s workplace, respected by employers and cost effective to both them and the taxpayer. I concluded by congratulating them not just on their graduation, but on the institution of higher learning in which they chose to pursue their vocation. They should be proud of their accomplishment and know they are helping to solve Wisconsin’s skills gap literally one person at a time. n Follow Kurt on Twitter @Kurt_R_Bauer

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July 2017

G OV E R N M E N T R E L AT I O N S

Smaller Government Yields Economic Success By Scott Manley WMC Senior Vice President of Government Relations

n his first inaugural address in 1981, President Ronald Reagan boldly declared that “Government can and must provide opportunity, not smother it; foster productivity, not stifle it.” In the same speech, Reagan sounded an alarm about the growing size and scope of government, noting that “it is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government.” Thirty years after President Reagan set a visionary path for rethinking government, Gov. Scott Walker and Republican lawmakers blazed a long trail of successful reforms that have reduced the scope of government, and allowed markets to function without undue intervention from state government. They unleashed Wisconsin’s economic potential, and today we are reaping the rewards of those conservative policy changes. The data is clear, and the latest numbers show our state’s unemployment rate at 3.1 percent, nearly a record low. Wisconsin’s labor force participation rate is 68.8 percent – well above the national average. When looking at prime working-age adults in the 25-54 age bracket, Wisconsin has the highest percentage of people working in the country. Many of the reforms WMC and the governor fought for were considered

July 2017

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politically impossible, and all of them came with dire warnings from the left of apocalyptic consequences if they were enacted. History has proved the labor unions and radical environmentalists to be extraordinarily wrong. Consider the example of Act 10, Gov. Walker’s government union reforms that have saved taxpayers $5 billion and counting. When it was debated in 2011, Democrat legislators and their political allies in the teachers union foretold the ruin of education as we know it. They claimed that forcing teachers and other government employees to contribute to the cost of their health care and generous pension benefits would result in lower test scores for students and a mass exodus of teachers from the profession. Neither prediction came true. Wisconsin continues to be among the top ten states in the country for ACT test scores among states where all students take the exam. Moreover, we actually had more licensed teachers in the 201516 school year than we did in the 201112 school year, despite the fact that student enrollment has actually dropped since Act 10 was enacted in 2011. Because of those collective bargaining reforms, Wisconsin now enjoys a marketplace for educators where high-performing teachers can command a higher salary than they could under the old system dominated by union seniority rules. Republican lawmakers also took on significant tax reform, having enacted across-the-board income tax reduc-

tions, a freeze on property taxes and the Manufacturing & Agricultural Tax Credit to bolster those two super-sectors of our economy. Opponents called the tax cuts irresponsible and warned that allowing people to keep more of their money would create government deficits. On the contrary, each of Gov. Walker’s

Many of the reforms WMC and the governor fought for were considered politically impossible.

budgets has balanced, and the state has actually generated budgetary surpluses. Wisconsin proved that you can cut taxes by the seventh-largest amount in the country, as Wisconsin did from 2010 to 2014, and still have more than enough revenue to meet spending priorities like education and social services. Far from being reckless fiscal policy as alleged by some, Wisconsin has placed itself in a stronger financial position than nearly every other state. For example, we are one of only two states that has a fully funded pension system for state employees. Moreover, Wisconsin is in the top ten for states with the lowest long-term debt. The manufacturing tax reforms are already paying dividends, with many recent announcements of companies moving their operations to Wisconsin. Since 2011, the year the Manufacturing

G OV E R N M E N T R E L AT I O N S

& Agricultural Tax Credit was enacted, Wisconsin has grown 35,700 manufacturing jobs – the 10th-most in the country. The fact that we stopped bleeding family-supporting manufacturing jobs, and are actually growing them now, is nothing short of remarkable. WMC also led the charge on workplace freedom by helping enact Wisconsin’s Right to Work law in 2015. At the time, Detractors said Right to Work would lead to lower wages for workers, while labor unions claimed it would put an end to worker training. In reality, the opposite has happened. Real wages in Wisconsin have grown faster than inflation during every economic quarter since Right to Work became law. In fact, wages in our state have grown 11.6 percent over the last three years, which is the 19th-highest in the country. Solid wage growth and low cost-of-living have resulted in Wisconsin workers enjoying the 20th-highest purchasing power in the country. While wages have continued to rise, rumors of the demise of worker training proved greatly exaggerated. All throughout Wisconsin, businesses continue to

train workers for the skills they need to remain competitive. Meanwhile, unionbased training programs have flourished. For example, the International Union of Operating Engineers Local 139 recently expanded its 380 acre stateof-the-art training facility in Coloma, Wisconsin and trained 7,500 workers in a single year. While Wisconsin was busy cutting taxes, our neighbors to the west in Minnesota were busy raising them. Many Democrat lawmakers in Wisconsin held Minnesota out to be the exemplar for our state to follow. They argued that if we would only raise taxes and double-down on government regulation, as Minnesota has, we would be in much better shape. Republican lawmakers correctly took a divergent path from that of their Golden Gopher counterparts, and the Badger State is all the better for it. Lower taxes, regulatory reform and lawsuit reform have helped position Wisconsin with a lower unemployment rate than Minnesota. Our economy is growing faster too, with private sector GDP growth outpacing Minnesota since 2015. Perhaps our favorable jobs climate is the reason that

more people are moving to Wisconsin from Minnesota on a net migration basis. There are many more signs that our economy as a whole is on the right track. Our per capita GDP growth from 2009-2015 ranks 13th-best in the country. Ongoing unemployment claims last year were at their lowest level since 1973. Wisconsin has grown about 210,000 jobs since Gov. Walker was elected and a new era of bold reform took root. President Reagan famously said that the best social program is a job. He was right. Last year the poverty rate in Wisconsin dropped to its lowest level since 2008 thanks to the creation of 70,000 jobs from 2014 to 2015. Reagan’s wise words are a great reminder that businesses will grow and families will be better off when the size and scope of government is reduced. Gov. Walker and legislative Republicans in Wisconsin have proved his theory correct. n Follow Scott on Twitter @ManleyWMC

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July 2017

TA X P O L I CY

"Dark Store" Legislation = Business Property Tax Hikes By Jason Culotta WMC Senior Director of Government Relations

mong the more serious issues circulating in the Capitol this session is an effort by some Republican legislative leaders to give local assessors permission to raise property taxes on businesses. Under the guise of fixing a "dark store loophole," these lawmakers are seeking to tax business property on the value of a lease rather than the actual property, and exclude vacant buildings as comparable property, both efforts to drive the assessment of business property higher than current law allows. Sensational news stories have run in several communities across the state where local governments have had to pay out refunds to “big box” retail stores. Local elected officials have decried that these commercial property owners aren’t paying their fair share of property tax. The assessors (about one-fifth of those employed by local governments) and the municipalities they work for contend that the law which has governed commercial property assessment since 1970 should be dramatically changed to empower assessors to levy higher amounts. State Senate President Roger Roth is authoring a bill to exclude vacant comparable property, while Sen. Duey

Stroebel is leading the legislation to tax leases. Assistant Assembly Majority Leader Rob Brooks, a former Ozaukee County Board chairman, is spearheading both bills in the Assembly. These lawmakers have generally been supportive of making Wisconsin more economically competitive, but on this issue have embraced the cause of aggressive assessors seeking to jack up taxes on employers.

Local elected officials have decried that these commercial property owners aren’t paying their fair share of property tax.

Some aggressive assessors started out focusing on large retailers, insisting these stores did not pay enough in property taxes and assessing those properties for anywhere from two to five times the value they previously had been assessed at. They did so unlawfully and have consistently lost the resulting court challenges. Today, those assessors are moving on to restaurants, hotels, and other commercial properties, broadening the application of their new theories of how to extract more tax revenue from business property owners. For example, the Concourse Hotel in Madison saw its assessment triple this year compared to last – and it was

just one of several examples in Madison this year. Advocates for raising taxes on business property have pointed out that Indiana adopted two laws in 2015 allowing for these new means of assessing higher values. Both laws were subsequently amended in 2016 to correct over-reaches in the original language. While one house of the Michigan legislature passed similar legislation in 2015, no further progress has been made on the issue. It should be noted that both Americans for Tax Reform and the Council on State Taxation have recently come out strongly against this new legislation. Another complication unique to Wisconsin is the Uniformity Clause of our state constitution. If these changes are made for commercial property as their advocates espouse, they must also apply to residential, manufacturing and agricultural property. What is unclear is how significant those changes will be for using vacant property as comps for all classes of property. So why are some Wisconsin Republicans determined to raise property taxes on business through a backdoor tax on income? The common theme between the authors and others supportive of the legislation is to please their local elected officials. It’s time for these lawmakers to decide if they stand with taxpayers or the government spenders. n Follow Jason on Twitter @JGCulotta

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COOLEST

THING

MADE IN

WISCONSIN Nearly 300 nominations. Over 20,000 votes. One winner. The 2016 Coolest Thing Made in Wisconsin contest was an undeniable success. With Harley Davidson–last year’s winner–out of the running, who will take the trophy this year? Join the fun at madeinwis.com and nominate a product that is made in Wisconsin starting August 1! From there, a popular vote will decide the top 16 contenders and Manufacturing Madness will begin. Finally, the Coolest Thing Made in Wisconsin will be announced at the State of Wisconsin Business & Industry Luncheon on October 19. Aug. 1 to Sept. 1 – Nominations Accepted Sept. 4 to Sept. 11 – Popular Vote to Determine Field of 16 Sept. 18 to Sept. 25 – 1st Round Oct. 2 to Oct. 6 – 2nd Round Oct. 10 to Oct. 16 – Final Round Winner Announced Oct. 19 at State of Wisconsin Business & Industry Luncheon

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FUTURE WISCONSIN

Will Wisconsin Workforce Meet Economy’s Demands?

oday’s world has become a lot smaller than it was decades ago. International trade is becoming more commonplace – even for small companies. From better and cheaper transport for goods to innovative technologies that allow everyone to be connected with any other part of the globe, the new economy is truly here. However, not everyone is ready for the new economy, especially when you look at the workers needed. Unfortunately, there is an incorrect theory that getting a bachelor’s degree will guarantee success. That is simply not true. Seventy percent of jobs available in Wisconsin do not require a four-year degree. Even more unfortunate, the Wall Street Journal reports that the jobs available in this country that do require a degree are not lining up with the majors students are choosing. According to the data, the top three college majors businesses are looking for are business/accounting, engineering and computer sciences. More than 80 percent of hiring employers want graduates fresh out of business school. Three-quarters are looking for engineering graduates and 64 percent are in need of candidates with computer sciences degrees. However, only 29 percent of students choose business or accounting. Only five percent choose engineering. And – sitting at the bottom – a mere three percent of students major in computer sciences. What beats out both engineering and computer sciences as a chosen major? More than 11 percent of students choose health sciences, but

only 1.8 percent of hiring companies are actually in need of workers with those skills. With an economy that is becoming more and more competitive on the global scale, employers need to know they have a workforce they can count on. This is something Gov. Scott Walker has been highlighting throughout the state – including during a visit to Waukesha County Technical College with President Donald Trump. Walker routinely points out that there are as many as 90,000 jobs available right now in Wisconsin; the state just needs the workers with the right skills to fill them. The governor is right. There are some short term fixes that include marketing to workers in Illinois who are looking for a better place to live, work and raise a family. Other steps include immigration reform and opening up opportunities to Wisconsinites who may have had mul-

tiple barriers to entry into the workforce. But, there are also long-term ideas that need to be a part of any solution. That includes working with high school students to get them ready for a career in Wisconsin. WMC Foundation’s Business World program does just that. It gets younger individuals to realize there is more to business than what they may inherently know, and it gives them the opportunity to explore their own unique talents. Two four-day camps are held each summer for the Business World program, in addition to numerous miniBusiness World programs throughout the year. This is, at least, a first step in preparing students for the workforce.n

To find out how you can get more involved with The Future Wisconsin Project, please contact Jack Orton at jorton@wmc.org or 608.661.6904.

Employers' Most Wanted Majors: Business/Accounting 81.3% 19.2% Engineering 75.9% 5.2%

Pct. of Employers Looking to Hire Pct. of Seniors in Major

Computer Sciences 64.3% 3.1%

Source: Wall Street Journal

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July 2017 13

E N V I RO N M E N TA L A N D E N E RG Y P O L I CY

Wisconsin Leads Nation on Energy Independence By Lucas Vebber WMC Director of Environmental & Energy Policy and General Counsel

e are closer than ever to achieving true North American energy independence, something that will bolster our economy and our national security. Unfortunately, radical environmental activists are committed to holding up progress every step of the way. The fact is that fossil fuels power our economy, and as we have seen in Wisconsin, we can use more and more fossil fuels, grow our economy and simultaneously improve our environment. Embracing these energy resources will benefit Wisconsin and help push us toward true North American energy independence. Over the past eight years the fossil fuels industry has seen an ever-changing regulatory environment at the federal level. along with a constant drum beat of attacks from environmental activists throughout the country opposing development of energy resources and new energy infrastructure. Simply opposing fossil fuels on principle is misguided. We need a diverse energy portfolio to meet our economy’s needs, and fossil fuels need to play a significant role in that to ensure affordable and reliable energy. Across the United States there are companies using materials, supplies and services from right here in Wisconsin, to develop new fossil fuel resources. Wisconsin’s energy story is a great example of how we can utilize fossil

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fuels to drive our economy while simultaneously improving our environment. Wisconsin has a long and proud history of environmental stewardship and conservation. We are also a manufacturing state that is largely powered by reliable, low cost fossil fuels, like coal and natural gas. Wisconsin companies are playing a critical role in supplying the materials and supplies to develop new fossil fuel resources.

Wisconsin’s energy story is a great example of how we can utilize fossil fuels to drive our economy while simultaneously improving our environment. In Wisconsin, as our fossil fuel use has increased, so has our air quality. According to numbers from the Federal Energy Information Administration, from 1991-2015 Wisconsin power plants increased coal consumption by over 16 percent and increased the amount of natural gas used by more than 1,800 percent. Despite significant increases in fossil fuel use over the past 25 years, in 2015 Wisconsin power plants emitted 82 percent less sulfur dioxide and over 80 percent less nitrogen oxides than they did in 1991. Wisconsin is using more fossil fuels, and putting out significantly less pollution. Despite this growth in fossil fuel use, Wisconsin’s air is currently the cleanest

it has been in decades. As the Wisconsin DNR reported at the end of 2016, “concentrations of most criteria pollutants have been decreasing over the past decade in all regions of the state.” As America produces more oil and gas, we are creating thousands of jobs nationally and right here in Wisconsin, paying less for the energy to heat our homes and drive our vehicles, and continuing to see an improved environment. As we have developed more and more energy resources nationally, Wisconsin companies have played a key role. Wisconsin mines provide some of the finest frac sand to the oil and gas industry, a key component in the development of new energy resources. In addition, Wisconsin manufacturers are producing the supplies and equipment necessary to make cutting edge energy development possible. These industries directly employ thousands of Wisconsinites, while other Wisconsin employers and families are benefiting from the lower fuel prices. Fossil fuel development is great for Wisconsin. Next time you hear an environmental extremist complaining about fossil fuels, let them know that Wisconsin has shown firsthand that we can use fossil fuels and improve our environment, and make sure to tell them that thousands of Wisconsin jobs are directly tied to energy development. Wisconsin is playing a critical role in the march toward North American energy independence, and that is something we should all be proud of. n

Follow Lucas on Twitter @VebberWMC

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S M A L L BU S I N E S S

Small Businesses Drive Wisconsin, U.S. Economy By Brittany Rockwell WMC Director of Small Business Advocacy

isconsin has seen an incredible turnaround over the past few years. The state’s unemployment rate of 3.1 percent – just a tenth of a point away from the historic low of three percent – is proof positive of that fact. As it is pointed out on other pages in this magazine, the statistics of Wisconsin’s economy are quite impressive, and we must thank Gov. Scott Walker and the legislature for their hard work in turning this state around. The reforms put in place have created an environment that is richly successful for businesses of all sizes. Businesses, both large and small, are reaping the benefits of the change that has taken place in Wisconsin. While many of the larger businesses get the lion’s share of the news cycle, let’s take a moment to focus on the impact of small businesses in Wisconsin. Just over half of the private workforce in Wisconsin is employed by small businesses. That is about 1.2 million people, according to the U.S. Small Business Administration’s (SBA) 2017 Wisconsin Small Business Profile. The SBA’s report used the most up-to-date government statistics and demographics available to track growth and provide a snapshot of how small business ranks in each state. Wisconsin’s Small Business Profile breaks down employment numbers

by industry. It dissects valuable data and explains how many individuals are employed in the private sector and of those employees, how many are working for small businesses. Finally, it breaks down the percentage of small business employment in each individual industry. It is not surprising that the industry that has the largest small business employment in the state is manufacturing. According to the data, 443,111 people

Small businesses are creating more than 30,000 net jobs annually in Wisconsin.

work in manufacturing in Wisconsin, and 205,806 of them – 46 percent – work for small businesses. Manufacturing is followed closely by health care and social assistance with total private employment equaling 388,018. Fortythree percent of that industry is employed by a small business. While manufacturing and health care employ the highest number of employees, three other industries seem to be run almost completely by small businesses with more than 80 percent of employment coming from small businesses. Those industries include: construction, real estate and agriculture/ forestry/fishing and hunting.

These industries play an important role in Wisconsin and so does small business. In the rural regions of the state, small business employment represents anywhere from 77 percent to 100 percent of the total employment in a county. This is crucial in a state like Wisconsin that struggles to evenly distribute employment opportunities. It is safe to assume that without small business, the rural counties in Wisconsin would be in a calamitous situation. Small businesses are creating more than 30,000 net jobs annually in Wisconsin. Not only are jobs being created by small businesses and the unemployment rate is decreasing, but Wisconsin’s economy grew at an annual rate of 1.6 percent in 2016 which is higher than the national average of 1.2 percent. As the business climate in Wisconsin continues to improve so will our small businesses. Wisconsin is a significantly better place because of the positive impact of small business. We strive every day to make it better through the efforts of WMC’s Small Business Committee (SBC). The SBC stands up for entrepreneurs and small businesses all across Wisconsin, and we will continue our work to improve the state’s business climate.n To find out more about WMC’s advocacy and the Small Business Committee, contact Brittany at brockwell@wmc.org.

Follow Brittany on Twitter @RockwellWMC wisconsinbusinessvoice.org

July 2017 17

HUMAN RESOURCES

Worker’s Compensation— Negotiations Underway By Chris Reader WMC Director of Health and Human Resources Policy

he labor and management members of the Worker’s Compensation Advisory Council (WCAC) exchanged proposals in May, kicking off this year’s negotiations. If you are unfamiliar, the WCAC is a government board consisting of five employer representatives and five labor representatives charged with negotiating reforms to the worker’s compensation law every two years. I serve on the Council as a member of the employer team. After negotiations are complete, the final product of the Council, the “agreed-to bill,” goes to the legislature for their consideration. Usually the agreed-to bill becomes law without much fanfare, as it already has the support of industry and labor. Per usual, the stakes are high in this negotiation process, which will likely run through the summer and into early fall.

Employer proposals: • Fee Schedule to contain medical costs as is done in 44 other states • Allow employers to direct injured workers to preferred providers • Treatment guidelines to ensure proper care • Electronic billing and medical records • Disallow benefits to injured workers who lied about their physical ability • Stop workers from seeking benefits if another state already denied their claim

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• Change statute of limitations to two years • Require benefits be paid based on wages at time of injury • Revise minimum ratings to account for advances in medicine • Require notice of injury within 30 days (currently one year)

Labor proposals: • Increase maximum weekly benefit by $2,080 (nine percent) over two years • Increase PTD supplemental benefit by 16 percent • Start statute of limitations at last medical expense payment • Eliminate statute of limitations for shoulder replacements • Eliminate employer’s role in third party settlement decisions • Mandate employers display a poster of employee worker’s compensation rights • Require employers continue providing group health insurance to an injured worker • Index PPD benefits after 200 weeks • Taxpayer funded college scholarships for children of severely injured or killed workers WMC will keep our members updated as the negotiations move forward. Certainly we think there is much to like in the employer proposals, and much to be concerned with in the labor proposals. In addition to the work of the Advisory Council, another governing body also took action recently related to worker’s compensation. The Wisconsin

Compensation Rating Bureau (WCRB) is the bureau under state law that sets worker’s compensation insurance rates each year, among other duties governing insurance companies. I also serve on this board, appointed by Gov. Scott Walker as a representative of employers. The WCRB relies upon sound actuarial analysis of recent and expected worker’s compensation injuries, economic trends in the state, medical costs and other factors in determining insurance rates each year. In May, the Bureau voted to adopt an 8.46 percent insurance decrease for the next year. If approved by the Office of the Commissioner of Insurance, the rate decrease will take effect on October 1, 2017. If the WCAC successfully adopts a medical fee schedule and keeps tight control over benefits paid to injured workers, on top of the expected insurance rate decrease, Wisconsin will be in a position to truly boast about our worker’s compensation system going forward. We already have high quality of care, a strong focus on safety and quick return to work for injured workers. Add to that competitive pricing, and Wisconsin will be able to market our worker’s compensation system as another reason for employers and workers alike to want to move to our state. n

For a complete list of proposals, contact Chris at creader@wmc.org.

Follow Chris on Twitter @ReaderWMC

education

environment human resources HEALTH CARE

economic

TRANSPORTATION

ENERGY

WMC POLICY DAY Wednesday, August 16

Monona Terrace Community and Convention Center, Madison

Policy Day 2017 will be the canâ&#x20AC;&#x2122;t-miss event of the fall when it comes to local, state and federal legislative updates. Featuring multiple tracks on different topics and top-notch general session speakers, this event is sure to make headlines. If you want the latest information on how proposals will impact your business, mark down Policy Day 2017 on your calendar.

PROGRAM AGENDA Policy Day features four breakout tracks each on Tax Policy, Human Resources Policy and Energy & Environmental Policy. 7:30 am

Registration and Continental Breakfast

9:00 am

Opening Session: Senator Ron Johnson (invited)

10:00 am

Breakout Tracks Session 1

10:45 am

Morning Break

WORKFORCE

11:15 am

Breakout Tracks Session 2

12:00 pm

Luncheon

TAXES

1:15 pm

Breakout Tracks Session 3

2:00 pm

Afternoon Break

2:30 pm

Breakout Tracks Session 4

3:30 pm

Closing Session: Governor Scott Walker (invited)

CIVIL JUSTICE

* Schedule subject to change

Visit www.wmc.org for a full list of breakout track sessions, program details and to register, or call 608.258.3400.

WMC POLICY DAY PROGRAM SPONSORS:

C OV E R STO RY

SELLING

A Comprehensive Look at Wisconsin’s Place in the World and Why it Pays to Make Things in the Badger State By Nick Novak WMC Director of Communications and Marketing

rom London to Shanghai to Rio de Janeiro, there is no doubt what Wisconsin’s number one export is: the Green Bay Packers. If you are sporting an Aaron Rodgers jersey on a trip abroad, it would not be out of the ordinary to hear a stranger yell “Go Pack Go” in your direction. While it is true the Packers might be the first thing people think of when someone asks them about Wisconsin, this state is known for a lot more than just championships. Though, Lombardi is likely to come up more than a few times in conversation.

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Sports-talk aside, Wisconsin is known around the world for making things. Not only is Wisconsin known for making things, the state is known for making high-quality things.

Choosing Wisconsin According to Katy Sinnott, vice president of the International Business Development Division at the Wisconsin Economic Development Corporation (WEDC), there are several markets around the world that look to the Badger State and the U.S. because they want quality.

“Japan is a very interesting market,” Sinnott said in a recent interview. “It is a very demanding market, similar to Germany, in that they want very high quality equipment, and that is why they come to Wisconsin.” The data proves her point. In 2016 alone, exporting accounted for $21 billion in economic activity, according to the U.S. Census Bureau. Some of the top products exported from the state seem logical. Coming in at number five on the list last year was marine outboard motors. It makes sense that $231 million

worth of boat motors were exported from Wisconsin when one of the top manufacturers of outboard motors in the world – Mercury Marine – is located in Fond du Lac. Another top product exported from the state is tractors. Thanks to manufacturing facilities for John Deere, CNH Industrial – owner of Case and New Holland – and others, Wisconsin exported $174 million worth in 2016. Other top exports might be more surprising. In fact, Wisconsin exported $574 million worth of civilian aircraft, engines and parts in 2016 – making it the most exported product from the state last year. Another one near the top of the list was mink furs, which accounted for $145 million in exports. Countries that are buying Wisconsin goods may be more obvious. Canada accounted for 31 percent of total

exports from Wisconsin, valuing $6.6 billion. Mexico followed with $3.1 billion in value, and China rounded out the top three with $1.4 billion worth of export value. Japan and the United Kingdom were the next largest purchasers of Wisconsin products at just under $1 billion each. Aaron Jagdfeld, President and CEO of Generac Power Systems based in Waukesha, says in addition to manufacturing high-quality products, there is something different about doing business with a Wisconsin company. “A handshake deal in Wisconsin means a lot more to people,” Jagdfeld said. “A handshake means lot more to people here than in other parts of the country, and certainly more than other parts of the world, for that matter.” His argument is that there is a higher

level of trust thanks to the Midwestern business approach many companies take. Jagdfeld says there is a better relationship that is created, and it is something that is valued by customers. In essence, manufacturers are doing more than selling their product, they are selling Wisconsin.

The Impact of Trade Since the 2016 presidential campaign, the North American Free Trade Agreement (NAFTA) has come under quite a bit of scrutiny. If there was any doubt where President Trump stands, he made it clear during a visit to Wisconsin this past April. "We're going to make some very big

wisconsinbusinessvoice.org

July 2017 21

C OV E R STO RY changes or we're going to get rid of NAFTA for once and for all,” the president said. However, according to data, NAFTA has not been a bad agreement for Wisconsin. Last year, the state’s top two trading partners – Canada and Mexico – actually purchased more goods from Wisconsin than Wisconsinites purchased from them. That means thanks to NAFTA, Wisconsin has a trade surplus with both countries. The state had a $299 million trade surplus with Mexico and a $2.5 billion trade surplus with Canada. “I think the U.S. needs more agreements like that, rather than fewer agreements like that,” Jagdfeld commented about NAFTA. “They need to promote free trade on a global basis and on a regional basis. That is going to ensure you have capital markets that work the way they were intended, which is to work as efficient as possible.” He explained that trade agreements have actually helped the Mexican economy, which is one of the things that excites him about that market. In 2012, Generac purchased two facilities near Mexico City to manufacture products for the Mexican market. He said Mexico has a good manufacturing base and a workforce that is eager to learn new skills and better their lives. This is leading to a growing economy and more opportunity for companies like Generac to sell products to Mexico. In addition to Mexico, WEDC highlighted two other emerging markets for Wisconsin companies. One is China, which with a population of more than 1.3 billion, it should not be surprising. The other is the region of southern Africa – specifically Tanzania. China is a go-to importer of Wisconsin goods for scientific and medical instruments, industrial machinery and electrical machinery. However, a growing industry that does not get the press it deserves is water filtration, pipes and

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WEDC's Katy Sinnott during a recent trade trip.

pumps. According to WEDC, Wisconsin is an international leader in this industry. The state is such a leader that WEDC is working to raise awareness about Wisconsin’s growing water industry. “We are going to create a consortium made up of our current companies that are in China like A.O. Smith and Rockwell,” Sinnott said. “By doing this, we are hoping to expand the market size

Nineteen out of 20 consumers live outside the United States. of Wisconsin companies in China.” Sinnott also added that places like Tanzania could be a new market for Wisconsin companies – specifically food processors because most of southern Africa has very few companies in that industry. Since food processors are more plentiful in Wisconsin, it could be an opening for new business potential.

Wisconsin’s Exporting Future Without trade, Wisconsin’s economy would face numerous challenges.

Nineteen out of 20 consumers live outside the United States. That number shrinks even more when looking at consumers living outside of Wisconsin. But numbers like those do not worry folks like Generac’s Jagdfeld. He is excited about the growth of foreign markets and thinks exporting can offer great potential for Wisconsin business. “We continue to become a more global company,” he said. “Twentyfive percent of our revenues in the first quarter came from outside the U.S. and Canada. That is up from one percent five years ago. So it has moved pretty dramatically.” Now, Generac is a $1.5 billion company with facilities across the globe – including Mexico, China, Brazil, Spain and Italy. Of course a company of that size can make exporting a large part of its business. WEDC’s Sinnott argues it is not just big companies, however, that can take advantage of new markets. “Many manufacturers feel hesitant to go into exporting. Maybe they don’t speak the language, they don’t know what forms are supposed to be filled out to get there. Maybe they don’t even know how to get paid,” she said. “That can feel like a very daunting task when

you are a small to medium-sized enterprise. What we try to do to belay that fear is encourage them to participate in our ExporTech program.” ExporTech is run by the Wisconsin Manufacturing Extension Partnership. It offers participants three, eight-hour days of customized training for export expansion strategy development. A company can enroll for $7,000, but some of that cost can be covered by a WEDC scholarship, Sinnott says. “On average, our manufacturers see an impact of nearly $1 million in less than 12 months after going through this program,” Sinnott explained. “Plus, they will see increased revenues of $450,000 on average after 12 months.” This program is run throughout the country, and Sinnott said that Wisconsin companies’ results are twice as good as the national average.

Leading not Lagging For decades, states have relied on historical information to determine where their next step should be for trade missions. If a country has historically purchased large amounts of automotive parts, then states with more automotive part manufacturers would

2016 Wisconsin Top Export Markets 1. Canada

$6.6 billion | 31% total exports

2. Mexico

$3.1 billion | 15% total exports

3. China

$1.4 billion | 7% total exports

4. Japan

$865 million | 4% total exports

5. United Kingdom

$813 million | 4% total exports

6. Rest of World

$8.3 billion | 39% total exports

look to that market. Over the coming months, WEDC is changing the game. Instead of using lagging indicators to determine where they market Wisconsin’s companies, they are researching where new growth markets are. “What WEDC is going to do over the next three to six months is to look at the expected future growth worldwide for our industries that are driving the economy of Wisconsin today,” Sinnott

said. “That will help us better target our trade ventures and point companies in those industry clusters to specific countries where there will be growth movement over the next three to five years.” By looking toward the future instead of the past, companies can be at the forefront of growing economies and growing markets. And that is what Wisconsin companies need. They need to be able to compete on a global scale, because competition no longer comes from the business down the street. It comes from someone in Indiana and someone in India. But, Wisconsin businesses have a distinct advantage. Their products are made in a state known for quality. Their products are made by a skilled workforce. And if a business doesn’t know how to break the ice with a new buyer in another country, they can likely start by highlighting the Green Bay Packers. There are certainly industries and topics that were not covered in this article, but it is safe to say that exporting is not going away anytime soon. Trade will continue to have a big impact on the state’s economy, and several companies serve as proof that it pays to make things in Wisconsin. n

wisconsinbusinessvoice.org

July 2017 23

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24 July 2017

wisconsinbusinessvoice.org

I N T E R N AT I O N A L BU S I N E S S

Sister-State Relationship Enhances the Economy By S. Mark Tyler OEM Fabricators, Inc. Founder/President WMC Board of Directors

he University of Wisconsin System continually looks for opportunities to help improve the lives of citizens, perform world-renowned research that develops the cures and innovations of tomorrow and supports our Wisconsin businesses. In our recent stakeholder meetings across the state, business and community leaders emphasized the need for employees who can work as part of a team with people from different cultures, backgrounds and geographic areas. Businesses headquarter themselves in our state because they know the UW System produces an innovative and creative workforce. Reuters ranked the UW System as #13 in the world for “doing the most to advance science, invent new technologies and help drive the global economy.” In the spirit of continuing to do more to support our businesses, I recently visited our sister-state of Heilongjiang in northeast China. Wisconsin and Heilongjiang Province are celebrating the 35th anniversary of their sisterstate relationship this year, and our UW institutions are committed to supporting and growing our educational and economic affiliations. This trip continued to foster a positive connection which began several years ago. A Wisconsin trade mission in 2015 to Harbin, the province’s capital city, yielded business contacts from China’s World Dairy Expo and Summit. One of the largest dairy regions in China, Heilongjiang Province had an inter-

est in importing dairy products, live animals and other agricultural products from Wisconsin. According to the US Census Bureau, Wisconsin exported more than $1.4 billion worth of commodities to China in 2016. China has been Wisconsin’s third largest export market since 2006, consistently beating out Japan and the United Kingdom for that spot. This

Wisconsin exported more than $1.4 billion worth of commodities to China in 2016. sister-state relationship helps increase Wisconsin exports to China, as well as business opportunities in our state – meaning more jobs for Wisconsinites! As Governor Walker stated in his proclamation to celebrate the 35th anniversary of this sister-state, these business and educational ties allow Wisconsin to stand out as a global leader “in manufacturing, clean water and energy technology, and agriculture,” as we continue to develop partnerships within China’s growing economy.

To build upon the relationships our campuses have developed over the years, the UW System signed an agreement with provincial education officials to reiterate our commitment to facilitate academic, research and cultural collaborations at our UW institutions across the state. For example, UW-River Falls and the Harbin University of Science and Technology finalized arrangements for faculty and students to travel between the two universities for study and research. These programs provide business contacts and opportunities for students in undergrad and graduate school in different areas of the world. With more than 3,500 Chinese students currently enrolled in UW System institutions in both undergraduate and graduate programs across Wisconsin, our future graduates have the opportunity to learn new points of view which enriches their educational experience and prepares them for a global workforce. China’s economy and demand for imports grows every year, and our continued partnerships with them will certainly mean great things for Wisconsin schools and businesses – now and in the future.n S. Mark Tyler serves on the UW System Board of Regents as the Wisconsin Technical College System (WTCS) representative. Tyler is vice president of the WTCS Board and serves as chair of the Governor’s Council on Workforce Investment.

wisconsinbusinessvoice.org

July 2017 25

I N S U RA N C E

Employee Benefits Made Simple By Russ Cain WMC Director of Group Insurance Services

ealth insurance has long been the elephant in the room when employee benefits are discussed. It currently encompasses over 26 percent of the benefits spend for civilian workers and over 90 percent of the benefits insurance spend. The Affordable Care Act has limited any association’s ability to provide meaningful savings on health insurance for members, so WMC’s focus has been on the remaining products and services. Because of our ability to save members money – sometimes significantly – WMC has been steadily growing our flagship group life and disability plan participation with fully-insured products by Aetna for some time. Not only can WMC typically save members money, there are numerous other differentiations in products and services that we offer. How does insuring with WMC Group Benefits impact the bottom line, though? These plans are structured as multiple-employers policies with WMC as the policyholder and the WMC Service Corporation as the plan administrator. As such, we can maximize our collective purchasing power and offer participating members local customer service, bucking the national trend where insurers are shifting customer service to large call centers. That is why more than 200 mem-

26 July 2017

wisconsinbusinessvoice.org

bers participate – insuring nearly 15,000 employees. Beyond our member focused customer service, our benefits business is following national trends with steady growth in voluntary products with the ongoing shift to employee elective coverage and delivering technology solutions for HR staff for the growing leave management puzzle.

Voluntary Products Outside of basic life, short and long term disability that is most often paid by the employer, the majority of ancillary benefit programs are either employer subsidized or employee-paid voluntary plans. We have long offered voluntary

More than 200 members participate – insuring nearly 15,000 employees. life, short and long term disability, but the fastest growth has been in supplemental group accident, critical illness and hospital indemnity. These plans have historically been sold using individual products within the worksite, but group plans are quickly dominating this market. The drawback to the older individual plans were that employees often forgot to submit claims for covered expenses and procedures. Today’s group plans are better integrated with other ben-

efits providing greater return for the employee and making it simpler for the employer to service within the group insurance model. These plans are also being bundled with high-deductible health insurance plans. Having an accident, critical illness or hospital plan in place can give employees first-dollar coverage even if they haven’t met their medical plan deductible providing greater peace of mind and greater high-deductible health plan participation.

Leave Management While the outsourcing of leave administration continues to increase, the majority of employers still manage leaves in-house. Since 65 percent of all leaves are linked to the employee’s own health condition, more employers are seeking to integrate leave and disability management. Aetna provides certain employers access to their web-based WorkAbility leave solution at no additional cost. This self-serve solution equips employers with the right technology and knowledge to manage employees’ leaves. With this technology, employers can develop actual absence statistics, reduce compliance risk and effectively manage intermittent leaves. n Contact Russ at rcain@wmc.org for more information about employee benefit options.

State of Wisconsin Business & Industry Luncheon OCTOBER 19, 2017

Monona Terrace Community & Convention Center • Madison, WI

The State of Wisconsin Business and Industry Luncheon is an annual check-up of the state’s business climate and overall competitiveness.

Cost is $125 per person or $750 for a table of eight. Discounted price for WMC Members: $75 per person; $500 for a table of eight.

To register, visit www.wmc.org/SOWB or call 608.258.3400.

PROGRAM SPONSORS

WMC FOUNDATION SPONSORS John Deere • Mayville Engineering Co. • Waupaca Foundry BMO Harris Bank • Alliant Energy • The Boldt Company Briggs & Stratton • M3 Insurance • Ariens Company • Kikkoman Foods Kwik Trip • Prent • Greenheck Fan • Brakebush • Delta Dental Wisconsin Public Service Foundation • Hydrite Chemical • Kohler ITU Absorbtech • Colony Brands, Inc. • Fearing’s • BDO USA, LLP

WISCONSIN ECONOMIC METRICS

Wisconsin Economy: Best in 15 Years By John Koskinen Wisconsin Department of Revenue Chief Economist

he Wisconsin economy is now in the best shape it has been for the past 15 years. The body of evidence shows that trends are positive in many areas.

is rare. A rate of 3.1 percent or lower has been achieved in only 11 of the 497 months from January 1976 to May 2017. Compare that rate to other states. At 3.1 percent, Wisconsin is among the 13 states with unemployment rates below 3.3 percent and is the lowest in the Great Lakes economic region. For much of the state, unemployment is at generational lows. Comparing the April 2017 county unemployment rates to April of all prior years back to 1990, 44 of the state’s 72 counties reached record lows. All the rest are at levels not seen since

Unemployment Low Across Wisconsin The May 2017 Wisconsin seasonally adjusted unemployment rate fell to 3.1 percent, only 0.1 percent from the all-time low of three percent reached in the summer of 1999. This

Unemployment Rates

2% 0%

4. 4 3. 1

4. 1 4. 9

2010 2011 2012 2013 2014 2015 2016

Wisconsin

United States

2017

Visit wmc.org to view WMC's Two-Minute Drill video about Wisconsin's economy.

28 July 2017

wisconsinbusinessvoice.org

Job Creation Strong in Major Industries Through April, the Wisconsin economy has added over 220,000 private sector jobs since December 2010. Recovering from the Great Recession, Wisconsin set a record for private sector employment in March 2015. It has added more than 70,000 jobs since then. The gains have been widespread across industries. Manufacturing is up 36,000; Construction is up 22,000; Trade, Transportation and Utilities is up 34,000; Leisure and Hospitality is up 24,000; Education and Health is up 41,000; and Professional and Business Services is up 40,000.

Labor Force Growing, Work Ethic Strong

5. 3 4. 6

5. 5

6. 2

7. 4 6. 8

7. 1

8. 1

8. 9 7. 8

8. 7

9. 6

10%

at least 2000. In a very remarkable shift, counties north of Highway 29 that in 2010 were confronting unemployment rates over eight percent (at times over 10 percent) are now at record lows.

The decline of the state’s labor force during and immediately after the Great Recession has been reversed. Wisconsin’s labor force losses were fully recovered by February 2016. It is now up another 35,000 to a new high. For May 2017, Wisconsin ranked fifth in the nation for labor force participation at 68.8 percent of population. Among the prime working age population (25 to 54) Wisconsin has the highest employment-population rate in the country. Measuring percent of popula-

50,000

Real Earnings in Wisconsin

experience access

49,000 48,000 47,000 46,000 45,000 44,000

A National CPA & Advisory Firm

43,000 42,000

2009

2010

2011

2012

2013

2014

2015

2016

tion employed by age, by gender, by ethnicity, or by any level of educational attainment, Wisconsin outperforms the rest of the country.

Strong GDP Growth From 2009 to 2015, Wisconsin per capita real GDP increased 8.5 percent, ahead of the U.S. average of 7.2 percent. This placed Wisconsin 13th in the nation. Real earnings in Wisconsin are now at new highs, too – reaching $47,611 in the third quarter of 2016.

1:6

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Poverty is Declining Back in May 2015, President Obama tweeted, “the best anti-poverty program is a job.” Wisconsin proves it. On May 22, 2017, the University of Wisconsin’s Institute for Research on Poverty reported that poverty in Wisconsin achieved a nine-year low. Their specific Wisconsin Poverty Measure fell from 11.2 percent in 2008 to 9.7 percent in 2015. The report attributed the reduction to gains in employment and wages. Since the gains in employment and earnings continued in 2016 and 2017, we can expect further reductions.

State and Local Tax Burden Lowest in 50 Years Continuing efforts to limit government spending and lower taxes have produced results. As recently as 2010, Wisconsin ranked ninth in the nation for state and local tax burden which was 7.9 percent above the national average. By 2014, the ranking dropped to 16th overall, only 1.5 percent above

the national average. That is the lowest burden relative to the rest of the country since the early 1960s.

The Bottom Line Measured by unemployment rates, job creation, real earnings and tax burden, Wisconsin’s economy is in its best shape in the past 15 years and we've got strong momentum for the future. n

wisconsinbusinessvoice.org

July 2017 29

WCCE

September is Chamber Month T he core services Wisconsin’s 267 local chambers of commerce offer their members vary from village to town to city. But whether they focus on advocacy, tourism, economic development, entrepreneurship, young professionals, workforce or organizing community events, they all play an important role in our state that should be recognized. That is why, for the first time, Wisconsin Chamber of Commerce Executives (WCCE), a division of WMC, is asking Gov. Scott Walker to proclaim September as Chamber of Commerce Month in Wisconsin. “Chambers are central to Wisconsin’s local economies,” said Philip Fritsche, president of the Beaver Dam Area Chamber of Commerce and WCCE Advisory Board Chair. “In most places, the chamber is involved in all major local decision making either as a facilitator or advocate for its members.” Fritsche said that chambers are critical community partners and problem solvers with the unique ability to work with stakeholders from both the private and public sectors. “We are going to be asking all chambers in Wisconsin, big and small, to reach out to local media, community groups, government and the public

to talk about what they do every day to make their part of Wisconsin more prosperous for business, great places to visit and ever better places to live,” Fritsche said. Some suggested activities to celebrate Chamber Month include hosting a ‘Business After Five’ social event or dis-

Chambers are central to Wisconsin’s local economies.

cussing the state of their local economy, something that is also done at the state level by WMC and at the national level by the U.S. Chamber of Commerce. Chamber Month will culminate on September 27-29 with the annual WCCE Conference, which will be held in Neenah. At least 80 chamber professionals from around the state will attend.n

Wisconsin Chamber of Commerce Month Fun Facts! On the coast of Lake Michigan, Door County has more shoreline than any other county in the United States.

The four-wheel drive mechanism was first invented in Clintonville.

The town of Poniatowski, just west of Wausau, contains the exact center of the northern half of the Western Hemisphere.

What is now the Metropolitan Milwaukee Association of Commerce was founded in 1858 and is one of the oldest chambers in the country.

Madison is home to the world’s largest brat festival, which is a four-day event that takes place each Memorial Day weekend. In 2010, the festival set the record for most brats ever consumed in four days – totaling nearly 210,000 brats!

For more information on Chamber of Commerce Month, please contact WMC’s Susan Nyffenegger at 608.661.6919, snyffenegger@wmc.org.

Dave Minor and Bob McCoy at Bob’s retirement party this June. Dave, the former Superior Chamber of Commerce President/ CEO, will take over for Bob at the Eau Claire Area Chamber of Commerce.

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wisconsinbusinessvoice.org

WHO WE ARE We are we, not I or they. We are members. We are owners.

WE ARE EMPLOYERS MOVING HEALTH CARE FORWARD. We see the opportunity in supporting one another.

We learn from the past. WE KEEP OUR EYE ON THE FUTURE. We are adaptable. We are unstoppable. We love what we do. We know quality matters. We do what is right. We give health care a warranty. We believe in a better tomorrow. We believe in the power of numbers. We care for community together. We operate on principle.

WE ARE A COOPERATIVE. WE ARE THE ALLIANCE.

JOIN US FOR SELF-FUNDING SUCCESS. Call Calvin Rigsby at 800.223.4139 x 6643

| www.the-alliance.org

Highly Regarded by Clients and Colleagues Alike for More Than 100 Years

SOLVING WORKPLACE CHALLENGES IS ALL WE DO Labor Relations • Collective Bargaining • Employment Counseling Regulatory Compliance • Employment Litigation • Employee Benefits Immigration • Work Injury Defense • Restrictive Covenants

411 E. Wisconsin Ave. Milwaukee, WI 53202 (414) 273-3910 lindner-marsack.com

To find out more about WCCE or your local chamber, visit wmc.org.

MEMBER NEWS

Wisconsin Manufacturer Meets with President Trump Earlier this spring, the National Association of Manufacturers (NAM) coordinated a meeting with President Donald Trump to discuss issues facing the nation’s manufacturers. During the meeting, the president noted a NAM survey that said 93 percent of manufacturers in the country have a positive outlook for the future of their business, which was up from 57 percent the year before.

The meeting brought together manufacturers from every corner of the United States, including one Wisconsin company. Ed Paradowski, President of Apache Stainless Equipment Corporation in Beaver Dam, participated in the meeting at the White House and said later that the president’s policies will “allow manufacturing in this country to be much more competitive.”

Former WMC Board Member Recognized for Service to the Industry Waupaca Foundry retired CEO Gary M. Gigante recently received the Peter L. Simpson Gold Medal from the American Foundry Society for long-term contributions to the sustainability of the metalcasting industry through environmental stewardship, technological advances

and the development of people in the industry. He was endorsed for the award by Waupaca Foundry suppliers, customers, employees, educational partners, industry peers and past award winners. Gigante started at Waupaca Foundry in 1981 as a metallurgist and held posi-

tions as metallurgist, plant manager, vice president of manufacturing, President & COO and was appointed CEO in 2007. He also served on the WMC Board of Directors from 2012 and 2016.

CNH Industrial Celebrates Case IH and CASE 175th Anniversary CNH Industrial celebrated the 175th anniversary of two of its brands – Case IH Agriculture and CASE Construction Equipment – with a rally and luncheon at the Racine Tractor Plant in June. Case was founded in 1842 in nearby Rochester, Wisconsin as the Racine

Threshing Machine Works Company. It has since evolved into one of the world’s leading producers of agricultural and construction equipment. “2017 is the 175th anniversary of Jerome Increase Case’s journey to Racine County and the beginning of his—and

our—legacy,” said CNH Industrial CEO Richard Tobin. “Not every company gets to celebrate 175 years, and it’s worth taking a moment to recognize that this is a company with significant history and deep roots.”

MEC Named Top Fabricator for Seventh Consecutive Year Mayville Engineering Company, Inc. (MEC) has once again been named first on the FAB 40 list of the nation’s largest fabricators which is published by The Fabricator magazine. This marks the seventh consecutive year that MEC has led the list. Founded in 1945, MEC is one of the nation’s leading supply chain partners for blue chip original equipment manufacturers.

“We’re honored to be named #1 on the FAB 40 list of the largest fabricators for the seventh year in a row,” said Robert Kamphuis, chairman, president and CEO of MEC. “I’m proud of the MEC team that has made this possible. Customer success will always be at the top of our Mission Statement and we understand that when our customers are successful, we will be successful.”

Send your company news to nnovak@wmc.org 32 July 2017

wisconsinbusinessvoice.org

W M C F O U N DAT I O N

Immigration as a Recruitment Strategy By Kari Hofer WMC Foundation Executive Director

isconsin’s unemployment rate is at an astonishing 18-year low – 3.1 percent. Government and policymakers are celebrating this success (rightfully so), but the majority of Wisconsin employers who have more work and less people are growing anxious in a near full-employment economy. Wisconsin’s workforce shortage is nearing crisis mode. Delaying work or turning down jobs is not an option for our state’s industrious work ethic. Among the solutions, including enticing border-state migration and investing in STEM (Science, Technology, Engineering and Math) education, immigration can help supplement Wisconsin’s staffing needs. Jerry Gzreca and Carrie Ziegler Thomas are seasoned immigration attorneys in Milwaukee with Gzreca Law Group who work with Wisconsin companies to develop long-term immigration recruitment strategies. Gzreca and Ziegler Thomas lent their expertise to WMC Foundation in an informational webinar presented this past May. The presentation set the stage for Wisconsin’s workforce shortage with real facts giving cause for worry. The good news – Wisconsin’s business sector is experiencing tremendous growth. Every other day there is an announcement of either a Wisconsin company expanding here or a company moving operations to Wisconsin – Uline, InSin-

kErator, Kohler Company, Johnsonville, Haribo and Amazon, to name a few. According to the U.S. Department of Labor, growth will continue and employment is expected to grow by 19 percent through 2020. Research shows STEM jobs are most impacted due to the combination of growth and expansion in manufacturing

Today, there are three STEM-related jobs available for every one unemployed worker. and IT industries, as well as the looming retirement of baby boomers. Today, there are three STEM-related jobs available for every one unemployed worker. Add that to the estimated one million jobs nationwide being vacated by baby boomer retirees. Locally, it is estimated that Wisconsin will need to fill over 120,000 STEM jobs by 2020. The problem continues when looking at low-skilled and unskilled jobs in construction or agriculture. There are over 150,000 unfilled construction jobs in the U.S. and 20,000 available in just southeast Wisconsin with the new expansion of facilities, such as the Milwaukee Buck’s arena, Northwestern Mutual Tower, etc. According to the Western Growers Association, agriculture is reporting a 20 percent labor shortage going into the growing season.

When making the case for hiring foreign workers, Gzreca argues immigrants are not only supplementing workforce needs, they are also positively contributing to the economy. In 2015, foreign students contributed over $300 million to the state’s economy through their tuition and purchasing power. Currently, foreign workers make up 5.6 percent of Wisconsin’s workforce. Immigration is not the only answer to solving Wisconsin’s workforce needs, but it can serve as one solution among the others. Before you dive in, it is important to clearly understand your workforce needs and define your goals. Are you looking to hire seasonal workers or a one-off hire? Or will your company be utilizing immigration as a long-term, regular recruitment strategy? Once you understand your needs and goals, professional advice can walk your HR department through the procedurals and paperwork. The immigration application process is time-consuming and can be overwhelming, but following basic guidelines allow for a smooth process and simple compliance in the eyes of enforcement officials. n WMC Foundation webinars are complimentary for WMC members. If you’d like access to this webinar or other educational resources, contact Kari Hofer at khofer@wmc.org. Stay tuned for future educational offerings from WMC Foundation.

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S O C I A L M E D I A & C O M M U N I CAT I O N S

Your Every-Platform Social Media Strategy By Spencer X. Smith AmpliPhi Founder

n the early 2000s I was the drummer for a small rock band. I also booked the shows. I realized early on that success as a rock band — just like anything else — was more about networking and less about talent. Band promoters are the ones who have the power to get you exposure, especially to groups that you’re not already in front of, so you need to get networked with band promoters. In 2002, I dialed the number for a local band promoter that I found on one of his flyers around town. He operated under the pseudonym Joe Miller. He said, “I don’t know you, but I get calls like this a lot. If you help me out on my street team, I’ll take another look at your band. You can volunteer to stand outside venues and hand out flyers and demo CDs of other bands before my shows.” I was more than willing to serve on Joe’s street team, but with so many other bands calling him, he already had a volunteer waitlist that was several months long. So, I asked him what else he needed. “I need a website,” Joe said. Joe was in the business of selling tickets directly to consumers. He didn’t like losing a cut of his profits to Ticketmaster, so he wanted a website that would help him sell more tickets. He also wanted to include a button that would allow visitors to play the most famous song from a band in case they

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didn’t recognize the band name. I asked, "What's your budget?" "What do you mean?" He asked. "I thought this was quid pro quo." "I won’t charge you,” I said. “What's your bandwidth budget? Sending

Take every opportunity you can to promote other people in a way that provides context and meaning to your audience. a song file across the internet, that costs money." Basically, Joe would have to pay a fee every time a visitor played a song. Back then, running his website this way was the only option. Joe opted in immediately. He was an early pioneer in digital marketing, and he wasn’t hamstrung by choosing between eight different social media platforms. This experience taught me two valuable lessons about marketing my band, which later turned into marketing my brand. 1. When there’s only one option, you’re free from the paralysis of choice. 2. The best way to get your own story out there is to help tell other people’s stories. It would be much easier to build Joe’s website today using YouTube or Spotify. However, building his digital media strategy would ironically be harder because of the paradox of choice. I speak regularly to groups of mar-

keting executives about social media strategy. The number one request I get ahead of these speaking engagements: “What’s the next platform I don’t know about yet?” My answer: you haven’t mastered the platforms that are already available, so why jump onto the next one? How do you get past this way of thinking? Simple. Pick one strategy that works across all platforms, and then pick the platforms that make sense based on the demographics of your customers. It’s not always about what you say. Take every opportunity you can to promote other people in a way that provides context and meaning to your audience. This is not the same thing as just offering meaningless “shoutouts." Introduce your audience to ideas that could solve their problems. New platforms should never change your strategy. Use your voice and influence to provide PR for other people. Fit your message to the platform and you will gain gratitude and respect from your audience. That’s the only social media strategy you’ll ever need. n Spencer Smith is the founder of spencerXsmith.com, and principal of the Cobalt Companies, a real estate investment firm he started in 2000. Spencer is also an instructor at the University of Wisconsin, where he teaches classes on Social Media Strategy and Digital Marketing Strategy.

WO R K F O R C E

Trump Visits Wisconsin to Talk Apprenticeships The CEOs of some of Wisconsin’s most iconic companies, like Harley-Davidson, Rockwell Automation and Oshkosh Corporation, shared the stage with technical college students, federal and state cabinet secretaries, Gov. Scott Walker, Ivanka Trump and the President of the United States to promote voca-

During the discussion, several CEOs, including Todd Teske of Briggs & Stratton and John Pfeifer of Mercury Marine lamented how challenging it is to find skilled and willing workers in a state with 3.1 percent unemployment. Teske and Pfeifter are not alone. According to WMC’s latest economic

Briggs & Stratton President/CEO Todd Teske discussing issues facing manufacturers with President Donald Trump.

tional education. President Trump visited Waukesha County Technical College (WCTC) on June 13, a day before he signed an executive order expanding the nation’s apprenticeship program, to talk about workforce issues.

survey, 77 percent of Wisconsin businesses are having trouble finding workers (see page 36 for details). The President also heard from students, including 18-year-old Ella Johnson who clearly impressed Trump

and every other attendee with her passion for welding. Johnson explained that she had earned both her welding certificate from WCTC and her high school diploma in May as part of Wisconsin’s dual enrollment program and plans to return to WCTC in the fall to pursue her associate degree. During his remarks, Trump talked about the importance of manufacturing to both the Wisconsin and U.S. economies and the need to encourage more young people to pursue technical education. He also teased that an unnamed major manufacturer was considering building a plant in Wisconsin. WMC’s Kurt Bauer and Scott Manley were among the select group of education, community and business leaders who attended the small event at WCTC. It was Trump’s second visit to Wisconsin since becoming president. In April, Trump visited Snap-On Tools in Kenosha to announce a change to the H1-B Visa program. n

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W M C E C O N O M I C O U T LO O K S U RV E Y

Business Leaders' Top Concern is Finding Workers State business leaders rate both the U.S. and Wisconsin economies as stronger today than six months ago but say the state’s labor shortage is getting worse, according to the latest semiannual economic survey conducted by Wisconsin Manufacturers & Commerce (WMC), the state chamber of commerce. Half of the 232 C-suite executives who completed the survey rated the Wisconsin economy as “strong,” up from 23 percent in December. Six percent said the Wisconsin economy is “very strong,” up from one percent, while 38 percent rated current conditions as “moderate,” down from 66 percent. Just three percent rated the Wisconsin economy as “weak,” down from eight percent. Ratings for the U.S. economy also improved with 33 percent of respondents saying national conditions were

“strong,” up from eight percent six months ago. Fifty-nine percent said the U.S. economy was “moderate,” down from 65 percent and just four percent rated it as “weak,” down sharply from 25 percent. In the next six months, 76 percent said the state’s economy will see “moderate growth,” up from 65 percent in December. Seven percent expect “good growth,” up from four percent and 13 percent said the Wisconsin economy will remain flat through the end of the year, down from 29 percent. Despite the economic optimism, 77 percent of employers report having trouble finding workers, up from 70 percent a year ago and 53 percent in the summer of 2014. Not surprisingly, 44 percent said that labor availability was the top concern facing their business, up from 30 percent six

months ago. Health care costs and excessive regulations were a distant second and third at 12 percent and 11 percent, respectively. “The economy can’t stay strong if labor availability is weak,” commented Kurt R. Bauer, WMC president/CEO. He said the issue should command more attention from law- and policymakers because it is already holding the state’s economy back. Bauer said that efforts to retain the state’s working age population are helping, but it is not enough. “Wisconsin needs to attract labor from other states and abroad in order to grow our economy,” he said. Business leaders apparently agree. Seventy-seven percent support federal immigration reform, according to the survey. That is up from 59 percent who said they favored immigration reform last summer.

Other findings: • 59% of survey respondents plan to hire in the next six months, up 1% from the winter survey. • Wages are ticking up slightly. 35% of respondents say they will raise salaries between 3 and 3.5% in 2017, up from 28%.

• The percentage of businesses that predict to be profitable in the next six months was 90%, unchanged from six months ago. • 86% say Wisconsin is headed in the right direction, down from 90% six months ago.

• “Make health care more affordable” overtook “reduce/reform regulations” as the top thing “state government could do to help your business,” followed by “reduce taxes.”

• 81% say the U.S. is headed in the right direction, up from 60% six months ago. But a sharp reversal from a year ago when 84% said the US was headed in the wrong direction.

• 78% support repealing and replacing the Affordable Care Act.

• 42% support funding transportation projects through greater government efficiency and cost

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W M C E C O N O M I C O U T LO O K S U RV E Y

What is the ONE thing state government could do to improve Wisconsin’s business climate?

What is the top business concern facing your company? Other 2.5%

Global Economy 2.5%

No Response 1.7%

Competition

Affordable Energy

6.0%

Reduce Taxes 20.2% Reduce/Reform Regulations 19.8% Make Health Care More Affordable 9.4% Education Reform 4.3% Reform Human Resources Laws 4.3% Tort/Legal Reform 2.5% Reduce Spending 6.8% Other 2.5% No Response

<1.0%

29.7%

8 7 6 5 4 3 2 1 0

National Economy 9.4%

Labor Availability 44.3%

High Taxes 9.9%

Excessive Regulation 10.7% 1

Health Care Costs

Series1

12.0%

Generally speaking, would you say things here in Wisconsin are headed in the right or wrong direction?

86.2%

Generally speaking, would you say things here in the U.S. are headed in the right or wrong direction?

81.0%

8.6% No Response

14.2%

5.1% No Response

4.7%

control measures, while 38% support increasing the gas tax.

24% gave him a “C,” 6% gave him a “D” and 8% gave him an “F.”

• 86% of respondents either “approve strongly” (55%) or “approve somewhat” (30%) of the job Scott Walker is doing as governor.

• 53% support renegotiating the North American Free Trade Agreement (NAFTA). 14% oppose.

• 69% either “approve strongly” (31%) or “approve somewhat” (38%) of the job Donald Trump is doing as president.

• 43% support Trump’s decision to withdraw from the Trans-Pacific Partnership (TPP). 19% oppose.

• Trump earned a “B” from a plurality of respondents (42%) for his first six months as president. 17% awarded the president an “A,”

• 53% believe the U.S. should impose tariffs on goods imported from certain countries. 20% oppose tariffs.

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W I S C O N S I N E X P O RT S

Israel Provides Opportunity for Exporters By Katy Sinnott WEDC Vice President, International Business Development

srael is a relatively small country in a volatile political region, but it has developed strengths in entrepreneurship and innovation, positioning itself to make an impact on the global economy. Because of this, potential exists for Wisconsin companies to sell into the Israeli market. As reported by the Bank of Israel in March, the Israeli economy grew by four percent in 2016, outperforming the U.S. and other OECD nations and exceeding projections by 1.2 percentage points. Last year marked the country’s best economic performance since 2012. Israel’s economy is technologically advanced: as of 2016, the nation ranked 19th on the UN's Human Development Index, which places it in the category of "Very Highly Developed." Israel’s digital health sector is a world leader; it grew significantly in 2016 both in terms of funding and number of companies, with investment jumping almost 30 percent to $183 million, according to a report released by the nonprofit organization Start-Up Nation Central. High tech continues to provide opportunities for U.S.-Israel commercial partnerships, specifically in information and communications technologies, safety and security equipment and services, renewable energy technologies, defense equipment, medical technologies and biotechnology products. Power generation and education/train-

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INTERNATIONAL GROWTH OPPORTUNITIES IN ISRAEL 2016 Top Wisconsin Export Categories to Israel

2016 Top Wisconsin Import Categories from Israel

Population: 8.2 million (1 1/2 times greater than Wisconsin) Area: 20,770 km2 (1/10 the size of Wisconsin) GDP: $311.7 billion (approximately the same size as Wisconsin) 2016 WI Exports: $82.8 million WI Export Rank: 36

Medical and scientiﬁc instruments – 30% Industrial machinery – 16% Iron or steel products – 8% Electric machinery – 7% Prepared vegetables, fruit, nuts – 6% Vehicles and parts, except railway – 4% Other – 29%

Medical and scientiﬁc instruments – 29% Vehicles and parts, except railway – 20% Industrial machinery – 19% Electric machinery – 6% Tools and cutlery of base metal – 22%

To learn more about growing your business in India, visit InWisconsin.com/Exporting or call 855-INWIBIZ (toll free).

ing also represent good opportunities. U.S.-Israeli commercial linkages often consist of U.S. firms providing electronic inputs, which Israeli firms integrate into final products destined for re-export. The U.S. is Israel’s largest singlecountry trade partner. Israel ranks 36th as a destination for Wisconsin exports and 16th as a source for imports. The U.S.-Israel Free Trade Agreement was the first free trade agreement entered into by the U.S. Israel has also entered into free trade agreements with the European Union, Canada, Turkey, the Czech Republic, Slovakia, Poland, Mexico, Romania, Bulgaria, Jordan and the Mercosur bloc of South America. The Wisconsin Economic Development Corporation (WEDC) will be leading a global trade venture to Tel Aviv in late October. While the potential for all-

2016 WI Imports: $205.1 million WI Import Rank: 16 Key Industries: High-technology manufacturing (including aviation, communications, medical electronics, ﬁber optics), diamond cutting and polishing, high intensity agriculture, potash and phosphates, tourism

out war is currently low, random violence can break out with little or no warning, but even that has declined significantly over the last two years. Security is a major concern of the Israeli government, and a traveler in Israel is statistically safer than he or she would be in most major U.S. or European cities. WEDC’s local contacts stay abreast of the current situation and conduct background screenings of all potential local partners or customers before scheduling one-on-one meetings. Each trade venture participant can rely on having a driver and/or interpreter who knows the local area and can help travelers stay in safer areas. n For more information on WEDC’s global trade venture to Israel, visit InWisconsin.com/Israel17.

T E C H N O LO G Y

Accelerating Wisconsin's Place in the New Economy By Joe Kirgues gener8tor Co-Founder

et's face it: the most important competitive advantage on the global economic stage right now is computing skills. And I'm pleased to report that Wisconsin businesses will get a major boost in this area when 15 Wisconsin high schools begin participating in a unique academic/ business partnership this fall aimed at enhancing our home-grown talent pool. Starting with Outagamie and Brown counties, Microsoft is bringing its TEALS program to Wisconsin. TEALS (Technology Education and Literacy in Schools) helps high schools build and grow sustainable computer science programs. To highlight this program's potential, Microsoft's home state of Washington, where the TEALS program was pioneered, went from a few hundred students sitting for the Advanced Placement computer science test to 5,000, with about half those students coming from TEALS high schools. Nine high schools in Outagamie and Brown counties have signed up to participate in the TEALS program beginning in fall. Another five schools, three of them in the Milwaukee area, will also participate this year. Here's how TEALS works: volunteers with computer science backgrounds pair up with high school teachers in their community to teach an introductory or advanced placement computer

science class using widely accepted programs from places like Harvard, UC-Berkeley and the University of Washington. Currently over 80 percent of Wisconsin high schools do not offer any computer science programs. For high schools, especially ones in rural or distressed areas, the TEALS program provides a mechanism to add computer science without competing for

While there are more than 8,000 job openings in that state that require computational science skills, we are producing less than 1,000 computer science graduates from Wisconsin colleges and universities every year. those rare teachers already prepared to teach the curriculum. And the TEALS program could not have arrived at a more opportune time for Wisconsin. While there are more than 8,000 job openings in the state that require computational science skills, we are producing less than 1,000 computer science graduates from Wisconsin colleges and universities ever year – many of which are recruited away from the state. As we've learned at gener8tor, the spillover effects from losing these computer scientists and engineers are

magnified because these individuals provide a basis for building products that then create additional jobs in marketing, human resources, sales, etc. To build on this momentum, the TEALS effort will need strong engagement from Wisconsin's employers. Here are a few ways the state’s business community can help build a stronger tomorrow for Wisconsin: Volunteers: The TEALS effort requires as many as four volunteers with computer technology backgrounds for every one high school. Any employer interested in helping to facilitate volunteer opportunities would be a critical asset in bringing TEALS to that community. Internships: The TEALS program encourages employers to reserve internships for higher-performing high school students. Support: You can encourage your local superintendents to consider including TEALS courses in their curriculum. Over the next few years we hope the TEALS program will play a critical role in changing the narrative from a “brain drain” to a “brain gain” in Wisconsin and helping our industries compete even more robustly on a global scale. We're excited to bring more of Wisconsin's leading employers into this effort.n For more information about the TEALS program, or to be connected to TEALS managers, contact Joe Kirgues at Joe@gener8tor.com.

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ECONOMIC RESEARCH

Tax Credit Boosts Employment Growth By Noah Williams University of Wisconsin-Madison Professor of Economics

rom the depths of the recession, when employers were shedding thousands of jobs each month, the Wisconsin economy has experienced a sustained recovery. The recession was especially severe in the manufacturing sector, which lost roughly 75,000 jobs in the state. But since hitting bottom in 2010, the sector has reversed a years-long trend of declining employment and regained nearly 50,000 jobs. A key force driving and supporting the economic recovery in Wisconsin has been the changes in economic policy, which have vastly improved the business climate in the state. One of the most significant of these changes has been the Manufacturing and Agriculture Credit (MAC). Passed in 2011 and phased in from 2013-2016, the MAC has greatly reduced the tax burden on manufacturing and agricultural businesses, crucial sectors employing one in five workers in the state. While the MAC has made Wisconsin attractive to employers, it has always been controversial, in part because its revenue costs are apparent but its economic benefits are harder to measure. Through the pending Center for Research on the Wisconsin Economy (CROWE), a new initiative I’m leading at the University of Wisconsin-Madison focused on state-level economic and policy issues, I have recently com-

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pleted a study estimating the benefits. Analyzing manufacturing and overall employment growth, I find that the MAC has helped create substantial job growth in Wisconsin. Estimating the impact of the MAC is difficult because we don’t know what would have happened if the policy had not been implemented. Previous commentators have tended to focus either on recent outcomes in the state, which does not identify the policy impact, or compared growth in Wisconsin to other states or the nation as a whole, which includes many confounding factors. To isolate the impact of the MAC from other factors, I focus on counties on either side of the Wisconsin border. Apart from state-level policy differences, these border counties share many common characteristics, and my empirical work includes additional controls to better isolate the policy impact. I find that since the MAC took effect in 2013, manufacturing employment has grown nearly two percentage points faster per year in the Wisconsin border counties relative to counties just across the border. Moreover employment is sensitive to tax changes: every percentage point cut in the manufacturing tax rate leads to a 0.8 percentage point increase in manufacturing employment growth. Further, the cuts in manufacturing taxes spill over to the broader economy, with non-manufacturing employment growing 0.7 percentage points per year faster on the Wisconsin side of

MAC Job Creation From 2013-2016 42,000

Total Jobs

35,000

28,000

21,000

MFG Jobs

14,000

7,000

0 the border. In total, I estimate that since its introduction the MAC accounted for a total gain of nearly 21,000 manufacturing jobs and over 42,000 total jobs in Wisconsin. As the recovery in Wisconsin has continued, the pool of available workers has shrunk and overall job growth has slowed to the rate of workforce growth. But the border counties in Wisconsin have continued to outperform counties just across the border, which have seen a substantial loss of manufacturing jobs. This suggests that the economic policy in Wisconsin has helped support a robust economic recovery. n

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4TH ANNUAL WISCONSIN BUSINESS ACHIEVEMENT AWARD The Flowers Family Foundation will award the fourth annual Wisconsin Business Achievement Award at WMC Foundationâ&#x20AC;&#x2122;s State of Wisconsin Business and Industry luncheon on October 19. This award honors the recipient for its positive impact on the Wisconsin economy. The award may be granted to an individual, partnership, corporation, association, organization, industry or educational institution. Potential activities include exports, inventions, technology and/or products or service. The 2017 award will include a $75,000 donation given to a Wisconsin-based 501(c)(3) organization of the awardeeâ&#x20AC;&#x2122;s choosing.

Nominations are due August 1. To learn more or nominate a candidate visit wmc.org/WBAAward or contact info@flowersfamilyfoundation.org.

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E D U CAT I O N

Preparing the Next Generation of Workers By Ed Paradowski Apache Stainless Equipment Corporation President

here is some real “headline news” taking place in Wisconsin as it pertains to workforce development, the skills gap and career readiness generally. In an article I wrote in the October 2016 edition of Wisconsin Business Voice, I touched on the systematic change happening in the state. A great deal of work has been going on since then, largely out of the public eye, to bring together the many players that shape our workforce. I want to focus on how this work is changing the future workforce and leave you with a clear understanding of where we are headed next. In Wisconsin, there are varied economic and workforce issues that challenge our economic prosperity. Most notable is the shortage of talent in many industry sectors. Employers are reporting a shortage of skilled workers and this shortage is exacerbated in key industry sectors such as advanced manufacturing, healthcare and information technology. According to America Works: Education and Training for Tomorrow’s Jobs, “Ensuring states’ and citizens’ future economic prosperity will require significant improvement to the education system and workforce training programs. It will require closer relationships among high schools, colleges, career-tech programs, workforce training providers and employers.” Starting in the fall of 2015, a crossfunctional team was established consisting of top leadership from the Wisconsin Department of Public Instruction, the UW System, the Wisconsin Technical

College System, the State Chamber (WMC), state government and other private sector representatives. The group’s

For the first time, Wisconsin will have state-approved career pathways that encompass K-12-post secondary education. focus was initially on building up career readiness work already in place. That included supporting the good work being done locally, regionally and across the state. During this time, Wisconsin secured Phase I and Phase II JP Morgan Chase New Skills for Youth grant funding. Through the key objectives of the grant, the state has developed measurable goals that revolve around forming career pathways regions within four geographic parts of the state (Milwaukee, Madison, Moraine Park and Indianhead) and will be measuring career readiness in our schools. What Makes this Career Readiness Work Different? For the first time, Wisconsin will have state-approved career pathways that encompass K-12-post secondary education. The pathways will be aligned to areas of workforce need, now and in the future, and will be selected with input from key private sector leaders. To make Wisconsin’s pathways a success, we are concentrating on key themes of: • Top leadership from all critical areas

New Skills for Youth partners meet for a press event about the program at Apache Stainless in Beaver Dam.

are engaged in this work. The right people are around the table. • The focus of the educational process is commerce, and as the customer, commerce will play a leading role in this initiative moving forward. • Paradigm shift in that real change to the educational process is required to result in career readiness for all, and all members are committed to the task of driving this change. So, what is next? There is much more to the story than could be covered here, and consistent with my previous article, private sector leadership is needed in the form of CEOs and presidents to move this project forward. If you would like to get involved, please email me at ed.paradowski@apachestainless. com. Together we can do our part to help reshape the workforce development process in Wisconsin. n To learn more about the work of the grant or the states’ career readiness work, visit dpi.wi.gov/career-readiness.

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GOLF OUTING SentryWorld, Stevens Point Thursday, August 17

A celebration of business

in Wisconsin!

SPONSORSHIPS ARE AVAILABLE! For sponsorship opportunities, contact Kari Hofer at WMC, 608.258.3400 or khofer@wmc.org

Winning foursome will get four roundtrip air travel tickets, generously sponsored by Southwest Airlines! VISIT WWW.WMC.ORG TO REGISTER! The WMC Foundation is dedicated to a better Wisconsin by providing information on the state and its economy, promoting the value of the free enterprise system, and advancing efforts that ensure a high quality of life for our citizens. The WMC Foundation runs the Wisconsin Safety Council and Wisconsin Business WorldÂŽ, as well as events including State of Wisconsin Business & Industry, and the Future Wisconsin Summit.

Program Sponsors 44 July 2017

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WMC IN VIEW

Mayville Engineering Company, Inc. Chairman/President/ CEO and WMC Board Chairman Bob Kamphuis and his wife Connie pose with Gov. Scott Walker during an event at the Executive Residence.

WMC and WSC staff present USG with their Corporate Safety Award Winner Flag at an event with employees in June.

WMC President/CEO Kurt R. Bauer and WMC Senior Vice President of Government Relations pose with Congressman Sean Duffy after a meeting at the WMC office in Madison. WMC General Counsel and Director of Environmental & Energy Policy Lucas Vebber discusses WMC’s legislative agenda on Capital City Sunday.

WMC President/CEO Kurt R. Bauer poses with President Donald Trump after a meeting and plant tour at Snap-on in Kenosha.

U.S. Sen Ron Johnson meets with WMC staff and the Sheboygan County Chamber of Commerce.

WMC Board members Dan Ariens of Ariens Company, Cliff King of Skyward, Steve Loehr of Kwik Trip and Bob Kamphuis of Mayville Engineering Company join WMC President/ CEO Kurt R. Bauer, UW System President Ray Cross and UW System Board of Regents President Regina Miller at a meeting of the UW System Business Council. WMC Vice President of Operations & Finance Katie Yeutter and WMC Foundation Executive Director Kari Hofer attend gener8tor’s OnRamp Insurance Conference in Chicago in advance of the OnRamp Manufacturing Conference in Milwaukee on Sept. 6.

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CHAMBER CORNER

Time to Right the Ship on Entrepreneurship By Zach Brandon Greater Madison Chamber of Commerce President Think back to the founding of your company. How was it named? What problem did you set out to solve? While your answers to these questions may vary, I am certain your company’s story began with an entrepreneur who saw opportunity. You are not alone. Companies like Harley-Davidson, Kohler, Leinenkugel’s, Oshkosh Corporation, Marinette Marine and Culver’s were named after either their founders or the communities in which they were founded; the surest sign of entrepreneurship. Yet when the Kauffman Foundation released its Startup Activity Index last month, Wisconsin ranked dead last for the third straight year. Reactions to the data varied. Some

CHAMBER FACT Madison Greater Madison’s software publishing workforce density is 14 times higher than its share of the U.S. population. In fact, Madison has the second-highest concentration of software publishing jobs in the country, according to the U.S. Department of Labor.

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questioned its true correlation to our economic standing. To be sure, no one is proclaiming Nevada, Oklahoma or Wyoming – the top three states in the report – as the next Silicon Valley. In fact, Wisconsin is doing well in the vitality of existing businesses, with Kauffman’s Main Street Index showing our state as a leader in small business survival rate. However, it is a mistake to dismiss the startup index findings entirely. Data shows that net new jobs come from

More than one-third of new Wisconsin entrepreneurs were driven by necessity of employment rather than opportunity. new businesses – not just highgrowth technology companies, but all businesses. Being dead last year after year says something about the vibrancy of our entrepreneurial ecosystem. The Kauffman report bases its rankings on the rate of new entrepreneurs, startup density and opportunity to succeed. The opportunity results are especially sobering, with Wisconsin again in last place. More than one-third of new Wisconsin entrepreneurs were driven by necessity of employment rather than opportunity. That matters because new busi-

nesses created from opportunity are more likely to succeed. In his recent book, America Online co-founder Steve Case talks about how the next wave of the internet is going to transform the industries that have historically defined Wisconsin, including manufacturing, agriculture, logistics and health care, to name a few. At the same time, Case argues that states like Wisconsin should be well-positioned to lead in this transformation. I believe Case’s industry transformation prediction is already happening. I suspect you feel it too. Our performance as a state in this “Third Wave” is not guaranteed but inaction will guarantee under-performance. The time is now for statewide action to grow our economy and renew our state's reputation as problem-solvers. Our Chamber’s new policy roadmap, the Access Agenda, calls for the creation of a new statewide “blue ribbon” council charged with developing a cohesive strategy to grow entrepreneurship across Wisconsin. While each Wisconsin region is distinct in its businesses, we are tied together by a common thread that drives us to learn from each other, foster new partnerships and support a new generation of Wisconsin businesses. Our state’s brand, our ability to attract talent and our economic future depend on it. The next economic wave is coming. We must take action now to ride the wave or do nothing and risk getting swept under. n

Activity: Industry: Widgets: Soils: Method: Material: Product: Key Features:

Critical Cleaning - New Food Manufacturing - Retail Baking Pump Housings & Other Equipment Food Processing Residue / Lubricants Agitation Parts Washing Steel - Mild Mirachem 500 Performance

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We needed a responsive service partner.

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