WISCONSIN
July 2013: Issue 7
Official magazine of Wisconsin Manufacturers & Commerce
Wisconsin Agriculture More than Milk and Cheese
Inside: State Budget Proposals How do We Fix America's Debt? MMAC: A Partnership for Prosperity
Flexion + Google Cloud Services
Flexion + New Google Maps brings you Smart Stories Flexion’s data visualization strategy is a graphical way to tell your story and achieve your objectives utilizing Google’s Cloud Services to increase user engagement. To learn about the benefits of Flexion + Google, please visit flexion.us/smartstories
flexion.us/smartstories
Flexion.us | 866.620.4353 |
+
WISCONSIN
BUSINESS VOICE From the Editor
In this issue…
Agriculture Pages 18-21
More than Milk and Cheese:
Wisconsin’s Agricultural Industry is Diverse, Dynamic and in High Demand
Page 21
W.D. Hoard – Father of American Dairying
The WMC Board of Directors was honored to have Governor Scott Walker at its spring strategic planning retreat. During the discussion, Walker asked WMC to do more to promote the landmark Manufacturers and Agricultural Production Tax, enacted in 2011. WMC supported the measure and we have covered it in these pages several times. But Walker is right; this tax credit is too important to have eligible companies not know about, so we are happy to talk about it again. Besides, it fits nicely with this edition’s agriculture theme.
Page 22
Wisconsin manufacturers will be able to claim this new tax credit this year that will help offset their state tax liability. The manufacturers’ tax credit provides a 1.875 percent credit based on production activity income derived from manufacturing or agricultural property in Wisconsin.
Kurt R. Bauer, WMC President/CEO, details Wisconsin’s economic drivers.
C-corporations and pass-through entities like S-corporations and LLCs are eligible to claim the credit. Unused credits may be carried forward up to 15 years. To claim the credit, speak to your accountant to maintain appropriate records on direct and indirect costs, as well as determining the factor for what multistate companies can claim.
Key Industries Threatened by Court Decision
The credit is scheduled to increase in each of the next three years until reaching 7.5 percent in 2016. It will virtually eliminate the tax on income derived from manufacturing and agriculture activity in Wisconsin. And that’s a good thing because the one thing we rarely hear is that Wisconsin’s taxes are too low. The right steps are being taken to help make Wisconsin the most competitive state in the nation.
Wisconsin Agriculture: Farm-to-Market Facts and Figures
Page 26
Safety in Agriculture
The agricultural industry sees the second most injuries and deaths of any industry in Wisconsin. Janie Ritter, Wisconsin Safety Council Director, talks about the top hazards to working in the agricultural industry.
Feature Columns Page 2
Economic Multitasking
Page 4
Taxes (almost) Made Me Break My Computer
Jim Morgan, WMC Foundation President, explains the simple math of tax reductions.
Page 8
Scott Manley, WMC Vice President of Government Relations, discusses the Wisconsin Supreme Court decision impacting high-capacity wells.
Page 12
Be Careful with the Precautionary Principle
Eric Bott, WMC Director of Environmental & Energy Policy, dissects the precautionary principle.
Page 14
WMC Economic Outlook Survey
Jim Pugh, WMC Director of Public Affairs, reveals the results from WMC’s latest economic survey.
Page 28
State Budget Improves Wisconsin’s Tax Climate
Jason Culotta, WMC Director of Tax & Transportation Policy, explains the latest tax package in the Governor’s 2013-2015 budget proposal.
Page 30
Family Medical Leave
Chris Reader, WMC Director of Health & Human Resources Policy, makes a case for why Wisconsin should be aligned with federal FMLA standards.
Katy Ryder Pettersen Editor, Wisconsin Business Voice kpettersen@wmc.org
Guest Columns Page 10
Will You be Ready?
Ted Nickel, Commissioner of Insurance for the State of Wisconsin, shares details about the federal Affordable Care Act.
Page 25
Poverty and the Law of Unintended Consequences
Eloise Anderson, Secretary of the Wisconsin Department of Children and Families, discusses the problems with Wisconsin’s current entitlement programs.
Page 32
The Economic Power of Early Childhood Education 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. Send address changes to WMC, P.O. Box 352, Madison, WI 53701-0352. WMC's physical address is 501 E. Washington Avenue, Madison, WI 53703, (608) 258-3400. This publication is proudly printed on paper made in Wisconsin. Kurt R. Bauer, WMC President/CEO Katy Pettersen, Editor (kpettersen@wmc.org) Jane Sutter, Designer (jsutter@wmc.org)
George Lightbourn, recently retired President of the Wisconsin Policy Research Institute, encourages quality early childhood education programs.
Pages 34-35
How do We Fix America’s Debt
U.S. Congressman Reid Ribble (R-8th District) and former U.S. Congressman Jim Moody (D-5th District, 1983-1993), share their insights on what it will take to fix America’s growing debt.
Page 36
A Partnership for Prosperity
Tim Sheehy, President of the Milwaukee Metropolitan Association of Commerce, talks about the importance of Milwaukee’s economy to the rest of the state.
Economic Multitasking Kurt R. Bauer, WMC President/CEO
M
anufacturing and mining are so last century.
I heard a lot of that talk during debates over the WMC-supported manufacturers’ tax credit, enacted two years ago, and the iron ore permitting law. The argument seems to be that WMC advances a policy agenda “from the 1950s,” as one pundit claimed, by favoring the “old” industrial economy over the so-called “new” or “knowledge” economy.
As I told someone recently who holds this belief, WMC is pretty good at multitasking. We can preserve and even expand the best of the old, while pursuing the promise and opportunities of the new. Call it a balanced, “all of the above” approach to grow Wisconsin’s economy and jobs along with it.
Manufacturing is also the backbone of the middle class. By contrast, I often wonder what happens to the middle class if we forsake manufacturing (and mining) in favor of the knowledge economy. My fear is career and income opportunities will be limited for far too many.
That is not to say Wisconsin shouldn’t work to grow science and technology sectors. In order to do so, you need innovation, highly skilled people and capital. With major research universities (UW-Madison, UW-Milwaukee) we arguably have the first two and are working on the third in the form of a state-assisted venture capital fund. But that formula is overly simplistic. It’s tough to commercialize innovations because most scientists/researchers make poor entrepreneurs and the practical application for discoveries isn’t always clear. You also need to attract and keep quality professionals. That means paying competitive salaries and offering a quality of life that appeals to them, including vibrant urban centers with thriving arts and entertainment options.
But people who dismiss manufacturing and mining are as shortsighted as they accuse WMC of being. Take, for And even with the venture capital fund legislation, Wisconsin example, the lawmaker who said during the Assembly floor doesn’t have the overall wealth other states enjoy. In fact, high debate on the mine permitting bill that mining “is the net worth Wisconsinites are attracted to low tax and warm economy of the past.” This perplexes me. So we won’t need weather states like Arizona and Florida when they retire, steel in the economy of the future? What will wind turbines creating a “wealth drain” that compounds the “brain drain.” and Priuses, two symbols of the so-called “green” economy, These challenges are why it often seems be made of? Not to mention that high tech easier to grow traditional or what electronics are made with various semi-precious, some deride as “old” sectors than “Manufacturing drives precious and rare earth minerals. Clearly old to build new ones. For example, doesn’t mean obsolete. innovation and vice versa.” Wisconsin’s large tier-one There is an economic axiom that says in order manufacturers rely on smaller tierto create wealth you have to make it, mine it or grow two and tier-three metal fabricators, machine shops and tool it. Everything else just redistributes what’s already there. In and die makers to produce parts and other components, which Wisconsin, we do all three. We shuffle back-and-forth with is a major reason the sector is so strong. A prime example Indiana for bragging rights on which state has the most per is Milwaukee-based Joy Global Inc., which has vendors, capita manufacturing jobs in the country. We are also the subcontractors and suppliers in 38 Wisconsin counties. number one producer of industrial silica used for, among We have similar examples of how success begets success in other things, hydraulic fracturing and we hope to add iron ore the tech sector as well. Spin-off companies founded by former mining to this category. And, of course, we are well known employees of Epic Systems Corporation, the big medical for agriculture, another “old” industry that no one seems to records software company in Verona, have created at least believe is outdated and for good reason. 600 jobs. We would be fools not to recognize the continued importance Growing the science and tech sector clearly requires some and economic multiplying power of manufacturing or how targeted policies. But just as a rising tide lifts all boats, it overlaps with other sectors, including technology. After continuing to improve Wisconsin’s overall business climate by all, manufacturing drives innovation and vice versa. In other reducing costs and bureaucratic obstacles helps all sectors. BV words, innovation is the yin; manufacturing is the yang. They are interconnected and interdependent.
Follow Kurt on Twitter @Kurt_R_Bauer 2
ENVIRONMENTAL SERVICES Have you made your choice? AMERICA HAS!
Why Choose Crystal Clean? ervice employees – Satisfied employees provide better service. Our dedicated professionals and the superior service they provide are the reason so many have chosen Crystal Clean. quipment – Crystal Clean’s parts cleaning equipment is some of the newest equipment available in the marketplace today. Newer equipment provides more reliable, consistent performance. ecycle - Crystal Clean constructed and now operates our own spent solvent recycling center and a grass roots used oil re-refinery in Indianapolis, IN. Each year, hundreds of thousands of solvent gallons are recycled while over 50 million gallons of used oil are re-refined, resulting in 30 million gallons of base oil lubricating stock.
American BUSINESS HAS SPOKEN. Crystal Clean is now the fastest growing parts cleaning company in America. But we don’t stop there. Whether your needs include parts cleaning, drum waste disposal, absorbent, aqueous filtration, used oil collection, vacuum services or other environmental needs, there is one logical choice - CRYSTAL CLEAN.
ehicles – The average age of Crystal Clean’s route service fleet is less than half the age of some of our competitors’ fleets. nsurance – Crystal Clean’s liability and pollution legal liability insurance coverage is among the strongest in our industry. ompliance History – Crystal Clean’s excellent regulatory compliance record is the result of a proactive approach to work with regulators to ensure our customers’ materials are managed in an environmentally compliant manner. conomic Stability – Unlike many companies in the environmental industry, Crystal Clean is financially strong. This strength is built on the foundation of our solid relationships with tens of thousands of loyal customers.
Heritage-Crystal Clean, LLC Check out our website; www.crystal-clean.com or call 877-938-7948 and ask for Jim Skelton for more information on our services and member only discounts and pricing.
As American business has discovered, if your company wants true SERVICE, Crystal Clean is the only answer to help you overcome your environmental challenges ... If that isn’t enough, we can also help save you money.
TAX EDUCATION
Jim Morgan WMC Foundation President
Taxes (Almost) Made Me Break My Computer T here are certain conversations that drive all of us crazy. You listen and think, “How in the world can they not understand that?” Many of the letters to the editor in the Sunday paper make me want to crumple it up and toss it across the room, and the comments posted online that follow an article make me want to break my computer.
Two recent debates on taxes got me going this time: 1) the recently approved Wisconsin income tax reductions, and 2) the fallout from Apple setting up shop in Ireland.
Case #1: The Wisconsin income tax reduction.
If the vast majority of the taxes are paid by a certain group of earners, doesn’t it stand to reason the vast majority of the reductions would impact that same group? For simplicity’s sake, I’ll use a 10 percent reduction. If my tax liability is $0, it is very hard to pay less! If it is $1,000, my reduction is $100. If it is $10,000, my reduction is $1,000. The greater reduction, by simple math, will go to the high earner who is the higher payer. Yet in all the reports, we read about the significant “breaks” for higher income earners. In 2010, people making $70,000 or more made up 29.3 percent of the
Wisconsin tax filers, but they paid 72 percent of the taxes, according to the Wisconsin Department of Revenue. Conversely, those making under $30,000 made up 30.3 percent of the filers and they paid 3.9 percent of the taxes.
How those roughly same-sized groups of earners could have equal tax reductions when one paid 72 percent of the taxes and one paid 3.9 percent is not mathematically possible. That does not seem very complicated to me, yet it was not part of the dialogue.
Case #2: The Apple controversy.
My argument here is not to defend Apple, but to consider the role taxes play in behavioral change. The federal component of the corporate tax rate in Ireland is 12.5 percent. In the United States it is 35 percent. France is 33 percent, Mexico 30 percent, China 25 percent, Canada 15 percent… just to give you an idea. My favorite example for explaining the behavioral impact of taxes is cigarettes. Why do we have $2.52 tax on every pack of cigarettes in Wisconsin? We are trying to curtail behavior. The more we tax the cigarettes, the less people will smoke. They will “avoid” the behavior that is costing them money.
Why then, don’t people see that taxes will have the exact same impact on the behavior
of a business or individual? If I can locate in state X and pay 4 percent, why would I locate in state Y where I have to pay 8 percent (or 7.9 percent)?
Tax it – get less of it! Simple human nature suggests preservation of your resources.
Every time I scream at my newspaper or computer, I harken back to what must have been going through the minds of the WMC Board of Directors in the early 1980s when they decided to launch our Business World program for high school students. They had the foresight to realize if young people do not understand how the free enterprise system works and its purpose – the economics of supply and demand, and what variables go into business decisions necessary for growth, employment and community investment – this state and country would be in deep trouble. Three hundred more high school students just completed the Business World experience in June and we had the opportunity to discuss the factors that impact business decisions – the economy, globalization, health care, competition, innovation, and, yes, taxes! And, in my calmest and most rational voice, I tried to explain the impact. The computer is still intact. BV
Follow Morgan on Twitter @JimMorgan1960
Visit www.wmc.org to view an interview with Jim Morgan on the workforce paradox.
4
Apprenticeship Programs that Work for You
Q
uad/Graphics, Inc. is the second largest commercial printing company in the Western Hemisphere, employing more than 25,000 workers. Since 2002, the company has increased its use of registered apprenticeship and currently has 23 active apprentices in Wisconsin. Support for apprenticeship stems from Quad/Graphics Chairman, President & CEO Joel Quadracci’s commitment to sustaining a globally competitive workforce.
He noted “the apprenticeship model allows us to constantly shift and improve our training structure in order to meet the demands of the changing technology of our industry.” He further noted Quad/Graphics needs a number of highly skilled workers in a variety of occupations. Quad/Graphics uses apprenticeship because it results in highly skilled, qualified workers who are loyal to their company.
Quadracci noted “apprenticeship allows you to find those people with that work ethic, with that drive, that desire to become something more.” Quad/Graphics has used the registered apprenticeship program to The Department of Workforce Development has been find and train high-quality workers promoting apprenticeship over the last several months “Quad/Graphics uses in critical positions within the as the state’s premier training program for highly apprenticeship because it company, including maintenance skilled workers. Outreach activities have included technicians. results in highly skilled, qualified visits to Quad/Graphics, Trane Company, Green Bay Packaging Inc., Sargento Foods Inc., and Nate Butt is a Production Support workers who are loyal to their several technical colleges to raise awareness of the Department Manager at Quad/ importance of apprenticeship in meeting Wisconsin’s company.” Graphics. He oversees the company’s skills gap. Visit www.WisconsinApprenticeship.org to learn apprenticeship program and plays a role in more or to participate. BV shaping state apprenticeship policy as co-chair of the statewide Electrical & Instrumentation Apprenticeship Advisory Committee.
WMC will once again be promoting manufacturing throughout the month of October. The point of Manufacturing Month is to expose students, parents, educators, legislators, and others to the career opportunities available in the manufacturing industry. Visit www.wimanufacturingmonth.org for up-to-date information on tours and events happening throughout the month. Contact Susan Nyffenegger, snyffenegger@wmc.org or (608) 258-3400, for more information or to add your event to the list.
6
Have a Video You Want to Share? Seeing is believing, and that is especially true in manufacturing. As part of the WMC Foundation’s ongoing efforts to promote manufacturing in Wisconsin, we are developing a video library for schools, students, parents and teachers. If your company has a 1-3 minute video that provides an overview of your operations, or a more in-depth presentation showing details of your operation and the employment opportunities, contact WMC President Jim Morgan, jmorgan@wmc.org or (608) 258-3400.
apprenticeship : works for wisconsin.
workers for you. Better workers produce Better work. That’s the idea behind training apprentices. Because more skilled, more knowledgeable, more loyal employees make your company more productive. And a more productive company is a more profitable company. Learn more at WisconsinApprenticeship.org.
SUPREME COURT
Scott Manley WMC Vice President of Government Relations
Key Industries Threatened by Court Decision B eing surrounded by two Great Lakes, including the largest freshwater lake in the world, we in Wisconsin often take for granted the availability of water.
Water is vitally important to many key industries in our state including breweries, crop production, livestock growers, dairy producers, food processors, power plants, paper mills and numerous manufacturers. Unfortunately, the availability of water from high capacity wells, including those used for municipal drinking water, is under threat because of a 2011 Wisconsin Supreme Court decision.
The case, known as Lake Beulah Management District v. DNR, involved a high capacity well permit to provide drinking water for the Village of East Troy. The controversy involved speculation that siting a well would have adverse impacts on water levels at nearby Lake Beulah.
Although the well was ultimately permitted, and the concerns about lake levels proved to be completely unfounded, the Supreme Court decision ultimately wrapped a shroud of uncertainty around the process for obtaining a high capacity well permit. Environmental groups intervening in the case argued that the Department of Natural Resources (DNR) must consider the impact of groundwater withdrawals on lakes, rivers and other waters of the state, despite the fact that the Legislature never granted the DNR authority to do so. They also argued the constitutional “public trust doctrine” extends to permits involving groundwater withdrawals.
The Great Lakes Legal Foundation filed a brief on behalf of WMC and other business groups making the argument that the Legislature created a very specific permitting framework for these wells that did not authorize or require the DNR to analyze groundwater impacts on surface waters. Because the public trust doctrine is a legislative delegation to the DNR, the Legislature’s decision to not grant the DNR this authority means public trust considerations are not triggered in the groundwater permitting process. In an activist decision authored by Justice Patrick Crooks, the Supreme Court held that the Legislature gave the DNR authority,
8
under limited circumstances, to consider the impact of proposed high capacity wells on surface waters. However, the Court did not articulate a clear delineation of when circumstances trigger that authority, noting only they are a “highly fact-specific matter.”
The poorly reasoned decision left farmers, municipalities, manufacturers and the dairy industry with a groundwater permitting process that is as clear as mud. The legal and regulatory uncertainty resulting from the Supreme Court’s decision had an immediate impact on businesses.
Heartland Farms, Inc. one of the largest potato growers in the Midwest, notified suppliers that the Lake Beulah case will cause the company to suspend future investment in irrigated lands in Wisconsin. Heartland CEO Richard Pavelski noted the risk and threat to agriculture arising from the decision left the company with no other logical course of action. In addition, activist environmental groups have used the court decision to challenge permits needed for expansions in the dairy industry. For example, a groundwater approval needed for a $40 million dairy project in Adams County has been delayed because the Lake Beulah case opened the door to litigation. If successful, environmental groups are likely to use this same type of lawsuit to block future economic development projects in our state. Wisconsin is a national leader in water-dependent industries like agriculture, manufacturing and food processing. If we truly want Wisconsin to be “open for business,” the Legislature must act decisively to remove the legal uncertainty created by the Lake Beulah decision, and take steps to more clearly define the manner in which they choose to delegate authority to the DNR under the constitutional public trust doctrine.
The viability of future growth and investment in these key industries will depend upon the Legislature’s willingness to clarify the law. BV Follow Scott on Twitter @ManleyWMC
Pro-Growth Reforms Advancing at the Capitol Policies Likely to be Signed into Law as Part of State Budget The policy items mentioned below are included in the state budget bill, which has not yet been enacted as this publication went to print.
W
MC’s effort to make Wisconsin the most competitive state in the nation for business has taken significant steps forward during the first six months of the legislative session. Reforms focused on streamlining regulation, lowering taxes and reducing the cost of doing business have advanced as a result of WMC’s advocacy. Many pro-jobs policies are likely to be signed into law by Governor Walker as part of the state budget. Following is a list of pro-growth highlights from the legislative session thus far: • Income Tax Cut – $650 million in individual income tax relief was approved for the next two years across all tax brackets.
• Manufacturers’ Tax Credit – More than $100 million in business tax relief will be provided over the next two years to the manufacturing and agriculture sectors for producing in Wisconsin. This credit was included as part of the 2011 budget but goes into effect this year. • Iron Mining Reform – A major overhaul of our iron mining laws will help attract a $1.5 billion investment and create thousands of jobs without lowering air or water quality standards. • Air Permit Streamlining – Regulatory burdens on employers will be reduced by expanding the availability of the streamlined “registration operation permit” (ROP) threshold to 50 percent of major source thresholds, and directing the DNR to exempt many minor sources from permitting. • Unemployment Law Reforms – Improved the Unemployment Insurance system by adopting several significant reforms, including defining
“misconduct” to include a substantial fault standard, meaning an employee could be discharged for violations of law or an employer’s rule without receiving UI benefits, and cutting the number of quit exceptions by half.
• Unemployment Tax Relief – Legislators included $30 million in the state budget to pay interest on the federal unemployment insurance loan the state acquired during the recession to pay overdrawn benefits. In the past, this additional cost was billed to employers. • Research & Development Tax Credit – Beginning in 2013, pass-through entities like LLCs and S corporations will become eligible to claim the research and development tax credit.
• Federalized Depreciation – State rules for depreciation and depletion will be phased out starting in 2014 in favor of federalization, easing taxpayer compliance. • Electrician Licensing Relief – Delayed a costly electrician licensure mandate signed by Governor Doyle in 2007 that was scheduled to begin in 2013. WMC is now working to fix the law going forward to ensure companies won’t have to shut down due to noncompliance with the unnecessary licensure and inspection requirements.
this year to help address the skills gap in our state. The package provided $15 million in worker training grants for public and private entities and created the Labor Market Information System (LMIS) to help connect job seekers and employers.
• Regulatory Certainty for Groundwater Permits – Employers will be protected from costly litigation by activist environmental groups seeking to invalidate their high capacity well permits, saving time and money for the dairy, agriculture, manufacturing and food processing sectors.
In addition to these victories, WMC has made significant progress on other priorities including tort reform to curb lawsuit abuse, funding for venture capital investment and reforms to human resources and employment laws. We will continue to advocate for policies that improve our business climate and make people want to invest in Wisconsin. BV
• Worker Training Initiative – Governor Walker signed the “Wisconsin Fast Forward” bill earlier
Gtac, the mining company interested in building a mine in Ashland and Iron Counties, presented WMC with a hunk of magnetic iron ore in appreciation for help in passing legislation that reforms the state’s permitting process. Gtac hopes to begin test drilling in the Penokee Hills soon. Wisconsin Business Voice
9
Affordable Care Act: Will you be ready? By Ted Nickel
A
fter passage of the federal Patient Protection and Affordable Care Act (PPACA), Vice-President Biden confided (on an open microphone) to President Obama that it was “A big (expletive deleted) deal.” He was right. The law will permanently change the way health insurance is purchased. Its impact will be felt by small, medium and large businesses. It will permanently impact your employees and the way you interact with them. It will impact the kinds of plans you buy, from whom you buy those plans and how you buy them. On top of all that, there are new taxes and penalties for employers not complying with the law. And the law does nothing to retard the growth of healthcare expenses.
With all these changes, it is important you have the necessary information to make the right decisions for you and your employees. In this short article, I hope to provide a primer on the key issues you will face in the coming months. These changes can be divided into market and plan changes, exchanges and penalties. The changes will separately impact small group coverage (employers with 2 to 50 employees), large group coverage (employers with more than 50 employees), self-funded coverage (employers of any size who create their own insurance plan) and individual coverage.
Market Changes
A main focus of PPACA was to expand access to health insurance coverage to everyone across the country. While most Wisconsinites did not face access issues (HIRSP – Wisconsin’s high risk pool for those who could not get commercial coverage – helped ensure there was no access problem here) that was not true in all states. In order to achieve universal access to coverage, PPACA made two fundamental changes to the way insurance is purchased: by requiring insurers to provide coverage to anyone who applies for coverage (called guaranteed issue) and by creating price controls limiting how much insurers charge different consumers for coverage (called modified community rating).
The combination of guaranteed issue and modified community rating will result in significant price increases for the market. The price controls set narrower limits between the rates charged to older and unhealthy workers versus the rates charged to younger and healthier workers. The net result will be companies with an older workforce would see rates drop (if PPACA did not make other changes) and those with younger workforces would see rates rise. The experience for most employers in states that have already implemented guaranteed issue and modified community rating is an overall increase in insurance rates.
Plan Changes
President Obama may have promised if you like your plan you’d be able to keep it, but odds are you won’t be able to keep it. PPACA includes a number of provisions that will force insurers to make changes to their plan designs and limit the plans employers are allowed to purchase. For example, no employer is allowed to offer a plan that has an in-network out-of-pocket maximum (the maximum amount an insured person will have to pay for their medical expenses over the course of a year) of more than $6,250. Small employers are limited to offering plans with a $2,000 individual or $4,000 family deductible (the law allows employers to increase the deductible if the employer contributes to flexible spending arrangement but the U.S. Department of Health and Human Services (HHS) is currently eliminating that option). All employers are required to offer plans that have a minimum 60 percent actuarial value (the plan would cover an average of 60 percent of the costs incurred over a standard population) and small employers are further limited to metal tier plans (Platinum, gold silver, bronze plans meeting 90, 80, 70, and 60 percent actuarial values respectively). In addition, small employers are required to cover “essential health benefits” which include: • Ambulatory patient services; • Emergency services; • Hospitalization;
• Maternity and newborn care;
• Mental health and substance use disorder services, including behavioral health treatment; • Prescription drugs;
• Rehabilitative and habilitative services and devices; • Laboratory services;
• Preventive and wellness services and chronic disease management; and • Pediatric services, including oral and vision care.
Large and self-funded employers are not required to cover “essential health benefits” but when the benefits are covered, employers are not allowed to apply annual or lifetime dollar limits.
10
Exchanges
The federal government recently decided to call health insurance exchanges a “marketplace” and alternatively, a member of my staff refers to the exchange as a “billion dollar website.” Taking away the marketing, the truth is health insurance exchanges are intended to be a turbo-charged website making it easier for small businesses and individuals to obtain health insurance. We don’t know if the exchange will be successful and we believe small businesses and individuals will have more choices outside of the exchange. For some, the exchange is the vehicle which will help determine eligibility for subsidies to offset the full cost of purchasing health insurance from existing commercial carriers. In the end, that was the stated goal of the law.
Penalties
One of the most complicated aspects of PPACA is the application of the employer mandate. Since the IRS is tasked with enforcing this provision, it is virtually guaranteed to get even more complicated, some of which are detailed here: Small employers (less than 50 employees) are not required to provide coverage.
The penalty for NOT providing coverage is $2,000 per employee (with an exemption for the first 30 employees).
If the employer provides coverage that is not affordable (the employee share is more than 9.5 percent of the employee’s income), AND the employee accesses subsidized coverage through the exchange, the employer is penalized the lesser of $3,000 per employee accessing the subsidized coverage or the penalty for providing no coverage (see number 4).
OCI is Ready
We have been working on these issues for months, and we continue to perform the state’s role as insurance regulator. Insurers have already begun to file their plans, and we have begun answering many of their questions. As you have concerns, our staff will be ready to answer your questions too. In the meantime, we have put together some FAQs on our website to answer your questions. You can find them online here: www.oci.wi.gov/healthcare_reform.htm BV Ted Nickel is Commissioner of Insurance for the State of Wisconsin.
The employer mandate applies to large employers (more than 50). For purposes of the mandate, employers count full-time and fulltime equivalent (primarily part-time) workers.
Employers are only required to cover full-time workers. So an employer may have more than 50 workers (when including full-time equivalents) but is only required to provide coverage to full time employees.
WMC Legislative Update Conference Calls One of the benefits of being a WMC member is the direct access you have to WMC’s knowledgeable staff, including our government relations professionals. WMC hosts conference calls every other Friday throughout the legislative session to keep members up-to-date on the issues at the State Capitol. These issues include topics of interest to your business such as taxes, transportation, tort reform, healthcare, energy and more. The calls take place Friday mornings at 10:00 a.m. To receive notifications of these member-only meetings, contact Karen Mahlkuch, kmahlkuch@wmc.org or (608) 258-3400 and ask to be added to the Legislative Update Conference Call email list.
Governor Walker spent time with WMC’s government relations team prior to speaking to WMC’s board during a meeting this May. From left, WMC’s Chris Reader and Scott Manley; Governor Walker; WMC’s Eric Bott and Jason Culotta.
Wisconsin Business Voice
11
ENERGY
Eric Bott WMC Director of Environmental & Energy Policy
Be Careful with the Precautionary Principal
I
recently had the honor of meeting famed neurosurgeon Dr. Ben Carson before an address he made in Waukesha. Dr. Carson spoke about the sorry state of public discourse in America. He contended the quality of discourse declines when the arguments of one segment of society can’t stand on their merits. As that segment moves to avoid honest debate, it becomes ever more difficult to find solutions to the problems we face. I couldn’t agree more.
inconvenient fact the precautionary principal is meant to squash. Agriculture is also a target, particularly when it comes to genetically modified (GM) foods. A few years ago, a coalition of environmentalists brought suit to halt the planting of sugar beets, which had been modified for resistance to the common herbicide, Roundup. Unable to make credible arguments these crops were a danger, the plaintiffs turned to the precautionary principal arguing the USDA must conduct a comprehensive analysis proving them safe, before allowing planting. A federal judge agreed ordering the destruction of 95 percent of America’s beet plants.
Dr. Carson talked about one of the tools used to squelch discourse, political correctness. Another employed with increasing frequency by progressives is called the precautionary principal. At its most basic the precautionary principal Fortunately, that order could be described as “better “Fracturing has been was reversed on appeal safe than sorry,” however used in over one million but the agricultural a better definition community remains might be that a given wells for more than sixty- under constant threat activity or product is five years without causing the precautionary considered dangerous principal could be and therefore forbidden any significant harm to applied to other until proven otherwise. GM crops. Keep in public welfare. ” Since it’s impossible to mind that in 2012, 86 prove anything 100 percent percent of all corn varieties safe (we don’t even apply that standard to and 92 percent of all soy beans planted in pharmaceuticals) the precautionary principal Wisconsin were GM. isn’t as much about safety as it is about In Wisconsin, the precautionary principal shutting down debate. is more than just an esoteric threat to One industry to which progressives agriculture. It’s a living, breathing animal are jumping over themselves to apply that has succeeded in shutting down the precautionary principal is hydraulic an entire industry through the Mining fracturing. Fracturing, they reckon, must be Moratorium Law. The moratorium prohibits banned until its proponents can prove it to non-ferrous metallic mining until a be 100 percent safe. The state of New York company proves a mine somewhere in the took this tack when enacting a moratorium U.S. or Canada was operated for at least ten in 2010. Progressives in Illinois advocated years without polluting and has since been a similar approach earlier this year. Never closed for at least 10 years without polluting. mind that fracturing has been used in over The Flambeau Mine operated during the one million wells for more than sixty-five mid-1990s without polluting. It’s been years without causing any significant harm closed for more than 10 years and still hasn’t to public welfare. That’s exactly the type of 12
caused any pollution, yet it couldn’t be used by a potential mining company to comply with the moratorium because the mine ran for less than 10 years.
Thanks to the precautionary principal, it doesn’t matter if mining technology, waste disposal and treatment methods, or remediation techniques dramatically advance. The door remains shut and locked to the very thought of mining non-ferrous metals in Wisconsin. It’s ironic a concept so core to modern progressivism does so much to hinder real progress. In the case of the moratorium, that impediment comes with a high price tag. The estimated value of Wisconsin’s undeveloped mineral wealth is $6.2 trillion. BV Follow Eric on Twitter @BottWMC
The Boldt Company gave WMC staff members a tour of the Fox River Cleanup Project near Green Bay. Pictured from left to right aboard one of the dredge barges are WMC’s Scott Manley, Eric Bott, Kurt Bauer and The Boldt Company’s Tom Boldt, Oscar Boldt and Jay Grosskopf.
Speakers at this year's environmental conference included (left to right) Pat Stevens, Wisconsin DNR; Todd Palmer, Michael Best & Friedrich LLP; Bart Sponseller, Wisconsin DNR; and panelists Dan Anderson, Phillips Plastics Corp.; Jay Jagodinski, Green Bay Packaging, Inc.; Wade Nolte, Century Foods International; and Mark McDermid, Wisconsin Manufacturing Extension Partnership. Senator Tom Tiffany (R-12th District), above, gave the keynote address during lunch.
T
he Business Friend of the Environment Awards highlight what Wisconsin companies are doing in the areas of pollution prevention, innovative technology and environmental stewardship. The goal of this awards program is to demonstrate to state policymakers, businesses and the public that sound environmental practices are good for Wisconsin and its business environment. Winners are selected by an independent judging panel with
representatives from industry, the Department of Natural Resources, and the University of Wisconsin-Extension. The 2013 Environmental Policy and Awards Conference was held May 15 at the Country Springs Conference Center in Pewaukee. Attendees heard from industry experts about environmental policies and the impact they have on business. BV
2013 WINNERS
Pollution Prevention Category
Pollution Prevention Category
Environmental Innovation Category Environmental Innovation Category
Environmental Stewardship Category
Environmental Stewardship Category
ECONOMIC SURVEY
Jim Pugh WMC Director of Public Relations
WMC Economic Outlook Survey Uncertain Impact of Affordable Care Act Hurting Job Growth
W
ith implementation of the federal Patient Protection and Affordable Care Act now less than six months away, state business leaders are expressing concern about how they will comply with the massive new entitlement.
The WMC Economic Outlook Survey of CEOs throughout the state found that 26 percent of CEOs said health care was the top policy problem, followed by taxes at 24 percent, the weak economy at 20 percent and regulations at 11 percent (visit www.wmc.org for full results). Business leaders said any increased health care costs will be passed onto employees, with 54 percent increasing employee contributions and 28 percent reporting decreased benefit levels.
In the survey, 94 percent say Wisconsin is headed in the right direction and 84 percent say state government is pro-business. Fortyseven percent of respondents say they are increasing employment, 47 percent said they are not adding workers and 6 percent are cutting, the survey found. CEOs in Wisconsin are looking for certainty, predictability, lower taxes, less regulation and they see our federal government as making things worse. They are more optimistic about our state’s improving business climate, but that enthusiasm is dampened by the storm clouds generated by Washington, D.C.
Conducted biannually by WMC, the WMC Economic Outlook Survey in May is based on the responses of 364 CEOs whose companies are WMC members. WMC conducted the survey online and by direct mail of 1,200 CEOs statewide. Sixty-one percent of respondents are from the manufacturing sector, our state’s top industry. In this survey, we probed to find CEOs’ attitudes about what’s holding back the economy. The responses are stunning and tell a tale of significant concern among business leaders at this moment in our nation’s history as we move to the health care entitlement.
WMC member CEOs are pessimistic largely because of the uncertainty created by federal government policies and overall political dysfunction in Washington, D.C.
14
Those sentiments dominate the verbatim answers in the survey.
In fact, when asked the open-ended question “what is holding back the economy and job growth,” “uncertainty/unknowns” were mentioned over and over again, and “health care costs/reform” is mentioned nearly as often. Here are some direct quotes from survey respondents, and all responses are on our website:
“I think Obamacare is representative of federal overreach and uncertainty that has plagued this economy. People and business overall are afraid or uncertain with the future as it relates to government debt, taxes, growth, etc.” “The constant state of ‘unknown.’ As a businessman, we just ride it out until there is a ‘known.’” “Too many existing and proposed entitlement programs; unreasonable regulation based on emotions, not facts. No fiscal responsibility at the federal government level. Wisconsin is doing much better.”
But while WMC member company executives believe Governor Scott Walker’s administration is business-friendly, there is concern that his pro-growth policies haven’t been embraced by state bureaucrats. Here are some direct quotes about Wisconsin’s business climate:
“Governor Walker understands – the Legislature and the bureaucrats do not.” “It is better than previous years but still has a long way to go with regulation reform and taxes.”
In other areas, employers are predicting some wage increases in the coming year with 26 percent reporting wage hikes of 3 to 3.5 percent. Thirty-five percent report wage hikes between 2 and 3 percent, and 35 percent report wage hikes 2 percent or less. Employers are reporting difficulty hiring workers, with 55 percent saying workers are hard to find and of those, 76 percent report a lack of qualified applicants.
Many employers say burgeoning government-sponsored benefits like protracted unemployment insurance and other entitlement programs are undermining workers abilities to re-enter the workforce. Employers report that workers’ don’t keep their skills up when they can get unemployment benefits for 24 months along with other entitlements. Employers say they compete against each other on wages, but they can’t compete against the government on handouts. Wisconsin is heading in the right direction, but under a dark cloud from Washington, D.C. BV
You see the destination. We see your path. Insight. Experience. Passion for business. And a promise that we’ll work as hard making your business a success as we do our own. Because to us, the only true measure of our success is yours.
OFFICES IN MILWAUKEE, MADISON, WAUKESHA, GREEN BAY AND APPLETON, WISCONSIN AND WASHINGTON, D.C.
© 2013 Godfrey & Kahn, S.C.
MADE IN W It’s no secret Wisconsin is a beautiful state abound in farmland. If you glance out your car window while driving nearly anywhere throughout the Badger state, it is almost certain you will see multiple dairy farms smattering the landscape en route to your destination. But, did you know the soil supplement that keeps many of our gardens plentiful is made right here in Wisconsin? Bovine Basics, located in Hudson, was created in 2010 by business partners Ed Rudberg and Mike Kinney. The innovative and environmentally conscious duo produce a Wisconsin-made soil supplement made of anaerobically digested Wisconsin dairy cow manure. Bovine Basics is a company dedicated to being good for your garden and good for the environment. They do this by using what would be farm waste, and turn it into lawn and garden products. Bovine Basics is an all-natural alternative to chemical fertilizer. So, the next time you drive past a field teeming with corn or a meadow full of cows happily grazing, you’ll remember the soil supplement that keeps those farms plentiful and vibrant was most likely made right here in Wisconsin. www.bovinebasics.com
Since its founding in 1837, Deere & Company has remained dedicated to those who are linked to the land – farmers and ranchers, builders, land owners, and loggers. John Deere’s largest business is agricultural equipment as it has remained the world’s leading manufacturer of farm machinery for decades. But among Deere’s most popular products are the lawn tractors and utility vehicles built in Wisconsin.
The city of Horicon has been an important part of John Deere’s success since 1911. Horicon is a community built on a strong work ethic, where people take pride in doing their job well. This work ethic is apparent in the quality products rolling off the assembly lines at the John Deere Horicon Works including Select Series riding lawn tractors and Gator Utility Vehicles. Few factories can boast of a 100-year history, but John Deere Horicon Works has achieved this significant milestone. From the early days of building horse-drawn grain drills to the present of manufacturing premium lawn care equipment and utility vehicles, Horicon Works has built a reputation for manufacturing durable and reliable products for generations of John Deere customers. The next time you notice John Deere equipment on a work site or home site, you can be proud of the fact that the lawn tractors and utility vehicles could very well have been made in Wisconsin. www.JohnDeere.com
The car you drive packs an average of 350 to as many as 1,200 pounds of aluminum into some larger model vehicles. The aluminum foundry industry supports auto manufacturers worldwide with engines, transmissions, brakes and other component parts made of the lightweight material. Much of the aluminum used is melted in furnaces designed and manufactured by Modern Equipment Company, Inc. in Port Washington. Founded in 1919, Modern Equipment employs 50 people in their 165,000 square foot facility and provides equipment to the iron, steel, brass, copper and aluminum industry worldwide. As CAFÉ standards require lighter and more fuel efficient vehicles, Modern Equipment has kept pace with technology and its customer’s needs by developing aluminum melting “JetMelter” brand furnaces that are the standard of the industry. Beyond the automotive market, this company also supports other foundry equipment for customers who cast products for defense, appliance, hand tool, housing, electrical and other end use markets. www.ModernEQ.com
WISCONSIN North Wood Flooring, located in Coleman, manufactures unfinished strip and plank hardwood flooring utilizing up to 13 different northern species of hardwood. North Wood Flooring’s business plan is simple – manufacture the best possible product in the safest and most honest way possible. North Wood’s 52 employees take pride in every board that comes off the line. The company sells 400 different items to be competitive and meet the needs of the “one-stop-shop” customer. North Wood Flooring’s main focus is offering a broad line of hardwood flooring products to distributors, addressing the residential and commercial markets. This company is one of the top-ranked in Wisconsin in its industry, measured by square feet of product produced. The next time you attend a Parade of Homes in your community and set foot on exquisite wood floors or you see the North Wood Flooring logo on your local high school basketball court, be proud to know that the wood used to build these critical structures was manufactured in Wisconsin Anyone who lives or works near Madison knows it is as common to see someone riding a bike as it is to see someone driving a car. Using a bicycle as a means of transportation is practically a way of life in Wisconsin’s capital city. Catering to this vast, outdoors-loving audience is Saris Cycling Group located in Dane County. In 1989, Chris and Sara Fortune purchased Graber, a family-owned bicycle rack company in Madison that manufactured roof, trunk and hitch racks. Now known as Saris Cycling Group, and consisting of three brands; Saris car racks and commercial parking, CycleOps indoor cycling products, and PowerTap cycling power meters and computers; they have continued to grow the company’s success out of an old farm house and an adjoining manufacturing plant. Saris designs and builds its products with the help of its dedicated 160 Wisconsin employees. Saris’ loyalty to and support of Wisconsin is exemplified by the fact the company works almost exclusively with local suppliers, with 67 percent of its suppliers being located within three hours of Saris’ facility. Saris has grown into an industry leader and distributes its products globally to more than 50 countries worldwide. The next time you see anyone load their bicycle onto a hitch rack, know that there is a very good chance it was made by Madison’s own Saris Cycling Group. www.sariscyclinggroup.com It seems to make sense that nearly every successful business we frequent or drive by has an eye-catching sign calling attention to its location. Sign Effectz, located in Milwaukee, is a custom sign manufacturer that blends creativity with technology to provide customers with the most visually effective and physically durable signage possible. Their products include the simple box sign or block style channel letters, pylon signs, neon signs and architectural monument signs as well as custom built awnings and sun control devices. Their full service capabilities enable them to serve customers as a one-stop-shop to provide everything from design to fabrication, installation, service and maintenance. Sign Effectz’s vision is to be an innovative leader in advertising technology by inventing new products to inspire their audience. It is the goal of each of the 16 Sign Effectz employees to help make their customers’ brands more visible, increase sales and attract more customers through the use of signs, which have proven to be very powerful forces of advertising. As you pass the businesses and shops that line the streets and see stand-out, custom electrical, pylon or neon signs, know that there is a good chance some of them were made in Wisconsin. www.signeffectz.com You can credit this West Allis company with helping people cope with the symptoms of Lymphedema or venous disease. Solaris is a medical garment manufacturer that specializes in providing home solutions for wound care management and treatment. F R E E D O M T O L I V E Venous insufficiency and Lymphedema, which refers to swelling (usually in the legs) is caused by lymph accumulating in the tissues in the affected areas are a couple of the conditions that Solaris products can help manage and alleviate. Since its founding in 2000, Solaris has become the leader of the nighttime Lymphedema management industry and is quickly expanding its reach in the venous and wound care management markets as well. The focus of the 47 employees at Solaris is customer service. That is why they are the only company in their industry to offer patients an exclusive Sure-Fit Warranty on every custom-manufactured product. You can be proud to know there are leading manufacturers in Wisconsin who are helping to make better lives for people everywhere. www.solarismed.com
SOLARIS
AGRICU
ULTURE
MORE THAN MILK AND CHEESE:
Wisconsin's Agricultural Industry is Diverse, Dynamic and in High Demand By Mark Crawford
W
hen most people think of agriculture in Wisconsin, milk and cheese immediately come to mind, and rightly so. But chances are they’d be surprised to learn that Wisconsin is also one of the most agriculturally diverse states in the nation. Dairy accounts for only about half its agricultural output. The state is also a leader in cranberries, green beans, carrots, potatoes, sweet corn, peas, onions and cabbage for kraut. “It all works together,” says Nick George, Executive Director for the Midwest Food Processors Association in Madison. “Because of dairy, we also have strong vegetable-processing and meat-processing industries.” Other leading agricultural sectors are ginseng, mink pelts, dry whey, milk goats and corn for silage. Wisconsin also ranks seventh in the country for the production of ethanol from corn.
Wisconsin’s farms and related businesses generate about $59 billion in annual economic activity and employ about 354,000 people (nearly 10 percent of all jobs in the state), according to University of Wisconsin-Extension. This output can be broken down as follows: Direct economic effect of agriculture is $38.8 billion (sales of all farm products and value-added products)
$13.6 billion in business-to-business purchases for items such as fuel, fertilizer, feed, farm equipment, etc. This business-to-business activity generates another $6.7 billion in economic activity (people employed in agriculturerelated businesses spending their earnings)
$26.5 billion a year to the state’s economy. Wisconsin has more dairy cows per square mile than any other state. According to the Wisconsin Milk Marketing Board, the dairy industry accounts for almost 40 percent of all state agriculture jobs. Then, of course, there is cheese. As a region, Wisconsin ranks fourth in the world for cheese production, making about 2.7 billion pounds of cheese every year – more than 25 percent of all the cheese made in the U.S. Other leading subsectors are:
Cranberries. Wisconsin is the top cranberry producing state in the country – providing about 60 percent of the nation’s supply. The industry contributes more than $300 million annually to the state economy and supports about “Today’s Wisconsin 3,400 jobs.
farm produces more food, using less land, cattle, water and other resources than it did just a few years ago”
Ginseng. About 95 percent of the cultivated ginseng in America comes from Wisconsin, or about 10 percent of the world’s production. Nearly 700,000 dried pounds of ginseng are produced in Wisconsin annually.
Organic. Wisconsin has the secondlargest number of organic farms in the U.S. (second only to California). Wisconsin is home to Organic Valley, the nation’s largest cooperative of organic farmers, which grew sales by 20 percent in 2012.
Wisconsin’s dairy industry contributes
Wisconsin Business Voice
19
Livestock genetics. Wisconsin ranked second among all states in the export of bovine semen in 2012 ($50 million) and fifth for live bovine ($24 million). Four out of the six major dairy and beef genetics companies are located in Wisconsin.
cranberry growers use water conservation systems that measure tension and pressure in the soil so they know how much or little to irrigate. “Others use innovative pest-management tools such as weather monitoring to help reduce unnecessary pesticide applications,” says Tom Lochner, Executive Whey. Wisconsin is the largest whey producer in the Director for the Wisconsin State “About 96 percent of U.S. Demand for whey-based protein products is Cranberry Growers Association in strong, with export growth averaging 7 percent the world’s population lives Wisconsin Rapids. annually. Whey production and processing outside the U.S. and Wisconsin accounts for more than 16,000 jobs in the state. Wisconsin also leads the nation in the number of on-farm bio-energy companies are helping to meet Mink pelts. No state comes close to systems, with 36 methane digesters Wisconsin for mink pelt production. In 2011 the food needs of consumers installed and more planned across Wisconsin produced over 1 million pelts valued the state. Methane digesters convert worldwide.” at $292 million (about 35 percent of the nation’s total manure into renewable bio-energy. Using pelt production); Utah was second with about 700,000 pelts. this technology, five cows can provide enough energy to power an average-size home. Technology Makes a Difference Advances in product design, materials, microelectronics, manufacturing, automation and plant and animal genetics are just some of the science-based improvements that make agriculture more efficient, productive and self-sustaining.
“Thanks to technology, today’s Wisconsin farm produces more food, using less land, cattle, water and other resources than it did just a few years ago,” says Casey Langan, Executive Director of Public Relations for the Wisconsin Farm Bureau Federation. “For example, GPS technology allows farmers to pinpoint the level of inputs required for maximum yield on each square foot of their fields.”
Last year’s severe drought made it a challenging year for most Wisconsin farmers. Crop yields were down and forage for feed was in tight supply. However, plant-genetics companies helped mitigate losses by providing hybrid seeds that were more drought-tolerant. “Last year’s final corn and soybean yields were not as bad as they were during the Allow Us to Introduce... 1988 drought,” says Langan. The Cranberry! “Thankfully, seed technology has come a long way since For several years the cranberry then.” industry has increased its “We’re also dealing with marketing efforts overseas. drought by investing in bigger, Because cranberries are native to faster and more productive North America, sometimes there equipment,” adds Bill Harke, isn’t even a word for the cranberry Director of Public Affairs for in foreign countries. “The first Milk Source LLC, a dairy step is educating these markets producer in Kaukauna. “Now about the berry, especially its when Mother Nature gives versatility and health benefits,” us a smaller window to plant says Tom Lochner, Executive crops, we can do it much more Director for the Wisconsin State quickly.” Cranberry Growers Association in Wisconsin Rapids. “Then we More farmers are also using can introduce different cranberry sustainable farming techniques products as each unique culture to protect soils and maximize begins to learn about the fruit.” yields. For example, many 20
With Wisconsin’s reputation for dairy operations, and agricultural research at the University of Wisconsin, it is not surprising that leading agricultural manufacturing companies are located here, such as Madison-based BouMatic, which designs stall and automation systems, dairy hygiene products and milk harvest and milk cooling systems. One of its newest products is a real-time software activity program that lets dairy operators know when the best time is to breed each cow, as well as alerts for cows that are exhibiting extended periods of high activity, or groups of cows. The system allows producers to breed their cows with more accuracy than ever before – increasing operational efficiencies and reducing costs. This innovative leadership has resulted in steadily increasing sales, even during the Great Recession. More than half of all company revenues are now generated outside the U.S. – one reason the company received the Governor’s Export Award last year.
“It’s up to us to come up with the technology that helps dairy farmers be more efficient, effective and productive,” states BouMatic president Bob Luna, “At the end of the day it’s about working with dairy farmers to provide end-to-end solutions and teaching them how to use this technology to take care of their cows and improve cow health.”
Challenges and Opportunities
The Wisconsin Department of Agriculture, Trade and Consumer Protection is committed to expanding and diversifying Wisconsin’s agricultural sectors and related businesses. It helps promote product and process innovation to take advantage of new consumer markets. Another key initiative is aggressively pursuing export opportunities to other parts of the world – a huge potential market for Wisconsin producers. “More agricultural processors are entering or expanding their stakes in more market channels, including the international marketplace,” states James Dick, Communications Director for the Wisconsin Department of Agriculture. “About 96 percent of the world’s population lives outside the U.S. and Wisconsin companies are helping to meet the food needs of consumers worldwide.” In 2012 Wisconsin ranked 13th among all states for the value of its agricultural exports ($2.94 billion) and the Wisconsin Department of Agriculture will continue to work with foreign governments to facilitate agricultural development initiatives.
There is also a tremendous need to educate Americans about agriculture and its supply chain. Most of us don’t understand what it takes to get food from farms to the dinner table. This is becoming a big concern for the industry – as people get further removed from production agriculture it is harder for them to remain unbiased when it comes to inaccurate representations of agriculture policies and processes.
“For example,” says Harke, “people may have the misconception that as agriculture gets larger, it becomes less humane. Take a walk through our barns, look into our cows’ eyes and tell me these aren’t the most comfortable, stress-free cows you’ve ever seen. Our cows live in an air-conditioned barn where they are free to move around as they please, have fresh food and water available 24 hours a day and sleep on a one-foot-deep bed of sand. More than 10,000 people tour our dairies every year to see what state-of-the-art of dairy farming is all about.”
Another education effort is underway regarding irrigation in the Central Sands region in south-central Wisconsin. This area is one of the most productive growing areas in the country, thanks to the high water table and abundance of water for irrigation. However, there are consumer groups that want to limit access to this water supply because they think irrigation will harm lake levels. To address this concern, growers, processors, businesses, and some educators have formed the Irrigation Task Force. This organization, supported by the Wisconsin Potato and Vegetable Growers Association, is spending about $500,000 on research and education initiatives. “A key objective of the task force is to show how the growers and processors respect this important resource and are implementing strategic water-conservation efforts that make good environmental and economic sense,” says George. BV Crawford is a Madison-based freelance writer.
William Dempster Hoard, 1836 – 1918 Father of American Dairying
F
armers and scholars alike consider W.D. Hoard to be Wisconsin’s bestknown dairy leader. Some believe he is also the father of American dairying. How did Hoard lead the transition from wheat to dairy farming and why was he successful? Hoard spent his early years learning about dairy farming. He was born on his parents’ farm near Stockbridge, Madison County, in central New York in 1836. Rather than finishing school, he worked five years on a nearby dairy farm before migrating to Wisconsin in 1857, at the age of 21, where he worked on his cousin’s farm in Dodge County. By the early 1870s, when he began the fledgling country newspaper the Jefferson
County Union, Hoard was honing his talents as writer and editor. His vision of spreading advice to farmers on dairying grew from a regular column in his weekly newspaper to become the Hoard’s Dairyman magazine in 1885. It soon became one of the nation’s leading agricultural journals with a subscription of 6,000 by 1889, and Hoard became a popular speaker around the area. In 1872, he co-founded the Wisconsin Dairyman’s Association which historians credit with launching the state’s dairy revolution by establishing markets and transportation for butter and cheese. He also helped start state regulation of dairy production. As Governor of Wisconsin (188991), Hoard created a dairy and food commission to protect the quality of food and drink and he supported state training for dairy farmers. By 1899, Hoard was testing new dairying techniques on his farm near Fort Atkinson and dispersing his findings through both his publications and his speeches. As an agricultural expert, editor and masterful public speaker, he had become well known across the state and the nation as a leading champion for dairy farming.
Hoard’s success as a national leader came from his high-quality agricultural journalism based on scientific testing, combined with excellent communication skills and a deep knowledge of dairying.
The political connections he forged at both state and national levels helped turn his ideas into policy and practice. While his meteoric rise from country editor and farmer to Wisconsin’s State Capitol was brief, it helped his star as the father of American dairying shine long and bright. BV
October 10 Officially Governor W.D. Hoard Day On May 12, 2010, Governor Jim Doyle signed Assembly Bill 430 into law, denoting October 10 as Governor W.D. Hoard Day in Wisconsin. “Governor Hoard was a great champion for our dairy industry, and his hard work helped make Wisconsin the dairy leader it is today,” said Governor Doyle. “I am proud to sign this bill into law to establish Governor Hoard’s birthday as a holiday.”
The Hoard Historical Museum proudly celebrates Governor Hoard Day each year with a free event open to the public. In 2013, this will take place on Saturday, October 12, between 1:00 and 4:00 p.m. Contact the museum for additional details: info@hoardmuseum.org or (920) 563-7769.
Wisconsin Business Voice
21
Wisconsin Agriculture Farm-to-Market Facts & Figures
Who Produces?
Top Agricultural Products $1,000s
Number of farms
77,000
2,188,098
Farm acres
15M
Meat (animals)
1,374,014
Average size
195 acres
Dairy Products
5,245,114
Total value
49B (2007)
Oil Crops (soybeans)
845,048
Vegetables
546,387
Poultry
408,203
Feed Crops (corn)
The number of farms decreased from 199,877 in 1935 to 76,500 in 2005 but has increased to 78,000 in 2010. Average farm size has increased from 117 acres in 1935 to 195 acres in 2010.
Commodities
Meat
Fowl
Cheese
Vegetables
4th largest manufacturing industry in Wisconsin
#2 producer of turkeys in U.S.
Cheese production – 2.7B lbs; 2.79B
2nd in nation in harvested acreage
450 plants
2.3B lbs of beef
Value of $12.3B
Since 2000, production of Italian Chickens – 46.5M cheese has outpaced broilers per year American cheese by almost 2-to-1. 90% of Wisconsin milk goes to cheese production. It takes 10 lbs of milk to make 1 lb of cheese.
U.S. Rankings: Cranberries: 1st Snap Peas: 1st Carrots: 1st Green Peas: 3rd Sweet Corn: 3rd Cucumbers for pickles: 5th
Ag Production
What does it Cost? Farm Expenditures Total$9B Seed, chemicals & fertilizer 16%
What does it Take to Produce? Farm machinery (NAICS 333111)
Interest & taxes 9% Labor 10%
Farm services 15%
Wisconsin ranks 2nd to Illinois in total farm machinery production.
Supplies & construction 17%
46 manufacturers $1.5B value of shipments Feed 15%
$176M payroll 4,096 employees
Rent 5%
Machinery, vehicles & fuel 13%
How do we Rank? W isconsin led the nation in the export of: Commodity
% of total U.S. exports
Cranberries
47.36%
Flax seed
45.1%
Durum wheat
43.3%
Ginseng
37.07%
Sweet corn
36.99%
2nd in the export of cheese and ethanol
Where does it Go? Total value of exports of Wisconsin agricultural exports $2.94B; 13th in U.S . All ag products represent 2nd largest Wisconsin export category - industrial machinery is 1st Country
Value of Total Exports
Primary Export Commodity
Canada
1.45B
Ethanol
Mexico
217M
Dairy
China
177M
Hides/dairy
South Korea
134M
Meat
Japan
106M
Dairy
Awards
19th Annual Wisconsin Corporate Safety Celebrating Safety in Wisconsin
2012 Award Winners
*Lakehead Painting Company, Superior not there to accept award.
www.wisafetycouncil.org
Poverty and the Law of Unintended Consequences By Eloise Anderson
W
hen making policy, Washington politicians seldom seem to be faced with a problem they can’t make worse by trying to correct it. There has never been a clearer example of this than when they have attempted to do something about unemployment and the resulting poverty. There can be no argument that unemployment is unacceptably high and, for certain segments of the population, severe. Some are individuals without a strong work ethic who have gotten by with help from government programs. However, many would desperately like to find a job but have neither the personal attributes nor basic skills to qualify for jobs that are available. Let’s look at the data. Nationally, the official unemployment rate for African Americans stands at around 14 percent. This compares with less than eight percent for all workers. But the truth is that the real figures are much higher because many have simply given up, dropped out of the labor force and are no longer looking for work. In larger cities, black youth unemployment is close to 40 percent and even higher in some places. The problem is not limited to African Americans. In Wisconsin, these pockets of unemployment and the resulting poverty are concentrated in central city Milwaukee, in parts of other larger cities and on Indian reservations. What are policy makers doing wrong? To begin with, government policies going back to FDR’s New Deal, Kennedy’s New
Frontier and Johnson’s Great Society have all attempted to deal with poverty, racial injustice, urban blight and other social ills by throwing money at them. In Wisconsin alone, current state and federal programs expend billions of dollars a year on such efforts. That’s not to say many of these programs have not been beneficial. But the unhappy conclusion one must draw is that achieving the primary goal of eliminating poverty has been a dismal failure. Rather than helping people out of poverty, many have become locked into it. And in the process, our economy suffers.
While some politicians have called for more government giveaways as a way to pull individuals out of poverty, others have dug in and defended the status quo for entitlement programs. There are no easy answers, but several things are clear: Proposals that might provide proponents with a warm and fuzzy feeling but are actually harmful must be rejected. Those who are not so inclined must be strongly encouraged to seek employment. Government policies must be reordered to remove obstacles to job creation and find better ways to aid those looking for work gain the social and basic job skills they need to enter the workforce. Simply handing out cash clearly doesn’t work.
priority to facilitate the creation and filling of jobs for Wisconsin citizens. His fiscal 2014-2015 biennial budget contains a number of aggressive, innovative programs designed to help accomplish this goal.
Instead of proposing massive new handouts or defending the status quo, Governor Walker’s budget reforms our current entitlement programs. One major proposal is to make job training a requisite for ablebodied individuals to receive food stamps. This job training requirement will help individuals who are currently receiving food stamps gain the skills necessary to end their dependence on government programs. Beyond this change Governor Walker’s budget contains a new Trial Employment Match Program, which will open-up additional opportunities to individuals who would otherwise have trouble getting a job. Governor Walker’s proposals are in stark contrast to the direction of our federal government. Working together in Wisconsin, we will be able to help address the issue of poverty by empowering individuals to determine their own future. BV
Data shows despite the nation’s continuing unfavorable economic conditions, thousands of jobs are available and, for whatever reason, employers have been unable to fill them. Governor Walker has made it his highest
Eloise Anderson is Secretary of the Wisconsin Department of Children and Families. She can be reached at eloise.anderson@ wisconsin.gov
Business Directories and Lists Available from WMC Access to business lists is now easier and less expensive with our new lineup of Dun & Bradstreet® data products. WMC’s print directories and custom lists help you reach your target markets at an affordable price. Contact Mike Shoys to order today, mshoys@wmc.org, (608) 258-3400. Wisconsin Business Voice
25
SAFETY
Janie Ritter Director of Wisconsin Safety Council
Safety in Agriculture America's Dairyland S till fresh in our minds is the recent deadly blast at the West Fertilizer Company in West, Texas. The blast killed 14 people and devastated the small rural town. With agriculture ranking as one of the most dangerous industries, and Wisconsin leading most other states in agricultural-related commodities, Wisconsin businesses need to recognize and understand the risks associated with being America’s dairyland and ensure their employees are properly trained in necessary, life-saving safety procedures.
Economic
The United States is an integral part of the international food and agriculture system, with the U.S. enjoying 20 percent of the global market for agricultural goods. In Wisconsin, agriculture contributes $59.16 billion annually to our economy. Over 350,000 Wisconsin citizens - 10 percent of our workforce - rely on agriculture in some way for their job.
Wisconsin is home to 77,000 farms, with 99 percent of them family owned. The average farm in Wisconsin is 195 acres. That’s over 15 million acres (or 36 percent of overall land) dedicated to farming. Dairy farming leads the way in Wisconsin with nearly 40 percent of all agricultural jobs in the state.
Agriculture is much more than farming. Safety Biotechnology is a thriving and growing Agriculture ranks among the most hazardous sector across the U.S., especially in industries, experiencing a fatality rate eight Wisconsin. Wisconsin leads the nation with times that of the all-industry average. the number of non-farm bio-energy systems Nationwide, 550 workers die annually featuring methane digesters that turn cow performing farm work, and 88,000 manure into renewable bio-energy. Other emerging fuel source technologies from corn, experience lost-time injuries. Every day, roughly 243 agricultural workers suffer a soybeans, wheat, barley and other vegetables serious lost-worktime injury. Five percent are being studied and of these injuries result in implemented. permanent impairment. The intellectual “Agriculture ranks among community Agriculture workers the most hazardous industries, is involved are exposed to as well. The experiencing a fatality rate eight times numerous safety, University of health, environmental, that of the all-industry average.” Wisconsin – biological and Madison is home respiratory hazards. to one of the largest These include vehicle rollovers, agriculture research communities in the heat exposure, falls, musculoskeletal injuries, nation, shaping the technology of the future hazardous equipment, grain bins, unsanitary with studies on livestock genetics and other conditions, chemical and pesticide exposure, agricultural breakthroughs. confined space, electrical, noise, and many others. Proper training in CPR/First Aid, Exports by Wisconsin agriculture the use of personal protective equipment companies was $2.94 billion in 2012, and (PPE), and rescue procedures is crucial. the state ranked 13th in the U.S. for value of agriculture exports. Wisconsin’s fertile upland soils and a moderate climate are ideal conditions for growing crops like corn and alfalfa to feed the state’s livestock, including the 1.26 million dairy cows in the state.
Occupational Fatality Rate by Industry, U.S., 2009 Rate Per 100,000 Workers
30
20 15
13.3 9.9
10
5
5 0
26
27.2
25
2.3 Ag, Forestry, and Fishing
Trans and Warehousing
Construction
Wholesale Trade
Manufacturing
3.5
All U.S.
A recent article in the Wisconsin State Journal featured Wisconsin farmers and others in the agriculture community working together to mitigate these hazards, train rescue workers and map agricultural sites to quickly identify where hazardous chemicals are stored on-site, where to disconnect power and locate water sources. Once developed, this type of mapping could be expanded and used in other manufacturing sectors. Many of the hazards experienced by agriculture workers are the same as in general industry, yet some are quite unique to their environment. Agriculture operations are covered by several Occupational Safety and Health standards including Agriculture (29 CFR 1928), General Industry (29 CFR 1910), and the General Duty Clause. Language barriers for nonEnglish speaking employees needing safety
training is a growing and ongoing issue. OSHA requires employers conduct all required training of workers in a language and vocabulary workers can understand. Like any business, those in agriculture can be financially set-back by safety violations, injuries, illnesses and deaths. As with all industries, it is imperative that agriculture businesses – whether a dairy farmer, cheese maker, or a manufacturer of farm equipment – offer safety education and proactive training programs. These important programs dramatically help prevent unintentional injuries and death that affect your business financially and protect your most valuable asset… your employees. BV
WSC Director Janie Ritter promoted June as National Safety Month in a video released last month. To view video visit: www.wisafetycouncil.org
Follow WSC on Twitter @WISafetyCouncil
22nd Annual Autumn Safety & Health Conference/Expo
September 11, 2013
Country Springs Hotel, Pewaukee www.wisafetycouncil.org Chapter of
2013 Safety Training
The Wisconsin Safety Council, a division of WMC, is the reason more people go home safely every day from manufacturing plants, offices, and construction sites. WSC offers training throughout the year at locations across the state.
MILWAUKEE AREA SAFETY TRAINING
MADISON AREA SAFETY TRAINING
July 16
August 12-15
July 17
August 20
Safety Inspections Job Safety Analysis
August 6-7
OSHA 10-Hour Voluntary Compliance for General Industry
August 13
Creating a World-Class Safety Culture
September 9
Ergonomics: Managing for Results
September 11
22nd Annual Autumn Safety & Health Conference/Expo
September 24
NFPA 70E Compliance Requirements
October 22
Coaching the Lift Truck Operator, Train-the-Trainer
December 4
Coaching the Emergency Vehicle Operator, Train-the-Trainer
December 10
Confined Space, Train-the-Trainer
December (date to be determined)
First Aid/CPR/AED Recertification
September 16-19
FOX VALLEY/GREEN BAY AREA SAFETY TRAINING
October 2
September 11
October 7-10
November 5-6
September 6
September 10
OSHA 30-Hour Voluntary Compliance for General Industry Incident Investigation: Root Cause Analysis Worker’s Compensation Case Management & Workplace Anatomy
October 11
Hazard Communication, Train-the-Trainer OSHA 30-Hour Voluntary Compliance for General Industry
Safety Management Techniques (SMT)
December 9-12
Safety Communication & Training Techniques
Principles of Occupational Safety & Health (POSH)
RCRA Compliance for Hazardous Waste Generators Overview (AM) DOT Hazmat Transportation Refresher (PM)
November 12
November 7
October 14-17 October 23
Coaching the Lift Truck Operator, Train-the-Trainer
Effective Team Safety Lockout/Tagout, Train-the-Trainer
5th Annual Worker’s Compensation Law Symposium
Effective Team Safety OSHA 10-Hour Voluntary Compliance for General Industry
WAUSAU/STEVENS POINT/MARSHFIELD AREA SAFETY TRAINING August 21
Coaching the Lift Truck Operator, Train-the-Trainer
October 8
Safety Inspections
TAXES
Jason Culotta WMC Director of Tax & Transportation Policy
State Budget Improves Wisconsin's Tax Climate G overnor Scott Walker and the state Legislature made dramatic improvements in lowering our state tax burden and simplifying our tax code as part of the 2013-15 state budget. Following Governor Walker’s initial proposal in February to lower individual income tax rates, the Legislature used surplus tax revenues to nearly double the scope of the tax cut.
A total of $650 million in income tax relief will be provided to Wisconsin taxpayers over the next two years. All five state individual income tax brackets will be reduced (and one bracket eliminated) beginning in 2013:
While WMC had sought greater reductions to the top individual income tax bracket and the 7.9 percent corporate income tax rate, the Legislature remained focused on broad-based middle class income tax relief – and delivered. Therefore the corporate income tax rate remains 7.9 percent.
Taxable Income (Married/Joint Filers)
Previous Law
2013-15 Budget
Up to $14,330 $14,330 to $28,650
4.60 6.15
4.40 5.84
$28,650 to $214,910 $214,910 to $315,460 $315,460 and over
6.50 6.75 7.75
6.27 7.65
A wide range of other significant pro-growth reforms championed by WMC were adopted in the budget:
• Federal depreciation and depletion rules were adopted, beginning January 1, 2014. This will simplify compliance by phasing-out comparable state rules over a five-year transition period. • Future changes made to the Section 179 expensing provision by Congress are now automatically be adjusted at the state level. Wisconsin has not federalized Section 179 provisions since 2001. • Provisions governing net operating losses were also federalized, allowing losses to be carried forward up to 20 years and carried back for two years. Previous Wisconsin law allowed a 15-year carry-forward but no carry-backs. • The R&D tax credit was extended to pass-through entities. This change allows S corporations and LLCs to claim the credit. Wisconsin previously allowed only C corporations to utilize this benefit.
28
• If federal law is changed to allow the collection of state sales taxes on out-of-state retailers, the revenues generated from this source will automatically be used to further lower state income tax brackets.
• The economic development surcharge is eliminated for passthrough entities. Many LLCs had been assessed this surcharge multiple times in a pyramiding fashion, which ranged from $25 to $9,800 per assessment. • The state tax code has been updated to almost wholly reflect the Internal Revenue Code, leading to greater simplification and compliance for state taxpayers. • A municipal fee appeal process was established that allows taxpayer challenges to unreasonably high municipal fees be brought to the state Tax Appeals Commission.
• Appeals of sales and use tax determinations and manufacturing property assessments can now be made in the circuit court of the county in which a taxpayer is located, owns property or does business. Previous law required these appeals to be filed only in Dane County circuit court. • A prior audit determination provision was adopted prohibiting state auditors from assessing tax liability to taxpayers if an earlier state audit had shown no such liability.
The Legislature adopted several other tax provisions, including the elimination of 18 little-used business tax credits, limiting the manufacturers’ tax credit to the amount of income or franchise tax paid on the income on which the credit is based, and reducing the amount of interest paid by the state on amounts owed to taxpayers from 9 percent to 3 percent.
Altogether, the state budget includes dramatic tax relief and will encourage investment in our state’s economy over the next two years. Governor Walker and legislative leaders have stated this budget is a first step and more relief is to come. BV Follow Jason on Twitter @JGCulotta
Visit www.wmc.org/taxes for more information on the tax package and what it means for your business.
WMC at Home and on the Road
1
2
3
4
5
6
7
8
9
1. Janie Ritter, Wisconsin Safety Council Director, honors Thom
6. WMC Foundation President Jim Morgan talked about the workforce
2. Byron Franz, Special Agent with the FBI, presented to WMC
7. Representatives from Turkey visited WMC to discuss economic
Wielgus, Compliance Director for HG Meigs LLC in Portage for earning his Advanced Safety Certificate. executives on the perils of industrial espionage.
skills gap during an interview for WMC’s new video series. Watch the video at www.wmc.org.
development.
3. WMC works closely with the National Guard and other organizations encouraging employers to consider veterans when hiring for open positions. This banner was displayed proudly on the WMC building throughout the month of May.
8. U.S. Senator Ron Johnson (R-Oshkosh) met with Kurt Bauer and
4. Governor Walker spoke to the WMC Board of Directors at a
9. Eric Bott (left), WMC Director of Environmental & Energy Policy,
planning session in May. Pictured here (l-r) are Tom Howatt, Wausau Paper, Dan Ariens, Ariens Company, Todd Teske, Briggs & Stratton, WMC’s Kurt Bauer, and Tim Christen of Baker Tilly.
WMC’s Government Relations team earlier this spring to discuss federal immigration reform.
and Chris Reader (right), WMC Director of Health & Human Resources Policy, met with Sen. Tom Tiffany (R-12th District) to discuss WMC’s legislative priorities.
5. Tom Boldt (center right), CEO of The Boldt Company and past
WMC chair, inspects his construction crew's handiwork at the WMC headquarters in Madison. The first floor of 501 East Washington is undergoing the first major remodel since the building was constructed in 1986.
Wisconsin Business Voice
29
HUMAN RESOURCES
Chris Reader, WMC Director of Health & Human Resources Policy
Family Medical Leave
Wisconsin Should Be Aligned with Federal Standards
W
isconsin is known for being a reform-focused state, often leading all other states when it comes to implementing major initiatives. The first kindergarten in the nation started in Watertown in 1856. In 1919, Wisconsin became the first state to ratify the national women’s suffrage amendment. School vouchers were first utilized in Milwaukee almost twenty-five years ago. Wisconsin led the way on welfare reform in the 1990s. And in 1988, Governor Tommy Thompson, in his first term as Governor, signed 1987 Wisconsin Act 287, establishing the Wisconsin Family Medical Leave Law.
Certainly, family medical leave has value for employees and employers alike. Having a happy and healthy workforce is an essential component of a productive and profitable company. In cases such as caring for a newborn child, an ill parent or a spouse with a serious medical condition, no one thinks twice anymore about temporary leave from work being appropriate. Unfortunately, because Wisconsin’s family medical leave law was signed before the federal version, there are discrepancies between the two that make compliance at times difficult. For instance, the federal law allows an employer to decide which calendar to use when computing leave benefits – a calendar year, fixed year, or rolling year 12-month period, Wisconsin’s family medical leave law versus the state law which demands provided what is considered a the calendar year be used. common benefit today for Another instance is “In total, there are employees at medium to what type of paid large companies – the more than a dozen leave substitution ability to take unpaid time may be available. instances when the federal off for a major medical
situation, to care for a and state laws simply do In total, there are newborn child or to care more than a dozen not line up.” for a sick spouse or parent, instances when without the fear of losing one’s job. the federal and state laws simply do not line up. This makes A few years after Governor Thompson compliance difficult and sometimes very brought this reform to Wisconsin the federal burdensome on employers, particularly for government followed suit. Fresh off his first those operating in multiple states and having inauguration, President Bill Clinton signed to use two different sets of rules; one for the federal Family and Medical Leave Act their Wisconsin employees and one for those of 1993 on February 5, 1993. The federal law in the rest of the country. Complicating created a very similar mandate for medium matters further are a very small percentage to large employers nationwide to provide of workers who have figured out how to unpaid time off for employees facing serious abuse the systems in order to stack both medical situations personally or in their federal and state leave on top of each other, families, or to care for a new child.
30
or who consistently have a “serious medical condition” every Friday.
WMC has heard from employers throughout Wisconsin, large and small, about the burden this duplicative law causes for human resource departments. In response, WMC is working on a legislative reform package to federalize our law. Doing so will not only reduce employment red tape, but it will bring fairness to the system. In addition to family medical leave, we are pursuing reforms of several other human resource laws to better align our employment laws with federal requirements. A few examples of where we would like the state to adopt the federal standards include the definition of work time, the federal standard of time-keeping, the definition of loss, theft and damage, and adopting the federal provisions relating to the discipline of exempt employees. Taken together, the family medical leave update and human resource law reforms will break down employment red tape while preserving the protections employees have come to know and depend on. BV Follow Chris on Twitter @ReaderWMC
WMC in the News “Employers can compete against each other on wages, but they can’t compete against the government on handouts.” – Kurt Bauer, WMC President/CEO, speaking about WMC’s CEO survey results indicating federal policies are slowing job growth. “There are so many businesses that don’t pay taxes under the corporate income tax code, most businesses actually pay tax as individuals. So that’s where reducing these brackets are so important to helping our job creators.” – Jason Culotta, WMC Director of Tax & Transportation Policy, speaking about the tax package in the 2013-15 proposed budget. See Jason’s column on page 28 for details on the tax changes. “We are proud to honor the deserving winning companies who work tirelessly to ensure safety remains a top priority every day.” – Janie Ritter, Wisconsin Safety Council Director, congratulating the winners of the 2012 Wisconsin Corporate Safety Awards. See page 24 to view all the winners.
Experience. A simpler web. Easier, more efficient, more customizable, and definitely more user-friendly: The new www.deltadentalwi.com is everything you love about Delta Dental … on the web. A simpler website makes for a better experience.
“Wisconsin’s Lemon Law encourages litigation, and drives up costs for consumers and manufacturers.” – Scott Manley, WMC Vice President of Government Relations.
Experience. The Delta Dental Difference.
October 8-10, 2013 Wisconsin State Fair Park, West Allis
www.wimts.com
Keynote speaker Dan Ariens, CEO Ariens Company October 8 | 11:30 a.m. - 1 p.m. Wisconsin Business Voice
31
The Economic Power of Early Childhood Education By George Lightbourn
V
alue. Assets. Return on investment.
These are terms not usually associated with early childhood education. We have to change that for the sake of Wisconsin’s children and our economy.
One thing Wisconsin government has done right under both Democrat and Republican leadership is establish YoungStar, a system for rating Wisconsin’s 3,000 early childhood centers. You see, not all early childhood centers are created equal. Low-rated centers, while they might keep the children safe, do not focus on getting them ready for formal education. High-rated centers do.
The Wisconsin Policy Research Institute published a report, “The Economic Power of Early Childhood Education (WPRI),” that showed why it is essential to encourage quality early childhood education. Many people thought it unusual that a conservative, business-friendly think tank would publish such a study. We think it makes perfect sense. Conservatives should join with business interests and anyone else advocating for quality early childhood education in Wisconsin.
centers to higher quality, four- or five-star centers. A conservative calculation shows an initial $20 million cost would generate a $60 million a year return in future benefits – a huge impact.
However, as a state, we should all be troubled by the fact that 84 percent of low-income children attend two- and three-star centers - the lowest rated. Only 15 percent attend the highest rated centers. Boy, do we have work to do.
At WPRI, we are convinced Wisconsin state government is serious about tapping the potential of early childhood education but it needs the diligent oversight the business community can provide. So far, the Wisconsin Shares program has been run as a social program. That must change. Within state government, the Wisconsin Economic Development Corporation must have input into early childhood education issues. Business should have a hand in advising how the program operates, the way it works for unemployment insurance or worker’s compensation. Business needs an active voice in moving more low-income children – those who will benefit most from quality early childhood education – into higher rated centers.
Wisconsin’s early childhood centers have the potential to be a tremendous asset. But there is no guarantee. One key to determining the potential of early childhood centers is a new rating system to assess the quality of more than 3,300 providers. The YoungStar rating system, initiated by the Doyle administration and fully embraced by Governor Walker, is designed to make high-quality early childhood education available to low-income children through the Wisconsin Shares program.
Moving more low-income children into high-quality centers will prove invaluable for both the children as well as for the Wisconsin economy. Quality early childhood education will prove a good value and will provide a solid return on investment. Of the economic development tools, early childhood education is both the most powerful and the most cost effective. BV
I asked the experts who wrote the study for Wisconsin Policy Research Institute (WPRI), including an economist from the Minneapolis Federal Reserve Bank, to estimate what would happen if we moved half of those children from the lowest rated two-star
Snap this QR tag with your smart phone or tablet to read the WPRI Report “The Economic Power of Early Childhood Education.”
Children exposed to high-quality early childhood education will be more successful in school, are less likely to ever be incarcerated and, as adults, will be better providers for their families. High-quality early childhood programs pay for themselves several times over as children grow into productive members of society.
George Lightbourn is the recently retired President of the Wisconsin Policy Research Institute and formerly served as Secretary of Administration under Gov. Tommy Thompson. Visit www.wpri.org for more information on the Institute.
State of Wisconsin Business Luncheon Monona Terrace Community & Convention Center, Madison
October 2, 2013 www.wmc.org 32
Company News
WMC Member Receives PR Industry Awards
The Southeastern Wisconsin chapter of the Public Relations Society of America honored local organizations and agencies at the 2013 Paragon awards luncheon late last month for excellence in the field of public relations. Laughlin Constable received the ‘Best in Show’ honors, along with 11 other Paragon awards. The awards were for PR and social media work on behalf of the Wisconsin Department of Tourism, McDonald’s Restaurants of Southeast Wisconsin, Bon-Ton Stores, the Wisconsin State Cranberry Growers Association and the BMO Harris Bradley Center.
WMC Board Member Joins EPS as a Director
WMC Board Member Mark Tyler, President of OEM Fabricators, Inc. recently joined Engineered Propulsion Systems, Inc. as a director. Tyler is excited about EPS’ development of a light-weight diesel engine for uses in general aviation aircraft and military applications. His enthusiasm is in part because of the background of the founders, the early milestones achieved, the market potential and the intellectual property that is in place to protect the design’s technology. Tyler has said his involvement in EPS is reminiscent of when he started OEM Fabricators; a solid business plan to address a needed market niche. The EPS engine sets new standards for fuel economy and performance through its revolutionary light-weight, Flat-Vee, engine design using internationally available jet fuel.
Project Mini-Chopper Promotes Manufacturing
A mini-chopper unveiling event took place in late April as part of a collaborative effort spearheaded by The Economic Development Corporation of Manitowoc County and The Chamber of Manitowoc County. The unveiling event, which was hosted by The Ant Hill Mob M.C., Ltd. and Hoban’s Cycle, took place at the Manitowoc County Ice Center in order to recognize the teams and sponsors involved in Project Mini-Chopper as the finished products were unveiled for the first time.
Project Mini-Chopper is a program designed to introduce high school students to the career opportunities available in manufacturing. This educational experience teams students from area high schools with local manufacturers to design and build a functional mini-chopper. During this journey, the students learned all aspects associated with taking a product from concept through production. The Project Mini-Chopper Mission is to help students, parents, educators and the community understand manufacturing provides excellent career opportunities. This education of the public will help create a skilled and professional workforce to meet local manufacturing and economic needs, today and in the future.
The BenefiTs Of hiring VeTerans
Translating Military Expertise to Civilian Excellence Schedule for 2013 July 10–Gateway Technical College– iMET Center–Sturtevant August 7–Wisconsin Indianhead Technical College–Superior September 10–Blackhawk Technical College–Janesville October 9–Wausau Window and Wall Systems–Wausau November 5–Logistics Health, Inc.– La Crosse
TOPICS WILL INCLUDE: How to Translate the Skills Veterans Possess The Financial Benefits of Hiring Veterans (tax credits, on-the-job training funds, etc) Employer Presentations: A Businessto-Business Explanation of how Hiring Veterans will Benefit Your Company How to Connect with Potential Veteran Candidates, and Much More!! COST: Free, but space is limited, so register soon to reserve your spot. For more details and to register, please contact Al Hoffmann: 608.266.1209. Allen.Hoffmann@dva.wisconsin.gov You can also access the Registration Forms through the fliers listed on the “Events” page of our website at www.WisVets.com
How Do We Fix A Solving our Debt Crisis Requires Pragmatic Bipartisanship By Jim Moody
T
he United States government debt has doubled over the last twelve years, largely the result of three causes: Two unfunded wars, costly entitlement programs and significant tax cuts in the early 2000s. And the annual interest payments we make on money borrowed from other countries continues to grow.
The latest projections from the Congressional Budget Office illustrate a weak, but positive, economic recovery, marked by tentative short-term and still minor improvement in deficit levels. But without basic and bipartisan reforms, our national debt will reach 75 percent of GDP by 2023 – a 60-year high – and continue to rise if Congress and the President cannot agree to reforms that will “bend the curve” down to more sustainable levels. It is imperative that Members of Congress and the White House work together on a bipartisan plan to reverse this dangerous trajectory.
Having served ten years representing the Milwaukee area in the House of Representatives, I am aware of the political hurdles a bipartisan agreement must surmount. And, as a former UW Economics professor, I am also aware that borrowing to pay interest on earlier debt dangerously enlarges the drag on other economic activities in both public and private sectors. (Alfred Einstein once said, “The most powerful force on earth is not nuclear power; it is the power of compound interest.”) If Washington fails to reach an agreement on debt control, the debt load will choke-off considerable economic opportunity in the private sector. Many businesses will see higher long term interest rates, making it more costly for them to take out a loan to build their business. But before the “money wonks” suggest a specific approach to reverse the growth of the debt they must share the facts with the public – without the political dressing that favors one party or the other. I know the voters are thoughtful and fair, and want solutions that are balanced and effective, rather than ideological.
I am proud to have worked with Congressional colleagues on both sides of the aisle to push for meaningful change on historically divisive issues, like the highly successful tax reform legislation of 1986. In that bill some taxes went up; some went down – creating both momentary winners and losers – but America’s tax laws became 34
far more fair, efficient and transparent. Those strong merits would not have been captured without a bipartisan approach.
Fortunately, awareness of the importance of seriously dealing with the federal deficit in a bipartisan manner is apparent. But bipartisan awareness and action are two different things, largely because agreement here requires choosing between ideology and pragmatism. We nearly all agree the debt and deficit needs to be brought down, now we must agree on HOW to do it. So how do we best tackle this huge problem that both Republicans and Democrats agree is an absolute must? The first step is reaching common ground and agreeing that fiscal problems this large and complex require both parties to work together, and merit a pragmatic approach that tackles the tough decisions on both the spending and the tax side of the ledger.
Only a grand bargain, where members from both parties agree to use tools from the other’s toolbox – increased taxes and reduced spending – will fix our fiscal house. We need a plan that addresses the true drivers of our debt and puts it on a downward path for years to come. A comprehensive plan must reform our entitlement programs and make them solvent for years to come, raise revenue by broadening and reducing the deficit spending.
With the national debt and subsequently, our outgoing cash payments for interest charges continuing to climb, we must address these issues immediately before we go broke. This is no time to score political points. BV Jim Moody is a former Democratic member of the U.S. Congress. Moody represented Milwaukee, Wisconsin in Congress from 1983 to 1993. He can be reached at JimMoody26@gmail.com. This article was written by Jim Moody, Financial Advisor with Oppenheimer & Co who can be reached at Jim.Moody@OPCO.com. The article is not to be construed as an offer to sell or buy any securities. The information set for the herein has been derived from sources believed to be reliable and does not purport to be a complete analysis of market segments discussed. Opinions expressed herein are subject to change without notice. Additional information is available upon request. Oppenheimer & Co Inc nor any of its employees or affiliates, does not provide legal or tax advice. However, your Oppenheimer Financial Advisor will work with clients, their attorneys and their tax professionals to help ensure all their needs are met and properly executed.
America's Debt? Let's Focus on Fixing, Not Fighting By Reid Ribble
A
ballooning federal debt is exacerbating many of our country’s problems. From high unemployment to stagnant economic growth, the scope of its impact has been felt not only domestically, but also globally. The now $16.8 trillion debt has been used by both sides of the aisle as political fuel and has become the driving force for some of the most controversial legislation in recent history. The House and Senate passage of the Budget Control Act was the first attempt to get our nation’s financial house in order, but the failed Supercommittee and resulting sequester has created more skepticism regarding Congress’ ability to fix problems.
Each of these pieces of legislation has support from both Republicans and Democrats, but still never moved forward in the Senate after passing the House. I have realized that one of the biggest hindrances to fixing our nation’s problems, including the debt, is resistance from both sides of the aisle to work together. Any bill that passes the House has a slim, if not zero, chance of getting a vote in the Senate. The constant bickering and demonizing of ideas in Congress has added even more problems to the long laundry list of ones we are currently facing.
Since I was elected to Congress in 2010, I have made a concerted effort to work on reigning-in government spending and scaling back the debt. As a member of the House Budget Committee, I have worked hands-on in the development and passage of the House Budget Resolutions and introduced numerous pieces of legislation to reduce government spending and fix the broken budgetary process. One of the first bills that I helped author and subsequently introduce was the bipartisan Cut Cap and Balance Act, and most recently I introduced the Biennial Budgeting and Enhanced Oversight Act, which currently has 30 co-sponsors with more signing on every day.
find a way to work together on paying down the debt and creating an economic environment that is ripe for growth and opportunity. I have been fully committed to solving our country’s spending and debt problems, and I will remain committed to these efforts as long as I represent northeast Wisconsin. BV
For this reason, I have also made it a priority to work with my colleagues from both sides of the aisle. I have been a member of the organization No Labels from its inception which focuses on ‘fixing, not fighting’ in Congress. Fellow Wisconsinite and Representative of the 2nd District, Mark Pocan, is also a member As a former small businessman, I recognize the danger of No Labels. We have already of America’s record-breaking debt and it was for that joined forces on legislation, “Both parties will have to reason that I decided to run for office. I believe including my Biennial find a way to work together on the future of our children and grandchildren are Budgeting bill, of which he at risk and if we, as Americans, continue to allow paying down the debt and creating is an original co-sponsor. Congress to push it aside, it will be detrimental. an economic environment that is ripe The federal debt won’t I am not one for hyperbole, so when I say that go away on its own; the our nation is at risk, I genuinely mean it. Admiral for growth and opportunity.” American people deserve Mullen, former Chairman of the Joint Chiefs of Staff a Congress who can put aside famously said “The single biggest threat to national security the petty differences that have prevented is the national debt.” viable solutions from being implemented. Both parties will have to
Congressman Reid Ribble is the Republican representative for Wisconsin’s 8th Congressional District which covers the northeast part of the state. He can be reached through ribble.house.gov or (202) 225-5665.
Wisconsin Business Voice
35
CHAMBER CORNER
A Partnership for Prosperity By Tim Sheehy
A
s of this writing we are in the final days of the Joint Finance Committee’s deliberations on the most important legislative document produced every two years, the state’s budget.
the return on that partnership for the entire state. No other region has such a grip on Wisconsin, and no other region relies on the state to be such a strong partner.
By the time you read this, the contentious issues that divide the We have unique challenges that come from being a large urban Legislature and at times seem to pit one geographical part of market; low educational attainment and a high use of the correctional Wisconsin against another in the allocation of resources, will have system are two that come to mind. These economic deterrents call on been decided. No need to crystal ball the results resources and policy solutions from the entire state. as chambers of commerce across the state Bottom line, next time during election season will have determined the outcome on their “What serves Wisconsin when you hear an ad run against your local state own scorecards, and legislators will be back best is a partnership for a legislator for voting for something that benefitted at home. Milwaukee, think about this unique partnership.
prosperous Milwaukee.” Milwaukee has a responsibility to more than This taffy pull for state resources is not new, it’s been going on for the past 31 years I pull its economic weight if Wisconsin is to thrive, have been involved in lobbying at the Capitol. State we appreciate that role and we respect the help we get from Representative Harvey Dueholm from Polk County, who served legislators all over Wisconsin. from 1959-1977, put it this way in lamenting the state budget one As a founding member of WMC, we remain strong supporters of year: “Pennies for Polk, and pounds for Milwaukee.” My goal for their mission and their leadership; it is a real partnership that has this column is not to ask you to help us shake out more pounds served chambers of commerce in Wisconsin well! BV for Milwaukee, but to suggest that what serves Wisconsin best is a partnership for a prosperous Milwaukee. Tim Sheehy is President of the Milwaukee With an economy that produces a gross metropolitan product of $100 billion dollars, providing nearly one million jobs, with more Fortune 500 corporate headquarters per capita than all but nine other cities in the U.S., Milwaukee is a partner that pays extraordinary dividends for the entire state. The supply chain networks needed to feed our manufacturing industries, the property tax base supported by vacation homes and the jobs provided to graduates are just part of
36
Metropolitan Association of Commerce. Visit www.mmac.org to learn more.
Client service should be
EXCEPTIONAL, not the exception. Every bank wants to provide real client service. But most aren’t set up to make it happen. First Business is different. We intentionally limit ourselves to fewer clients than comparable banks of our size so that we can offer each client an exceptional level of service. We know your name. More importantly, we get to know your business. That’s what makes the difference. Call us today.
Member FDIC
(L-R standing) Corey Chambas, President & CEO of First Business Financial Services, Inc. Joan Burke, President of First Business Trust & Investments Dave Vetta, President & CEO of First Business Bank - Milwaukee Chuck Batson, President & CEO of First Business Capital Corp. (L-R seated) Mickey Noone, President of First Business Bank - Northeast Mark Meloy, President & CEO of First Business Bank - Madison
Y O U R S U C C E S S C O M E S F I R S T.
Treasury Management : Trust & Investments : Private Banking : Specialized Lending : Equipment Finance : Commercial Lending
www.firstbusiness.com 608-238-8008