Clusters help manufacturers thrive
When it came time to pick a location for Zurn Industries, LLC’s new headquarters, the choice was easy for the maker of plumbing products for commercial, municipal, health care and industrial markets: the Reed Street Yards Water Technology Park. The 16-acre business park is adjacent to the Global Water Center and the heart of the area’s water industry cluster.
More than 150 water-related companies are located in the Milwaukee area. That high number of related businesses – especially manufacturers – concentrated in a particular region is called a cluster by economic development leaders.
When it comes to advanced manufacturing, clusters play an integral role in helping businesses grow, said Buckley Brinkman, executive director of the Wisconsin Center for Manufacturing and Productivity.
“Wisconsin is home to multiple industry clusters that provide strength to those involved in them,” he said.
Manufacturing clusters range from water in Milwaukee to the defense industry in northeastern Wisconsin. Statewide, manufacturing remains the number one employer, with more than 19 percent of the state’s workforce involved in the industry.
“Manufacturing is what we’re about in Wisconsin, and we’re building on it and specializing,” Brinkman said.
Clusters normally form organically, said Connie Loden, senior project manager with New North Inc. For example, the defense industry cluster in northeast Wisconsin grew out of success at two different original equipment manufacturers (OEMs) – Oshkosh Corp. and Marinette Marine. Both need suppliers to help them make the equipment they supply the defense department, either ships or heavy machinery.
“That cluster really has its roots in the paper industry since a lot of machine shops and other manufacturers sprang up through the years to help them,” Loden said. “As that industry began to wane, the manufacturing of heavy equipment – and then defense – in the region took off, and it was a natural fit for those suppliers.”
The concentration of manufacturing companies in the northeastern part of the state is five to seven times the national average, Loden said. “OEMs get a reliable source of suppliers close by and they have a lot to choose from,” she said. “It’s easier for them to work with a company nearby than someone in another state.”
As for the water industry cluster around Milwaukee, that development was driven not only by local manufacturers, but also academic institutions, said Meghan Jensen, director of marketing and membership for the Water Council.
“The Water Council didn’t create the cluster, the local manufacturers working in that sector and the universities created the cluster. The Water Council just brought a name to it,” she said. “The goal is to help members grow their own businesses. The variety of manufacturers involved, whether it’s a company in Manitowoc that makes ice machines or a company in Waukesha County that makes filters, is what makes this cluster so dynamic.”
The Water Council helped generate excitement about the industry and will hopefully lead additional businesses to locate in the Milwaukee area, Jensen said.
“There’s a lot of collaboration going on and we have a great ecosystem where, within one hour of your business, you have 150 others in the same industry,” she said.
Zurn, which is moving its headquarters from Pennsylvania, will open its new facility later this year and like Rexnord, its parent company, is closely tied to the water industry.
“Milwaukee has created an ecosystem for water technology companies like ours to access world-class talent, innovation and technology development, as well as research partnerships that will help shape and address the world’s water challenges,” Rexnord CEO and President Todd Adams said in a statement announcing the move.
Not all clusters have a central nexus point like the Global Water Center. Jensen said the building, which houses water-centric research facilities for both businesses and universities, along with accelerator space for emerging water tech companies, will attract additional development and draw more water-related manufacturers and businesses to the area.
Southwest Wisconsin’s machine tooling cluster was fostered by the presence of a strong OEM.
“Trane and others were really the anchors in manufacturing and it spun off from there,” said Lisa Herr, executive director of the 7 Rivers Alliance, a regional economic development group that spans parts of three states. “The thing with large OEMs is that they need other machine shops to help them fulfill their orders. The legacy of manufacturing here attracted similar businesses to start or move here.”
While the La Crosse area’s machine tooling cluster remains strong, Herr does have one concern – the workforce. “We have some of the lowest unemployment rates in the state. Each year we do a retention and engagement survey and 85 percent of companies, who are mostly manufacturers, indicated they want to grow,” she said. “But are there enough skilled workers to do that?”
The 7 Rivers Alliance is applying for a capacity-building grant with the Wisconsin Economic Development Corp. to create community response teams to make sure the area is doing all that it can to attract and retain talent, Herr said.
“We’re all working together on this – the local technical colleges, the chambers and workforce agencies – since we see it as such a need. If we can’t find the workforce, the industry’s growth will be affected,” she said.
During the 2000s Oshkosh Corp. saw tremendous growth as the U.S. Department of Defense was fighting two wars, and many of its suppliers grew along with it. As defense spending declined, Oshkosh began cutting jobs and many suppliers saw their workloads drop. The East Central Wisconsin Regional Planning Commission sought a grant from the Department of Defense to help companies in the Oshkosh supply chain diversify and seek out new industries.
“Our goal was to try to mitigate some of that and help these companies find new work and keep more people employed,” said Loden, adding that as part of the grant the New North compiled a Supply Chain Marketplace online directory. “These businesses offer a lot of sought-after services, but they just need to be found.”
Keeping the suppliers strong benefits Oshkosh as well since “that means they’ll be here when their orders pick up again and it’s not like everything stopped at Oshkosh. Many of these suppliers not only supply the defense sector, but also the construction or emergency vehicle segments.”
Over time, Loden said the area, which already transformed itself from focusing on the paper industry to the defense industry, could see another shift.
“There’s really a lot of potential,” she said. “We want our suppliers who are now making O rings for Oshkosh to know that there’s a market out there for their O rings in other sectors, too, and we want to help them enter those clusters. Keep doing what you are for the defense industry, but also find new industries in which to grow.”
Wisconsin has a new organization to help guide its manufacturing efforts, the Wisconsin Center for Manufacturing and Productivity, Inc.
The center received $4 million in federal funds from the National Institute of Standards and Technology to help small- and medium-sized manufacturers. If that sounds a lot like what the Wisconsin Manufacturing Extension Partnership (WMEP) and the University of Wisconsin-Stout Manufacturing Outreach Center are doing, you’re right. This new organization serves as an umbrella organization for the two, said Buckley Brinkman, the center’s executive director and CEO, who previously served in that role for WMEP.
The new center offers a diverse set of services in exporting, supply chain management and sustainability while focusing on five strategic industry clusters: power generation and control, water, food and beverage, biotechnology and aerospace.
“We’ll also be able to partner with other advanced manufacturing initiatives out there in the country,” Buckley said. “This really simplifies what’s being offered in Wisconsin and will allow us to do even more.”