Many Wisconsin manufacturers are thriving, despite facing obstacles such as global competition and a less-than-ideal state tax environment, according to the leaders of five prominent manufacturing firms who spoke at the Manufacturing Summit. The Manufacturing Summit at the Small Business Times BizTech Expo on May 1 featured a panel of five prominent Milwaukee-area manufacturing executives: Mark Readinger of P&H Mining Equipment; John Heppner of Master Lock Co. LLC; Jerry Jendusa of Emteq Inc., Jim Lindenberg of World Class Wire & Cable Inc.; and Carl Sheeley of Fontarome Chemical Inc.
The five companies are all growing:
- Fontarome’s sales are up 60 percent so far this year.
- P&H has tripled its workforce since 2003.
- Master Lock is posting double-digit growth. Emteq is finding new work in servicing corporate jets.
- World Class Wire & Cable is growing despite industry slowdowns and rising commodity prices.
- Chinese competitors are focusing on commodity products, and many Wisconsin-based firms are able to compete by making more intricate, higher-end products.
Instead of manufacturing chemicals that Chinese chemical companies can make for far cheaper prices, Fontarome Chemical has hired chemical engineers from around the globe, helping the company develop more innovative products that it can sell at higher prices. Fontarome still sells some commodity chemicals, but it buys them in bulk from China.
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"We don’t dislike the Chinese," Sheeley said. "We said goodbye to the commodity products that they can make. Our philosophy is that we’ll have them make those cheaply for us and we’ll sell it. We go there a couple of times a year." Fontarome is a maker of chemicals for the food and drug industries.
While global demand for commodities has helped grow P&H, companies such as World Class Wire & Cable and Master Lock have had to come up with creative ways to absorb or pass costs on.
"With copper and shipping prices, you do have to get creative," Lindenberg said. "We’ve done double and triple buying. And by consolidating some suppliers we’ve been able to get a break on volume."
Master Lock has been able to pass some of those costs on to retailers, largely because of its iconic brand name, Heppner said. That brand name has helped the company rebuild from its struggles in the 1990’s. "It’s very important for us," Heppner said. "We are making sure our brand is first and foremost in front of the customer. We continue to invest in the media – we do a lot of cable and print (advertising), and we do a lot with the Internet." Although it can be seen as a threat, China is a source of great opportunity for many Wisconsin companies such as P&H.
"Some of our biggest growth is from China, Russia and India," Readinger said. Because P&H’s mining equipment is so large, it has large shipping costs when it builds machinery for foreign markets. Those costs persuaded P&H to build a new production facility in China, where it will manufacture mining equipment to be sold there, he said.
"The labor rates (in China) are getting to be close to Western rates for professional people, but we wanted to be in the market so we’re not killed by shipping," Readinger said. Master Lock does source some parts from China, but the company sees long-term value in keeping its complex manufacturing in Milwaukee, Heppner said. Master Lock’s assembly operations are in Mexico.
"Master Lock lost jobs to the Chinese market – we lost 40 percent of our market share," Heppner said. "We have it back now, and we’re selling Milwaukee-made locks to Chinese customers." With labor rates changing in China, the company also is seeing financial advantages to having most operations based in Milwaukee and Mexico. However, if Wisconsin manufacturers are going to continue to grow, the state needs to change how it treats the companies that are currently based here, Readinger said.
"It would really help if we felt welcome in Madison," he said. "When our state is ranked 49th (in the country) in having a business-welcoming environment, any help can get to improve the situation would help us grow and invest in the area … We love it here… but it sure would be nice to feel welcome here."
The state also needs to reconsider the way it taxes businesses, including recent proposals to tax out-of-state operations, Readinger said. "That kind of thing needs to change (if Wisconsin is going) to be receptive to bringing in more businesses," he said. "The higher the taxes are suggests that, from a Madison standpoint, the state doesn’t want to attract more businesses here."
Wisconsin’s state college system, private universities and technical schools need to improve how they work together, Jendusa said. "The more we can marry the technical schools with business schools and teach engineers with good ideas how to bring them to life through entrepreneurial programs that work with technical people (the better)," he said.
Other Wisconsin businesses could better attract and retain younger workers by both listening to their ideas and giving them different opportunities within the work environment, both Lindenberg and Heppner said. "We try to give our younger workers different experiences and see where they best fit in," he said.
The Milwaukee region needs to pay attention to the needs of manufacturers and find ways to help them grow because of how many manufacturing firms are here, according to Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce, who provided the opening remarks at the Manufacturing Summit.
"It’s so important to our region and so important to our economy," he said. "If you think it’s a dying asset, you need to change your perspective. Our goals are in line with most of the manufacturers in the room – to be globally competitive. Manufacturing is in transition. It’s moving from low wages and low skills to high wages and high skills. And most important, it needs experienced, agile workers."
