Generac CEO discusses Wisconsin investments as labor market tightens

Company focused on automation, improving efficiency

Generac's headquarters in Waukesha.

On multiple occasions in the last several years, Waukesha-based Generac Holdings Inc. has brought manufacturing work back to Wisconsin.

Generac’s headquarters in Waukesha.

In 2016, the company closed a facility in Bismarck, North Dakota and brought production of MAC heaters to Berlin. In 2017, Generac moved assembly and distribution work from Vermont to Jefferson following the 2015 acquisition of Country Home Products.

Aaron Jagdfeld, Generac president, chief executive officer and chairman, says those decisions, and others like them, were driven by the company’s infrastructure in the state. With five manufacturing facilities in Wisconsin, including one in Jefferson that serves as a distribution hub for incoming materials, the state offers a chance for Generac to leverage its existing footprint, Jagdfeld said.

“We’re a big believer in the quality of the labor force in Wisconsin,” he added.

Jagdfeld will be among the panelists at the 2018 BizTimes Next Generation Manufacturing Summit on Oct. 4. Generac is hosting the event at its Waukesha headquarters. For more information and to register, visit www.biztimes.com/mfg.

The maker of standby and portable generators has quietly become one of the largest companies in the state. In 2009, the year before the company went public, there were around 1,350 employees and $588 million in net sales. By the end of 2017, Generac grew to 4,500 employees and $1.67 billion in revenue with sales expected to reach $1.9 billion this year.

The growth has come from a series of acquisitions that made Generac’s product offerings more diverse while also growing its international presence. Five years ago, just 1 percent of sales came from outside the U.S. and Canada, a figure that is now around 25 percent.

When Generac made the decision to move work to Wisconsin, the Badger State seemed like an easier place to find labor over energy-focused North Dakota or Vermont, which has less than 30,000 people working in manufacturing. But the Wisconsin labor market has only gotten tighter since those decisions were made and the arrival of Foxconn and Haribo will likely only exacerbate those trends, at least in the short-term.

“What we have to do going forward is we have to deeply evaluate: do we want to move any more production back to Wisconsin? That’s a hard decision, given the current state today,” Jagdfeld said.

Generac’s factories are already starting to fill up as the company continues to grow, so Jagdfeld said any additional consolidation into Wisconsin would likely require an expansion of the manufacturing footprint. The company also currently has 300 job openings.

“We’ve decided there’s probably more opportunity for us in trying to automate,” he said, adding Generac is also emphasizing lean and continuous improvement efforts.

The advantage of integrating automation or improving the efficiency of a production line comes with the ability to move employees to other tasks in the company.

“For us, it’s a very difficult workforce environment right now,” Jagdfeld said. “We’re much more focused on how do we take the workforce we have, hold on to them, develop them, maybe turn them into people who are operating automation equipment instead of actually assembling equipment.”

The decision to bring manufacturing work back to Wisconsin isn’t the only time Jagdfeld has had to take a hard look at the state’s workforce. Before Generac announced a $73 million investment in its Wisconsin operations last year, the company gave a lot of consideration to whether the state was the right place to be.

“We were pressed pretty hard by our board and even our team here internally,” Jagdfeld said.

He said Generac never threatened to move its headquarters out of the state, but did consider whether its next major investment should be made in a larger city like Chicago, Detroit or Indianapolis.

In the end, Generac chose to invest in Wisconsin, including converting the 1960s-era manufacturing building that serves as its headquarters into a state-of-the-art research and development facility.

Beyond the technical improvements the project required, Generac also invested in making the facility, located near Highways 59 and 83 in western Waukesha County attractive to top talent.

“We’re out here, we’re asking them to drive a ways to get here, we want to give them a great environment,” Jagdfeld said.

That approach requires creating a more modern workspace that gives people a chance to work in different environments.

“We’re trying to get people to be more interactive with the space and you have to have a great space to do that, which we clearly have invested in here,” Jagdfeld said, adding that approach is “very different” from where the company was five or six years ago.

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Arthur Thomas
Arthur covers manufacturing for BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.