Three organizations are launching a public-private initiative aimed at helping manufacturers improve productivity in factories throughout the state.
Productivity has been flat or growing slowly over the last several years, averaging a 1.7 percent annual increase in the United States from 2007 to 2016. The long-term average is a 3.2 percent increase.
Wisconsin manufacturers’ productivity growth, measured as real GDP per employee, has been even lower, averaging just a 0.1 percent annual increase over that time period.
Randy Bertram, Wisconsin Manufacturing Extension Partnership director of sustainability services, said the state is around the middle of the pack when it comes to productivity. Wisconsin ranked 31st for use of structured management on the U.S. Census Bureau’s most recent Management and Organizational Practices Survey.
The Wisconsin Economic Development Corp., WMEP and the Milwaukee 7 are trying to address those figures with a new program called the Transformational Productivity Initiative.
The program is designed to help small and midsize manufacturers and includes WMEP identifying factors that limit productivity growth and then work to help individual companies improve. The initiative is focused on leadership and strategy; enterprise excellence; human capital management; technology; and growth and innovation.
Bertram said research has shown the presence of major OEMs tends to drive improved productivity while smaller and family-run companies, in general tend to lag behind.
“That’s a big section of manufacturers in southeastern Wisconsin,” he said of the smaller, family-operated companies.
WMEP staff will work with representatives of the University of Wisconsin-Stout Manufacturing Outreach Center, the Erdman Center for Operations and Technology Management at UW-Madison, UW-Milwaukee and select manufacturers to develop diagnostic and assessment tools to expose companies to factors affecting their productivity.
Bertram said addressing productivity is complex and the first step is to understand where a company is relative to best practices and then catch up. It also requires turning to technology and addressing IT infrastructure, cybersecurity, robotics and automation.
The tools will initially be used at five to 10 pilot sites over a two-year period with quarterly measurements of a company’s progress. Bertram said the plan is to have the initiative in the field in November and be able to refine the diagnostic tools.
“There’s a lot that we need to do to bring resources to bear in order to help companies moving forward,” he said.
WEDC awarded M7 a $190,000 matching grant to implement the program.
“TPI is a long-term strategy directed at moving the needle on productivity in the aggregate, working with small and midsize manufacturers in a way that will ultimately drive wage and job growth in Wisconsin,” said Kelly Armstrong, WEDC project lead.
WMEP executive director Tim Wiora said addressing productivity is at the core of his organization’s work.
“Increases in productivity allow manufacturers to reduce their cost and ultimately price while maintaining profitability,” said Randy Bertram, WMEP director of sustainability services. “This leads to lower consumer prices and improved living standards.”
Bertram said addressing productivity means going beyond implementing a lean initiative. It requires addressing how effective implementation of lean has been and if it has been implemented across the organization.
“You need to have driven a lot of the waste out of the system already,” he said.