Last updated on May 13th, 2019 at 02:21 pm
While transition to service economy continues, manufacturing still matters
Racine County continues in its transitional phase between a manufacturing and a service and professional business environment, according to Racine Area Manufacturers and Commerce (RAMAC) President Roger Caron.
“We’ve been in transition for for 22 years,” Caron said, adding that at one time the county relied on manufacturing for 60% of its employment base — while now it is only a fraction of that. “We are experiencing a change in manufacturing jobs — and that will not stop. It will continue to change and will maybe erode.”
Caron said members of his organization are not taking the situation lying down. Efforts are under way not only to breathe new life into the manufacturing sector and enhance the downtown retail and entertainment district, but to build a tech/Internet business sector in the county. RAMAC has hired an Austin, Texas, firm, TIP and its partner firm IC2, to identify opportunities to build a Web-heavy economy.
“Working with TIP, we will set a new strategy for the Racine area relative to future growth,” Caron said. “They’ll come in and find out where our clusters of companies will be — not only geographically, but in terms of vertical industries. We set strategies around those clusters to help them grow and survive here in Racine.”
A big part of RAMAC’s strategy, according to Caron, hinges on a study of the availability of Web connectivity in the county. To this end, TIP and RAMAC are working on a study of connectivity infrastructure.
“There are three pieces of our infrastructure study,” Caron said. “There is the mapping side — you map out the infrastructure. Southeastern Regional Planning Commission (SEWRPC) is taking this on as a layer of their service. We approached them because they do transportation and land-use maps. Now they will offer maps illustrating connectivity — showing where it is.”
A subsequent step, according to Caron, will be to test connectivity speed, interruptions and file-transfer speed from various locations using a laptop computer and special tracking software. DSL, ISDN and dial-up connections will all be monitored.
A third step will be a survey of households and businesses to determine their current level of connectivity and how they use their connections.
“You set your strategies around that baseline,” Caron said. “Maybe we find out that some rural areas and part of our downtown are not served — then we can deal with that.”
While concentrating on technology as a hedge against an uncertain future for manufacturing in the Racine area makes sense, major manufacturers that have recently defected are being replaced with ease, according to Caron.
Recent manufacturing losses include:
– Danfoss Fluid Power Systems removed 100 jobs from its location in June of last year following a consolidation with Sauer, a German company.
– Artech Printing idled 275 after going into receivership in January.
– Acme Diecasting closed after sales of Daimler-Chrysler products hit the wall in February of this year.
– In June, Jacobsen, more recently known as Textron Golf, Turf & Specialty Products, let go about 300 workers indefinitely to consolidate its mower and lawn products operations in North Carolina.
“If you look at the individual companies that left, it was more a result of the economy or dynamics within each company as opposed to anything about Racine in particular,” Caron said. “Danfoss Fluid Power left as the result of a merger. Acme Die Casting — that was the result of the auto industry slowdown. Artech went bankrupt — and that certainly wasn’t because they were in Racine. Jacobsen had excess capacity elsewhere in the Textron line. It really doesn’t have anything to do with how good of a town you are. But when they do leave, it certainly has an impact. We have service industries, retail — we have good diversity in those areas. But we have always had more of our jobs located in the manufacturing sectors. When that sector was hurt, we were impacted negatively to a greater degree than other areas. We first noticed the slowdown probably towards the end of last year, maybe during the summer. As of now there are some companies saying they are noticing an upswing in orders.”
While the jobs have gone, the facilities, supplier base and workforce remain in place and will attract other manufacturers, according to Caron.
“It’s amazing. We lose a couple employers and all of a sudden Bombardier comes in,” Caron said. “They were looking at a four-county area around Milwaukee, Racine and Kenosha. Looking within 150-mile radius, but the 500,000-square-foot building is what got them here. It was available with the closing of Artech — a state-of-the-art manufacturing building.”
According to Jan Scheske, manager of public relations and events for Bombardier’s Boats and Outboard Engines Division, final assembly for Johnson and Evinrude product lines will take place at the former Artech plant. Total dollar and product count estimates for the first year will be hard to estimate since OMC/Cobra had been idled, and part of this year will be dedicated to getting the manufacturing process back up and running. But the move represents a real opportunity for local suppliers.
“The idled plant was in Waukegan, Ill.,” Scheske said. “Many of the suppliers are in the Illinois and Wisconsin areas. Many of them are also located in the Racine area. We also have two other plants (also former OMC facilities) in Beloit and Delavan.”
Scheske added that many of the functions of various closed OMC facilities would be moved north, opening doors for local businesses that supply machining, equipment and other products and services to the manufacturing sector.
“Bombardier is a major addition to the community,” Caron said. “Most of the supplier base is in and around Racine — and are now are being contacted to come back into the picture.”
One Racine small business that stands to gain from the relocation of Bombardier is Wisconsin Pattern and Die Tool, which employs 100.
“We’ve been a supplier of OMC/Cobra, the assets of which are now owned by Bombardier which manufactures Evinrude and Johnson,” Wisconsin Pattern general manager Ken Reed said. “We have been a key supplier to OMC for 10 years. OMC was located in Waukegan — and since the Bombadier acquisition they are now moving their headquarters here to Racine. They are consolidating things that had been spread around the country — including plants in the south. This gives us more of an opportunity to serve them on a local level.”
Wisconsin Pattern had seen a slow erosion of its market in southeastern Wisconsin as foundries moved south — and even south of the border — according to Reed.
“We serve the cast metals industry — mainly in the automotive area,” Reed said. “Most of those foundries have moved south or even into Mexico.”
But location near the manufacturing client is more of a key than being located near the foundry, Reed said.
“It’s always easier to understand the customer’s needs if you can meet with them expediently,” Reed said. “It’s easier moving samples and models. It’s easier giving service if you have a 15-minute drive rather than a day-long plane trip. There are cost savings and no barriers because of language.”
Other big Wisconsin Pattern accounts include Ford Motor Co. and Navistar — which had been known as International Truck.
“We service the large automotive accounts — anyone building engines,” Reed said. “We do a lot of tooling to manufacture the heads. We had a slight slowdown — but it has picked up quite heavily in the last half of the year. There is always tremendous change in the auto industry. Because we are an OMC supplier, and since OMC has been bankrupt since September — sure, that hurt us. But we had other companies that helped us bridge the gap. The marine business was 15% of our business for the last several years. It took us six to eight months to take up the slack.”
When asked if the closer proximity to the client will benefit Wisconsin Pattern, Reed said, “We would hope so — hopefully there will be other items we could manufacture for them. We might have the opportunity in the shorter term to pick up added products.”
While other corporate buildings vacated by manufacturers are on the sales block, Caron could not float any names of companies that were looking at relocating to the area. He did drop one hint about the 125,000-square-foot building vacated by Danfoss Fluid Power.
“You would think that the Danfoss building would be very attractive to a company looking for very beautiful corporate headquarters,” Caron said. “We hope that the Danfoss building will be a way for a company to come here and just jump right into a beautiful headquarters. There has been some interest in it. We just haven’t been able to get anyone to sign on the bottom line yet. I would think that would make a good North American headquarters for someone. It’s right on Highway 20 — a beautiful landscaped presence on a pond. Any company would want to have that kind of presence.”
Aug. 3, 2001 Small Business Times, Milwaukee