Sullivan: Immigration, tax reform keys to boosting manufacturing

Rev Group CEO discusses challenges ahead

Tim Sullivan talks about manufacturing during the Independent Business Association of Wisconsin Manufacturing Summit at the Wisconsin Club.

Tim Sullivan says Milwaukee and Wisconsin are poised to carry the manufacturing industry forward, but only if the state can address looming workforce challenges.

Sullivan, chief executive officer of Rev Group Inc. and former head of Bucyrus International Inc., spoke recently at the Independent Business Association of Wisconsin Manufacturing Summit.

Tim Sullivan talks about manufacturing during the Independent Business Association of Wisconsin Manufacturing Summit at the Wisconsin Club.
Tim Sullivan talks about manufacturing during the Independent Business Association of Wisconsin Manufacturing Summit at the Wisconsin Club.

In his remarks, meant to focus on the “optimism of manufacturing,” Sullivan painted a picture of a state with a shrinking population and pending workforce challenges that he said should be a “a call to arms.”

“You know, we’re doing pretty well right now, but the future is not very bright,” he said.

Sullivan said the state will see its retirement population double in the next 20-plus years, while the workforce will barely grow. On top of that, he said the state’s tax structure leads residents to migrate out of Wisconsin.

On the positive side, he noted Wisconsin already has a strong manufacturing presence, a strong supplier base, immigrant populations – particularly Hispanic and Hmong – filling workforce needs, and a willingness among state and local officials to recruit manufacturing companies.

“(Manufacturing is) really the cornerstone of economic success and a lot of states vie for those types of companies,” said Sullivan, who has brought two corporate headquarters – Gardner Denver from Philadelphia and Rev Group from Orlando – to Milwaukee.

He also said the state’s workforce already is oriented toward working in manufacturing.

“Our labor in this area, they look at manufacturing as a career opportunity. That’s important,” Sullivan said. “That’s not the case, obviously, in a place like Orlando or even in a place like Philadelphia, believe it or not.”

Sullivan has said the manufacturing environment in Wisconsin was one of the factors that convinced him to bring Rev Group here. The company, which makes specialty vehicles, is in the running to build the next generation delivery vehicle for the U.S. Postal Service. If he gets the contract, Sullivan plans to put the factory in Milwaukee’s Century City business park near North 30th Street and West Capitol Drive.

Despite the positives, Sullivan said the state faces issues with its tax structure, which he said relies too heavily on income taxes and not enough on sales or user fees. He lamented that the state’s residents pay for upkeep on roads and recreational activities, even as residents from other states enjoy the benefits.

“Until we have an adult conversation on tax reform in the state of Wisconsin, last man (out) please turn out the lights,” he said. “It’s going to kill manufacturing. It’s going to kill our businesses.”

Sullivan, the author of a 2012 report for Gov. Scott Walker on improving the state’s workforce, made the case for several of the report’s recommendations that were left for future consideration.

Tax reform was one of those areas, but also included was an increased emphasis on attracting immigrants and on tapping unemployment insurance for workforce training.

He said Wisconsin is too reliant on federal money for workforce training and drawing 0.5 percent from unemployment insurance could create $75 million in funding.

“We are woefully behind other states as far as trying to train our workers,” Sullivan said, highlighting Tennessee’s decision to offer free technical college education. “If you’ve got to get people into the workforce, you’ve got to put your money where your mouth is.”

Reforming the tax code would not only help limit migration out of the state but also would attract new workers to the state, he said, also suggesting the state establish a committee to attract immigrants from around the country and internationally.

“The smart people are actively pursuing national and international immigrants,” Sullivan said, noting these groups generally gravitate toward manufacturing jobs.

He also said Bucyrus originally was lured to South Milwaukee in the late 1800s because the city was seeking work for its German and Polish immigrants.

“Why is a German and Polish guy okay and a Russian and a Hispanic guy aren’t? I mean, aren’t we supposed to be a country of immigrants? I think we are,” Sullivan said.

Asked if the legal status of immigrants should matter, Sullivan said they need to be legal, but also said of the 300 he had working at Bucyrus, only a few ever had issues with their status.

He also said he made it a point to hire people who were previously incarcerated, saying most of them were among the most productive and motivated employees on the floor.

“It’s not just the immigrants; there’s a whole labor pool sitting in prisons that should be on factory floors somewhere when they come out,” he said.

The one group he said should not be pursued as actively is the children of those not already attached to the manufacturing industry.

“If you’re not in manufacturing, if you never worked on a manufacturing floor, your kids aren’t going to do it,” he said.

Even for those with family in the industry, the chances are lower. He recalled talking with union members at Bucyrus who bragged about their son becoming a lawyer or daughter becoming a doctor.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at 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.

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