Foxconn Technology Group is changing the game in southeastern Wisconsin, and it’s creating plenty of opportunities for business leaders who are ready and threatens to leave behind those who are not.
That was the consensus among a panel of industry-leading experts at “Key Industries for Wisconsin in 2019 and Beyond,” hosted by the Waukesha County Business Alliance on Dec. 13. Panelists included Tim Keane, director of Brookfield-based Golden Angels Investors LLC; Mark Mone, chancellor of the University of Wisconsin-Milwaukee; J. Michael Mooney, chairman and principal of Brookfield-based MLG Capital LLC; and Lisa Reardon, chief executive officer of Brookfield-based OwnersEdge Inc. Mike Flynn, Milwaukee market president of First Business Bank, moderated the discussion.
“I can’t picture a company, whether they have any hope of directly serving Foxconn or not, not being transformatively affected by what’s happening here,” Mooney said. “Whether it’s about their supply chain or their labor supply or their wage rates, or any number of other things, it’s going to ramp up the game for everybody.”[caption id="attachment_370633" align="alignnone" width="770"] Mark Mone, J. Mike Mooney, Lisa Reardon and Time Keane[/caption]
Todd McLees, founder and managing partner of Hartland-based Pendio Group Inc. and strategic consultant to Foxconn, was the keynote speaker. He said the state is undergoing transformational change that will affect generations to come, catalyzed by the ecosystem created by Foxconn.
According to a recent Accenture report, 76 percent of business leaders surveyed said their current business models will be unrecognizable in the next five years, with ecosystems being the primary change agent. Just as in a biological ecosystem, businesses must be flexible and agile to continually evolve within the changing ecosystem of suppliers, distributors, customers and competitors in the region.
“This is such a disruptive time in terms of the rate of innovation and the impact it’s having on every sector of talent,” McLees said. “It will only continue to accelerate for the rest of our lives. To me, it’s the perfect time for a company like Foxconn to come in to the region and disrupt the incumbent mindset.”
Businesses should be asking themselves how they will keep up, McLees said.
“Foxconn and other (original equipment manufacturers) are building ecosystems,” McLees said. “An ecosystem isn’t just a supply chain and transactional back-and-forth. It’s defined as a group of cross-industry companies working together to define, build and execute market-creating solutions. Foxconn is not building a television factory; they’re building a science and technology park that will develop solutions.”
Leaders anticipate that business park, dubbed Wisconn Valley, not only transforming the region, but raising the state’s profile nationally.
“It is probably the coolest thing we will ever experience, if we get it right in terms of the opportunity to create solutions,” McLees said.
Keane expects Foxconn’s presence to catalyze entrepreneurial activity, drawing comparisons to the transformative effect GE Healthcare has had on the region. Following World War II, the company grew its presence in Milwaukee to produce X-ray tubes at a site that had been used for building turbochargers during the war.
“It grew into what is GE Healthcare,” Keane said. “…it’s hard to map all the entrepreneurial activity because of GE Healthcare; all the people that worked there, had a good idea and said, ‘I’ll go do it myself.’ I have to assume that is what will happen here (with Foxconn).”
Keane said innovation within Foxconn is going to spur new ventures outside of it and the company’s competitive demands will lead to new ventures, as well. Foxconn, Advocate Aurora Health Inc., Johnson Controls International plc and Northwestern Mutual Life Insurance Co. have formed a $100 million corporate venture capital fund to invest in startup companies worldwide. That’s good news for startups in the region, he said.
Still, the scale and size of Foxconn has prompted questions about the region’s ability to produce enough talent for the corporation.
“It’s never easy to really be prepared for a tsunami,” Keane said, adding that finding enough trained workers will likely be a challenge.
Foxconn, which says it will eventually have 13,000 employees in the state, has been ramping up its hiring efforts, announcing a nationwide effort to recruit military veterans and holding career days at universities throughout the state.
Collaboration among higher education and workforce development leaders is key, according to Mone. Foxconn’s arrival, along with already existing worker shortages across industries, has prompted a new sense of urgency among southeastern Wisconsin’s higher education leaders to work in concert with one another.
Recently, leaders from 18 regional higher education institutions and other community nonprofit organizations formed a steering committee, called the Higher Education Regional Alliance, to work together to address workforce development needs. The alliance has coalesced around three goals: raising the region’s college completion rate, increasing program innovation, and better connecting employers with the talent coming out of the colleges.
The effort has prompted unprecedented levels of collaboration among higher education institutions, Mone said.
“The galvanizing effect of collaboration and bringing the walls down has exceeded competition,” he said. “It’s very heartening. I’ve been in this region in higher ed for 30 years and I’ve never seen anything like it. A lot of great things are happening. It’s different on every campus, but we’re seeing real momentum.”
Mone said there is a greater need to connect with the K-12 education system through academic and career planning, develop more efficient methods for training existing workers on new skills, and connect those who have historically been cut off from the workforce to jobs.
“There is a need for agility and moving quickly,” Mone said. “We have to upscale skills for existing employees. We have to have faster online applications and work directly with employers and make K-12 linkages.”
From a real estate standpoint, Mooney said he has been heartened to see the responsiveness of municipalities and economic development leaders when Foxconn arrived on the scene. MLG Capital has been active in developing land along the Highway 20 corridor in Racine County since the early 1990s, including a Mount Pleasant business park and The Renaissance in Sturtevant.
“Some of us have been preaching economic development for decades, but this has really captured people’s fascination,” he said.
Another byproduct of the Foxconn ecosystem will be increased merger and acquisition activity in the region over the next decade in the manufacturing industry, as well as other industries, panelists said.
“Those who serve the manufacturing sector, including my sector, which provides the real estate and facilities and the housing and the apartments and so on for those very companies – consolidation isn’t going to just stop at the manufacturing space,” Mooney said. “There will be fallout. There will be people who can’t handle this. One of the byproducts of this will be a lot of M&A work.”
Reardon said it would be easy for businesses that aren’t directly doing business with Foxconn to feel as if they are on the outside looking in. But, she said, they can’t afford to take a “wait and see” approach.
“Businesses in Wisconsin, regardless of if you are going to be a supplier to Foxconn or not, there is going to be a new expectation,” she said. “If you’re not very agile, you’re going to be left behind.”