Wisconsin manufacturers are being called upon to lead the charge to improve productivity, to boost the state’s economy.
“Productivity equals prosperity,” said Lee Swindall, vice president of sector strategy development with the Wisconsin Economic Development Corporation (WEDC).
The WEDC has joined the Wisconsin Manufacturing Extension Partnership (WMEP) and the Metropolitan Milwaukee Association of Commerce (MMAC) to address drains on productivity.
Together, they have launched the Transformational Productivity Initiative (TPI), a diagnostic assessment and strategy implementation with the goal of reaching a dramatic 40 percent productivity improvement within 18 months.
“It’s very ambitious,” Swindall said. “But we’ve been literally flat in manufacturing productivity since 2004. I was flummoxed. We have a major productivity problem.”
What’s more, the combination of rising real wages and declining productivity is a recipe for inflation, he added.
The manufacturing sector is being targeted because it is responsible for almost 19 percent of the state’s total GDP, and manufacturing employment makes up over 16 percent of the state’s workforce.
But Wisconsin ranks 33rd in productivity performance, according to Swindall.
“We have a responsibility to do this. We need to start attacking it now,” he said.
Various diagnostic pathways will be examined through the TPI program, including supply chain management, enterprise resource utilization, technology, human capital management and return on new investment.
An initiative already underway showcases a successful effort to boost productivity. The WMEP’s Profitable Sustainability Initiative recognizes the connection between sustainability and efficiency.
Swindall noted that PSI had its early skeptics, but has proven highly successful.
“Many of the companies we approached early on about PSI said you aren’t going to achieve much,” Swindall said. “But it got companies to change. We know there are opportunities there with TPI.”
The beta phase of the program is expected to be completed within a year
“I detect unusually high enthusiasm for this,” Swindall said. “I’m gratified that the world is waking up.”
The TPI diagnostic tool will be modeled after the one used in the PSI program, said Randy Bertram, program manager for the WMEP and member of the TPI Steering Team.
“It’s a big project and there’s a lot of work to be done,” Bertram said.
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The program’s aim is to increase productivity in order to drive economic growth, said Enno Siemsen, a professor and Executive Director of the Erdman Center for Operations and Technology Management at the University of Wisconsin-Madison.
“The United States has seen a decade or more of relatively flat growth. We’ve also seen little GDP growth,” he said.
If the program is successful with manufacturers, it could be expanded to the service sector or health care.
“This initiative is critical if Wisconsin and the Milwaukee region are to remain globally competitive,” said Pat O’Brien, executive director of the Milwaukee 7, an economic strategy group for the seven counties in Southeast Wisconsin, which also is involved in the initiative.
“Boosting business productivity, especially in our manufacturing sector, through TPI can make Wisconsin a national leader in productivity growth and position us for a prosperous future.”
Scott Lucas, president and COO at Racine Metal-Fab Ltd., said efforts such as lean manufacturing can boost productivity.
“Wisconsin is a big manufacturing state that has grown a little stale,” Lucas said. “I think Wisconsin manufacturers need to be re-energized through a good project like this.”