The Greater Milwaukee Foundation has weighed in with yet another slice-and-dice of the woes of the metro area. It was meant to be a “conversation starter.”
To be straight about it, we really don’t need more “conversation” about our deficiencies in housing, segregation, education, over-reliance on manufacturing, slow business creation and sluggish jobs numbers. Here’s the common denominator: many of the issues in those arenas could be fixed or improved with ramped up business creation.
As anyone who has ever done strategy knows that it’s 10% about concept and analysis and 90% about execution. We have the analysis part down pat.
The GMF “Vital Signs” report is essentially regression analysis. It looks in our rear view mirror.
So was the recent tomb from the Wisconsin Economic Development Corporation, the Wisconsin Manufacturing Extension Partnership and M7. That narrow study concluded that our leadership in manufacturing was holding the state back. It also said that sector was insufficiently global and technological.
With all due respect, that’s just plain wrong. Any company that has survived the globalization of manufacturing and the economic meltdown of the last decade is very competitive with any company anywhere. They have to be at the cutting edge of technology or they don’t make it. They or their customers are invariably exporters.
Have you been in a factory lately? Mostly, they are clean, lean, quality obsessed, automated and cost effective. Business wouldn’t be coming back from Asia to these plants if they weren’t. The rust belt isn’t so rusty any more. The global playing field has leveled. Many jobs, like those to make Apple’s devices, won’t be coming back, but the out-flow of jobs has been stemmed. (Disclosure: I am a manufacturer and we just bailed from our ownership position in plants in China, but are still doing business there.)
The long and short of the state’s strategic stance on manufacturing is to count our blessings. No strategist abandons a core strength. Accordingly, the legislature made a bold move in the last session to continue growth in manufacturing by phasing out most of the corporate income tax for firms in that sector. Note: the sector is growing again as it recovers from the Great Recession.
The same general case can be made for agri-business, the other bastion of the Wisconsin economy. It also has become technological and export oriented. Like manufacturing, farmers have married the old economy to the new economy. Note: our exports are growing. The legislature made the same smart strategic calculation when it gave the income tax break to agri-business.
Again, protect your base, run with your strengths. What the recent analyses missed in strategic terms is the dynamism of other clusters in the state, like the FIRE (finance, insurance, and real estate), health care IT, medical devices and the professional services sector. They are the ones adding the most jobs in the state. The insurance sector, for example, has grown to almost 250 companies, 80,000 jobs that pay an average of $61,549.
Good grief, researchers, look around! NML is building a mountainous new building in downtown Milwaukee, and more well paying jobs will come with it.
Maybe the analysts of the Wisconsin economy don’t get it because they were hired from out of state. Save me from visiting academics. We need a center here on the Wisconsin economy. Who’s going to step up? UWM? Marquette? UW – Madison had one, but let it expire.
Other blind spots: In health care IT, Epic Systems has grown to 6000 employees in Verona, and Xywave and Connecture in the M7 region have grown to more than 400 apiece. Entrepreneurs abound in this space in Wisconsin.
In medical devices, GE Healthcare alone employs more than 6000 people. Visit its plant in West Milwaukee, where it has made imaging tubes and parts since 1947. It’s an old economy plant by appearance, but it is crammed with bleeding edge technology and PhDs. From Wisconsin, GE exports more than $1.5 billion in products to more than 100 countries. Look around, researchers. Not global? Not technological?
We as a state are doing pretty well strategically with our emerging clusters: fresh water technology and energy storage in Milwaukee and biotechnology in Madison. UWM is a leader in the first two, and UW – Madison has committed hundreds of millions to the latter.
These clusters need the same kind of strategic support that we have given to manufacturing, agri-business and biotechnology in Madison.
As for business startups, we don’t need more sermons about how we are lagging there and the need to create an entrepreneurial ecosystem. Madison has been doing that aggressively for the last 20 years, and Milwaukee has been doing it for the last 10. Other regions are also pushing startups.
The state has done its part by providing investment credits for startups and is about to launch a pilot fund of funds to match private investment dollars in new ventures.
We have made progress on the strategy that was spelled out in the economic summits of 2000-2003 and reiterated in the “Be Bold – Wisconsin Prosperity Strategy” of 2010. All the major stakeholders in the state signed off on that strategy. The M7 strategy, which also engaged the major stakeholders, follows similar themes. We don’t need more conceptualizing. We need to execute the strategies we have forged.
That means, quite simply, we need to make strategic investments in our strategic clusters, and we need to start more high growth companies. Examples are the new Innovation Campus and JCI energy lab at UWM. Government subsidies for the NML expansion are another.
The retrograde analysts missed the forward-looking inflection points. Entrepreneurs are popping up all over the state, especially in Milwaukee, the state’s business center.
And we have a growing number of angel investors who are stepping up to help them launch and grow. As Al McGuire would say, “We have the Big Mo.” At least we have medium momentum.
Further, institutions and foundations are getting into the creation of businesses and jobs. UWM Foundation, for example, is one of four in the region that invested in a startup fund. So did Wisconsin Energy Foundation and the Herzfeld Foundation.
Grants to alleviate poverty are nice and necessary, but investments in entrepreneurs in our strategic clusters will reinvent the state and regional economies.
The Greater Milwaukee Foundation, for example, could move from a poverty strategy to a prosperity strategy by such an investment policy.
Footnote: ALL of great employers of the state and region started here. Name one that didn’t.
John Torinus is chairman of Serigraph Inc. in West Bend. He is involved with several business and civic organizations and is the author of “The Company That Solved Health Care.” His blog appears regularly at www.johntorinus.com and is republished with his permission by BizTimes.