Wisconsin Manufacturers Face Opportunities, Challenges

Wisconsin manufacturers must adapt to a fast-changing world in order to grow and succeed in the 21st century. That is the thrust of a recent study of the state’s industrial economy recently released by the Wisconsin Manufacturing Extension Partnership (WMEP).

In 2004, Wisconsin’s manufacturers generated more than $46 billion in gross product, employed 512,630 workers, produced $90,000 in gross product per employee, and exported $14 billion in manufactured goods, the Wisconsin Manufacturing Study shows. By 2008, the study projects the state's manufacturing gross product will be $54 billion.

Wisconsin has 13 statewide "driver" industries that are the underpinning of its industrial economy, according to the study. Wisconsin’s primary driver industries include agricultural and industrial machinery, fabricated metal products, electrical equipment, wood products, paper and dairy product manufacturing. The report suggests the state's 13 such industries give it a competitive advantage and demonstrate the diversity of the state's manufacturing economy.

The study's findings also indicate that exports represent a significant opportunity for the state’s many small manufacturers. From 1992 to 2001, 30 percent of U.S. exports were from small- and medium-size firms, two-thirds of which had 20 or fewer employees. Their numbers grew twice as fast as large-company exporters. Smaller, more flexible companies may be able to grow exports faster than their larger competitors, the authors say.

The Wisconsin Manufacturing Study includes a series of recommendations to improve and strengthen the state's industrial sector:

• Build on Wisconsin’s driver industries and help them adapt to a new manufacturing economy. Driver industry supply chains should be targeted for improvement services with original equipment manufacturers supplier consortia playing a key role.
• Create structural change to heighten the focus on manufacturing. One way this can be accomplished is through the creation of a bipartisan manufacturing task force in the state legislature. Another would be regular assessment of best practices of competitive and growing firms.
• Take immediate action to address skill shortages. Wisconsin should aggressively promote manufacturing as a high-tech industry with a strong future and high quality of life jobs. The state also should integrate manufacturing into public school education and expand internships for students and teachers to learn about manufacturing’s career opportunities.
• Prepare a broad-scale legislative package based on a close examination of the policies affecting driver manufacturing industries and their industry clusters, as well as issues related to healthcare, availability of skilled workers, taxation and regulation.

Many Wisconsin manufacturers provided direct input into the study, either through a survey or roundtable discussions held in May 2005. State strengths identified by the manufacturers include an excellent transportation infrastructure; a superior, highly-skilled workforce and well-educated managerial and engineering talent; outstanding support industries; and a highly valued quality of life.

Participants also identified major barriers to success, including an outdated manufacturing image in Wisconsin that makes it difficult to attract and retain high quality workers. This is especially true when finding dedicated replacement workers for the older generation who will be retiring soon, according to the study. In addition, taxes are high in Wisconsin compared to border and competitor states, the manufacturers said, and businesses are unable to contain manufacturing costs, due to spiraling healthcare, liability insurance, on-the-job training and new machinery and technology costs.

The Wisconsin Manufacturing Study was funded by grants from the U.S. Department of Commerce Economic Development Administration and the Waukesha-based Kern Family Foundation. To obtain a copy of the report, visit http://www.wmep.org/manufacturingstudy.html or contact WMEP at (888) 372-9602.

Links to this paper and more than 1,000 additional TBED-related research reports, strategic plans and other papers can be found at the Tech-based Economic Development (TBED) Resource Center, jointly developed by the Technology Administration and SSTI, at http://www.tbedresourcecenter.org/.

The above story was printed with permission of WMEP, Wisconsin Manufacturing Extension Partnership. www.wmep.org. Phone: 608-240-1740