Region’s manufacturers showing signs of emerging growth in the wake of the recent recession
Story by Sean Fitzgerald, Publisher
Manufacturing has been at the heart of northeast Wisconsin’s economy since the advent of the paper and wood products industries in the mid-1800s. Since that time, skilled trades needed to help maintain and advance production of quality goods made at these mills dotting the landscape of the Fox River Valley created highly-technical, well-paid jobs that drove the economic engine of northeast Wisconsin’s economy. Fast forward more than a century into the late 1990s, and manufacturing – lead by a slimming paper industry workforce – began to lose some of its economic prowess. At the end of the last century, northeast Wisconsin had the second highest concentration of jobs in manufacturing of any region in the U.S., with nearly a third of the workforce being employed in the manufacturing sector. But as globalism gained a stronger foothold heading into the 21st century, manufacturing took route elsewhere, sometimes taking Wisconsin jobs with it. Statewide, manufacturing employment totaled more than 565,000 in 2001, dropping as low as 420,000 at the beginning of 2010, according to statistics kept by the state Department of Workforce Development. Today, manufacturing employs an estimated one in five workers in northeast Wisconsin’s New North region. While some observers of the state’s economy have argued manufacturing is dying, the fact of the matter is that it’s changing – low-skilled jobs and production of commodity goods are heading overseas, likely for the long haul. But Wisconsin still has a hold on a number of segments of advanced manufacturing, those areas where innovation, continual development of craftsmanship and sometimes – simply – geography, leave state producers head and shoulders above the rest. A report released in early February from the Northeast Wisconsin Manufacturing Alliance indicated manufacturing in the region is poised to rebound following the recession at the end of the past decade. What the 2011 Manufacturing Vitality Index indicated was hopeful news for a struggling economy in the region. Manufacturers are expecting increasing revenues in 2011. Manufacturers do plan to invest in equipment and in their facilities this year. And manufacturers do plan to add to their workforce this year with well-paid, highly skilled positions. Of the 179 manufacturers from the region participating in a survey conducted through the University of Wisconsin-Oshkosh’s Business Success Center, nearly 60 percent experienced revenue growth from 2009 to 2010, and even more anticipated further sales growth into 2011. Slightly more than 40 percent said they planned some form of capital expansion totaling at least a quarter million dollars or more during the next two years. And about that same amount also said they plan to hire additional staff sometime in 2011, with the bulk of that staff coming from the local labor force. While we’re still awaiting the evidence of most of this investment and growth, there’s trace data and pockets of development that indicate manufacturing will come back to nearly as strong as it was before the recession. Statewide employment in manufacturing did climb by nearly 14,000 jobs from December 2009 to December 2010, an increase of 3 percent. Attending the release of the 2011 Manufacturing Vitality Index in early February and confidently upholding Gov. Scott Walker’s campaign promise to create 250,000 new jobs in Wisconsin by 2015, state Department of Commerce Secretary and former Green Bay Mayor and Green Bay Area Chamber of Commerce President Paul Jadin said the index reflects much of what local economic development officials already know: that many of the region’s manufacturers have been trendsetters for their colleagues around the state. “Northeast Wisconsin is going to be the leader in (working toward the creation of 250,000 jobs), and advanced manufacturing is going to lead the way,” Jadin said.
Growth around the region
While there were a small number of northeast Wisconsin manufacturers who thrived during the past two years, many struggled to stay afloat. Some shut down their equipment, let go of their workforce, and shuttered their factory doors altogether. Though still on the rebound, a variety of manufacturers across the New North have already made commitments of capital in recent months to expand their facilities and to expand their capabilities through the acquisition of new equipment. Currently there’s more than a dozen projects and more than a half-million square feet of new industrial space under construction along the U.S. 41 corridor in northeast Wisconsin. These and other manufacturers are also buying new equipment for facilities, looking to go after new business opportunities emerging on the heels of the recession. Little Chute-based Resource One International LLC, a high-end contract paper converter, has made consistent investments in its precision cutting equipment throughout the past decade. About a year ago the company made the decision to invest $1 million into an 88-inch Jagenburg Synchro machine, which allows it to do precision cutting on much larger sheets, said Tom Sonntag, president of the 30-year-old firm that supports about 60 employees. The two-story high piece of equipment was up and running this past January, enabling the company to expand its previous capabilities without competing against its customer base, which is primarily other, larger converters. “What we try to do is make ourselves a natural extension of our customers,” said Sonntag, indicating its new equipment will allow its customers to more effectively deliver on promises to its end-users in the printing and packaging industries. The new precision folio sheeting equipment provides capabilities to deliver raw materials for the general consumer packaging and food container packaging industries, both of which are showing signs of resurgence in the Fox Valley. Sonntag admitted the decision to invest in the equipment was somewhat predicated on the success of the industry. He hoped to see revenues increasing for the larger converters his firm works for to be reassured his team was making the right decision. At the outset, Resource One is training existing staff to operate the new equipment alongside the existing state-of-the-art cutting machines in its 200,000-sq. ft. plant. The work at Resource One is capital intensive, Sonntag said, not necessarily labor intensive, though he said there could be a need to bring on as many as a dozen additional jobs at some point down the road. Not too far away in Kaukauna’s Northgate Industrial Park, Precision Paper Converters purchased a new facial tissue converting line in early February. The company manufacturers the Sniffles brand of facial tissues and also produces a variety of tissue products for the away-from-home and health care markets. Once the new line is installed in its facility and up and running by the end of March, it should open up opportunities for new customers and add value for existing customers, said Jeff Anderson, vice president of sales and marketing for the company. Even though the new equipment provides some additional flexibility in packaging, the decision to invest the capital to purchase the new converting line was really about adding greater capacity. The capacity on Precision Paper Converters’ existing equipment was already nearly tapped out, Anderson said. With the new equipment, Anderson indicated Precision Paper Converters plans to add six to eight employees to help with its expanded production capabilities.
Building a better workforce
In spite of several rays of sunshine shedding light on the resurgence of manufacturing in the area, the vitality index of manufacturing in the New North region wasn’t all roses. President of Green Bay-based Fosberg America Jeff Pallini, who serves as chair of the Northeast Wisconsin Manufacturers Alliance, presented a sobering reality-check in sharing data from the recent survey. Despite many manufacturers ability to grow their operations at this point, many struggle to find sufficiently trained and qualified employees to fill those roles from the labor pool here in northeast Wisconsin. The end result of such a workforce shortage typically meant recruiting outside the area, or even more frustrating, not being able to produce the kind of quality manufacturers believe they’re capable of at a rate competitive enough to grow their top line. Pallini said it’s a genuine concern that begs the attention of educators, business leaders and economic development officials across the area. “We need a way to retain and keep this workforce in the area,” Pallini said, reporting from the vitality index that nearly one in four responding manufacturers who plan to add jobs this coming year anticipate difficulty locating and ultimately hiring appropriate talent. “It is important to note that as companies invest in advanced technology and modernization, the difficulty in finding the skilled workforce needed to work in advanced manufacturing will most likely increase.” That message isn’t new in the region, and there have been entities who’ve acted to make improvements. Such is the case at Fox Valley Technical College, which in February opened up its 27,000-sq. ft. Advanced Manufacturing Process Center in Oshkosh. The newly constructed, state-of-the-art training facility replaces a cramped facility at FVTC’s Spanbauer Center that ran on three shifts nearly around the clock. “It’s a facility expansion that’s been on our radar for some time,” said Susan May, president of Fox Valley Tech. “We looked to do it in three to five years, but it’s a need we have now. We knew we needed this to be on a fast track.” Increased production needs to service multi-billion dollar military contracts with Oshkosh Corp., Marinette Marine and their legion of supply-chain vendors throughout the region have only accented what was already a dire need for skilled welders across the New North. Fox Valley Tech’s new facility quadrupled the amount of weld-booth space available for training, offering 40 individual weld booths equipped with more than $1 million in brand new, top-of-the-line equipment donated by Miller Electric Manufacturing Co. in Appleton. “It’s all about staying competitive with a top-quality workforce,” said Mike Weller, president of Miller Electric, whose firm has more than a decade-long history of providing FVTC with quality equipment to train welding skills on equipment these skilled employees will likely use in their careers. While the new advanced manufacturing training center does include classroom space and accommodates more traditional students going though a two-year degree program, FVTC can also customize a training regiment based upon the needs of a particular employer. Oshkosh Corp., for example, is sending employees through an intense 10-week training module designed to teach specific welding capabilities needed to fulfill its large M-ATV contract with the U.S. military. As a unique facility in Wisconsin and in the Midwest, May said the new center is attracting interest from students and employers up and down the U.S. 41 corridor from Milwaukee to north of the Green Bay area.
What’s to come
The NEW Manufacturing Alliance is optimistic such workforce needs will be met, Pallini said, and has worked in its own programming to recognize manufacturing “all stars” across the New North for the past three years. The partnership of 80 manufacturers and other support entities across the region also recognizes the need to build a sturdy, local supply chain is critical for a competitive regional economy. But Pallini expects – as do many of his counterparts at other manufacturers across northeast Wisconsin – that a vibrant advanced manufacturing environment will only continue to hold its roots with a strong commitment from educational institutions at all levels, local government officials and the workforce development community. And while some manufacturers have threatened to move their operations out of the area – and others have left – Pallini believes nurturing such partnerships can create the best opportunities right here in the region. “By committing to the future of manufacturing in northeast Wisconsin, we can continue to say that you can make it here,” he said.