Official magazine of Wisconsin Manufacturers & Commerce
January 2014: Issue 9
War on Coal Energy Use in Wisconsin
Inside: Return on WMC Investment p. 29 Focus on Jobs Brings Results p. 25 Tort Reform Efforts p. 16
Dan Ariens, President & CEO of Ariens Company in Brillion WMC's incoming Chairman
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WMC Board of Directors WMC OFFICERS
WMC BOARD OF DIRECTORS
CHAIR, Todd J. Teske, Chairman, President & CEO, Briggs & Stratton Corporation, Wauwatosa
Randal W. Baker, President & COO, Joy Global Surface Mining, Milwaukee Sidney H. Bliss, President & CEO, Bliss Communications Inc., Janesville David H. Bretting, President & CEO, C.G. Bretting Manufacturing Company, Inc., Ashland Mark D. Bugher, Chairman, Marshfield Clinic, Marshfield *Thomas A. Burke, President & CEO, Modine Manufacturing Company, Racine *Bradley D. Chapin, Executive Vice President, BMO Harris Bank, Milwaukee *Scott A. Fawcett, President & CEO, Springs Window Fashions, LLC, Middleton Philip B. Flynn, President & CEO, Associated Banc-Corp, Green Bay James D. Friedman, Senior Partner, Quarles & Brady LLP, Milwaukee Gary M. Gigante, President & CEO, Waupaca Foundry Inc., Waupaca Robert D. Kamphuis, Chairman, President & CEO, Mayville Engineering Company, Inc., Mayville
VICE CHAIR, Daniel T. Ariens, President & CEO, Ariens Company, Brillion SECRETARY, Tod B. Linstroth, Senior Partner & Member & Past Chair of Management Committee, Michael Best & Friedrich LLP, Madison TREASURER, *Timothy L. Christen, Chairman & CEO, Baker Tilly Virchow Krause, LLP, Madison
EXECUTIVE STAFF PRESIDENT/CEO Kurt R. Bauer PRESIDENT, WMC FOUNDATION James R. Morgan SENIOR VICE PRESIDENT Michael R. Shoys VICE PRESIDENT, GOVERNMENT RELATIONS Scott Manley VICE PRESIDENT, MARKETING *Katherine E. Pettersen
*Patricia Leonard Kampling, Chairman, President & CEO, Alliant Energy, Madison *Robert L. Keller, Chairman, J.J. Keller & Associates, Inc., Neenah *Scott E. Larson, Executive Director, Marshfield Area Chamber of Commerce & Industry, Marshfield Scott A. Mayer, President, QPS Employment Group, Brookfield *Patrick J. McConnell, CEO/ Owner, FLASH, Inc., Green Lake *James J. McIntyre, President and CEO, Greenheck Fan Corporation, Schofield *John A. Mellowes, Chairman & CEO, Charter Manufacturing Company, Inc., Mequon J. R. Menard, Executive Vice President & Treasurer, Menard, Inc., Eau Claire Van W. Nutt, Executive Director, Middleton Chamber of Commerce, Middleton Paul Palmby, Executive Vice President & COO, Seneca Foods Corporation, Janesville *William C. Parsons, President, Palmer Johnson Enterprises, Inc., Sturgeon Bay
Gina A. Peter, CEO, Wisconsin Commercial Banking, Wells Fargo Bank Wisconsin, Milwaukee *Nicholas T. Pinchuk, Chairman, President & CEO, Snap-on Incorporated, Kenosha *Joseph T. Pregont, President & CEO, Prent Corporation, Janesville *Joel Quadracci, Chairman, President & CEO, Quad/ Graphics, Sussex *Jerry G. Ryder, Chairman, InSinkErator Division, Emerson Electric Co., Racine Michael W. Salsieder, President & General Counsel, Kolbe & Kolbe Millwork Company, Inc., Wausau Eric W. Sauey, Chairman & CEO, Seats Incorporated, Reedsburg *Edward H. Schaefer, President & CEO, Citizens Community Federal, Eau Claire Karl A. Schmidt, President & CEO, Belmark Inc., De Pere *Charles A. Schrock, Chairman, President & CEO, Integrys Energy Group, Green Bay Kristine N. Seymour, President, Wisconsin/Michigan Markets, Humana, Inc., Waukesha
Rajan Sheth, Chairman/CEO, Mead & Hunt, Inc., Madison Jay L. Smith, Chairman & CEO, Teel Plastics, Inc., Baraboo Karen L. Szyman, Executive Director, The Chamber of Manitowoc County, Manitowoc Glen E. Tellock, Chairman, President & CEO, The Manitowoc Company, Inc., Manitowoc John B. Torinus Jr., Chairman, Serigraph Inc., West Bend *S. Mark Tyler, President, OEM Fabricators, Inc., Woodville Donald D. Wahlin, CEO, Stoughton Trailers, LLC, Stoughton *Todd Wanek, President & CEO, Ashley Furniture Industries, Inc., Arcadia *David J. Yanda, President & CEO, Lakeside Foods, Inc., Manitowoc *Not pictured PAST CHAIRS, PICTURED Thomas J. Boldt, The Boldt Company Arthur W. Nesbitt, Nasco International, Inc. Rockne G. Flowers, Nelson Industries, Inc.
BUSINESS VOICE From the Editor
I never realized how many idioms there are using the word hill: Old as the hills… Head for the hills… Not worth a hill of beans. Right now I’m personally struggling with “Over the Hill!” You see, I celebrated a milestone birthday in December. I’m not telling which one, but I suppose I’m still pretty young by most accounts. Especially when talking history. WMC was founded more than 100 years ago to help give a voice to Wisconsin’s employers. We continue that important work today. WMC’s headquarters is located just four blocks off the Capitol Square in Madison. It’s an inspiring feeling to look up East Washington Avenue at the statehouse, which also happens to be one of our state’s most impressive architectural gems. At the same time, it is never lost on me that Wisconsin’s future is being decided in that building by a mix of elected officials and bureaucrats, including many who don’t understand free enterprise. That’s where WMC comes in. It’s been our job since 1911 to monitor state government to make sure business has the strongest voice possible. Of course, WMC’s advocacy should be no substitute for your personal involvement in the political and legislative process. After all, businesspeople make the best lobbyists for business! But we also know that you are busy running your business, which is why you belong to WMC in the first place. We know that many of our members expect us to keep watch on government so they don’t have to. And the evidence shows we do it pretty well. I hope you will take special note of the Return on Investment chart on page 29 of this edition of Business Voice. I also hope you will subscribe to WMC’s YouTube channel, WMC501. The channel includes interviews we have conducted with Governor Scott Walker, Lieutenant Governor Rebecca Kleefisch and numerous key lawand policymakers. We hope you agree it’s a pretty exciting time to be involved with WMC. We will continue to fight for the things that will help keep you competitive…. and keep you from wondering “What in Sam Hill is going on in Madison?”
In this issue…
Economic Metrics that Matter Most
Ariens Committed to Wisconsin
WMC INCOMING CHAIRMAN READY TO LEAD
Why Affordable Energy Matters SCOTT MANLEY
Is Good 10 Energy ERIC BOTT Uncommon Conversation 12 An JIM MORGAN Skilled Workers, Customized 13 Delivering Business Solutions
MORNA FOY, WISCONSIN TECHNICAL COLLEGE SYSTEM
Tort Reform Efforts Gain National 16 WMC's Recognition JASON CULOTTA
Energy Resources to Serve Industry in 18 Channeling Wisconsin and Beyond REED HALL, WISCONSIN ECONOMIC DEVELOPMENT CORPORATION
WISCONSIN AND THE WAR ON COAL WHERE ARE WE ON THE BATTLEFIELD?
on Jobs Brings Results 25 Focus CHRIS READER First 100 Days 28 My PAT SIMONETT is a Coal State 24 Wisconsin ELLEN NOWAK, WISCONSIN PUBLIC SERVICE COMMISSION
Climate Regulations will Cool the Economy, 33 EPA’s Not the Planet NICOLAS LORIS, THE HERITAGE FOUNDATION
Safety Audits 34 Corporate JANIE RITTER & CHUCK PALMER Leaders Need to Reach Out Now 38 Business JIM PUGH
Katy Ryder Pettersen Editor, Wisconsin Business Voice firstname.lastname@example.org
Priorities 39 Legislative SCOTT FITZGERALD, CHRIS LARSON, ROBIN VOS, AND
Wisconsin Business Voice is published quarterly by Wisconsin Manufacturers & Commerce. WMC is Wisconsin’s chamber of commerce, manufacturers’ association, and safety council representing businesses of all sizes and from every sector of the economy. Send address changes to WMC, P.O. Box 352, Madison, WI 53701-0352. WMC's physical address is 501 E. Washington Avenue, Madison, WI 53703, (608) 258-3400. This publication is proudly printed on paper made in Wisconsin.
Corner: Energy Issues Looming for 40 Chamber Wisconsin Business
Kurt R. Bauer, WMC President/CEO Katy Pettersen, Editor (email@example.com) Jane Sutter, Designer (firstname.lastname@example.org)
Economic Metrics that Matter Most Kurt R. Bauer, WMC President/CEO
he establishment news media in Wisconsin loves economic rankings, just as long as the data reinforces a narrative they want advanced. The most glaring recent example is how the mainstream media covered the Federal Reserve Bank of Philadelphia’s State Leading Index, which predicts a state’s six-month growth rate.
fee increases. Under Governor Scott Walker Wisconsin has finally ended more than 15 years of running multi-billion dollar deficits. In fact, Wisconsin now has a $759 billion surplus and tax collections are up 8.4 percent over the last fiscal year.
Several major media outlets covered the index in June last year when Wisconsin was ranked 49th in projected growth compared to the other 50 states. Obviously, that was not good news.
Wisconsin also has a record balance in its Budget Stabilization Fund (a.k.a., rainy day fund) of $278 million and the state pension system is among the strongest in the nation.
The Milwaukee Journal Sentinel, the state’s largest newspaper, thought highly enough of the Philadelphia Fed’s pessimistic prediction that it decided to place a story about it on the top of the front page on June 6 (“State is 49th in Forecast for Economy”). Several other media outlets also gave the story prominent coverage, including the Appleton Post Crescent and WISC-TV in Madison. But something interesting happened just a few months later; the Philadelphia Fed index began to improve Wisconsin’s economic outlook ranking and the state eventually hit number one in projected growth in September 2013. Many of the same media outlets that believed the poor ranking was news decided that a good ranking wasn’t. Instead, the media narrative suddenly shifted away from Wisconsin’s now positive growth outlook and onto dismissing the credibility of the Philadelphia Fed’s index as an appropriate measurement of the state’s current and future economic status.
Perhaps the most objective third-party evaluation of our state’s improved fiscal condition is that Moody and Fitch both upgraded Wisconsin’s bond rating (Moody from AA2 to AA3, Fitch from AA- to AA). That is a big contrast with many other states and the U.S. Government, which have seen downgrades during the same period.
And let’s not forget how effective Act 10 has been at saving taxpayers money ($2.7 billion and counting), while also preventing mass layoffs of public employees by giving local officials more flexibility. Unemployment Rate: While admittedly not as fast as we would all like, Wisconsin is growing jobs and our unemployment rate has been, and continues to be, lower than the national rate; 6.3 percent for Wisconsin in November 2013 versus 7 percent for the U.S. Wisconsin’s unemployment rate was 9.2 percent when Walker took office in 2011. Of the jobs Wisconsin is creating, a significant number have been in the manufacturing sector and we could add even more if manufacturers could find more qualified and interested workers. In October, the federal Bureau of Labor Statistics said Wisconsin was number one in the nation in net new manufacturing job growth. That is good news for two reasons: Manufacturing jobs pay on average about 30 percent above the median and one factory job creates between 2.5 and 3.5 jobs in other business sectors.
“95 percent of WMC’s members said in our most recent economic survey that Wisconsin is Other states may be growing jobs at a rate, but many of those states also headed in the right direction.” lostfaster more jobs during the Great Recession
That kind of uneven (to put it politely) coverage is unfortunate, but all too common. In fact, biased and/or limited media coverage of business issues is the reason WMC began publishing this magazine two years ago and why we built our own video studio (see page 37). It is also why WMC’s Issue Mobilization Council, Inc. spent $1 million last fall on statewide television ads educating the public about Wisconsin’s improving business climate. But the Philadelphia Fed episode poses an interesting question: What are the most important measures of how the state’s economy is performing? No matter who does them, rankings are arbitrary and some, like the Philadelphia Fed index, are prone to erratic swings. That‘s why I think the best economic metrics to follow are the state’s fiscal condition, the unemployment rate and overall business confidence. Fiscal Condition: Stable state finances generally mean a stable state business climate, at least as it relates to the threat of tax and
so they have more ground to make up. And many of the jobs being added in some states are part-time positions as opposed to family supporting ones. Business Confidence: Optimistic businesses hire and invest; pessimistic ones don’t. That’s why business confidence is important and why you have heard so many business leaders complain about the persistent “uncertainty” that has made the economic recovery from the Great Recession stubbornly anemic. The economists at the Philadelphia Federal Reserve Bank aren’t the only ones to take note of the positive changes to Wisconsin’s business climate beyond the fiscal reforms already mentioned. Reducing taxes, regulatory burdens and frivolous lawsuits are reforms that tend to get noticed by the business community as well. That explains why 95 percent of WMC’s members said in our most recent economic survey that Wisconsin is headed in the right direction, while 89 percent said state government is either very or somewhat pro-business. BV
Follow Kurt on Twitter @Kurt_R_Bauer 4
Ariens Committed to Wisconsin WMC Incoming Chairman Ready to Lead
an Ariens feels like he has a stake in making Wisconsin a great place to live and work.
The Ariens Company’s roots go back 80 years in Wisconsin when his greatgrandfather, Henry Ariens, began designing some of the first rotary tillers in the U.S. Today, the company produces a range of outdoor power equipment for consumer and commercial use, and it operates a distribution business of niche outdoor brands in the direct marketing arena. Although Ariens Company has operations in Indiana, Nebraska, Europe and Australia, Dan is committed to solving Wisconsin’s unique economic development challenges. “The fact that jobs in Wisconsin go unfilled while we have an unemployed population is a very real structural skills mismatch that must be on the agenda,” says Ariens. “When you factor in the aging demographic in the state this has the potential for long-term implications.” Ariens has been a strong advocate for business-education partnerships as a way to resolve part of this skills mismatch and prepare for changing demographics. But his approach differs from business leaders who
might ask for the school system to deliver the candidates with all of the required skills intact.
“Give me a good problem-solver and I can train him to weld,” says Ariens. “The challenges we face change so quickly that employees do best when they can adapt and resolve those challenges.”
“We each have our own agendas for our businesses and Wisconsin businesses certainly span a wide range of interests. But that is exactly where the strength of an organization like WMC exists -- bringing a consensus view to policy makers on our behalf.”
Dan has partnered with the Brillion High School to build the state-of-the art Ariens Technology and Education Engineering Center. Although the center is equipped Ariens is also looking forward to helping with the latest technology, the core of ensure the business perspective is heard the curriculum is built around problemwhen it comes to public policy. solving. Now more than three-fourths of “As the people who “Give me a good the students at the make decisions every school participate in problem-solver and I can day that drive our state technology classes – economy, we have a train him to weld.” those planning to go legitimate voice that can into medical fields, teaching enhance public policy debates,” says jobs or the service sector. Ariens. “We can bring the daily reality of what’s happening in towns and cities and “Our traditional hands-on culture in the workplaces across Wisconsin, one job at a workplace needs to evolve into a ‘minds-on’ time.” culture. And I mean for every level of job,” says Ariens. “Problem-solving is not only the domain of the engineer designing a product or a system. It’s the domain of every employee if we want to be successful.”
Ariens developed this perspective on his journey of becoming a strong proponent of Lean manufacturing principles which he began implementing in 1998. Since then, he has been recognized with the Eli Whitney Productivity Award from the Society of Manufacturing Engineers and is frequently tapped as a mentor by organizations promoting Lean leadership. In 2012, Ariens was inducted into the Association for Manufacturing Excellence Hall of Fame. It’s the skills he’s developed as a Lean leader that he hopes to use in his role as WMC Chair.
Dan holds other leadership roles in the Wisconsin business community, serving on several Boards of Directors for educational entities, for-profit companies and nonprofit economic development groups in the state, including the role of Vice Chair for the Wisconsin Economic Development Corporation (WEDC) Authority Board created by Governor Scott Walker.
But it’s safe to say one of the roles he relishes most is his position on the Executive Committee of the Green Bay Packers’ Board of Directors. He views this role through the lens of economic development as well, understanding clearly what that organization means to the city and the state. Dan and his wife, Julie, live in Green Bay where they are very active in the local community. They enjoy spending time with family that includes five children, each of whom are becoming involved with the family business in some way – the fifth generation of Ariens family members to do so. BV
Wisconsin Business Voice
ENERGY Scott Manley WMC Vice President of Government Relations
Why Affordable Energy Matters A ffordable energy is the lifeblood of any economy, and that is especially true for a state like Wisconsin which often leads the country in manufacturing jobs per capita.
Businesses in Wisconsin consumed roughly 939 trillion British Thermal Units (BTUs) of energy in 2011. To put that number into perspective, it exceeds the amount of energy that every household in Wisconsin used for gasoline to fuel their cars, electricity to power their homes and gas to heat their houses -- combined. Given the magnitude of energy used by businesses, it is difficult to imagine a competitive business climate in Wisconsin without the availability of affordable energy.
Our manufacturing sector, which accounts for more than 450,000 jobs and about 20 percent of our economic output, is a great case study in the importance of affordable and reliable energy sources. In total, industrial firms amounted to only 0.15 percent of all electricity customers in Wisconsin in 2012, but because they use so much energy, they accounted for about 33 percent of all electricity consumed.
advancements in pollution control technology mean our air is cleaner today than it was 20 years ago, despite the fact that we continue to burn more coal.
Coal’s status as the most abundant and affordable fuel source is now under fierce competition from another energy source: natural gas. Thanks to advancements in the hydraulic fracturing (fracking) process, our country’s proven reserves of natural gas have grown to 348 trillion cubic feet. This is great news for consumers because increases in supply have translated into significant reductions in price.
Five years ago, the average price for natural gas was $8.16 per thousand cubic feet. The vast resources unlocked through fracking have reduced that price more than threefold, down to $2.65 in 2012. Fracking is having a similar effect on petroleum prices, as access to shale oil has contributed to a 15 percent increase in our country’s oil reserves. We now have 49 billion barrels of proven oil reserves, and that number is expected to grow.
While the average monthly electric bill in Wisconsin was $92 per household in 2011, the average industrial electric bill was $31,570 per month that same year. With a typical industrial firm spending Although Wisconsin is not home to any of the shale oil or gas about $3.8 million per year on electricity, it’s easy to see why deposits driving this energy renaissance, it’s difficult to access manufacturers remain keenly focused on the these newfound resources without our sand. affordability of energy. Taken together, Wisconsin is blessed with some of the “…it is difficult to imagine a Wisconsin businesses spend about $4 hardest and roundest sand in the country billion per year on electricity, and another – the type that is ideal for use in the competitive business climate in $1.5 billion on natural gas. That’s more process. Wisconsin’s sand mining Wisconsin without the availability fracking than Wisconsinites spend each year on boom has created thousands of new jobs beer and cheese combined. and many prosperous businesses in the of affordable energy.” northern and western portions of our state. Fortunately, Wisconsin has invested in coal as an affordable source of electricity for consumers. In 2011, the cost of coal per million BTU was $3.86, which was less than half the cost of natural gas, its next closest competitor. Unfortunately, the Obama Administration’s protracted war on coal threatens the affordability of energy in our state at a time when businesses and consumers can least afford it. Consider that more than 60 percent of the electricity in our state is generated from coal. That’s more than the amount generated from natural gas, nuclear and renewable energy combined. In July 2013, Wisconsin ranked 11th in the country in the amount of coal consumed for electric generation.
Why do we use so much coal in our state? The answer is simple: it’s inexpensive and it’s abundant. The United States has more than 480 billion tons of coal reserves, which is the largest in the world. Our country has enough coal to meet our energy needs for about 300 years into the future. And 6
The lower energy prices from fracking are helping businesses and households alike. A recent study by IHS Global Insight found that lower energy prices increased disposable income by $1,200 per household in the U.S. last year. That number is projected to grow to $3,500 per household by 2025.
Lower energy costs are also helping speed the recovery of our manufacturing sector. For example, Wisconsin created 9,700 net new manufacturing jobs from October of 2012 through October of this year - the second-most in the country. Our state and our country are on the verge of a new era of economic prosperity and stability because of our domestic energy resources. The biggest question is whether misguided federal policies designed to bankrupt coal and hinder fracking activity will prevent us from realizing this enormous potential.BV
Follow Scott on Twitter @ManleyWMC
Teske Turned Challenges into Success B oycotts of businesses, historic recall elections and the succession of WMC's chief staff executive. Those are just a few of the challenges Todd Teske faced during his two-year term as WMC Chairman, which will end later this month. Teske, Chairman, President & CEO of Wauwatosa-based Briggs & Stratton Corporation, met each challenge head-on and in the process logged an impressive success record.
Under Teske’s leadership, WMC helped enact at least 60 probusiness reforms, including tax relief for manufacturers, farmers and individual taxpayers. WMC also helped protect those reforms by supporting pro-business candidates during the recall and general elections in 2011 and 2012, respectively.
Jim Haney with Kurt Bauer. “The last two years have certainly been full of challenges,” said Teske. “The WMC team did a great job working through the issues by being true to the goal of making Wisconsin a better place to do business. I am proud to have served with this talented group. It has been a pleasure working with Kurt in his smooth transition as CEO. The organization is well positioned for continued success under Kurt's oversight.” BV
In addition, Teske took an active role in addressing Wisconsin’s professional and technical workforce shortage by, among other things, reconstituting Manufacturing Month, a statewide and collaborative effort to promote manufacturing careers.
Teske also pushed for WMC to be more active on federal issues that impact business and to aggressively promote free enterprise via the Business World program, which teaches high school students about business and the opportunities available in Wisconsin. During Teske's term, WMC introduced Wisconsin Business Voice magazine and built a video studio to better inform member businesses. And if that wasn’t enough, Teske also served on the CEO search committee that eventually replaced 26-year veteran
Todd Teske’s (center) two-year term as WMC Chairman expires in January. He will be succeeded by Dan Ariens (right). The two men are pictured with WMC President Kurt Bauer during a recent WMC board meeting.
PowerForward Moving energy into the future. You count on reliable, affordable electricity at home and work. American Transmission Co. is preparing today for a brighter tomorrow by pursuing electric grid improvements that power local businesses and communities.
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ENERGY Eric Bott WMC Director of Environmental & Energy Policy
Energy Is Good H eadlines don’t paint a pretty portrait of energy these days. The media is quick to bash coal as dirty and nuclear as scary. Matt Damon wants us to believe hydraulic fracturing is going to cause our kitchen sinks to catch fire. Even renewables don’t get a pass. Political scandals plague the solar industry while stories about windmills’ murderous wrath on avian populations frequent the front pages. The whole energy sector has a black eye, the net effect of which is to create a cultural mindset that energy is at best a necessary evil. It is not.
Energy is good. It’s a virtue and a blessing. Energy, more than any other factor, is what allowed and allows humans to leave subsistence agriculture (or worse), organize as societies, and create and advance civilization. Throughout history the evolution of human societies has been sparked by advancements
Biomass Power Plant Coal Power Plant Hydroelectric Power Plant Natural Gas Power Plant Nuclear Power Plant Other Power Plant Petroleum Power Plant Wind Power Plant Wood Power Plant Petroleum Refinery
in energy usage and technologies. Preagricultural societies were extremely limited by their lack of access to energy. Through caloric intake and limited use of fire, they were only able to muster ten gigajoules (GJ) of energy production per person each year, or less than the energy potential of two barrels of oil. When ancient Egyptians increased energy production to 15 GJ through advancements in smelting, the New Kingdom arose, art and culture flourished, monotheism was created and civilization took several great leaps forward.
A millennium and a half later the Chinese adopted the use of coal, increasing per capita energy production to 20 GJ. The Han dynasty prospered for 400 years advancing astronomy, metallurgy and medicine and creating a helpful little invention called paper. Medieval Europeans doubled that production through the use of peat and the application of water wheels. Along came the Renaissance. The modern era began when Thomas Savery and Thomas Newcomen partnered in developing a steam engine that could drain water from coal mines. Energy production in England rose to 100 GJ per capita and a revolution in industry and human advancement followed. This story continued through the work of
Thomas Edison and Enrico Fermi and it continues today.
I’m not saying energy is the only catalyst for human advancement. Countless factors influence a calculus as complex as the evolution of human society; however, if one looks at each period of revolutionary human advancement they will find it inseparably tied to some innovation in humanity’s ability to harness and apply energy. In fact energy and human development are so inextricably linked, there’s even an equation for it: Energy=Progress=Civilization.
Two centuries ago seven out of every ten Americans labored on the farm. Life for most was a brutal toil. Thanks to advancements in automation and energy generation, our stomachs no longer rely on the kinetic limitations of our bodies and work animals. Fewer than two Americans in a hundred now work the land to feed the nation. Humanity on a vast scale now has the ability to devote countless resources to scientific advancement, the time for philosophical and social contemplation, and the leisure to create and enjoy fine art, music, film and even the slow food movement, all because of our access to energy. So the next time you’re dining with friends, remind them their plates of locally sourced pan seared foie gras and organic micro greens are made possible by the availability of cheap, reliable energy (and yes that does mean coal and petroleum). You might also take the time to remind them electricity doesn’t come from the wall but I digress. Energy’s had a bad rap in this country for too long and it doesn’t deserve it. It’s time to face facts. Energy is good. BV
Follow Eric on Twitter @BottWMC
Business Day in Madison: February 6, 2014 Monona Terrace Community & Convention Center, Madison
Founder, CEO & Chief Analyst of Wall Street Strategies; Fox Business Network Contributor; Award-winning Author
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An Uncommon Conversation
Wisconsin, Rightfully, Moves Forward with the Common Core Standards
hat should students know and be able to do?
That question has set off an educational firestorm that we have not seen since “outcome-based education” was introduced. A recent series of public hearings and legislative proposals on the Common Core Standards - already in place in Wisconsin schools for English/Language Arts and Mathematics (Science to follow) reignited the debate which continues as I write this article.
During my almost three decades at Wisconsin Manufacturers & Commerce, I have always had one foot in the business arena and the other in the education arena. Two fields that seemingly would have a great deal of common interest yet were often on opposite sides of political and fiscal issues. And, as the husband of a Madison public school teacher, home was the setting for as many interesting conversations as at the Capitol.
school leaders on the development of the standards in 2009, and Wisconsin adopted them in 2010. The purpose of the standards is to “provide a consistent, clear understanding of what students are expected to learn, so teachers and parents know what they need to do to help them. The standards are designed to be robust and relevant to the real world, reflecting the knowledge and skills that our young people need for success in college and careers.” This is a good thing, and here is why.
Consistency. From district to district and state to state, we will establish a foundation of what students need to know and be able to do. Accountability. Common Core requires accountability, high standards and testing. We will have results and the ability to set a course for improvement where needed.
For more than 25 years, Wisconsin businesses (and employers Competitiveness. If we are to compete globally, we must ensure our everywhere) have been asking for accountability and measurement students are truly ready for further education and a career that allows in schools. These companies are driven by data, and have struggled them to succeed in the global marketplace. to understand educational measurement because so many different Innovation. The standards encourage creative teachers to systems have been used throughout the continue to reach students in creative ways. Contrary years. How do we know a school “The standards are not a to what some proclaim, the standards are not a district or school building is doing national curriculum requiring national curriculum requiring everyone to teach a good job educating students? same thing on the same day from the same How do we know what a high everyone to teach the same thing on the book. The standards are the “what” and not the school student knows? How do the same day from the same book.” “how.” we compare to the rest of the state? The country? The world? We live in a Quality. The Common Core Standards have been competitive environment, and the quality, knowledge and talent of the benchmarked and are more rigorous than past standards. They individual is going to be the differentiating factor. focus on math, reading and science; require students to evaluate evidence and formulate conclusions; include problem solving and Also for more than 25 years, educators have been looking for critical thinking; and evaluate what students will need to know to be consistent, measurable outcomes. In a system where the school board workplace- and college-ready. members and superintendents have tenure of just a few years, there have to be benchmarks that transcend the individuals. You cannot While there is a great deal of concern being spread about a national change direction every three years and hope to reach your destination. textbook, cameras in classrooms to monitor teachers, and a complete loss of local control; the recent legislative review has resulted in With that in mind, let me provide a little history. clarity and an affirmation that, in Wisconsin, local control remains In 1996, at the National Education Summit, a bipartisan group the authority on education. However, the reality is the standards have of governors and business leaders decided to create and lead an been years in development, are well documented and are in place in organization dedicated to supporting standards-based education nearly all Wisconsin districts. They have given local communities a reform efforts across the states. Several initiatives were spawned and common purpose, the states a common goal and our country a tool all of that work eventually led to the Common Core Standards. to ensure our long-term success. The Common Core makes common The National Governors Association and the Council of Chief State sense for Wisconsin’s school districts. BV School Officers began working with local educators, businesses and
Follow Morgan on Twitter @JimMorgan1960
Delivering Skilled Workers, Customized Business Solutions By Morna K. Foy
ince becoming president of the Wisconsin Technical College System (WTCS) in January 2013, I’ve appreciated the welcome extended to me by the leaders and membership of Wisconsin Manufacturers & Commerce. It’s clear to me the fundamental goals of our organizations – creating opportunities to experience success and prosperity – remain closely aligned.
programs and certificate offerings focus on a specific skill set and take less than a year to complete.
The colleges also deliver apprentice-related instruction, which combines on-the-job training with classroom instruction to allow students to learn the practical and theoretical aspects of a highskilled occupation in a variety of construction, service or industrial occupations.
Wisconsin’s technical colleges do that by building skill pipelines in collaboration with businesses, K-12 partners, and local and regional In addition, the system is the premier provider of customized workforce and economic development experts. These partnerships business solutions and technical assistance for Wisconsin’s leading allow us to reach and teach those interested in starting or advancing businesses, large and small. For businesses looking to enhance in a promising career, or acquiring new skills to transition into one. competitiveness or expand, local technical colleges are cost-effective Your role is vital: working with your local technical and eager partners. colleges to ensure our courses and programs are “The technical colleges are Wisconsin’s technical colleges have also based in rigorous and relevant skills instruction. as the state’s newest “graduate a first-call collaborator for emerged With your valued partnership, WTCS has school,” offering a variety of advanced remained at the heart of the state’s workforce, Wisconsin’s employers.” certificate options that complement twoeconomic, and community development for more and four-year degrees to enhance job skills. than a century. Whether delivering highly skilled graduates Employers often look to applicants holding through industry-driven programs on campus, or enhancing advanced technical certificates to meet their need for highly skilled competitiveness with customized business solutions on-site, the workers. technical colleges are a first-call collaborator for Wisconsin’s The fact that nearly 90 percent of WTCS graduates consistently are employers. employed within six months of graduation means our colleges and With 48 campuses and many outreach centers serving communities employer partners have found success in ensuring the skills taught throughout Wisconsin, the technical colleges offer an unmatched are relevant and sought-after. breadth of learning opportunities. The colleges offer more than 300 Wisconsin technical colleges have been providing a demonstrated programs awarding two-year associate degrees, one- and tworeturn on investment for employers and students for more than a year technical diplomas and short-term technical diplomas and century, and we look forward to continued, shared success. certificates. Nearly 370,000 individuals access the technical colleges for education and training each year. Visit www.witechcolleges.org/employers for more information. BV Applied associate degree programs combine high-end technical Morna Foy is President of the Wisconsin Technical skills with general education, including math, communications, and College System social sciences, while one- and two-year technical diploma programs emphasize hands-on occupational skills. Short-term diploma
Focus on Manufacturing Breakfast February 28, 2014 7:00 - 9:00 a.m.
The Pfister Hotel, Milwaukee Keynote Speaker
Patricia Panchak Editor-in-Chief Industry Week Magazine
President & CEO QPS Employment Group
Editor-in-Chief Industry Week Magazine
Dirk Smith President & CEO Super Steel LLC Major Sponsor
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WMC at Home and on the Road
WMC staff members were in Washington, DC in October to receive an award for state legal reforms. While there, they visited Capitol Hill to meet with members of the Wisconsin Congressional Delegation, including U.S. Rep. Paul Ryan (R-Janesville).
Wisconsin and Chiba, Japan became sister-states in 1990 and participate in science and technology, education, health and culture exchanges. WMC’s Janie Ritter visited Kikkoman Foods' Walworth plant with a recent Chiba delegation visiting Wisconsin.
WMC staff visited Iron County last fall to tour the proposed site of an iron ore mine. During the visit, WMC also spoke with numerous local businesspeople about the need to create jobs in northern Wisconsin.
The WMC Small Business Committee heard from Lt. Governor Rebecca Kleefisch, seated center right, during their November meeting.
Four of WMC’s past chairmen were in town to visit WMC’s newly remodeled first floor. From left: Raymond E. Gregg, Jr., Randall S. Knox, Rockne G. Flowers, Arthur W. Nesbitt.
More than 70 chamber professionals attended the Wisconsin Chamber of Commerce Executives Annual Conference in Wisconsin Dells last fall.
TORT REFORM Jason Culotta WMC Director of Tax & Transportation Policy
WMC’s Tort Reform Efforts Gain National Recognition
ctober marked a significant achievement for WMC when the U.S. Chamber of Commerce’s Institute for Legal Reform bestowed the 2013 Outstanding Organization Award to Wisconsin’s chamber of commerce. WMC earned this recognition in large part because of our efforts to restore fairness measures in state law in 2011, and driving subsequent civil justice reforms.
Under Governor Tommy Thompson (R, 1987-2001), Wisconsin attained a relatively balanced civil justice regime that allowed businesses fair treatment under the law. The 2005 session of the Wisconsin Supreme Court changed that when an activist liberal majority struck down numerous rule-of-law statutes and tipped the scales of justice against the business community. WMC, working on behalf of its membership, was heavily involved in the 2008 Supreme Court election which effectively removed the liberal majority on the bench. However, the damage inflicted by the Court lasted until after the conclusion of the Doyle Administration in 2011. With the election of Governor Scott Walker and a new GOP legislative majority, Wisconsin’s civil justice climate was swiftly balanced again. The second law signed by Governor Walker was a package of reforms restoring the rule of law to Wisconsin’s civil justice statutes. These included:
• Setting the same strict product liability standard used in almost every other state; • Capping punitive damages at $200,000 or twice compensatory damages;
• Ending the “risk contribution theory” invented by the 2005 Supreme Court majority, which discarded the traditional proof or direct liability and instead adopted a guilty-until-proven-innocent test for manufacturers; • Adopting the expert witness testimony standard used by the federal courts and most states; and 16
• Re-establishing a “frivolous claims” statute allowing those determined to bring these suits be held liable for costs and fees.
Other positive legal changes for the state’s business climate that have been signed into law since early 2011 include:
• More reasonable interest rates on judgments, using the Federal Reserve prime rate plus one percent rather than the fixed 12 percent rate under prior law; • Adopting a standard for setting reasonable attorney fees and limiting those fees to no more than three times compensatory damages;
• Protecting property owners from owing trespassers “duty of care,” a legal obligation imposed on an individual requiring adherence to a standard of reasonable care while performing any acts that could foreseeably harm others; and • Repealing compensatory and punitive damages as remedies under the Wisconsin Fair Employment Act while still preserving the three traditional remedies including reinstatement, up to two years of back pay and the cost of legal fees.
• Reversing the Jandre v. Physicians Insurance Company of Wisconsin decision by the state Supreme Court, which threatened to dramatically increase the use of defensive medicine.
Among the reforms needed to pass yet in this legislative session is an asbestos trust transparency bill which would consider the role of bankruptcy trusts established to pay out claims. This would reduce liability for Wisconsin businesses to the level state law would normally apportion to them.
Wisconsin’s civil justice system has come a long way in the past three years. Yet more work remains to be done to provide a fair state legal system that affords equal justice to all, including the state’s business community. It is reassuring to know that people outside our state are watching the improvements to Wisconsin’s civil justice system with a keen interest. WMC is honored to have been recognized for its leadership on these issues, and we are proud to continue fighting the good fight on behalf of our members. BV
Follow Jason on Twitter @JGCulotta
On December 13, 2013 Governor Walker signed three additional WMC-supported tort reform measures into law:
• Sunshine legislation to bring transparency to the process of the state hiring private-sector attorneys on a contingency fee basis;
• Lemon law reform that repeals Wisconsin’s status as the only state requiring mandatory double damages of manufacturers; and
WMC traveled to Washington DC to receive the 2013 Outstanding Organization Award from the U.S. Chamber of Commerce Institute of Lawsuit Reform. From left; WMC’s Jason Culotta, Scott Manley, Kurt Bauer and Jim Pugh.
LEAVE INSPIRED. Where else can you meet the minds that are moving manufacturing forward? Nowhere but IMTS 2014. With a focus on success through cooperation, the week will be filled with technology, education, and ideas that we can all benefit from. Join us at McCormick Place Chicago, September 8–13, 2014. Learn more at IMTS.com.
Save the date • Sept. 8–13, 2014 • ImtS.Com
Come together. Leave your mark.
Channeling Energy Resources to Serve Industry in Wisconsin and Beyond By Reed Hall
n addition to providing financial and technical assistance to companies to help them grow and succeed in Wisconsin, the Wisconsin Economic Development Corporation (WEDC) develops and deploys programs that help fuel the state’s economy. WEDC’s Business and Industry Development division leverages industry leadership to accelerate growth and produce high-quality jobs by advancing targeted, high impact economic development initiatives in Wisconsin. Our investment decisions require verifiable evidence that a project will offer sustainable, positive economic impact; create or strengthen a unique competitive advantage for Wisconsin; and attract significant co-investment funds. One area where we see great promise is in the state’s energy, power and controls industry.
Wisconsin’s Energy, Power and Control Advantages
Electrical machinery and controls manufacturing is Wisconsin’s fastest growing and most competitive industrial sector. Companies operating in this sector are committed to addressing the world’s energy challenges by continuously adapting to new market demands and opportunities. From making effective use of our natural resources, fossil fuels, biofuels, wind and solar energy to building energy efficiency technologies, Wisconsin companies are employing advanced applications and new products to power the world’s energy needs.
More than 900 companies in Wisconsin’s growing energy, power and control sector employ more than 100,000 people and generate $38 billion in annual sales. The sector has shown 31.1 percent growth from 2008 to 2011. Export growth topped 18.73 percent from 2010 to 2011—compared to a national rate of 12.27 percent. Wisconsin’s capabilities are broad and widely disbursed and reflect particular strength in the areas of generation and transmission; storage and distribution; conversion, control and automation; and efficiency and conservation. Wisconsin also possesses the quality and quantity of necessary talent to compete on a global scale. Our highly educated workforce is the foundation for a thriving energy sector. Our industry leadership is apparent in the variety of companies fulfilling the specific demands of the energy continuum and in the healthy collection of consortia, associations, academic programs, institutions, and energy advancement and research centers located here.
One of the nation’s most influential energy associations, the Midwest Energy & Research Consortium (M-WERC) located in Milwaukee, is helping to drive the Midwest and the U.S. to be energy independent. M-WERC works closely with industry leaders and companies that provide solutions and services tied to serving major energy, power and control segments. M-WERC, along with many Wisconsin companies that provide energy and maintain the state’s power grid, is actively promoting new technologies that will result in innovative products, new employment opportunities and vibrant technology transfer. The state’s abundant natural resources have created opportunities to excel in a variety of new tech sectors including solar, wind, biofuels and water. Here are some of Wisconsin’s unique assets within the renewable energy industry: • Wisconsin leads the nation in anaerobic digesters with more than 30 digesters throughout the state—more than any other state in the nation. • In 2013, the American Wind Energy Association ranked Wisconsin 18th in total installed wind capacity and 16th in the Nation on their list of states with the most wind energy potential. • More than 140 solar companies in Wisconsin ranging from manufacturing to contracting to installation are helping to create and implement new technologies that draw upon the sun’s energy.
WEDC is assisting energy-related businesses and supporting organizations across the state to help maximize their potential through collaboration and innovation. Wisconsin’s specialized workforce, academic and private sector resources, and infrastructure provide opportunities for energy companies to succeed and for the state to be known as a global leader in energy innovation. A collaborative approach to leveraging industry leadership through forward-looking initiatives will advance economic development opportunities in Wisconsin.
For more information on WEDC investment strategies, visit www. InWisconsin.com. WEDC’s Wisconsin Energy, Power and Control industry profile is available at www.InWisconsin.com/energy. BV Reed Hall is Secretary and CEO of the Wisconsin Economic Development Corporation
BUSINESS GROWS STRONG HERE, BECAUSE THE CLIMATE IS RIGHT IN WISCONSIN. To successfully develop a business you need support from a state that celebrates growth. As you look to take your business strategy to the next level, you can count on the programs, resources and opportunities available to you in Wisconsin. From financial incentives to tax policies, we are taking bold action to encourage expansion by offering business development programs customized to meet your needs. We are demonstrating our commitment to our industries by introducing the Wisconsin Manufacturing and Agriculture Tax Credit, which virtually eliminates the tax on income from manufacturing activity in Wisconsin. In addition, we are driving advancements in workforce development and site certification to help meet the needs of your growing business.
As the state’s lead economic development agency, the Wisconsin Economic Development Corporation connects businesses to growth-oriented solutions throughout the state. We collaborate with a highly responsive and dedicated network of local and regional economic development partners to advance business development. To learn more about the programs that help optimize your business growth In Wisconsin®, call 855-INWIBIZ (toll free) or visit Succeed.InWisconsin.com.
In Wisconsin® is a registered trademark of Wisconsin Economic Development Corporation.
WISCONSIN AND THE “WAR ON COAL” Where are we on the Battlefield? By Mark Crawford
nergy has always been a critical commodity for Wisconsin businesses. Coal, nuclear and natural gas are the state’s three key energy sources for base load electricity. Most of this energy is shipped in from out of state. A moratorium currently exists on constructing new nuclear plants in Wisconsin, and if the recently proposed EPA regulations on CO2 emissions are approved, it will be very tough to build new coal-fired plants. As a result, more industries are looking at natural gas to fuel their operations. Even though today’s prices are low, natural gas prices are historically volatile. That leaves wind, solar, and other renewable resources, which only contribute a very small percentage of the daily energy needs of Wisconsin businesses. “The critical issue for any energy-intensive industry is having a supply of reliable and affordable energy that helps meet current and future demands,” says Gary Gigante, President and CEO of Waupaca Foundry. “Therefore the issues that impact the reliability and cost of the energy supply are of significant interest to industry. Given the current situation with fossil fuels, particularly coal, industries are concerned Wisconsin may not be able to develop a diversified energy plan that can maintain Wisconsin's economic competitiveness.” That’s a huge point. Reliable and lowcost energy is a key site-selection factor for companies looking to relocate or expand. This is especially true for big energy consumers, like manufacturing. Wisconsin's industrial sector, which includes energy-intensive industries
such as food processing, chemical manufacturing, plastics, and forest products, was the highest energy-consuming sector and low-cost in the state in 2011 using “Reliable 582 trillion British Thermal energy is a key site-selection Units (BTUs). Without abundant, competitively factor for companies looking priced energy, Wisconsin to relocate or expand.” cannot be a contender for new industrial projects that would hire hundreds or thousands of workers and expand the economy.
Wisconsin Runs on Coal
About two-thirds of the state’s electricity comes from coal. Wisconsin’s electrical capacity breakdown for 2011 is: • Coal (62.5%) • Nuclear (20.7%) • Natural gas (9.1%) • Hydroelectric (2.6%) • Wind (1.7%) • Wood (1.2%) • Oil (1.2%)
The largest users of electricity in Wisconsin are foundries, pulp and paper mills and food processors—all key contributors to the Wisconsin economy. Industrial ratepayers make up less than one percent of rate payers in Wisconsin, yet account for 35 percent of the electricity consumed each year. This large-scale economic production and job creation is driven by coal.
The War on Coal
Threatening this relationship, however, are stricter limits on CO2 emissions proposed by the EPA in September 2013 for new coal-fired plants (1,100 pounds of CO2
Wisconsin Business Voice
Wisconsin Energy Generation Wind 2% Wood 1% Hydro Oil 3% 1% Natural Gas 9% Nuclear 21%
legislative affairs representative for Wisconsin in the Association of American Railroads. “Without the revenues generated from hauling coal, portions of our rail system may be more difficult to maintain.”
Regaining the Wisconsin Advantage
per megawatt-hour). New regulations for existing coal plants will be revealed sometime in 2014.
Historically, lower-than-average utility rates have given Wisconsin a competitive advantage over other states in the Midwest. In recent years, however, this has changed, and today only one of the twelve Midwestern states has higher rates than Wisconsin. There are several reasons for this.
“Wisconsin embarked on a significant series of investments in utility infrastructure over the previous 10-15 years,” explains Eric Bott, director of environmental and energy policy for WMC. “We invested heavily in renewables in the early 2000s to meet our 10 percent renewable portfolio standard (RPS). Wisconsin also constructed new coal power plants based on anticipated increases in demand, and continues to build massive new transmission systems to improve the reliability of the grid.”
One of the requirements for new coal power plants is the installation of a carbon capture and storage (or CCS) system. CCS captures CO2 and pipes it to underground storage reservoirs. “The bottom line is there This, however, will not work in Wisconsin.
At this point, Wisconsin was on track to secure a are no economically viable ways “Wisconsin does not have any of these underground better position in terms storage reservoirs,” says Brian H. Potts, an attorney and to replace coal as Wisconsin’s primary of its rates versus those Partner at Foley & Lardner LLP in Madison. “The of other states. Some source for base-load electricity closest one is in southern Illinois. The DNR estimated neighboring states were the cost of installing CCS for We Energies' Oak Creek also mandating costly generation.” power plant would new renewables projects— be about $4.3 billion. The creating a situation where Wisconsin’s rates could stabilize while estimated pipeline cost to rates in neighboring states increased. Did You Know… ship the captured carbon “Now, however,” says Bott, “the proposed regulations for carbon WMC is party to the case dioxide to Illinois for emissions, on both existing and new coal plants, greatly jeopardize challenging the War on Coal before storage was $750 million this outcome. Depending on how these regulations are ultimately the U.S. Supreme Court? of that total cost, which led applied, massive rate increases could result and reliability could be The U.S. Supreme Court has agreed the DNR to conclude CCS threatened.” to review one question: Did EPA is not an economically An example of how these effects could cascade is the new source permissibly determine its regulation feasible control option.” performance standard (NSPS) rule that applies to new fossil fuelof greenhouse gas emissions from “All of these new fired electric utility generating units (EGUs). “Although the rule new motor vehicles triggered regulatory actions will does not apply to any existing EGUs, environmental groups are permitting requirements under the increase the price of arguing that modifications to existing coal plants should trigger this Clean Air Act for stationary sources electricity, because they will rule,” comments Arthur J. Harrington, an attorney with Godfrey & that emit greenhouse gases? require the construction Kahn in Milwaukee. “Given that our extensive base load power is In other words, the court already of expensive new plants,” dependent upon coal, these sorts of challenges will mean more cost ruled that EPA can regulate GHGs adds Dan Kish, senior for rate payers in the future.” from cars but does that mean they vice president of policy for have the authority to extend that the Washington DCAlternative Strategies regulation to coal fired utilities? based Institute for Energy Any uncertainties about energy supply make businesses uneasy. Research. Six cases were wrapped into one If regulations make coal too expensive to use, what other energy to be heard by the Court. WMC The proposed regulations sources are available at a reasonable cost? “Although the current is party to American Chemistry would also have negative natural gas boom provides some relief, well-designed energy Council v. EPA, however, the Court impacts on Wisconsin planning and regulation will be critical for mitigating the negative is likely to title the bundled cases rail. Almost two-thirds effects of coal-use reduction,” says Gigante. as Utility Air Regulatory Group v. of the railroad tonnage This approach includes lean strategies, conservation practices, Environmental Protection Agency. coming into Wisconsin is technological improvements to increase energy efficiency, and coal. If coal-fired electrical Oral arguments are scheduled for onsite use of renewable energy, which continues to become more generation is limited, “a Feb. 24, 2014. Stay tuned to WMC’s affordable. significant portion of our website for the latest information. For example, Ariens Company in Brillion recently replaced its business could go away 45-year-old boiler system with a geothermal heating and cooling in the next several years,” system. “We always look for the lowest project cost and the smallest says Sam Gratz, a state 22
Wisconsin Energy Consumption & Rankings U.S. RANKING
1,789 Trillion BTU
U.S. RANK 21
Consumption per Capita
Expenditure as % of GDP
Total Net Electrical Generation 6,015 MWh (1,000)
Wisconsin Energy Consumption Transportation 24%
Commercial 20% Industrial 32% carbon footprint, but there are always tradeoffs,” says President & CEO Daniel T. Ariens. “In this case, the long-term environmental impact of geothermal is minimal, but the installation cost was 50 percent higher than traditional systems. The tradeoff made sense for our long-term vision. Although geothermal is not our major source of energy, it is a significant producer that is reliable and efficient.” Waupaca Foundry has aggressively targeted energy use to reduce its carbon footprint and maintain global competitiveness. Energyreduction activities include heat recovery for building/hot water heating, energy efficient lighting retrofits and the widespread use of premium high efficiency motors. Waupaca was among the first companies in the U.S. to volunteer for the U.S. Department of Energy's “Better Buildings, Better Plants” program. The goal is to reduce industrial energy intensity by 25 percent in 10 years. “This effort includes the development of energy use and energy intensity baselines, and the ongoing implementation of an energy management plan to meet the 10-year goal,” says Gigante.
The ultimate goal for Wisconsin is to stay competitive—not just with other states, but other countries as well. “This ‘war on coal’ will make doing business a lot harder for Wisconsin's job creators,” says Bott. “Manufacturing drives Wisconsin's economy and we are dependent on affordable energy to compete in a global marketplace.”
There are also huge economic development opportunities for costcompetitive states that can ride the “reshoring” wave—companies coming back from low-cost countries like China to establish their operations in the U.S. or Mexico. Boston Consulting Group recently reported that more than one-third of the companies they interviewed with offshore operations are considering returning to the U.S. To be in contention for these capital investments and new jobs, states must be able to deliver low energy prices. For Wisconsin, that means coal must be abundant and affordable. “Coal is a critical element of our diverse fuel mix and helps keep energy prices under control,” says William Skewes, executive director for the Wisconsin Utilities Association. “However, as increased regulation makes coal more expensive to use, energy providers are
increasingly turning to natural gas, which has a significantly lower emissions profile and is in increasingly abundant supply.”
With the low cost of natural gas, there will be pressure on utilities to convert their old coal fleets to natural gas—for example, We Energies has proposed converting the Menominee Valley cogeneration steam/ electricity plant to natural gas. Rail companies are also looking at hybrid and natural gas engines to power their locomotives.
As attractive as natural gas is at the moment, it cannot replace coal. Wisconsin does not have the pipeline infrastructure needed to convert its coal fleet to natural gas. The coal plants in southeastern and southwestern Wisconsin also do not have sufficient access to natural gas to support conversion— building that infrastructure would be hugely expensive and difficult to permit. The bottom line is there are no economically viable ways to replace coal as Wisconsin’s primary source for base-load electricity generation.
• Two-thirds of Wisconsin households use natural gas as their primary fuel for home heating. • Coal fuels about 2/3 of Wisconsin electrical generation.
• Four-fifths of coal for Wisconsin comes via rail from Wyoming. • Hydroelectric and wood are the largest renewable sources of energy.
• Renewable accounts for about 8.4 % of Wisconsin's total electrical generation (2011). • One in 10 Wisconsin households rely on electricity as their primary energy source for heating. • Wisconsin's industrial sector is the highest energy-consuming sector. • In 2010, Wisconsin produced 438M gallons of ethanol, ranking 9th among states.
• Wisconsin households use 103M BTU per home annually, about 15% more that the U.S. average. But lower utility rates result in households spending 5% less for energy than the U.S. average.
“As always, Wisconsin’s biggest challenge is continuing to provide reliable, affordable energy • Industrial ratepayers make in an environmentally up 0.15% of the electrical responsible manner,” says ratepayers in Wisconsin Skewes. “This means but pay about 22% of the maintaining a diverse rates. mix of fuels, including coal, as well as operating a highly efficient electric system. We must have a sound but flexible infrastructure to produce and deliver power, but also make smart investments so customers aren’t paying the capital costs of facilities that aren’t giving them the most value. It’s a delicate balance.” BV Crawford is a Madison-based freelance writer. Wisconsin Business Voice
EPA Regulations Threaten Wisconsin’s Job Creation By Ellen Nowak
isconsin is a coal state. Approximately 62 percent of the state’s electric generating capacity is coal fired. Wisconsin is also a manufacturing state. Those two facts are, undeniably, related.
Wisconsin was recently ranked as the fifth best state for manufacturing job creation in the nation. But the multitude of upcoming Environmental Protection Agency (EPA) regulations, particularly the proposed rules regarding carbon emissions, threaten that ranking.
Coal is a cheap and reliable source of power. Manufacturers need cheap and reliable power to function and prosper. They need certainty that the power will be there when needed and certainty that prices won’t skyrocket out of control. Manufacturing and its connection to the energy and utility systems of Wisconsin is well documented – the more the manufacturing sector grows the better the energy market performs which, in turn, means better security and rates for the average consumer. Over the last several years, the EPA has proposed regulations that attempt to
drastically reduce the amount of electricity generated by coal. These rules require utilities to switch to a different fuel source (i.e. natural gas), retire plants or build new sources of generation. All of these solutions are costly to ratepayers.
Since 2003, Wisconsin utilities have already invested approximately $3 billion in emission controls to comply with EPA regulations. Those investments were made with the assumption the plants being improved would be used for the remainder of their expected lives. These controls are now at risk of being obsolete or insufficient to meet the newer, stricter regulations, causing utilities to abandon existing investments. But the costs to install these controls cannot be abandoned.
As a consequence, the EPA regulations could result in a double hit to ratepayers. First, they may be on the hook for past expenses from which they receive absolutely no benefit. Second, they will be asked to pay for the expense of replacing that generation or adding even more, costly emission controls.
Perhaps the rule that provides the greatest threat to Wisconsin electric rates is President
Obama’s proposed rule on carbon emissions on new power plants and the expected rule on existing plants. These rules, promulgated under Sections 111(b) and (d) of the Clean Air Act will impact Wisconsin in two ways.
First, they would stop the construction of any new coal-fired power plant in Wisconsin. Second, the rule on existing coal plants is expected next June. If it doesn’t afford states flexibility on implementation, give credit to utilities for previously installed controls, or if it requires a control technology that is uneconomic, rates for Wisconsin residents will “necessarily skyrocket” as the President declared during his candidacy. I am working to ensure that Wisconsin’s voice will be heard. We need to work together to convey Wisconsin’s concerns and suggested approaches to the EPA to minimize the impact to Wisconsin ratepayers. BV
Ellen Nowak is a member of the Wisconsin Public Service Commission. The views in this column are her own and do not represent the views of the Commission.
WMC Members Say State Will Outperform U.S. Economy in 2014 The stubbornly weak economic recovery, spiking health care costs and difficulty hiring qualified employees are the top concerns for Wisconsin business leaders heading into the New Year, according to a survey of 340 WMC member business executives conducted late last year.
Fifty-three percent of employers say the U.S. economy will see moderate growth during the first six months of 2014, while 35 percent predict growth will be flat. Ten percent believe growth will be good and just three percent say the economy will contract. Survey respondents are more optimistic about the state economy during the first half of the New Year. Sixty-five percent say the Wisconsin economy will experience moderate growth; 31 percent say growth will be flat. Just two percent say growth will be
good and one percent say the state economy will weaken. When asked their top business concerns, respondents said the sluggish economic recovery was number one (33 percent), followed by health care (21 percent), regulations (18 percent), labor shortage (9 percent) and taxes (7 percent).
Ninety-three percent said they offer employer-sponsored health insurance coverage to their employees. Of those, 87 percent said their costs will increase. Fortytwo percent said their premiums will rise between 11-20 percent; 40 percent said rates will rise between 1-10 percent. Seventy-eight percent of business leaders blame the federal Patient Protection and Affordable Care Act (ACA) for the
rate increases and 55 percent say ACA compliance had led to changes in the plans they offer employees.
Seventy-six percent of respondents say they will pass-on some or all of their higher health care costs to employees. Specifically, 54 percent said they will increase employee contributions and 22 percent said they will reduce benefits.
Overall, 54 percent say ACA has had a negative impact on their employees, 30 percent say it is too early to tell. Just one percent said ACA’s impact has been positive.
Despite a seven percent national unemployment rate, 60 percent of Wisconsin employers report having trouble hiring employees. Of that number, 69 percent say the reason is a lack of qualified applicants.
Chris Reader WMC Director of Health & Human Resources Policy
Focus on Jobs Brings Results F or several years, Wisconsin Manufacturers & Commerce has been discussing an apparent disconnect found in Wisconsin between manufacturing job seekers and the manufacturing jobs available. Even when the unemployment rate was at its high mark, manufacturers still struggled to fill open skilled positions, such as welders or CNC machine operators. The reason? For various contributing factors, the available workforce simply lacked the training and skills needed for modern manufacturing jobs. That was compounded by proper training becoming difficult and costly to obtain. Recognizing this paradox, WMC set out to advance an agenda over the last couple of years to tackle this issue and help connect willing workers with training and, ultimately, jobs. Working alongside Governor Scott Walker and the Wisconsin Legislature, we have made good progress advancing a number of key initiatives to close the skills gap found in the workforce. With a focus on training, apprenticeships, technical skills and connecting necessary skills with available jobs, real advancements have been made to reduce the skills gap and help people get back to work in manufacturing, the backbone of our state’s economy. In 2013, WMC and lawmakers have focused on directing resources where it matters most by investing in training and apprenticeships. $15 million was allocated for industry-specific training grants through the newly created Wisconsin Fast Forward program. The first round of grants, which included those aimed specifically at small manufacturers, were awarded late last year.
Similar grants will be awarded throughout 2014, and the training they will fund will bear fruit in the near future. Along with the training grants, the Fast Forward program includes the development of a labor market information system (LMIS), which is a modern website to help job seekers and employers connect.
Additional reforms passed last fall include a series of new laws that continue to focus on developing the Wisconsin workforce. The state invested in youth apprenticeships by increasing funding to the Youth Apprenticeship program by $500,000 annually. This worthwhile program helps high school students receive on-the-job training and technical education while still in high school. An additional $500,000 was allocated for apprenticeship tuition reimbursements, to be awarded in upto $1,000 reimbursements to successful apprentices. These awards will help reduce the cost of obtaining an apprenticeship and will encourage more individuals to enter the skilled trades. The Governor and lawmakers also created the Technical Excellence Higher Education Scholarship. Mirroring the current Academic Excellence Higher Education Scholarship, the new scholarship will be awarded to the top high school students who continue their studies at a technical college. This list is certainly not allinclusive, but it shows the strong focus lawmakers have had on encouraging technical skills, apprenticeships and putting people back to work in
manufacturing. The results of this focus have been unmistakable. In the data released by the U.S. Bureau of Labor Statistics in late November 2013, Wisconsin’s manufacturing job growth of 6,000 new jobs led the nation for October 2013, and Wisconsin was the second highest state in the nation for manufacturing job growth for the period of October 2012 through October 2013. As the reforms mentioned above all come online, we have every expectation that the jobs picture, especially for manufacturing jobs, will only continue to improve into the future. Going forward, the focus must remain on improving the picture for manufacturing jobs along with all sectors of the Wisconsin economy. As the manufacturing industry continues to modernize, advance and become increasingly complex, so too must the available job training programs improve and adapt in order to keep our workforce ready to compete with the world. BV
Follow Chris on Twitter @ReaderWMC
WMC’s Chris Reader, third from right, at a recent bill signing with Governor Walker for Act 57, which created a reimbursement for apprenticeship tuition and fees. Wisconsin Business Voice
Company News Wisconsin’s Business Climate is Ripe for Expansion
Mayville Engineering Co. is planning to expand five of its plants in Wisconsin, resulting in 100 new manufacturing jobs. This is the result of orders from existing customers as well as new work the company has landed.
Linetec, one the nation’s largest paint and anodize finishers, built a 30,000-square-foot addition to its anodize facility in Wausau. To support the addition and growth of its business, the company is increasing its anodize staff by more than 10 percent. Addison-Clifton, a Brookfield-based company specializing in global trade compliance solutions, has expanded its global footprint by establishing a new subsidiary in the port city of Ningbo, Zhejiang Province, China. Pictured at left is Ulice Payne, Managing Director of Addison-Clifton, LLC.
The Sartori Co., a family-owned cheese company, announced in December that it will embark on a $14 million expansion and renovation project at its plants in Antigo and Plymouth – a project that is expected to create up to 53 new jobs.
Advance Announces Manufacturing Award of Distinction Recipients
In November, Advance, the economic development program of the Green Bay Area Chamber of Commerce, announced the award recipients of the 2013 Manufacturing Awards of Distinction: Ariens Company, Brillion (Large Company Award); Lindquist Machine Corp, Green Bay (Workforce Development Award); N.E.W. Plastics Corp, Luxemburg (Medium Company Award); Precision Machine Inc, Algoma (Small Company Award); and The Solberg Company, Green Bay (Environmental Sustainability Award). Nominees were judged based on company size, operational excellence, financial growth and community support.
Tom Howatt Elected Chairman of WPRI Board of Directors
The Wisconsin Policy Research Institute Board of Directors elected Tom Howatt as chairman. Howatt has been a WPRI board member since 2006, and is the Wausau Paper Corp. Chairman of the Board, where he served as the company’s President and CEO from 2000 – 2011. Howatt replaced James Klauser, who served as WPRI chairman since 2006 and will continue to serve as a WPRI board member.
Super Steel Recognized for Growth and Hiring
Milwaukee-based manufacturer, Super Steel, received the Inc. Magazine Hire Power Award in recognition of its growth and contribution to the American people and economy with its continued hiring. The company is ranked #6 among private business job creators within the state of Wisconsin.
World Championship Cheese Contest Names First Female Assistant Chief Judge Masters Gallery Foods, Inc. proudly announced Sandy Toney was selected as the new Assistant Chief Judge for the Wisconsin Cheese Makers Association. She is the first woman to hold the position for the World Championship Cheese Contest since it began in 1957. Toney, Vice President of Corporate Quality and Product Development for Masters Gallery Foods, has been a licensed cheese grader for close to 20 years.
HNI Appoints New President and Celebrates 50 Years in Business
September was a monumental month for HNI Wisconsin – the appointment of their new President, Chad Tisonik, fell on their 50th anniversary and followed a record-breaking year of 35 percent growth! Tisonik’s new role as President is a milestone for the firm, as it marks the first time HNI Wisconsin will be managed by a non-family member of the founder since the company’s inception in 1963. Chad is the nominating chair and immediate past chair of the Wisconsin Safety Council Advisory Board.
Governor Walker Participated in Lakeshore Technical College Apprenticeship Program Tour
Gov. Walker and Congressman Tom Petri (R-6th District) joined state and local political, education and business leaders in November at the “Kickoff Your Manufacturing Career” event hosted by Vollrath and Lakeshore Technical College (LTC) in Vollrath’s new distribution center. During the presentation, Vollrath President & CEO Paul Bartelt said The Vollrath Company has doubled in size since 2008, which includes the expanded manufacturing facility of P.W. Stoelting in Kiel.
Experience. Bright ideas.
First Annual SkillsUSA Wisconsin Welding Challenge Held in October
SkillsUSA held the ‘First Annual SkillsUSA Wisconsin Welding Challenge’ in October. The event was hosted by Advanced Welding Institute in Eagle River, and each of the twelve participating students competed in various manufacturing welding processes as well as a job interview competition. Students were awarded over $3,000 in scholarships, welding helmets and much more. BV
Healthcare reform can be confusing. But at Delta Dental we’re developing effective plan designs and options to give you the benefit solutions you’re looking for. Bright ideas lead to brighter smiles. Learn more at www.deltadentalwi.com.
Experience. The Delta Dental Difference.
2014 Wisconsin Business Directories Now Available from WMC Access to business lists is now easier and less expensive with our lineup of D&B products. The 2014 editions of Harris InfoSource Manufacturing and Business Services Directories are now available for order. These are the same directories our customers have depended on for over 90 years. WMC’s custom list service provides you with reference and prospecting lists to reach your target markets, not only in Wisconsin, but in all states and regions.
Contact Mike Shoys to order today, email@example.com, (608) 258-3400 Wisconsin Business Voice
Pat Simonett, WMC Director of Membership
My First 100 Days
y first 100 days as WMC’s new director of membership have been an insightful submersion into an organization I apparently knew relatively little about six months ago. During the process of pursuing the position, I quickly learned more about the dramatic impact WMC has made to the business climate in Wisconsin and more specifically, the legislation WMC has worked to pass, defend and block throughout its 103-year history. Some of that legislation has helped propel Wisconsin into the top 20, according to several respected rankings. The other key takeaways from my initial interviews were the deep conviction and passion of the staff and board to make WMC’s mission of making Wisconsin the best state in the country to do business.
The annual business savings of $3.16 billion divided evenly across the 2,840,733 employees in Wisconsin*, equates to $675 per employee. For example, a Wisconsin employer with 50 full time equivalent employees (FTEs) has an estimated annual savings for the business of $33,750, thanks to reforms passed, defended or blocked by WMC’s efforts. So let me close by saying this, thank you for your membership! It’s only with you as an investor in WMC that we were able to make this happen. And know that we are executing our plan on your behalf to make sure 2014 is an even better year for your business! BV
*According to 2012 U.S. Department of Labor statistics of Wisconsin’s workforce.
Fast-forward three months… I’ve had the great privilege to speak with many members, board members and soon-to-be members. Conversations have been wide-ranging and feedback has been energizing to say the least. Members and most soon-to-be members are aware of the impact WMC has made. They are equally passionate about the work we are doing on their behalf at the Capitol.
Internally at WMC, the positive feedback coupled with the hardworking culture and belief in the mission is the fuel that drives our efforts to grow our presence in all corners of the state. Our goal in 2014 is to exceed 3,900 member companies (we currently have nearly 3,500.) In an effort to show our members the value we bring to the table, I set forth with a goal to quantify what WMC does for a business’ bottom line annually. The exercise allowed us to us illustrate the return on investment we create for Wisconsin businesses. (See the following page). WMC is…
• 1 Company
• 37 Dedicated Employees • 3,500 Members
• $3.16 Billion in positive impact to business in Wisconsin
Governor Walker with WMC’s membership team during a recent visit to the WMC office.
Return on Investment WMC Saves Businesses Money! Our team of five professional lobbyists have expertise in every policy area confronting employers, making WMC the leading voice for businesses at the Wisconsin Capitol. Lawmakers and state agency officials alike look to WMC to understand how laws and regulations will impact businesses – we put you and your business’s interests at the center of policymaking at the Capitol and key state agencies.
NOBODY WORKS HARDER FOR BUSINESS In addition to five full-time lobbyists, WMC has a team of attorneys on retainer with expertise in tax law, environmental law, transportation and employment regulation. During the 2013
legislative session, WMC spent more than 8,300 hours lobbying policymakers to achieve key business victories in the areas of regulatory reform, legal reform and tax reform. Our efforts are saving your business money and improving your bottom line.
ABOUT WMC Founded in 1911, Wisconsin Manufacturers & Commerce (WMC) is the state’s chamber of commerce and largest business association representing more than 3,500 employers of every size and from every sector of the economy.
Annual Savings Per Employee* = $675 750
00 5,0 67 $ EMPLOYEES 250 250 06, 5 EMPLOYEES $ 100 EMPLOYEES ,500 337 $ 0 68,75 0 $1 $67,50
$6 ,7 50 ,00 0
WMC IS YOUR LEADING BUSINESS ADVOCATE
0 00 5, 7 ,3 $3
Total Annual Savings = $3.16 Billion
WMC’S ADVOCACY SAVES YOUR BUSINESS MONEY! Fought to Freeze Property Taxes PASSED 2011 AB 40 ............................................................ $1.06B Defeated Global Warming Annual Energy Tax Hike DEFEATED 2009 AB 649 ...................................$700M Fought for Personal Income Tax Cut PASSED 2013 AB 40..........................................................$327M Maintained Property Tax Exemption for Machinery & Equipment PASSED S. 70.11 (27) (b) .............. $254.3M Capped Monthly Energy Bill Taxes PASSED 2011 Act 32 ...........................................................$156M Enacted Manufacturing & Agricultural Tax Credit PASSED 2011 AB 40...................................... $128.7M Passed Sales Tax Exemption for Electricity in Manufacturing PASSED 2003 AB 507 ........................$107M Dedicated Property Tax Relief PASSED 2013 Act 46.................................................................$100M Capital Gains Exclusions and Deferrals PASSED 2011 Act 32 ....................................................$99.2M Unemployment Tax and Insurance Reforms PASSED 2013 SB 200 & AB 40 ....................................... $86M Personal Property Tax Exemption for Computers PASSED S. 70.11 (39) ......................................... $76M Single Sales Factor Apportionment for Corporate Taxes PASSED 2003 SB 197 ................................ $45M Tax Deduction for Health Savings Accounts PASSED 2011 Act 1 ................................................$21.2M Reduced Magnitude of Air Permit Fees PASSED 2013 Act 20 ......................................................$4.5M
OTHER KEY BUSINESS SAVINGS 2011/12
WMC won a national award in 2013 for its efforts to enact reforms against lawsuit abuse, which is estimated to cost
Wisconsin $4.8 billion per year.
WMC supported Governor Walker’s reforms to collective bargaining laws for government workers that have saved
taxpayers roughly $2 billion statewide.
WMC implemented an award-winning advocacy campaign to defeat a $15
billion global warming energy mandate that
was expected to cost businesses an average of
WMC led the effort to defeat a payroll tax that would have cost an average of $2,600 per employee as part of a
government run healthcare proposal.
$1,834 per year. *Based on total Wisconsin workforce of 2,840,733, the 2012 monthly average employment according to the U.S. Department of Labor.
501 East Washington Avenue, Madison, WI 53703 | 608.258.3400 | www.wmc.org |
WMC Board Member Predictions: 2014 Daniel T. Ariens President & CEO Ariens Company Brillion I believe we are on the long slow road to recovery. The State of Wisconsin will do better than our surrounding state partners because we have a formula for state governance designed to build confidence in the free markets. Having our costs under control in the state and a reasonable tax strategy in line with policy direction, we will grow relative to those states that do not have alignment. Manufacturers will hire in 2014 provided we can find people with the necessary skills.
Gary Gigante President & CEO Waupaca Foundry Inc. Waupaca We expect to see moderate growth with GDP at 2.5 percent. Waupaca sales revenue will increase by about 5 percent when compared to 2013, mostly driven by the strong automotive market. The commercial truck and agriculture markets will be flat and construction will remain down. For our business, the second half of the year will be stronger than the first. My biggest concern continues to be number of new and unrealistic regulations coming out of Washington.
John B. Torinus Jr. Chairman Serigraph Inc. West Bend Barring a government shutdown in early 2014 over the debt limit, 2014 should be another year of slow but steady growth. There wonâ€™t be fast growth because the fed will step in with higher interest rates whenever there is a real uptick in GDP and/ or job growth. That will moderate the upside.
Positives for the economy will be the sluggish but steady job growth, less downside risk in Europe, increased consumer confidence and the willingness to buy big ticket items, the slowdown in job shifts to Asia and continued containment of health cost inflation in the private sector.
The negatives are a dysfunctional Congress, more distractions on health care reform and higher taxes. The positives should out-weigh the negatives.
Scott A. Mayer President QPS Employment Group Brookfield QPS is positioned to have a solid year in 2014. We think the unemployment rate will remain high; however, more jobs will be added next year. The labor market will tighten as quality candidates accept positions and companies will need to work on recruiting passive or already employed workers. The only factor that remains unknown is how healthcare reform will affect the economy.
A Partnership Built for Members in Wisconsin
MADE IN WISCONSIN Kimberly Clark 3120 Riverside Ave Marinette, WI 54143 (715) 735- 6644 Year Established: 1870 Number of Employees: 58,000 Worldwide; 4,008 in Wisconsin www.kimberly-clark.com
As the freeze of a typical Wisconsin winter keeps its hold upon us there is one particular, very recognizable, Wisconsin-made product every Wisconsinite will soon be turning to in order to stop their sniffles, and that is a box of Kleenex. Consisting of 58,000 employees in 37 countries, Kimberly-Clark’s global team is passionate about providing people in more than 175 countries with essentials for a better life by adding convenience to daily routines with some of the worlds most recognized products. In the U.S., they manufacture in 16 states where they produce well-known brands such as Huggies, Scott Paper Towels, WypAll wipers, Kotex, Poise and Depends, and have a substantial presence in Wisconsin where their North American operations are headquartered. The next time you reach for a paper towel to clean up a spill or a clean diaper for your infant you can be proud there is a good chance those indispensable products were made right here in Wisconsin!
Hampel Almost every Wisconsin citizen has seen one of Wisconsin’s many farms peppered with Calf-Tels, but did you know that those Calf-Tels are made in Wisconsin? Located in Germantown, Hampel is the Midwest's leading thermoformer and began serving the agriculture industry in 1981 with the introduction of the Calf-Tel calf hutch, and has since grown to be the world’s number one choice for calf housing. Hampel’s Animal Care segment is the world’s leading provider of calf housing solutions, providing calf care products including Calf-Tel as well as calf raising consultancy, serving domestic and international dairy markets with distribution in over 25 countries. Prior to Calf-Tel, calf housing was most commonly constructed out of wood. In time, wood panels breakdown, deteriorate and become a breeding ground for bacteria, resulting in the spread of disease to the calves. For nearly 30 years, dairymen throughout the world have turned to the experts at Calf-Tel for insight into proper calf management techniques. With an estimated 2 million calves raised in Calf-Tel housing worldwide each year, more calves are raised in Calf-Tels than in any other manufactured housing.
W194 N11551 McCormick Drive Germantown, WI 53022 (262) 255-4540 Year Established: 1976 Number of Employees: 150 www.hampelcorp.com
Waupaca Foundry, Inc. 1955 Brunner Drive Waupaca, WI 54981 (715) 258-6611 Year Established: 1955 Number of Employees: 3,700 Worldwide; 2,377 in Wisconsin www.waupacafoundry.com
Waupaca Foundry has a reputation as solid as the castings they create. Capable of shipping 1.5 million tons of castings per year, they are the largest producer of gray, ductile, austempered ductile and compacted graphite iron castings in the world. Their castings are produced for global markets including more than 400 customers in the passenger car and light truck, commercial vehicle, off-highway and industrial sectors. Typical automotive castings include brake rotors, brake calipers and anchors, differential cases and carriers, engine bedplates and flywheels, crankshafts and more. Commercial vehicle castings include brake drums and discs. Agricultural and construction castings include tractor engine and transmission components, agriculture implements, combine parts, and turf care parts. In fact, there are more than 75 Waupaca Foundry castings on a John Deere tractor and every Toyota vehicle made in the U.S. has braking component castings made by Waupaca Foundry.
EPA’s Climate Regulations will Cool the Economy, Not the Planet By Nicolas Loris
he Environmental Protection Agency’s greenhouse gas regulations for both new and existing power plants will impose a massive, bureaucratic energy tax devoid of any meaningful environmental benefit.
Before we get into the costs, we first have to ask why the federal government is regulating carbon dioxide (CO2) and other greenhouse gas emissions (GHGs) in the first place. Unlike other regulated pollutants, CO2 emissions have no direct impact on human health. But the EPA concluded that manmade GHGs’ warming effect would create more floods, hurricanes, droughts, and other natural disasters and thus adversely affect human health and public welfare.
cost of energy increases the cost of production across most of the economy and those adverse economic effects ripple throughout the economy.
A new report from The Heritage Foundation analyzed the effects of a 20-year phase-out of coal power, and the results are economically devastating. By the end of 2023, job losses reach nearly 600,000. America’s manufacturing base will lose 270,000 employees. A family of four’s annual income drops more than $1,200 per year, and its total income falls by nearly $24,400 over the 20-year time period.
If the news wasn’t grim enough, the federal government’s climate regulations will inflict a lot of economic pain for no noticeable impact on global temperatures. Even if climate change were a Proponents of the regulations contend that 97 dire threat, unilaterally reducing our greenhouse gas percent of the climate literature agrees emission would barely make a dent on global that manmade emissions are causing “The argument is whether human emissions and thus have no impact on warming and thus the debate activity is the primary driver of climate climate. Developing nations like India and is over. While a near-universal China would have to play ball in order to change and the magnitude of climate have any significant reduction in global consensus exists that manmade emissions have a warming effect, emissions. But those countries are not change created by greenhouse gas that is not the point of controversy. going to slow economic growth to solve emissions.” The argument is whether human activity a theoretic problem when their populations is the primary driver of climate change and the face far more pressing environmental problems and magnitude of climate change created by GHGs. when their citizens are trapped in grinding poverty and lack access to reliable electricity. And that is a debate worth having. Available climate data simply do not show that the earth is heading toward calamitous warming with consequences like Manhattan under water. Take a look at the climate models that the EPA relied on to promulgate these regulations. Those models projected a 0.3 degree Celsius warming over the past 17 years, when in reality no warming occurred (while CO2 emissions have increased). Over the past two years, 16 experiments published in peer-reviewed literature found that the equilibrium climate sensitivity (the effect that a doubling of carbon dioxide in the atmosphere would have) is much lower than projected by the models backed by the EPA. Observational data does not indicate natural disasters have worsened, either. Climatologist and professor at the University of Colorado Dr. Roger Pielke testified earlier this year saying “It is misleading and just plain incorrect to claim that disasters associated with hurricanes, tornadoes, floods or droughts have increased on climate timescales either in the U.S. or globally.” Despite questions about the underlying science, EPA is trudging forward with its war on coal and American families and businesses are the number one casualties. The loss of coal as a dependable, affordable energy source spells higher prices for electricity and forces consumers to pay more and use less. The higher
Congress needs to step up and prohibit the federal government from regulating greenhouse gas emissions because the economic realities of the EPA’s proposals are much more dangerous than the climate realities we’re facing today. BV An economist specializing in energy and environmental issues, Nicolas Loris is the Heritage Foundation’s Herbert and Joyce Morgan Fellow.
WMC hosted more than 400 people for the 2013 State of Wisconsin Business event last fall. The annual event provided unique insights into the economic health and future well-being of our great Badger State. Featured speakers included David Azerrad of the Heritage Foundation, Wisconsin CEOs and Governor Walker. Wisconsin Business Voice
WSC recently held its annual Worker’s Compensation Law Symposium featuring attorney Charles Palmer, managing partner at Michael Best & Friedrich’s Waukesha’s office. During the symposium Chuck updated Wisconsin employers on the complex world of worker’s compensation. I asked him to share with you one of the highlights from his presentation regarding safety audits.
− Janie Ritter, Director of Wisconsin Safety Council
Are Your Corporate Environmental Safety and Health Audits a Roadmap For Government Regulators? By Charles Palmer, Michael Best & Friedrich LLP
ost businesses engage in some form of self-inspection or audit of safety practices. Often the worker’s compensation insurance carrier also performs periodic audits. Recently, the question has arisen more often whether government regulators have a right of access to voluntary safety and health self-audits. Three recent cases provide an outline of the issues involved with this question.
Solis v. Grinnell Reinsurance (Northern District of Illinois) In this case where two teenage boys died in a grain bin, OSHA subpoenaed historical safety audits that had been performed by an insurance company. The federal judge ordered the audits to be disclosed rejecting the argument that an OSHA policy letter prohibited OSHA from seeking voluntary self-audits. That policy memo stated in relevant part as follows: a. OSHA will not routinely request voluntary self-audit reports at the initiation of an inspection. OSHA will not use such reports as a means of identifying hazards upon which to focus inspection activity. b. However, if the agency has an independent basis to believe that a specific safety or health hazard warranting investigation exists, OSHA may exercise its authority to obtain the relevant portions of voluntary self-audit reports relating to the hazard.
“Self-audit” means a systematic, documented, and objective review by or for an employer of its operations and practices related to meeting the requirements of the Occupational Safety and Health Act. The Illinois judge ruled that the policy memo was not binding, and that it did not apply to protect the insurer’s audits from disclosure.
Solis v. Milk Specialty Products (Eastern District of Wisconsin) The employer had been cited by OSHA at one of its Wisconsin plants for alleged combustible dust hazards. Directed by the general counsel 34
of the company, the employer engaged in an analysis of combustible dust exposure at its other plants.
OSHA demanded the analysis be disclosed during a second OSHA inspection two years later.
The company argued the analysis was subject to attorney-client privilege, and was attorney work product prepared in anticipation of litigation. A federal judge ordered the report be disclosed. He ruled it was not prepared in anticipation of litigation, because the first OSHA case had ended by the time the report was prepared. The judge also ruled that the company’s general counsel was not engaged in providing legal advice when he directed the analysis to be done. The judge concluded that the general counsel added no legal advice or recommendation to the report and that he was merely engaged in giving business advice. Solis v. Grede (Western District of Wisconsin) Earlier this year OSHA subpoenaed a company’s self-audits at two separate Wisconsin plants early in the inspections. After the company refused to disclose the audits, OSHA brought an enforcement action in federal court in Madison. A motion was presented on behalf of the company asking the court to reject the subpoenas. It was argued that by preparing the policy memo (discussed in the Grinnell case above) and publishing it, OSHA created a constitutionally protected right of privacy against government intrusion.
OSHA’s subpoenas were rejected by the court until OSHA could actually independently identify hazards, and then only the portions of self-audits related to those independently identified hazards would need to be disclosed. As a practical matter, the holding of the judge required OSHA to first conduct an inspection, then identify hazards, before asking for audit reports. The reports themselves cannot be used
by OSHA as a roadmap to find hazards in the first place. Recommendations
The lessons learned from these three cases are: While there are many articles discussing the Grinnell case, based on the victory in Grede, there is less risk that OSHA can successfully demand audits at the beginning of an inspection in Wisconsin.
• An insurance company’s audit of its insured should be subject to the same protections as an insured’s own self-audits, but that case has not yet been argued in Wisconsin.
• General counsel and other companyemployed attorneys should not assume their involvement in audits will protect the results. Consideration should be given to engaging outside counsel to direct the audits, and in doing so, outside counsel should actually provide advice related to the audit. • If the audit can be prepared in connection with ongoing or threatened litigation, or based on the status of the company as a target of investigation, connecting the purpose of the audit to that targeting may increase the chances of protecting its content.
• Legal counsel should be consulted regarding the design and handling of voluntary self-audits, and such audits should not be disclosed to others, including government investigators, without consulting experienced legal counsel. BV Attorney Charles Palmer, Michael Best & Friedrich LLP, is a managing partner in Michael Best’s Waukesha office and is part of the firm’s manufacturing and energy teams. Follow WSC on Twitter @WISafetyCouncil
2014 Safety Training
January - June 2014
The Wisconsin Safety Council, a division of WMC, is Wisconsin's leading provider of safety training and programming. WSC offers training throughout the year at locations across the state.
MADISON AREA SAFETY TRAINING January 13-16
Fundamentals of Industrial Hygiene (FIH)
OSHA Construction Breakfast: Electrical Safety
MSHA/OSHA 8-Hour Refresher
OSHA Construction Breakfast: Carbon Monoxide Safety
WISCONSIN DELLS AREA
FOX VALLEY/GREEN BAY AREA
Annual Food Processors Safety Conference/Expo
OSHA Construction Breakfast: OSHA Update Instructor Development Course: First Aid/ Adult CPR/AED
OSHA Construction Breakfast: Workplace Attitudes
Safety Training Methods (STM)
Hazardous Communication, Train-theTrainer
Creating a World Class Safety Culture
MILWAUKEE AREA SAFETY TRAINING
MSHA/OSHA 8-Hour Refresher
RCRA Compliance for Hazardous Waste Generators Overview DOT Hazmat Transportation Refresher
February 24 March 18
MSHA/OSHA 8-Hour Refresher Supervisor Development: Safety & Health Fundamentals
Process Safety Management Boot Camp
72nd Annual Safety & Health Conference/Expo • Coaching the Lift Truck Operator, Trainthe-Trainer • Effective Team Safety • Ergonomics: Managing for Results • Incident Investigation: Root Cause Analysis • Electrical Safe Work Practices Compliance • Using Direct Reading Instruments to Assess Chemical, Noise & Heat Exposures • How to Create an Effective Workplace Violence Prevention & Intervention Program (Part II) • Crisis Management Communication • Leadership through Understanding People, Behaviors & Workplace Demands
OSHA 10-Hour Voluntary Compliance Courses for General Industry & Construction
Coaching the Lift Truck Operator, Train-theTrainer
OSHA 30-Hour Voluntary Compliance for General Industry
Confined Space, Train-the-Trainer Lockout/Tagout, Train-the-Trainer
Incident Investigation: A Root Cause Analysis
WAUSAU/STEVENS POINT/ MARSHFIELD AREA March 27
Job Safety Analysis
OSHA 30-Hour Voluntary Compliance Course for General Industry
EAU CLAIRE AREA February 17
MSHA/OSHA 8-Hour Refresher
Wisconsin Safety & Health Conference & Exposition
April 28-30, 2014
Kalahari Resort & Convention Center, Wisconsin Dells
Honoring Manufacturing Excellence in Wisconsin Winners will be announced at the Awards Banquet at The Pfister Hotel February 27, 2014.
MOTY Nominees for 2013 Small (0-99 Employees)
Precision Machine, Inc. Algoma Realityworks, Inc. Eau Claire Renardâ€™s Cheese and Deli Sturgeon Bay
Sign Effectz, Inc. Milwaukee Solaris, Inc. West Allis Steelwind Industries, Inc. Oak Creek
Medium (100-299 Employees)
Allied Plastics, Inc. Kenosha Automation Components, Inc. Middleton Badger Alloys, Inc. Milwaukee *Empire Screen Printing, Inc. Onalaska
N.E.W. Plastics Corp Luxemburg Saco Polymers/NWP Inc. Sheboygan *Schuette Metals Rothschild
large (300-750 Employees)
*Alto-Shaam, Inc. Menomonee Falls EMTEQ Inc. New Berlin
*KHS USA, Inc. Waukesha *Masters Gallery Foods, Inc. Plymouth
*Alliance Laundry Systems LLC Ripon Enerpac Columbus EVCO Plastics DeForest
Mega (751+ Employees) Frito-Lay, Inc. Beloit GE's Waukesha gas engines Waukesha Grede Holdings LLC Menomonee Falls
*Superior Crane Corporation Waukesha *Tailored Label Products, Inc. Menomonee Falls Visual Impressions, Inc. Milwaukee *Waukesha Metal Products Sussex Winsert, Inc. Marinette Xten Industries LLC Kenosha
*PendaForm Portage Super Steel LLC Milwaukee *Mercury Marine Fond du Lac MGS Mfg. Group, Inc. Germantown *Plexus Corp. Neenah
*These companies are also entered into the Workforce Development Grand Award category.
www.wimoty.com The annual awards competition is sponsored by:
Follow WMC on Channel WMC501 Sen. Alberta Darling (R-8th District): Education and Workforce Development
Lt. Governor Kleefisch: Wisconsin Fast Forward
WMC’s Jim Morgan: A Video for Wisconsin Chamber of Commerce Executives
Speaker Robin Vos (R-Rochester): Legislative Priorities
Wisconsin Business Voice: Interview with Governor Scott Walker “Unintimidated”
U.S. Chamber’s Doug Loon: On Federal Issues
Atty. Chuck Palmer with WSC’s Janie Ritter: Worker’s Compensation
he Wisconsin Business World program wishes to thank the remarkable volunteers who devote their time and energy to working with the smart and talented BW high school students each summer. Going beyond their role as mentors, these Company Advisors help ensure every student feels comfortable when they arrive at camp – and empowered when they leave.
Advisors make the sacrifice to be away from their families and jobs for nearly a week each June so the students of Business World can have an experience they will remember for a lifetime. If you see any of these selfless Wisconsinites please give them a pat on the back, and a big THANK YOU on behalf of the next generation of Wisconsin business leaders: Megan Barlow, WMC, Madison Eileen Baus, TAKKT, Milwaukee Rob Bermke, Georgia-Pacific, Green Bay Bob Denor, Ariens Co., Brillion David Hovde, ATC, De Pere David Leef, ITU, Inc., New Berlin Andy Lemorande, Hospital Sisters Health System (HSHS), Green Bay Traci Licari, M3 Insurance Solutions, Waukesha Mike Michalski, Belmark, Inc., De Pere Brian Mirr, Wisconsin Safety Council, Madison Jim Morgan, WMC Foundation, Madison
Michelle Morrow, WPS Health Insurance, Madison Erin Ott, Teacher, Madison Katy Pettersen, WMC, Madison Jack Pfister, SCORE, Madison Jeff Raymond, EnvisionIT, Madison Jim Schulz, Ad Venture, Waupaca Andy Sefcik, Colony Brands, Inc., Monroe Samantha Sepic, WMC, Madison Carol White, Greater Brookfield Area Chamber of Commerce Scott Wiedenhoeft, Engine Power, Oconomowoc
Business World is a program of the WMC Foundation and has helped educate and inspire over 14,000 young adults since it began in 1982!
GRASSROOTS Jim Pugh WMC Director of Public Relations & Issue Management
Business Leaders Need to Reach Out Now Breaking the Election-Year Inertia is Critical
ark your calendar for Tuesday, January 14. Look up the phone number for your legislators and Governor Scott Walker, and jot down a few notes. January 14 is when Wisconsin’s legislature resumes its 2013-14 session. So when 8:30 a.m. arrives, pick up the phone and start dialing for business reforms.
If you really want to have an impact, draft a letter on your company letterhead and mail it on Friday, January 10 to your lawmakers and the governor. On the 14th, every business executive who is reading this magazine should pick-up the phone and call your legislator and the Governor to urge them to keep pushing hard to make Wisconsin the most competitive state in the nation. Rest assured, the personal injury lawyers,
labor unions and environmentalists will be pressuring lawmakers to adopt policies that hurt your business.
As we enter the last stages of the legislative session, the WMC team will be calling on you at critical times to contact lawmakers. When you receive those alerts, it’s important that you take immediate action. Imagine the impact it would have if 4,000 business executives all called the Capitol on the same day urging lawmakers to keep pushing for pro-business reforms. It’s true; Wisconsin’s business climate has improved under Governor Walker’s leadership in partnership with the business community and pro-growth legislative majorities in the last couple of years.
But we all know our work is not done. So pick up the phone. Send the email. Write the letter. Inertia sets-in on lawmakers when elections are looming, and we need to apply a little torque to those at the Capitol to advance the business agenda. You can break the inertia. You can find your lawmaker’s contact information on WMC’s website – just go to Government Issues & Policy at the top of the homepage, then click Find Your Elected Officials. The Governor’s office phone number is (608) 266-1212. BV
Here are some key messages and talking points to use when writing or calling your legislators. • Lawmakers listen to business leaders from their home districts. Use that clout to have an impact that will make your business more profitable, and our state more competitive for all of our families. • Thank Governor Walker and lawmakers for working to promote tax cuts, regulation relief and lawsuit reform over the last few years. The progress has been dramatic and is much appreciated.
• Remind them we cannot sit on our laurels. We can’t spike the ball at the 30 yard line. Our business climate is improving and we need to keep up the momentum. • Urge them to support passage of pro-growth WMCendorsed bills that are currently in committee or stuck between the houses. Visit www.wmc.org/billtracking for more information, or call any one of WMC’s government relations specialists at (608) 258-3400 for details on how some of the pending issues may affect your company.
Legislative Priorities WMC asked Wisconsin’s legislative leaders what their priorities are for the legislative session when it resumes in January. This is what they told us… CHRIS LARSON (D-Milwaukee) Senate Minority Leader
Our priorities should include taking action on Wisconsin Jobs Now Package that included critical job creation legislation introduced by Democrats in the spring of 2013. Wisconsin’s lagging economy will not turn around if we continue down the same road. For that reason, we need to take decisive action by reforming the scandal-ridden WEDC to finally put Wisconsin job creation on the right track.
Reinvesting in current and future generations of Wisconsin workers by enacting Higher Ed, Lower Debt legislation to put more money into the hands of Wisconsin’s middle-class families and refunding the $800 million cut to K-12 education in Wisconsin that has put immense strain on local communities across Wisconsin;
And finally, accepting the federal funding to strengthen BadgerCare for Wisconsin’s working families will alleviate pressure on Wisconsin’s small businesses and healthcare providers, all while giving Wisconsin’s families the needed economic security to invest in their local communities and purchase local goods.
PETER BARCA (D-Kenosha) Assembly Minority Leader
The Wisconsin legislature spent far too much time this year on divisive bills that did not address what should be our top priorities to secure economic stability for Wisconsin – education, worker training and getting people back to work quickly. The keys to creating success for those priorities are: Education reform emphasizing achievement and accountability for all schools that receive taxpayer funding and fair funding for schools. Investing in workforce development with such bills as Workforce Growth Grants and Skills Enhancement Grants.
Focus on passing economic development bills that are aggressive, creative and will put people back to work quickly, such as Entrepreneurial Tax Credit Access, Made in America and renewable energy, cost-reduction and infrastructure initiatives. Other economic development priorities include Refundable Angel Credits and creating a Nanotechnology Hub at UW-Extension.
SCOTT FITZGERALD (R-Juneau) Senate Majority Leader
Responsible budgeting has kept Wisconsin’s books balanced and in the black, so at this point I do not expect there will be a need for a budget repair bill in Spring 2014. On top of the billion dollars in tax relief we have provided taxpayers over the past two legislative sessions, we have witnessed sustained increases in tax revenue due to private-sector economic growth. The shot in the arm we have attempted to give the state’s business environment has had a profound impact on the way we are able to save, invest, and return taxpayer dollars. The spring legislative session will serve as a period to address pieces of legislation that have yet to receive a vote on the senate floor, while holding true to the Republican philosophies of lower taxes, limited government and economic growth. ROBIN VOS (R-Rochester) Speaker of the Assembly
The 2013-2014 legislative session has been successful thus far. Republicans have cut income and property taxes, froze UW tuition and expanded the state’s worker training and education programs. Our top priority has been creating the best environment possible for private sector job creation and we’ll continue to work on that goal this spring.
Right the Rules: We will continue to “Right the Rules” in Wisconsin by eliminating unnecessary and burdensome regulations that hurt businesses and don’t protect the environment. Education Reform: Assembly Republicans will take-up additional education reforms. We will consider accountability measures for all schools receiving public funding as well as recommendations from the Speaker’s Task Force on Rural Schools and the Select Committee on Common Core. Fighting Heroin Abuse: The Assembly will vote on legislation authored by Representative John Nygren (R-Marinette) to fight heroin abuse and its horrible effects on Wisconsin families.
Assembly Republicans will continue to address the critical issues facing Wisconsin families, schools and businesses.
Wisconsin Business Voice
Energy Issues Looming for Wisconsin Business By Philip C. Fritsche
nergy is a subject all chambers of commerce should be prepared to address in the next couple of years as their constituent business members are going to be greatly affected by rising energy costs. Changes already scheduled to take effect, and still more that are being proposed, will spike the price of energy in our state in the coming years. Patricia Kampling, Chairman, Chairman, President and CEO of Alliant Energy, recently outlined five issues facing power generation utilities in the Midwest. These issues should be a concern for everyone representing Wisconsin business:
• Carbon Emission Management – The federal government, mostly through the EPA and arbitrary rules and regulations, is creating carbon and other fossil fuel emission reduction mandates that will force the closure of many coal-powered electric generation power plants (among the least expensive methods of generating electricity) and bring costly upgrades to others, all at the cost of the utility’s customers. • Cyber Security – All electric power generation and grid companies around the nation have been receiving confidential briefings from the U.S. Department of Homeland Security. These briefings focus on the vulnerability of the U.S. power system and the steps that must be taken to ensure a more secure grid. Efforts to make the power grid more secure will need significant investment, again at the cost of the utility’s customers.
• Net Metering – Utilities are required to buy back “excess” power at set rates from private power generation facilities such as privately held windmills, solar arrays or water-powered generators. In many cases, the set rates pay more to the private party than the per kilowatt hour rates charged to the public by a utility.
• Gas and Electric Coordination – Gas and electric utility companies within regions of the country are encouraged to work together in grid expansion and utility access plans in developing areas. More gas-fired power plants will be built to replace coal-fired plants. Siting of both the plants and the close access to gas lines is critical in efforts to minimize costs in building new plants.
• Flat and Declining Sales – Greater efficiencies in power usage from residential and commercial customers reduces the demand on the grid (lower sales for utilities) due to conscious conservation efforts. A second factor causing a decline in power usage in Wisconsin within the last several years is the loss of major manufacturers, such as the GM plant that closed in Janesville. This is an economic development issue as much as a utility issue.
The bottom line is despite aggressive efforts by many Wisconsin utilities to keep energy costs as a positive reason to either maintain a business in Wisconsin or relocate a business to Wisconsin, government regulations put increasingly upward pressure on costs that will have to be paid by rate payers in the years ahead. What can business people or chambers of commerce do to help? Contact members of the Wisconsin Congressional delegation and let them know that Midwestern states are going to be hit hard by unlegislated EPA mandates, unfunded security requirements and unfair Net Metering price rates, as well as a languishing national economy. BV
Philip C. Fritsche is Executive Director of the Beaver Dam Chamber of Commerce and President of the Wisconsin Chamber of Commerce Executives board of directors. Follow WCCE @WIChamberExecs
The WMC Foundation is dedicated to building a better future for Wisconsin by providing business and economics education, workforce development initiatives, local chambers of commerce support, safety training programs and business best practices.
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(L-R standing) Corey Chambas, President & CEO of First Business Financial Services, Inc. Joan Burke, President of First Business Trust & Investments Dave Vetta, President & CEO of First Business Bank - Milwaukee Chuck Batson, President & CEO of First Business Capital Corp. (L-R seated) Mickey Noone, President of First Business Bank - Northeast Mark Meloy, President & CEO of First Business Bank - Madison
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Wisconsin Business Voice is the flagship publication of Wisconsin Manufacturers & Commerce. WMC is Wisconsin's statewide chamber of commerce...
Published on Dec 27, 2013
Wisconsin Business Voice is the flagship publication of Wisconsin Manufacturers & Commerce. WMC is Wisconsin's statewide chamber of commerce...