DRIVING ECONOMIC GROWTH
Milwaukee 7 Council Meeting February 19, 2015 Gale Klappa – M7 Co-Chair
Chairman, President and CEO Wisconsin Energy Corporation Frank Unick Jim Kreuser CFO County Executive Uline Kenosha County M7 Agenda
Business Driving Global Plan Prosperity Trends M7 Mission
Help companies in our driver industries – companies that EXPORT goods and services from the region – to create jobs and invest capital here. M7 Win: Gardner Denver
Privately-held former Fortune 1000 manufacturer of industrial compressors, blowers, pumps and loading arms
$2.5 billion annual sales; global employment of 7,000
Moving global HQ to Milwaukee’s Third Ward (competed against Houston and Quincy, IL)
200 highly-paid executives & professionals
Team effort: WEDC, City of MKE, M-7 M7 Win: Toolamation
Lake County (IL) CNC machining company
Consolidating two facilities to 50,000 sf complex in Kenosha
77 skilled manufacturing jobs; $1.5 million capex
Announcement February 2015
Team effort: WEDC and KABA
Among first meetings sourced via M-7 calls on Illinois manufacturers (2013) M7 Kenosha “Wins”
Jobs Payroll CapEx Konecranes 50 2,346,000 250,000 Kenall 621 34,487,856 32,000,000 Niagara Bottling 70 3,088,750 75,000,000 Quest 56 2,805,880 3,600,000 Toolamation 77 2,788,324 1,445,000 874 45,516,810 112,295,000 M7 Win: ConsortiEX
Healthcare technology company that provides IT systems and services to manage the ordering and tracking of patient injections
Locating office in downtown Milwaukee
50 highly-compensated engineers and software developers
Recipient of WEDC angel investor tax credits
Emerged from MassChallenge accelerator M7 Win: Orchard Street Press
Milwaukee-based screen printer that specializes in eco- friendly production methods
Milwaukee- and Wisconsin- centric products and designs; sold in Milwaukee, Madison and Door County
Expect to add 15 employees
MEDC loan candidate STRATEGY: GROW JOBS M7
Scorecard of Wins for the Region
Performance Measures 2010-To-Date 2005-2009 Project Wins 46 12 Pledged Jobs* 7,390 3,220 Audited Jobs** TBD 2,449 (76%) Average Wage*** $49,998 $58,800 Payroll $369M (est.) $144M Capital Investment Pledged $657M $156M
* Results based on company projections at time of M7 engagement ** Jobs accounted for at 5 year audit using public records *** Average regional wage $45,000 M7 Pipeline of Prospects
50 Active Projects
16 International M7 Pipeline of Prospects
5,292 Potential Jobs Campaign 3.0 M7
Campaign Leaders
$3,969,000 STRATEGY: BUILD REGIONAL CAPACITY M7
Next Generation Manufacturing Council
ACCOMPLISHMENTS: WHAT’S NEXT: One of 12 federally designated Create and integrate regional “Manufacturing Communities” manufacturing initiatives The Region receives preferential Lead collaborative applications consideration for up to $1.3 billion for federal dollars in federal grant money M7 NGM Council M7
National Manufacturing Institute Competition
Competition will award $70M in federal funding to the consortium best suited to execute the vision for a national Smart Manufacturing hub
$70M federal investment must be leveraged by at least $70M in matching private investments
The award is for five years with the goal of the institute being self-sustaining after that period M7 Talent Initiative M7
Mission: Align workforce with growth opportunities in high potential industry clusters
Supporting → M7 Attraction & Expansion efforts → Employers in M7 driver industries
KEY STRATEGIES:
1. Provide a coordinated “Rapid-Response” to address immediate industry talent needs Link employers to 250 quality job placements per year. 2. Address the skills gap by improving the quality of the regional labor pool Increase the # of apprenticeships in M7 region. Expand the # of students in cluster-specific pathway programs (e.g., Welding and Machining 101) Increase the number of students on a clearly articulated pathway (2+2+2) from basic credentials to Bachelor’s degrees in engineering.
3. Gather and disseminate real-time data of available talent for industry; and align talent systems to meet current and future industry needs STRATEGY: BUILD REGIONAL CAPACITY M7 Export Initiative Regional strategy to grow the number of exporting companies In the past 10 years, exports have grown RESULTS: Selected as one of eight regions across the nation to share export strategy best practices 45% Strategies offsetting a 6% loss in domestic sales. 1. Catalyze export engagement by small and mid- sized enterprises (SMEs)
2. Help companies navigate the exporting process
3. Use the region’s commercial strengths to expand and intensify export engagement
4. Create a strong local export culture Kenosha County M7 NGM Steering Committee Jim Kreuser, County Executive Carmel Ruffolo, UW-Parkside Gordy Kacala, Gateway Technical College Kenosha Area Business Alliance Todd Battle, President M7 Talent Subcommittee Gordy Kacala, Gateway Technical College Water Council Members Doug Bartz, Kenosha County Carthage College Michelle Blanchard, SE WI WIB University of Wisconsin-Parkside Gateway Technical College M-WERC Members Centrisys Corporation UW Parkside Gateway Tech College FaB Wisconsin Members Engendren Ocean Spray, Gina Balke, FaB Careers Chair BizStarts Members Kenall Lighting Procubed Gateway Technical College Dossett Centrifill M7 Todd Battle John Daniels – M7 Co-Chair
Chair Emeritus Chair Quarles & Brady Greater Milwaukee Committee Milwaukee 7 Economic Development Partnership Council Critical Global Business Trends Opportunities for the Milwaukee 7 Region
Paul A. Laudicina February 19, 2015 Discussion agenda
■ What’s on the minds of business leaders? ■ Global trends ■ Technology and creative disruption ■ Worldwide economy ■ FDI flows ■ Opportunities for Wisconsin
23 Discussion agenda
■ What’s on the minds of business leaders? ■ Global trends ■ Technology and creative disruption ■ Worldwide economy ■ FDI flows ■ Opportunities for Wisconsin
24 Business leaders are optimistic for 2015, but they have concerns
■U.S. economic recovery ■Hard landing in China? ■Rising cost pressure ■Technology and innovation ■Climate change and resource scarcity ■Potential changes in taxes ■International trade agreements
25 Discussion agenda
■ What’s on the minds of business leaders? ■ Global trends ■ Technology and creative disruption ■ Worldwide economy ■ FDI flows ■ Opportunities for Wisconsin
26 Adaptation is the key to survival
We live in a world of continuous, disruptive change
“Strategy is a sense of direction around which to improvise.” – Peter Drucker
27 Trends will influence global change over the next 10 years
Globalization/ Consumer Demographics geopolitics behavior & economics
Natural resources Social/political Turbocharged by and environment tensions technology
28 Discussion agenda
■ What’s on the minds of business leaders? ■ Global trends ■ Technology and creative disruption ■ Worldwide economy ■ FDI flows ■ Opportunities for Wisconsin
29 As the pace of change accelerates, we are flooded with information
■ 90% of the world’s data ever created was generated in the last two years ■ It takes only 15 minutes to produce as much information as is in the Library of Congress ■ The Internet of Things could link some 50 billion smart objects by the year 2020
30 Technology is leading to creative disruption in business
Big data Robotics
Internet of things 3D Printing Biotech advances
Source: A.T. Kearney; IBM 31 Augmented reality, augmented confusion
Knowledge Pyramid
Wisdom
Knowledge
Information
Data
32 Droning on: The global robotics revolution will accelerate World robot population, millions of robots
34.2 Service Robots Industrial Robots +23%
18.2 32.6
17.0 6.5 Hen-na Hotel, to open July 2015 5.5 1.0 1.2 1.6
2007 2011 2015 If robots formed a nation, in 2015 it would be the 36th largest country, larger than Canada
Source: International Federation of Robotics 33 The Internet of Things could link some 50 billion smart objects by the year 2020
Number of things connected to the internet, global population, bn
50 Connected things 40
30
20
10 People 0 2000 2005 2010 2015 2020 Machine generated data, % of digital universe
50
40
30
20
10
0 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: IDC, Cisco 34 3D printing could transform the manufacturing landscape
Current advantages, hand-tools example Production cost, US$ Production time, days
-92% -58% 18.0 420
176
1.5
Traditional Additive Traditional Additive Machining Manufacturing Machining Manufacturing Unit cost comparison
Tool based manufacturing (Forging)
Additive Manufacturing
Past Unit Unit cost Present Future?
1 10 100 1k 10k 100k 1M Units
Source: Stratasys 35 Biotech advances will mean the end of some diseases and the advent of personalized medicine
Cost of sequencing human-sized genome, US$ per genome, logarithmic scale
100,000,000 95,263,072
10,000,000
1,000,000
100,000
10,000 4,008
1,000 2001 2014
Source: Human Genome Research Institute 36 Discussion agenda
■ What’s on the minds of business leaders? ■ Global trends ■ Technology and creative disruption ■ Worldwide economy ■ FDI flows ■ Opportunities for Wisconsin
37 Policy choices impact competitiveness and growth ■ 3.3% base-case average annual real growth between 2015 and 2020 ■ Lower global commodity prices ■ >4% growth for emerging economies ■ > 2% growth for advanced economies ■ Diverging economic performance based on policy choices ■ Significant risks ■ Positive wildcards 38 Discussion agenda
■ What’s on the minds of business leaders? ■ Global trends ■ Technology and creative disruption ■ Worldwide economy ■ FDI flows ■ Opportunities for Wisconsin
39 Globally, FDI inflows are once again trending upwards Global FDI Inflows
FDI inflows: 1998-2013 ($B)
2,200 2,000 1,800 1,600 1,400 World 1,200 1,000 Developing 800 countries 600 Developed countries 400 200 0 1998 2001 2006 20112013
Shaded area indicates recession
Source: UNCTAD, A.T. Kearney analysis 40 Five developed countries account for >40% of FDI inflow to the U.S.
FDI by Source Country ($B, % of US) FDI from Select Developing Countries (% of Total U.S. FDI) $B 110% 216 Mexico 1.4% 136 105 237 306 144 198 230 170 231 1.7% 100% 1.0% 1.1% 1.2% 90% 0.2% 2013 U.S. 0.1% 80% FDI: $231B 0.0% -0.1% -0.5% 70% 1.6% Brazil 1.4% 60% 0.5% 0.9% 50% 0.2% 0.1% 40% 0.0% -0.2% -0.4% 30% India -1.1% 0.4% 0.7% 0.5% 20% 0.8% 0.4% 0.2% 0.2% 0.3% 0.3% 10% 2.1% 0.0% 0% China 1.0% -10% 0.5% 0.5% 0.1% 0.1% 0.1% 0.2% 0.3% 2006 2009 2013 0.0%
Rest of World France Canada Germany United Kingdom Japan 2006 2009 2013
(1) Does not include Caribbean countries often used as tax shelters for global corporations 41 Source: UNCTAD, A.T. Kearney analysis Investor confidence in the U.S. has been the highest for the last two years
FDICI 2014 rankings +38% +3% 2012 2013 2014 4 1 1 United States 2.16 1.52 2.09 2.16 1 2 2 China 1.95 20 4 3 Canada 1.93 8 8 4 United Kingdom 1.91 2012 2013 2014 3 3 5 Brazil 1.91 5 7 6 Germany 1.84 2 5 7 India 1.81 6 6 8 Australia 1.76 7 10 9 Singapore 1.75 17 12 10 France 1.74 About the FDI Confidence Index 15 14 11 UAE 1.74 -- 9 12 Mexico 1.72 • Index is based on a 11 15 13 South Africa 1.70 proprietary survey of 22 18 14 Switzerland 1.68 senior executives of 300 10 25 15 Malaysia 1.65 -- -- 16 Sweden 1.64 of the world’s leading -- 22 17 Chile 1.64 corporations 24 16 18 Spain 1.63 • 1 year after survey, 10 21 13 19 Japan 1.62 -- -- 20 Italy 1.61 top ranked countries -- -- 21 Belgium 1.61 have consistently 25 -- 22 Netherlands 1.61 received 50% or more of -- -- 23 Denmark 1.61 global FDI inflows 13 -- 24 Turkey 1.60 9 24 25 Indonesia 1.60
Source: A.T. Kearney FDI Confidence Index 2014 42 The largest FDI flows are directed towards Manufacturing, Wholesale Trade, and Information industries
FDI by Industry into the U.S. ($B)
$230 $231
$84 $170 $95 Manufacturing
$27 Wholesale Trade Information $94 $32 Finance & Insurance Retail Trade $26 Professional, Scientific $22 and Technology $6 Depository Banking Real Estate & Leasing Others -$5 2011 2012 2013
(1) ‘Others’ includes agriculture, mining, utilities, construction, waste management, food service, and health care (2) ‘Information’ includes publishing, telecom, media, data processing, and software Note: Petroleum industry investment is included in the appropriate phase in the value chain, e.g. manufacturing through retail trade (Petroleum contributed ~20% of total FDI in 2010-2011) Source: Bureau of Economic Analysis, US Chamber of Commerce website, WEDC Website, A.T. Kearney analysis 43 A number of factors will likely increase FDI in U.S. manufacturing
Competitive labor costs Abundant energy supply
Strong market potential Attractive business and regulatory environment
Source: BLS, ILO, EIU, Fraser Institute Economic Freedom Ratings, IEA Quarterly Energy Price Statistics, A.T. Kearney Analysis 44 Discussion agenda
■ What’s on the minds of business leaders? ■ Global trends ■ Technology and creative disruption ■ Worldwide economy ■ FDI flows ■ Opportunities for Wisconsin
45 Wisconsin has proven capabilities in manufacturing with a strong industry base and leading academic institutions
46 Wisconsin needs to define its investment personality
“Ireland at the heart of things” “Raise a glass with Scotland” “Our people and your business, a winning combination” “We favour green lights over red tape”
47 A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission- critical issues. For more information, visit www.atkearney.com.
Americas Atlanta Calgary Dallas Houston New York San Francisco Toronto Bogotá Chicago Detroit Mexico City Palo Alto São Paulo Washington, D.C.
Asia Pacific Bangkok Hong Kong Kuala Lumpur Mumbai Seoul Singapore Tokyo Beijing Jakarta Melbourne New Delhi Shanghai Sydney
Europe Amsterdam Budapest Helsinki Ljubljana Moscow Prague Vienna Berlin Copenhagen Istanbul London Munich Rome Warsaw Brussels Düsseldorf Kiev Madrid Oslo Stockholm Zurich Bucharest Frankfurt Lisbon Milan Paris Stuttgart
Middle East Abu Dhabi Dubai Manama and Africa Doha Johannesburg Riyadh
48 States are adopting different strategies to attract investors and are focusing on a handful of regions Foreign Economic Development Office Presence – Sample States
Preliminary - based on public data1
Color State Comments & #1 Netherlands UK & Ireland CA (1) Stated focus on China Montreal, Spain Toronto Germany Czech TX n/a Trade missions France Poland Munich Beijing Korea NY (4) Trade missions Belgium Japan Israel Shanghai IL (9) FDI & export alignment Mexico Hong Kong PA (11) Integrate local universities New Delhi Taiwan Bangalore NC (4) Integrate local universities Brazil GA (10) Trade events FL (13) Local events Chile SC (4) Country specific websites S. East Africa Sydney MS (5) Country specific websites
LA (4) International trips to Significant concentration of Only few in selected sample attend industry shows foreign offices states have foreign offices WI n/a Trade Missions and Events
(1) Analysis based on scan of Economic Development websites of each state 49 Source: State websites, Site Selector Magazine, A.T. Kearney analysis M7
Question & Answer NEXTDriving MEETING: EconomicJUNE Growth 2
Milwaukee 7 Council Meeting
November 5, 2013