M-7 tallies wins, losses
Organization still searching for an industrial trophy
News & Community | Articles | M-7 tallies wins, losses
- John Schmid
JSonline.com
August 30,2008
It was 18 months ago that Jeffrey Joerres, chief executive of Milwaukee-based Manpower Inc., argued that the Milwaukee 7 – an organization formed to attract, retain and expand business in southeastern Wisconsin – must "get a real win out of this within the next 12 to 18 months."
"The Milwaukee 7 will not work if we don’t have a breakthrough soon," Joerres said at the time.
The verdict, 18 months later?
"There is no big win," said Tim Sheehy, one of the M-7’s leading collaborators and president of the Metropolitan Milwaukee Association of Commerce. "And if that’s a surprise to you, then there is no Easter Bunny."
But the M-7 notes it has had its share of victories – biggest among them the retention and expansion of Direct Supply Inc., which means hundreds of added technology jobs.
And there have been losses, including the high-profile decision to locate the headquarters of the MillerCoors LLC joint venture in Chicago. And lots of opportunities are still pending.
"Have we accomplished a bunch of wins that add up to a big win? Yes," Sheehy said.
Yet in its fourth year, the M-7 is still scrambling for an industrial trophy that will add momentum to its efforts and possibly compel outsiders to rethink their views of the Wisconsin economy.
In an ideal world, the big win would be akin to the blockbuster 2001 announcement that Boeing Co. would move its headquarters to Chicago, a coup that World Business Chicago, that city’s economic development agency, pulled off 18 months after its inception in 1999.
The Milwaukee 7 was founded in 2005 to promote business in a seven-county metro region that once teemed with heavy industry.
Its leaders say the state seldom tried to compete for new business until the M-7’s launch, while Atlanta, Denver and scores of other cities have played the industrial-attraction game for a decade or longer. The M-7 and its consultants also note that other states often outspend Wisconsin on tax breaks, subsidies and other incentives, often by wide margins.
Reminded of Joerres’ comment, which was made during a Journal Sentinel executive roundtable in 2007, the M-7 released a previously undisclosed scorecard noting its wins, losses and deals pending. Including companies that had threatened to leave but stayed, or those that promised to create new jobs in the region in response to M-7 intervention, the group totaled up 11 wins accounting for 4,365 jobs.
The M-7 staff often cannot disclose details of the prospects in its pipeline or of deals that get away, because no one would do business with them if they publicized their negotiations. But they can admit, for instance, that a neighboring state this summer won a new manufacturing plant and 3,500 new jobs from an unnamed company, primarily because the other state offered a more lavish incentive package than metro Milwaukee could.
"This is a perfect example of what we’re up against," said M-7 deputy director Jim Paetsch.
To be sure, the M-7 is in the throes of a challenging year.
Despite its intervention, Milwaukee-based Miller Brewing Co. and Coors Brewing Co. of Colorado chose in July to locate the headquarters for their joint venture in Chicago, draining up to 175 executive-level Miller jobs from Milwaukee.
Husco International, a $250 million-a-year Waukesha manufacturer, opted this year to put a new 200-job expansion facility in Iowa, which Husco said offered four times the incentives of Wisconsin as well as greater "political energy."
And in another blow to blue-collar civic pride, the U.S. Bowling Congress announced in March that it will move its headquarters to Texas from suburban Milwaukee.
"Heaven help us if Milwaukee’s future is defined by the Bowling Congress," Sheehy said.
Darin Buelow, a corporate relocation specialist at Deloitte Consulting LLC, is not surprised that Wisconsin "is getting its hat handed to it."
Wisconsin recently has trailed all other Midwestern states and much of the nation in the industrial-recruitment game, according to the annual rankings collected by Site Selection magazine, the trade publication for the corporation-relocation industry. From 2005 to 2007, Illinois recruited three times as many new manufacturing projects as Wisconsin. Ohio scored four times as many. Iowa had twice as many.
"Wisconsin seems to be more on a par with the Dakotas," said Buelow.
Part of the problem, he said, is Wisconsin’s legacy of sitting on the sidelines while other states learned to court business. Wisconsin labors under the perception that it is a high-cost, high-tax state.
And to this day, Wisconsin never has found a consensus on how much it wants to spend on tax incentives.
"Iowa, Illinois, Indiana and Michigan all have stronger incentive packages," Buelow said.
"We do some of that, and each time we do, we get criticized and then have to spend time justifying it," Paetsch said.
Critics regard incentive packages as taxpayer costs instead of investments in the economy, he said.
The M-7 coordinates with city, county and state officials on each prospect. It regales each prospect with tailored statistics that range from electrical costs and labor conditions to the number of flights at Mitchell International Airport. It produced a video in its unsuccessful effort to win MillerCoors.
Atlanta and Denver required years to find their feet, said Julia Taylor, president of the Greater Milwaukee Committee, the civic group that coordinates much of the M-7 work with the MMAC.
"They started with a strategic economic vision and stuck to it long term," Taylor said.
Biggest win
The M-7’s biggest win involved Direct Supply, a fast-growing e-commerce firm that Illinois courted three years ago with an offer of $20 million in incentives and free land.
Direct Supply, the nation’s largest distributor of medical supplies to nursing homes, is hardly the city’s best-known company. Its fast-growing campus on the northwest side is a den of technology workers who built and maintain a network center that speeds thousands of orders each day from over 1,400 shipping points to nearly 3.5 million patients.
It had 600 employees in 2005. With the M-7 systematically clearing away city and state bureaucratic hurdles, it aims to add at least 900 more in less than 10 years.
Founder and chief executive Bob Hillis by reputation has little tolerance for bureaucratic delay.
"Without the M-7’s work, I can guarantee that Hillis would not be here," Sheehy said.
Other M-7 wins range from a handful of jobs in a satellite office set up in 2006 by the Germanischer Lloyd AG engineering group of Germany to the Harley-Davidson Museum, which recently opened in Milwaukee’s once-industrial Menomonee River valley.
In its first year, M-7 built a Web portal (www.choose milwaukee.com) to market the region internationally, with archives of data and information about available business sites and economic conditions.
With an annual budget of about $1.2 million and other grants, it hired consultants to draft long-term strategic plans on its manufacturing base. In an era when much of the world suffers from a scarcity of drinkable water, it has begun to market the region’s water-technology companies.
"You can also define us," Sheehy said, "by what would have happened without the M-7."
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