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More than 130 representatives from key Wisconsin cluster industry companies, regional economic development organizations, policy makers, elected officials and the academic community attended an information- and opinion-packed meeting at the Alliant Energy Center on Tuesday, September 27.

Scott VanderSanden, president of AT&T Wisconsin and current president of Competitive Wisconsin, welcomed the group with an overview of the collaborative organization’s long history of engagement with major initiatives designed to enhance the ability of Wisconsin companies and institutions to compete. VanderSanden indicated that Competitive Wisconsin’s decision to focus on the role of cluster industries in Wisconsin’s economic development grew out of its leadership role in the development of BE BOLD: The Wisconsin Prosperity Strategy, the plan that helped shape much of the focus of the 2011-13 Legislature’s early discussions about economic development and job growth. “It was clear in all of our discussions at that time that many of the state’s foremost economic thinkers and strategists believed that industry clusters and regional economic development systems would play a key role in the revitalization of the state’s economy,” VanderSanden said. “And, Competitive Wisconsin is pleased today to move forward with that critical discussion.”

The group then heard from cluster industries expert Mr. Matt Kures of the UW Extension Center for Community and Economic Development. Kures reminded the audience of Dr. Michael Porter’s (Harvard Business School) definition of cluster industries as “…geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions (e.g. universities, standards agencies, trade associations) in a particular field that compete but also cooperate…” and pointed out that cluster industries have played different roles at different times in the nation’s economic development. (see figure 1 below)

Eras or Waves of Economic Development Approaches

Figure 1

Mr. Kures said that states across the country are looking now at cluster industries as systems and from perspectives of competitiveness [that could] provide frameworks for organizing and implementing public policies/investments related to economic development. For example, he said, states, which focused on business retention and expansion, are examining specific opportunities for strengthening and growing core industry sectors. Those more interested in business attraction and start-up formation may be working on recruiting and developing new core firms and suppliers that could tie into regional clusters. And, those dedicated to leveraging human capital and work force development are working with universities, tech colleges, community colleges and others to “…articulate career paths, develop standardized industry training and collaboratively recruit/retain talent.”

After a very informative discussion that touched on work force migration patterns, location quotients and other key measurements of cluster industry strength and growth potential, Mr. Kures suggested some guidelines and cautions should a Wisconsin cluster initiative develop. First, he said, private sector involvement is critical. Implementation is an exercise that requires developing a cluster identity, coalition building and action based on common needs. He also encouraged the attendees to determine what differentiates a cluster in one region from a similarly named cluster in another region (i.e. what makes medical device manufacturing in Wisconsin different from medical devices in Indiana, or the Twin Cities, or Boston?). In industries dependent on natural resources, he observed, it is not enough to simply have the resources present. Critical skills and knowledge are needed to use those resources. A cluster that is primarily based on natural resources should increasingly become knowledge-based. He also pointed out that clusters generally cannot be created from scratch, but can be built upon existing assets; that most regions have a unique industrial heritage that provides some expertise and resources that might constitute the basis for innovation, technological advance and sustainable competitive advantage; and he cautioned against relying solely on NAICS codes or generic definitions such as “high tech” or “advanced manufacturing” for defining clusters.

Finally Mr. Kures urged the group to determine an appropriate role for government, pointing out that while government may decide to support all existing and emerging clusters, participate in discussions about those clusters, enable data collection and dissemination at the cluster level, and even finance some initiatives, government should not pick favored clusters or companies, subsidize or distort competition, or define cluster action priorities. Please Note: Mr. Kures’ PowerPoint Presentation is available.

Jim Wood, president of Wood Communications Group, facilitated the group discussion that followed Mr. Kures’ presentation. According to Mr. Wood, the group first focused on the question of whether or not the experts, cluster members and representatives, and regional economic development leaders agreed that there was a role for Wisconsin’s cluster industries in the state’s economic development efforts. When offered three possible examples, the majority of meeting attendees saw a role for the clusters in helping the state by identifying approaches to regulatory and tax policies that would enhance a cluster industry’s ability to grow and compete. A majority also indicated that they saw a role for clusters in supporting and growing Wisconsin’s entrepreneurial community and encouraging start-ups. The group was less persuaded that clusters could provide significant rapid short-term job growth, but a number did agree that recent trends in defense and health spending suggested that there were obviously some clusters that held more promise in this area than others.

In the second half of the meeting’s plenary session, the discussion focused on the value of collaborative effort both within and among the cluster industries. Audience comment, both at the microphones, and we are led to believe, in smaller groups seemed more focused on how to improve communication and action within and among clusters than on whether or not collaboration should be encouraged. Economic development specialists, for example, are reported to have suggested in off-microphone discussions that if Competitive Wisconsin moves forward on a cluster initiative, the organization should make sure it balances “tools with advocacy.” Nonetheless, others, while supportive of the need for more collaboration and cross-fertilization of effort warned against duplication of effort.

Ultimately, it seems fair to say that a significant majority of the attendees do believe that cluster industries could play a larger, positive role in Wisconsin’s economic development efforts and to conclude that they would be interested in pursuing the question of how to achieve greater collaboration, focus and capacity within and among the clusters.

During its October 12 meeting, the Competitive Wisconsin Board will be briefed on the meeting and discuss meeting outcomes and next steps. Based on the input and feedback from participants, the Board will offer recommendations and plans to contact cluster participants in October. Competitive Wisconsin welcomes additional participant comments prior to the meeting.

Please contact Kristin Dollhopf at kdollhopf@wcgpr.com or 608-259-0757 with any questions, feedback, resources or materials.

Items of Note

• Competitive Wisconsin wishes to thank Senator Van Wanggaard for taking time from his busy schedule to share “A Capitol Perspective” on the role of cluster industries in Wisconsin’s economic development efforts. His comments were appreciated and well received. Those wishing more information about Senator Wanggaard’s legislative initiatives are encouraged to visit his website at: http://legis.wisconsin.gov/senate/wanggaard/Pages/default.aspx
• Mr. Kures’ PowerPoint presentation and Mr. Tim Cooley’s cluster chart are available.
• You are Invited … to attend a Competitive Wisconsin Pints and Policy Reception on Tuesday, October 11, 5:00 to 7:00 p.m., at the Madison Club, 5 E. Wilson Street in Madison. The event will feature Competitive Wisconsin Board members and Wisconsin legislative leaders including:
• Assembly Majority Leader Scott Suder (R-Abbotsford)
• Representative Louis Molepske (D-Stevens Point), Ranking Minority Member of the Assembly Jobs, Economy and Small Business Committee
• Senator Joe Leibham (R-Sheboygan), Chairman of the Senate Committee on Economic Development
• Senator Tim Cullen (D-Janesville), Former President of Competitive Wisconsin and member of the Senate Committee on Workforce Development, Small Business and Tourism.
• Attendance is free, but registration is required. For additional information or to register, please e-mail Jenny Parchem at jenny.parchem@capitolconsultants.net with your questions or interest in attending.

This has been the busiest, and most successful, twelve month period in the 30-year history of Competitive Wisconsin.

CWI was instrumental in crafting the BE BOLD Wisconsin Plan and the Wisconsin Prosperity Strategy. Those documents have become the blueprint for economic success in Wisconsin. More importantly, CWI understands that great public policy plans mean nothing if they aren’t implemented and executed. That is CWI’s “secret sauce.”   CWI has the most diverse membership of any statewide public policy organization and a unique ability to build coalitions with other key stakeholder groups to get the job done. The bottom line is CWI gets results!

The success CWI has enjoyed over the past year is a direct result of the leadership of our immediate past President, Sue Marks, and our current President Scott T. VanderSanden. Sue and Scott have dedicated countless hours, keen perspectives and a clear vision for CWI’s role in developing and supporting non-partisan, data-driven policy solutions to make Wisconsin more competitive.

CWI even filled a marketing void while the state was transitioning the economic development functions (on CWI’s recommendation) from the Department of Commerce to the new quasi-public Wisconsin Economic Development Corporation. With help from Translator Digital Café and Discover Mediaworks, CWI created a new website and marketing campaign called Wis4biz. The website allows companies to tell their personal success story and will also be used to directly market public policies and incentive programs to in-state businesses as well as prospects from other states that could be attractive to their business. Finally, Wis4biz took out six ads in Site Selection Magazine, purchased billboards on the Illinois border, and ran a television spot touting Wisconsin as a great place to do business. Now that WEDC is up and running it may be time to return these marketing functions to the state with help from the private sector.

This has been a historically productive year for CWI. With your continued investment and involvement, next year can be even better! CWI will conduct a “Breakfast Series” of high-level speakers focused on job creation in Wisconsin. CWI will also continue our Cluster Series under the direction of Wood Communications Group to develop broad consensus around non-partisan, data-driven policy recommendations for lawmakers, WEDC and the Governor.

If you know other business executives that want to make a difference, please recommend CWI to them.

Competitive Wisconsin, Inc. has enjoyed a very busy and extremely productive year — a year in which our organization was a key catalyst for a transformative, pro-growth legislative agenda that enjoyed bi-partisan support.

That critical agenda emerged from two dynamic processes that together have changed not only Wisconsin’s perception of its challenges and opportunities, but also its understanding of how to move forward boldly and successfully.

The first step in CWI’s transformational initiative was the development of a professional objective analysis of the strengths and weaknesses of Wisconsin’s approach to economic development efforts accompanied with recommendations to better position Wisconsin for future growth. CWI, along with the Wisconsin Economic Development Association and the Wisconsin Counties Association, recruited then UW School of Business Dean Mike Knetter, Marquette Business School Dean Linda Salchenberger and executives representing business, education, agriculture and labor as well as a bi-partisan group of lawmakers to oversee this effort and retained Deloitte Consulting and NKF Consulting to undertake the necessary research. This exciting and exhaustive effort led to the BE BOLD Wisconsin Economic Development Plan, which as I am sure you all remember was made public in early August 2010.

Shortly after BE BOLD Wisconsin was released, Competitive Wisconsin joined forces with a diverse group of citizens, businesses, educators and labor to sponsor the 2010 Wisconsin Economic Summit Series and help lead the development of a detailed economic development action plan called BE BOLD Wisconsin: The Wisconsin Prosperity Strategy. Together, these reports represent the most comprehensive economic development analysis and recommendation put forth in Wisconsin in the last generation.

And, unlike so many well-intentioned previous efforts, in less than a year, the BE BOLD strategy that emerged from CWI’s work and your leadership has produced major public policy results! (Please see the BE BOLD Progress Report)

Rest assured, however, that CWI is not resting on its laurels. CWI continues to pursue new avenues of implementation for the BE BOLD strategy with opinion leaders and policy makers.

• We have, for example, asked Jim Wood and Wood Communications Group to help facilitate a discussion with Wisconsin’s leading investment capital practitioners in an effort to generate a specific BE BOLD strategy for capital development and investment.
• CWI is also currently organizing an outreach effort dedicated to developing a BE BOLD strategy for Wisconsin’s critical cluster industries.
• And, we are in the process of developing a “Breakfast Series” of high-level speakers on key topics of job creation and economic development.

When we began this amazing journey, one of our primary goals was to make Wisconsin a top ten (10) place in the nation to start, expand or relocate your business. Recently, CEO Magazine, moved Wisconsin from 41st place (which is where we were when we started) to 24th in their rankings of business-friendly states.

Obviously CWI and the BE BOLD strategy can’t take all the credit for this remarkable progress. Governor Walker has clearly made job creation and economic development his administration’s priorities, and he and the Legislature deserves a lot of credit for the work they have done. That said, however, I think it is clear that CWI helped make a major and very positive difference, a difference that touches the lives of our citizens and our businesses directly. Consider, for example, just a few of the more encouraging developments:

• Wisconsin has created new jobs for six (6) consecutive months. According to the Bureau of Labor Statistics you would have to go all the way back to 2004 — seven years — to find the last time this has occurred in Wisconsin.
• Wisconsin has created more than 39,000 new jobs since the start of 2011.
• Wisconsin’s unemployment rate of 7.6% is well below the national average of 9.2%.
• Wisconsin’ total manufacturing job growth has been more than twice the national rate: 3.2% vs. 1.2% for the nation.
• Wisconsin’s total private sector job growth has been almost twice the national rate: 1.7% vs. 0.9% for the nation.

The bottom line on all of this is that your organization is doing important work — work that will make a difference to the people of Wisconsin, to your business, and to the long-term economic viability of our state. If you are currently a member of CWI — Thanks for your essential support! If you’re not and you’re looking for an organization that is action orientated and results driven, I believe that CWI is that organization and would encourage you to consider joining now.

Thank you for your continued support.

Scott T. VanderSanden, President Competitive Wisconsin, Inc.

In 2010, after extensive study and a series of statewide summits, Competitive Wisconsin developed and vetted BE BOLD: The Wisconsin Property Strategy, which Scott VanderSanden and Bill McCoshen both referred to in their reports. This strategy was shared with Governor-elect Walker in November and was instrumental in inspiring and shaping many of the transformational efforts undertaken by Governor Walker and the Wisconsin Legislature during this year’s Special Session.

BE BOLD: The Wisconsin Prosperity Strategy specifically recognized the importance of Wisconsin’s cluster industries and recommended that a cluster industry strategy should include the following components:

• Create a policy council for each existing, identified cluster.
• Charge the councils with developing a supportive strategy for each existing cluster.
• Develop metrics to judge the success of each cluster.
• Promote the fast-growing Business Services sector that underpins all clusters.
• Support growth of emerging “knowledge clusters” that can attract and retain high-skilled workers. Possible examples are freshwater technology in M7 region, composites in the Seven Rivers Region and wind energy systems in NEW North. Set up councils for each of these “knowledge clusters.”
• Without lowering standards, align and streamline regulations to promote growth of clusters throughout the state.
• Eliminate tax irritants in each cluster that will improve ease of doing business in Wisconsin, without significant loss of tax revenue.
• Use Green Tier regulatory platform guidelines to develop compacts that encompass environmental advances and economic growth.
• Promote exports and competitiveness in the global economy.
• Attract foreign investment to expand business in key clusters.

Since the release of these recommendations, Competitive Wisconsin participated in a gathering of representatives from Wisconsin’s printing industry cluster and has had numerous conversations with others about the importance of cluster industries and the positive role they can and must play in revitalizing the state’s economy.

Based on those meetings and conversation, Competitive Wisconsin believes that the time has come to begin refining and advancing these recommendations. And, to that end, Competitive Wisconsin is reaching out to cluster industry leaders across the state asking them to join and drive a discussion about the development of a Wisconsin Cluster Council that will: 1) foster job and economic development by targeting investment capital, rallying needed government support and encouraging entrepreneurialism; 2) facilitate adjustments to Wisconsin’s regulatory and tax climate in order to enhance competitiveness and increase workforce capability; and 3) provide access to information and services that will help its members grow and prosper.

If you would like to participate in the cluster initiative or would like additional information, please contact Kristin Dollhopf at kdollhopf@wcgpr.com or 608-259-0757.

BE BOLD: The Wisconsin Investment Capital Strategy planning group has met twice and is scheduled to hold their third meeting on Tuesday, August 30, in Madison, Wis., at the Madison Club from 1:00 to 3:00 p.m.

At the first meeting in April, approximately 45 of the 70 plus people invited to attend the first of the BE BOLD: The Wisconsin Investment Capital Strategy (ICS) meetings participated in a three-hour session at the Milwaukee Athletic Club. The attendees included angel investors, private fund managers, institutional fund managers, regional economic development directors, business leaders, professional association leaders, and governmental policy makers.

Sue Marks, President and CEO of Pinstripe and Chair Emeritus of Competitive Wisconsin, welcomed the group. Jim Wood, President of Wood Communications Group and designated facilitator for the meeting, identified the purpose of the meeting and outlined the overall process, explaining that both had grown out of the 2010 Wisconsin Economic Summit process and suggesting that the objectives for the first meeting were both organizational and substantive. Wood said, for example, the ICS process was dedicated to building on the Summit recommendations related to the need for more investment capital in Wisconsin, but also pointed out that the Walker Administration, the Wisconsin Technology Council and others were in the process of responding to the short-term need for investment capital and that the ICS’ focus should, therefore, be more on the mid-term and long-term strategies required to provide Wisconsin with access to sufficient investment capital necessary to support sustained innovation and growth.

Participants demonstrated their expertise, commitment and passion. They also reflected a significant degree of frustration with the status quo and a spirited degree of disagreement about how best to address the Wisconsin’s investment capital challenges and opportunities. In short, the first meeting underscored the need for a strategic plan to address not only Wisconsin’s need for investment capital, but also its capacity to stimulate an ecosystem in which the demand for funds is intelligently informed; ensure that the management and spending is credible and competent; and that the sustainability of the funds is considered and protected.

The June meeting focused on identifying and agreeing on a topic outline that could guide and channel the work needed to generate the final strategic document. Meeting participants worked their way through the strategic outline commenting extensively on issues of concern as they did so.

Participants commented, for example, on the impact of the new banking atmosphere and banking industry regulations on investment strategies and abilities; the gaps in the start-up funding; the role of certainty in governmental regulations; concerns about insurance regulations that make Wisconsin less competitive than some other states like Iowa; early-stage vs. later-state investment and whether there wasn’t a larger role for private equity in early-stage investment; the importance of the university systems and the need to find better linkages with those resources; the need for improving Wisconsin’s ability to channel funds strategically and for an easier way to identify who’s investing in Wisconsin; the role of WHEDA; and a half dozen other major issues and relationships, all of which will help enrich and shape the Investment Capital Strategy Outline.

CWI wanted the Bold Wisconsin Study and the subsequent BE BOLD strategy to inform the 2010 gubernatorial election policy discussions and to sharply focus the debate on the state’s economy and job creation. It was our hope our efforts would provide the winning candidate with a road map to initiatives that could positively hallmark the beginning of the new governor’s tenure in office. We were very successful in shaping the debate during the 2010 campaign and both candidates endorsed the study.

And as you can see below in our progress report, the BE BOLD plan has been very successful in providing the foundation for a number of important economic development and business climate recommendations recently enacted by Governor Scott Walker and the Wisconsin Legislature.

(MADISON) – Wisconsin’s competitive position improved compared to its neighbors for the first time since 2006, according to the annual report card Competitive Wisconsin, Inc. (CWI) commissions from the Wisconsin Taxpayers Alliance (WISTAX).

The study, “Measuring Success: Benchmarks for a Competitive Wisconsin,” (“Benchmarks”) relies on 34 measures, each of which is used, first, to gauge Wisconsin’s progress against its own past and, second, as a comparison with neighboring states and the nation as a whole. (Click here for the complete benchmarks report: CompetitiveWisconsin_Benchmarks2010.pdf)

On the upside, the study indicates that Wisconsin improved its regional composite competitive score from 40 in 2009 to 50 (on a possible score of 100) in 2010. Among measures showing progress were research and development spending, which rose from 1.8% to 2.0% of gross state output; high-tech employment, which grew to 3.7% of private employment; and high school graduation rates, which were up.

On the downside, Wisconsin grappled with yet another drop in new private businesses start-ups; rising electricity prices, and more hits on manufacturing jobs that shrunk that sector from 17.2% to 15.9% of employment. These difficulties came on top of a series of factors that hammered Wisconsin’s economy in 2009, when household income fell to 0.5% below the U.S. average; employment dropped 4.3%; unemployment climbed to 8.5%; and the broadest measure of economic well-being, per capita personal income (PCPI), declined for the first time since 1949.

“While Wisconsin’s improved regional competitiveness is welcome news, the reality of lost jobs and fewer business start-ups in 2009 underscores again the need to focus on helping our people get back to work,” said Sue Marks, CWI President and President and CEO of Pinstripe, Inc.

What data on education, workforce and quality of life revealed was neither all good nor all bad. The Benchmarks study confirmed that our workforce is one of the state’s greatest assets. But data also suggest that there may be trouble ahead. Generally, for example, students continued to perform well on national assessments, graduate in high numbers, and score well on college entrance exams (adjusted), averaging 22.4 (out of 36) , well above the U.S. (21.5) and all surrounding states, except Minnesota (23.2). But, Wisconsin continues to lag in the competition for college graduates. In 2009, for example, 25.7% of Wisconsin residents had a bachelor’s degree, below the U.S. (27.9%) and behind both Minnesota (31.5%) and Illinois (30.6%).

Some elements of Wisconsin’s quality of life attract college graduates and others to the state. Wisconsin has one of the nation’s highest rates of health insurance coverage. With only 9.6% lacking coverage, Wisconsin is well below the national average and all neighboring states, except Minnesota. Wisconsin is also relatively safe. Violent crime per 100,000 residents dropped in 2009 from 274 to 257. On the other hand, while home ownership here is high (70.4%) and remained above the national average (67.4%), all of Wisconsin’s neighbors, except Illinois, had higher rates.

“The 2010 Benchmarks study makes clear that Wisconsin must do better,” said Scott VanderSanden, President-elect of CWI and President of AT&T Wisconsin, “The bad news -fewer jobs and businesses – shows that our economy continues to be at risk. The good news suggests that we are making some progress, though it may be the result of poor performance in other states.”

Marks and VanderSanden both said that the report reinforces Wisconsin’s need to embrace the aggressive job creation and economic development strategy laid out in the widely distributed action plan entitled, BE BOLD: The Wisconsin Prosperity Strategy.

Competitive Wisconsin – BE BOLD

Competitive Wisconsin-a consortium of state leaders in agriculture, business, education, and labor-originated the “Measuring Success” report card after a 1997 gubernatorial commission urged the state to track its economic progress and the growth of quality jobs, education, and training. The report covers six categories: economic health, quality of life, workforce excellence, public sector, business climate, and environmental quality. In each area, state performance is compared with years past and with other states in the region. The report is prepared annually by the research staff at the Wisconsin Taxpayers Alliance, a nonprofit, nonpartisan organization devoted to public-policy research and citizen education.

The Wisconsin Taxpayers Alliance, founded in 1932, is the state’s oldest and most respected private government-research organization. Through its research, publications, civic lectures, and school talks, WISTAX aims to improve Wisconsin government through citizen education. Nonprofit, nonpartisan, and independently funded, WISTAX is not affiliated with any group-national, state, or local-and receives no government support.

Copies of the 52-page report are available directly from WISTAX for $3.00 (plus tax). Write WISTAX at 401 North Lawn Avenue, Madison, WI 53704-5033; email wistax@wistax.org; visit www.wistax.org; or phone 608.241.9789

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