Transcript Deloitte On-screen Presentation

Wisconsin Competitiveness Study
Executive Summary
July 29, 2010
Deloitte Consulting LLP and NKF Global Corporate Services
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A collaborative effort by
Background
Wisconsin’s Change Imperative
Wisconsin’s economy has struggled based on a wide range
of indicators, and for many years
 Per capita personal income ranking has fallen from #19 of the 50 states
in 1998 to #27 in 2008
– Wisconsin’s per capita income of $37,770 was nearly $2,400 under the US average for
2008 and far below neighboring Minnesota's average of $42,953
 178,000 jobs lost from December 2007 to December 2009
 Poor to fair business climate rankings in many national publications
– #48 in Forbes “Best States to do Business” (2009)
– #42 in Chief Executive “Best and Worst States for Business” (2010)
– #29 in CNBC “Best States for Business” (2010)
 Outreach to efforts to businesses and site consultants have been
minimal – for decades
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 4 Secretaries of Commerce in past 3 years
Project Objectives
The primary objectives of the Wisconsin Competitiveness
Study are to:
 Benchmark Wisconsin against various regional and national competitors
on a variety of business climate factors
 Evaluate Wisconsin’s competitiveness in selected sample industries
with regional competitors across the business lifecycle
 Recommend improvements to existing economic development
strategies to promote growth throughout the state
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 Create consensus with economic development stakeholders across the
state related to the conclusions of this study and proposed next steps
Our study does:
Our study does not:
 Build on the findings and
recommendations of existing
studies
 Engage in “just another target
industry analysis”
 Rely on rigorous, fact-based
objective analysis to draw
meaningful conclusions
 Develop public policy for local or
state government or advocate any
political party’s platform or
approach
 Identify actions that will tangibly
impact the state’s overall ability to
attract, retain, and grow business
 Develop a detailed, tactical
economic development plan for
Wisconsin
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Project Scope
Project Approach
Our overall approach includes four primary work steps:
Step B
Step B
CMM Analysis
Cost & Conditions
• Leverage maturity model
framework
• Research relevant costs
and conditions
influencing business
location decisions
• Define leading practices
in Economic Development
Project Kickoff
Past Study
Review
• Utilize past experience
with Economic
Development
organizations
• Utilize collective
experience in
benchmark states
• Interview economic
development
stakeholders
Recommendations
• Determine gaps between
current operations and
leading practices
• Determine criticality of the
gap
Step C
Benchmark Industry Analysis
• Research industry deployment trends and dynamics
• Focus critical location factors on industry, function, and
lifecycle
• Summarize leading perception surveys
• Review investment patterns and innovation economy
variables
-7-
• Determine alternatives to
close the gap
• Recommendations for
improvement
• Prioritization of
improvements
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Step A
Step D
Review of Past Studies and Survey Findings
Review of Past Studies
Our team reviewed the following studies provided by WEDA
and various regional groups:
Statewide Studies
Regional Studies
Competitive Mandate for Wisconsin
AO Opportunities (SW Wisconsin)
Economic Value of Academic Research WI Kenosha County Study1
Momentum West (Eau Claire) Studies
La Crosse Study
M7 (Milwaukee Region) Studies2
Thrive Study (Madison)
State of Working Wisconsin
The Wisconsin Way
Vision 2020 for Wisconsin
1
2
This study was prepared with the assistance of NKF Global Corporate Services
This study was prepared with the assistance of Deloitte Consulting LLP
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Grow Wisconsin
Grow Wisconsin (updated)
Growth Agenda for Wisconsin
Measuring Success – Competitive
Benchmarking WI
Moving Wisconsin Forward
Next Generation Manufacturing Studies
Common Themes from Past Studies
The previous studies have had many consistent themes:
 Growth of Wisconsin per capita income is the primary measure of
successful economic development
 Wisconsin’s overall trend in several key economic metrics has been
declining relative to the US Average and regional peers
– Improving the quality of the workforce and infrastructure in the state
– Building industry clusters in sectors including food processing, advanced
manufacturing, medical products and services
– Increased investment in R&D throughout the state, leveraging innovation in
traditional Wisconsin industries
– Encouraging a culture of entrepreneurship, venture capital and startups
– Improved technology transfer and harnessing of resources at Wisconsin
colleges and universities
– Reducing health care costs and taxes on business and individuals in the state
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 The studies identified a few common recommendations to improve
Wisconsin’s economy:
Common Pitfalls of Past Studies
Many of the past studies suffer from common problems:
 Studies succeed in describing the problem and presenting
recommendations, but they often do not present concisely or logically
the underlying evidence and analysis that led to the recommendations
 Recommendations are numerous (often exceeding 100) but are rarely
prioritized
 Recommendations generally lack specific initiatives, operating models,
funding strategies, or implementation plans that would help make them
a reality
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 Recommendations typically are not focused on economic development
organizational change or operational process improvements
Sample Stakeholder Survey Results
How successful do you think Wisconsin is, as a state, in terms of
economic development?
Very
unsuccessful,
11.1%
Somewhat
unsuccessful,
33.3%
Neither
successful nor
unsuccessful,
20.2%
Somewhat
successful,
33.3%
The survey was developed at project onset to assess various stakeholders’ attitudes and beliefs related to
economic development in Wisconsin. The survey was distributed to stakeholders via SurveyMonkey, an
online survey tool, and included 7 questions and 100 participants.
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Very
successful,
2.0%
Sample Stakeholder Survey Results (Continued)
Currently, what do you think are the largest obstacles to advancing
economic development in Wisconsin?
Weighted Scores from Survey (1 = Biggest Obstacle)
Economic development strategy, policies and…
1
2
3
4
5
7
8
3.93
High business costs (wages, taxes, utilities, etc.)
3.99
4.14
Economic development funding for statewide…
Economic development organization and…
Other
Economic development funding for regional…
4.89
5.17
5.40
5.53
Infrastructure (Transportation and Utilities)
6.84
Logistics: Wisconsin’s geographic location
6.88
Work force skills
Education system (schools, colleges, etc.)
The survey was developed at project onset to assess various stakeholders’ attitudes and beliefs related to
economic development in Wisconsin. The survey was distributed to stakeholders via SurveyMonkey, an
online survey tool, and included 7 questions and 100 participants.
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9
3.62
Incentives programs and funding levels
Regulatory environment
6
7.39
8.17
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0
General Benchmarking Assessment Findings
Capabilities Maturity Model (CMM) Introduction
The Capabilities Maturity Model (CMM) assesses each State’s economic
development organization based on multiple operating dimensions
• Quantitative and
qualitative criteria
•Industry-based attraction
•General business attraction and
• Current high ranking state
economic development
officials
•Reactive strategies for
strategy
strategy
retention focus
attraction and retention
Capabilities
Maturity
Model
for
Economic
Development
Leading
– IV
–byIII • Mission statement
Common
– IIfor
Outdated
all primary
areAdvanced
used
internally
defined
mission- I
• Strategy impacts
•Metrics
•No (or outdated)
Capability
procedures and tools
organization to measure
organization
statement
•Integrated industry-based
•Industry-based attraction
•General business attraction and •Reactive strategies for
and external
performance
created to measure • Limited metrics to define
•Measurement
• Some metrics
strategy
strategy
retention focus
attraction and retention
accountability (defined
metrics) –•Mission
statement has
achieved organization’s
performance
Capability
Leading
IV
III • Mission
Common
–success
IIfor
Outdated
all primary
used internally–by
statement
defined
mission- I
• Strategy impacts
•Metrics areAdvanced
•No (or outdated)
buy-in throughout organization
procedures and tools
organization to measure
organization
statement
•Integrated industry-based
•Industry-based attraction
•General business attraction and •Reactive strategies for
Strategy
and external
performance
created to measure • Limited metrics to define
•Measurement
• Some metrics
strategy
strategy
retention
focus
attraction and retention
turnover(defined
and
low turnover
•Market-leading
•Relatively•Mission
•Above-average
accountability
metrics)
statement has •Average
achieved turnover
organization’s performance
successturnover
all primary compensation
internally
by • Mission statement
defined for
•Metrics are used
•No (or outdated) mission
compensation levels• Strategy impacts
compensation
•Above-average
•Average
•Below-average
buy-in throughout organization
procedures and tools
organization to
measure development
organization
statement
skills
compensation
•Economic
Strategy •Will hire top-talent from industry •Industry-specific training
and external
performance training, but no industry
metrics created
• Some
• Limited metrics to define
training
not a focus
•Defined career path•Measurement
•Trainingtoismeasure
Organization/People
turnover(defined
and
low turnover
turnover
turnover
•Market-leading
•Relatively•Mission
•Average
•Above-average
accountability
metrics)
statement
hasroles
achieved
organization’s performance
success
and competencies
path
•Defined
•No established career
compensation levels
•Above-average
•Average compensation
•Below-average
buy-incompensation
throughout organization
compensation
•Will hire top-talent from industry •Industry-specific training
•Economic development skills
training, but no industry training •Training is not a focus
•Defined career path
Organization/People
turnover
•Market-leading turnover and
•Relatively low turnoverinteraction•Average
•Above-average turnover
withand
local
• State acts as funding resource for •Structured relationships
•Periodic •Defined roles
•Limited interaction
competencies
established career path
compensation levels
compensation •Average compensation •No
•Above-average
•Below-average
local stakeholders
between state and local agencies partners
•Partnerships generated on
development skills
compensation
•Will hire top-talent from industry •Industry-specific trainingefforts with
•Economic
partners
reactive/ad-hoc basis
• Catalyst for strategic partnerships •Regular interaction with local
•Proactive
career path
training, but no industry training •Training is not a focus
Organization/People
on an ongoing basis •Defined
agencies
(e.g. marketing)
value is not
•Partnership
withand
local
• State acts as funding resource for •Structured relationships
•Periodic interaction
•Limited interaction
competencies
•Defined roles
•No established career path
Partnerships
by
leveraged
•Regular contributions
local stakeholders
between state and local agencies partners
•Partnerships generated on
additional stakeholders (utilities,
reactive/ad-hoc basis
• Catalyst for strategic partnerships •Regular interaction with local
•Proactive efforts with partners
community colleges, workforce
on an ongoing basis
agencies
(e.g. marketing)
not
•Partnership value is
resource
for •Structured relationships
• State acts as funding
•Periodic interaction with local
•Limited interaction
development,
etc.)
Partnerships
contributions by
leveraged
•Regular
local stakeholders
between state and local agencies partners
•Partnerships generated on
additional stakeholders (utilities,
for strategic
partnerships
with but
localconsistent
with partners
reactive/ad-hoc basis
• Catalystto
•Regular
•Proactive efforts
marketing
budgetinteraction
marketing budget
•Well-funded and responsive
•Significant
•Moderate
•Limited
community
colleges,
workforce
agencies
•Partnership value is not
market opportunitieson an ongoing basis
mediums
for
marketing budget (e.g. marketing)•Inconsistent messaging
•Use multiple
development,
etc.)
Partnerships
contributions
by
leveraged
•Regular
general outreach (print, TV,
•Industry-focused outreach
•Sporadic participation in industry •Inconsistent delivery
Marketing and Branding
stakeholders
(utilities,
through multiple mediums
online, social media,additional
etc.)
conferences/tradeshows
•Lack of outreach marketing budget
marketingcolleges,
budget workforce
•Well-funded and responsive to
•Significant
•Moderate but consistent
•Limited
community
in target industries
outreach efforts,
•Leading brand
market opportunities
mediums •General
for
marketing budget
•Use multiple
•Inconsistent messaging
development,
etc.)
including
visits to site consultants
general outreach (print, TV,
•Industry-focused outreach
•Sporadic participation in industry •Inconsistent delivery
Marketing and Branding
through multiple mediums
online, social media, etc.)
conferences/tradeshows
•Lack of outreach marketing budget
•Well-funded and responsive to
•Significant marketing budget
•Moderate but consistent
•Limited
in target industries
outreach efforts,
•Leading brand
•General
market opportunities
marketing budget
•Use multiple mediums for
•Inconsistent messaging
including visits to site consultants
•Industry-focused outreach- 12 - general outreach (print, TV,
•Sporadic participation in industry •Inconsistent delivery
Marketing and Branding
through multiple mediums
online, social media, etc.)
conferences/tradeshows
•Lack of outreach
•Leading brand in target industries
•General outreach efforts,
including visits to site consultants
Strategy
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• Past employees of state
economic development
organizations
• State EDO Partners and
collaborators
10 Dimensions of Capability
• Strategy
• Retention Process
• Organization
• Entrepreneurship/Innovation Economy
• Partnerships
• Budgeting / Funding
• Marketing / Branding
• Incentives
• Attraction Process
• Technology
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• 100+ factors
•Integrated industry-based
Individuals Interviewed
Outdated - I
M7 11-20 Council Meeting Presentation Deloitte Final-3.ppt
• Past experience with
economic development
organizations
Capabilities
Maturity
ModelAdvanced
for Economic
Development
Leading
– IV
– III
Common – II
M7 11-20 Council Meeting Presentation Deloitte Final-3.ppt
• Secondary research on
economic development
organizations
Capabilities Maturity Model for Economic Development
Capability
M7 11-20 Council Meeting Presentation Deloitte Final-3.ppt
Inputs into the CMM
framework
Characteristics of State Economic Development
Organizations
Leading/Advanced Characteristics:
 Focused, consistent delivery
 Simplicity of tools, programs, strategies
 Work from strength to address weakness
 Skilled, tenured professionals
 Clear voice from the top
 Robust industry capability
 ED departments are focused on ED
 Understanding that it takes YEARS to change perception
 Bureaucratic organizations and operations
 No clear voice from the top being driven through the EDC
 Mission and responsibilities include multiple non-ED entities
 Complex intake process
 High turnover
 Poor regional partnerships
 Budget fluctuations
 Constantly changing strategies which are seldom implemented
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Common/Outdated Characteristics:
CMM Approach and Wisconsin Interview List
Role
Aaron Olver
Wisconsin Secretary of
Commerce
Zach Brandon
Deputy Secretary at
Department of Commerce
Cory Nettles
Former Secretary of
Commerce
Bill McCoshen
Former Secretary of
Commerce
Gale Klappa
Chairman & CEO of
Wisconsin Energy
Pat O’Brien
Executive Director of M7
Jerry Murphy
Executive Director of New
North
Sean Robbins
Executive VP - THRIVE
Noel Eggebraaten
Executive Director –
Momentum West
Barb Fleisner
Executive Director - Centergy
Vicki Markussen
President, 7 Rivers Region
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 In order to compile the results for the
Wisconsin CMM, our team interviewed
the individuals listed on the table to the
left
 All of the opinions and data provided
were aggregated prior to inclusion
 Discussions also resulted in several
common themes and related insights on
Wisconsin’s economic development
approach
WCS Interim May 27 Presentation-v06302010.pptx
Name
Key Themes Emerging from our Interviews
Opportunities
Observations
 Some of Wisconsin’s new incentive programs
are impactful (e.g., Jobs Tax Credit)
 Some innovative programs are being piloted
for manufacturing innovation, such as the
“Green to Gold” program
 Regional and local economic development
groups have been doing the work of providing
a “face-to-the-customer” for their regions
 There is a lack of understanding in the
corporate market of Wisconsin’s value
proposition
 Wisconsin’s Department of Commerce
appears to play a facilitator and enabler role,
often not a leadership role in economic
development activities
 The organizational mandate for Commerce is
vast and includes business development,
community development, housing, trade,
safety and buildings, and petroleum regulation
 Entrepreneurship efforts are facilitated
through multiple organizations with no single
point of contact, yielding unclear results
 Wisconsin’s incentive programs are poorly
communicated and not well marketed to
potential users
 Wisconsin’s economic development
connections to businesses (“face-to-the
customer”) appears to be reactive and
fragmented
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 Wisconsin appears to have been relatively
successful recently in expanding and retaining
several large employers within the state,
including Mercury Marine and Oshkosh Truck
Wisconsin Department of Commerce
CMM Observations for Wisconsin
Leading
IV
Advanced
III
Common
II
Strategy
Organization/Staff
Partnerships
Marketing/Branding
Attraction
Outdated
I
Rating Rationale
•
Focused strategy on manufacturing growth and entrepreneurship
•
Role as facilitator and enabler, especially for regional or local
organizations
•
High turnover at Secretary level (inconsistent leadership)
•
Vast organizational responsibilities and mandate
•
Below average pay, particularly at entry level
•
42.5 FTE’s in Business Development; personnel in other entities
also involved in this role
•
Strong focus on local or regional partnerships including M7, New
North, and THRIVE
•
Also focused on partnerships with universities and MEP’s
•
Unstructured relationships that tend to be primarily initiative driven
•
No state-wide marketing effort (previously done through Forward
WI); marketing primarily driven through local / regional initiatives
•
Reactive to client inquiries
•
Supportive of regional efforts
•
Highly focused on manufacturing innovation and broadening
existing industry
•
Responsive and creative solutions to opportunities
•
Focus on VC tax credits
•
Some acceleration capabilities through university
partnerships/MEP
•
Business Development operating budget of $3.4 Million + ~$43.2
Million funding for partner entities
•
Several new incentive programs recently passed
•
Complicated and poorly communicated to potential customers
•
Some utilization of social media; current Commerce website
contains outdated information and is hard to navigate
•
Outdated CRM system based in MS Access
Retention
Entrepreneurship
Budgeting/Funding
Incentives
Technology
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Capabilities
General Benchmark Assessment – Cost and Conditions Summary
Benchmark Operating Conditions
WI
MI
MN
IL
IA
IN
GA
WI Comments
Consistently ranked in lower quartile
(#48 of 50 in Forbes)
Last among benchmark states in most
Governor’s Cup measures
Based on entrepreneurs per capita
(300 per 100K population in WI)
Near US average (~22.8% with
bachelors or above)
MKE airport ~50th busiest in US (by
passenger enplanements)
Based on right-to-work status, union
membership
Business Climate Rankings1
Recent Project Activity2
Entrepreneurship3
Education Attainment4
Air Access
Labor Relations
Benchmark Operating Costs
Moderate production wages (average
of $16.52/hour)
Software eng. average of ~$32/hour,
2nd lowest among benchmark states
Ranked #42 in US (Tax Foundation)*,
20th highest tax burden per capita5
Labor (Production)
Labor (Software)
Taxes
Real Estate (Metro Office)
Based on Milwaukee rate (~$15.00/sf)
Incentives
* Primary source used for shading of heat maps
1
2
More Favorable
Moderately Favorable
Less Favorable
3
4
5
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Forbes, 2009
Site Selection Magazine, 2010
Kauffman Index, 2009
Bachelor’s or greater
Milwaukee Journal Sentinel, “The Tax Tale: 50 State
Comparison”, April 2010.
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Moderate electric costs (6.58
cents/kwH - similar to US average)
Some programs are underutilized
and/or unknown
Utilities (Industrial Electric)
Industry Benchmarking Analysis Findings
Industries and Locations Included in the Analysis
Sample Industries
Advanced
Manufacturing
Renewable Energy
Financial
Services and
Insurance
Financial Services
Technology
Software Development
Life Sciences
Ag/Dairy/Food
Processing
Common
Benchmark
Locations
Leading Benchmark Locations
Texas
Oregon
Singapore
Connecticut
Iowa
Ohio
Virginia
Texas
India
Medical Devices
Minnesota
Massachusetts
Ireland
Food Processing
Pennsylvania
Idaho
Texas
 Michigan
 North
Carolina
 California
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Target
Clusters
Benchmark Industry Location Drivers
Industry
Functional Focus
Life Cycle Applicability
Select Critical Location Drivers1
 Operating costs (labor, utilities)
Agriculture, Dairy,
and Food
Processing
 Manufacturing
Medical Device
 Manufacturing
 R&D
 Growth / Mature
 Utility capacity / quality
 Sites/permitting
 Market access
 Operating costs (labor, taxes)
 Growth / Mature
 Sites / permitting
 Quality of life
 Research / scientific cluster
 Quality of life
Software
Development
 Development
Center / Back
office
 University presence and educational attainment
 Emerging / Growth
 Perception as a software hub
 Access to capital
 Operating costs (labor, taxes)
 Operating costs (labor, real estate, taxes)
Financial Services,
Insurance, and Real
Estate (FIRE)
 Headquarters
 Back office /
support center
 Air access
 Mature
 Quality of life
 Natural disaster risk
 Regulatory environment
 Operating costs (labor, freight, taxes, utilities)
 Manufacturing
 R&D
 Emerging / Growth
 Supplier / market access
 Renewable portfolio standards
 Access to capital
1 Presence
of relevant talent (by industry and occupation), and labor quality, are key drivers for each benchmark industry, and
therefore not listed individually. Critical location drivers derived from Deloitte / NKF location advisory experience.
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Renewable Energy
Agriculture, Dairy, Food Processing – Conclusions

Wisconsin’s strengths for attracting/growing food manufacturing
include:
˗
Large existing food industry presence
˗
High concentration of relevant occupations
˗
Robust utility capacity (particularly water)
˗
Moderate real estate costs
Primary challenges include:
˗
Lack of certified, shovel-ready industrial sites
˗
Few incentives to encourage capital intensive investment
˗
Less favorable logistics for national distribution models
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
Renewable Energy Manufacturing – Conclusions

Wisconsin’s strengths include:
˗
Strong occupational presence to support wind and biofuels (and
potentially biomass) manufacturing
˗
Transferrable skills from advanced manufacturing sector
˗
Abundant electric capacity
Primary challenges include:
˗
Poor value proposition to attract solar manufacturing
˗
Lack of certified, shovel-ready industrial sites
˗
Few incentives to encourage capital intensive investment
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
Software Development – Conclusions

Wisconsin’s strengths include:
˗
Lower cost labor (lowest among US benchmark locations)
˗
Low cost real estate (lowest among US benchmark locations)
˗
Moderate quality of life (higher ratings in Madison compared to other
geographies)
Primary challenges include:
˗
Comparatively low presence of key occupations
˗
Not perceived as a software hub (either in US or globally)
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
Medical Device Manufacturing – Conclusions

Wisconsin’s strengths include:
˗
High industry presence (including major industry player in GE Medical
Systems)
˗
High occupational presence (for core manufacturing positions)
˗
Skills availability and healthcare infrastructure
˗
Proximity to Minneapolis and Lake County (IL) medical device clusters
˗
Relatively low real estate costs
Primary challenges include:
˗
Low concentration of biomedical engineers
˗
Lack of certified shovel-ready sites
˗
Few incentives to encourage capital intensive investment
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
FIRE – Conclusions

Wisconsin’s strengths include:
˗
Low natural disaster risk
˗
Low real estate costs
˗
Presence of significant players in insurance industry
˗
Workforce education and quality
˗
High LQ in select high-end occupations (e.g. actuaries)
Primary challenges include:
˗
Low LQ in certain occupations (e.g. financial analysts, and select higherend FIRE positions)
˗
Moderate air access compared with other FIRE clusters
˗
Tax climate (specifically personal income tax for HQ executives)
˗
Limited applicable incentives
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
Recommendations
Framework for Recommendations Development
Controllable
Executable
• Does the recommendation address a controllable variable
that can be impacted by strategic planning and policy
development?
• Does the recommendation focus on factors that are known
influencers and considerations of business decisionmaking and global competitiveness?
• Can the recommendation be traced to leading practices
in other states?
• Has the recommendation been executed elsewhere with
known results?
• Can a roadmap for success be developed that will be
discernable?
• Can the tactics from inception to execution easily be
developed and communicated?
Measurable
• Is the recommendation supported by facts and objective
evaluation?
• Would there be organizational ownership of the
recommendation?
• Can it stand the test of varied interests and stakeholders
throughout the state?
• Does the recommendation lend itself to measurable
KPIs?
• Does the recommendation represent a tangible and
realistic change event that will impact the economic wellbeing of the State of Wisconsin?
• Can accountability and transparency be built into the
recommendation with reasonable performance
management methods?
• Will the recommendation consider the unique economic
geography of the state?
• Can the recommendation be appropriately resourced
and affordable?
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Defensible
Overarching Goals
The Recommendations are designed to help Wisconsin reach two
overarching goals…
Wisconsin will rank among the top 10 states for starting a business
by 2016
˗

Currently #28 in Kauffman Index of Entrepreneurial Activity
Wisconsin will rank among the top 10 states for expanding a
business by 2016
˗
Currently #29 on CNBC’s America’s Top States for Business (July 2010)
… with the ultimate objective of raising per capita income and creating
greater opportunities for Wisconsin residents
- 31 -
WCS Interim May 27 Presentation-v06302010.pptx

The recommendations may be summarized into Change Imperatives
Change Imperatives
Recommendations
2
Image / Branding: Reposition Wisconsin’s brand
through an aggressive and targeted marketing
campaign
3
Alignment: Align State economic development
efforts, educational programs, and public/private
sector leaders around select targeted industries
4
Retention: Develop a structured, pro-active
approach to business retention
5
Innovation: Create a statewide, not-for-profit entity
to centralize and streamline the state’s innovation
programs
6
Attraction: Reinvigorate and focus Wisconsin’s
business attraction capabilities
7
Sites / Permitting: Deploy a statewide “shovelready” sites program with expedited permitting
procedures
8
Incentives: Implement new programs geared
toward capital-intensive and startup projects
9
Technology: Apply technology to enable and
underpin Wisconsin’s economic development
strategy
Structure and Strategy
Capability and Focus
Tools and Technology
- 32 -
WCS Interim May 27 Presentation-v06302010.pptx
1
Structure: Create a quasi-public entity charged
with crafting, delivering and overseeing Wisconsin’s
economic development strategy
Recommendation # 1: Create a new quasi-public entity to
oversee statewide economic development efforts
Description
Priority
Develop a public-private model, comparable to Indiana’s IEDC or
Michigan’s MEDC, while incorporating leading innovation,
collaboration, and metrics best practices from other states
Lower priority
Rationale
Higher priority
Potential Benefits

Current mission / responsibilities of Commerce do not enable
it to be effective in proactive retention or attractive efforts

Enables focus on economic development by
removing extraneous responsibilities

Commerce viewed by several as a political instrument rather
than an independent advocate for business development


States which have adopted a “Corporation” model for
economic development (e.g. Indiana, Michigan) tend to have
high-performing economic development organizations
Can help address challenges related to
compensation, career path, training and talent
attraction

Helps mitigate turnover risk among top leadership
position(s)

Helps align public and private sector entities
Growing trend among states, including recent proposal by
Arizona to replace Commerce with a new quasi-public entity
Supporting Information
Factor
Primary Responsibilities (#)
WI1
6
2
MN
5
IL
5
IA
7

Public / Private
Jobs from New Attraction Projects
(FDI Markets - 2009)2
MI
Potential Implementation Challenges
2,053
5,158
IN
1
GA
967
2,010
8,874
Pushback from existing organizations (Department
of Commerce, Forward Wisconsin, etc.)

Significant administrative change which requires
new legislation
3

218

7,938
2
1 WI
Department of Commerce responsibilities include: Business Development, Community
Development, Housing, Export and Trade, Petroleum and Tanks, Safety and Buildings
- 33 -
FDImarkets.com database (published by Financial Times); database consists of
major business investment announcements and may not be fully comprehensive
WCS Interim May 27 Presentation-v06302010.pptx

Recommendation # 2: Reposition Wisconsin’s brand through
an aggressive and targeted marketing campaign
Description
Priority
Develop a cohesive, statewide marketing campaign which rallies
around targeted themes, industries, and success stories
Lower priority
Rationale
Higher priority
Potential Benefits

Wisconsin spends substantially less on non-tourism
marketing / branding than most competing Midwestern states

Critical to business attraction efforts

Important to business retention efforts

Current marketing efforts are often led by local or regional
economic development groups with disparate value
propositions

Enables promotion of recent success stories

Can help address “business climate” concerns (i.e.
perception vs. reality of business taxes)

Helps Wisconsin keep pace with neighboring
states (e.g. MI, IA and IN) and global competitors
Wisconsin has been unable to react to the new realities of
economic development marketing (internet, social media,
etc.)
Supporting Information
Potential Implementation Challenges
* Based on interviews with economic development officials in each state
- 34 -

Requires development of a clear value proposition

Requires substantial funding increase from
Wisconsin’s current marketing allocation

Requires balancing interests of various diverse
regions throughout the state
WCS Interim May 27 Presentation-v06302010.pptx

Recommendation # 3: Align state economic development
efforts and resources around select targeted industries
Description
Priority
Identify target industries for the state. Tailor educational
programs (university, community college, etc), economic
development personnel, and private sector efforts around targets
Lower priority
Rationale
Higher priority
Potential Benefits

Limited connections between universities and State economic
development efforts

Provides universities with the direction they crave
to assist with economic development

Wisconsin’s government leaders and business leaders are
often misaligned

Promotes greater success in attraction and
retention of target industries

Target industries are typically central to effective state
economic development marketing campaigns and resource
allocation

Provides a foundation for training, infrastructure,
targeted incentives, talent development, and
marketing / branding
Potential Implementation Challenges
WI1
MI
MN
IL
IA
IN
GA
Life Sciences
NA






Renewable Energy
NA





Automotive
NA


Defense
NA


Agribusiness/Food Processing
NA
Advanced Manufacturing
NA
Identified Target Industries
1 Per







discussion with WI Department of Commerce, the State does not follow a target industry strategy
- 35 -

Requires leadership from State agency to
determine target industries

Must balance the interests of companies /
industries which are not primary targets
WCS Interim May 27 Presentation-v06302010.pptx
Supporting Information
Recommendation # 4: Develop a structured, proactive
approach to business retention
Description
Priority
Establish a regular calling program for existing industry to help
detect early symptoms of flight risk. Develop industry orientation
and knowledge base. Manage program with web-enabled CRM
software.
Lower priority
Rationale
Potential Benefits

Wisconsin retention efforts are mainly driven by local or
regional groups (State may be minimally aware / involved)

Retention is a primary focus of the State’s economic
development strategy, but most efforts are reactive

Most benchmark states utilize CRM software to centralize and
manage retention (and attraction) efforts

Early-stage detection provides more time to
adequately address company needs

Provides existing companies with a regular and
frequent opportunity to voice business climate
concerns

“Personal touch” can help offset ongoing and
aggressive marketing efforts by other states
MI
MN
IL
IA
IN
GA
Web-enabled CRM capability






Proactive calling program

Rapid response teams
Regional reps supported by
industry-oriented resources
WI
Potential Implementation Challenges







Likely requires additional personnel to manage
statewide program


Timing/costs of installing a CRM software system


Requires coordination among state and local/
resources

- 36 -
WCS Interim May 27 Presentation-v06302010.pptx
Supporting Information
State Retention Effort
Higher priority
Recommendation # 5: Create a statewide not-for-profit entity
to centralize and streamline innovation programs
Description
Priority
Create a statewide entrepreneurship not-for-profit organization
focused on investment and acceleration of early stage high
growth companies across the State. This organization would
also support manufacturing innovation investment.
Lower priority
Rationale


Potential Benefits
Wisconsin’s innovation programs are difficult to navigate, are
highly decentralized, and lack scale
Leading entrepreneurship initiatives in the US are
coordinated at the state level and have the capability of
investing capital and promoting start-up acceleration

Simplify accessibility to existing programs

Increase the base of venture capital within the
state, a key weakness in Wisconsin’s innovation
efforts

Leverage existing state resources in R&D centers,
universities, and existing entrepreneurship
programs (e.g. BizStarts) to create tangible
economic impact
Investment capital can provide the bridge between angel
financing and venture equity
Supporting Information
Potential Implementation Challenges
Venture Capital Funding ($ per capita)
Source: National Venture Capital Association MoneyTree Report – Per Capita VC dollars
- 37 -

Will require the consolidation of multiple existing
initiatives across the state

Additional funding will be required from local and
national foundations, individuals, etc.

Must have top talent to operate the organization
successfully
WCS Interim May 27 Presentation-v06302010.pptx

Higher priority
Recommendation # 6: Reinvigorate and focus Wisconsin’s
business attraction capabilities
Description
Priority
Develop a focused business attraction program with dedicated
State resources, consistent/streamlined processes, and targeted
outreach
Lower priority
Rationale
Higher priority
Potential Benefits

Faster, more streamlined response time to RFIs

Intake through execution processes are highly fragmented,
resulting in local or regional groups taking the lead

Can help enhance perception of Wisconsin as a
“can do” environment

State lacks dedicated resources to provide timely, effective
response to Requests for Information (RFIs)

Likely to result in more “at bats” and greater
conversion rate for new attraction projects

Efforts are currently highly reactive – minimal outreach to
prospective corporate investors, decision makers, and
leading industry associations

Can help advance high-potential industries and
clusters within the state

Attraction wins reinforce Wisconsin’s value
proposition to existing industry
Source: FDImarkets.com database (published by Financial Times); database consists of major business
investment announcements and may not be fully comprehensive
- 38 -

Requires additional personnel who are dedicated
to attraction efforts

Requires identifying target industries / companies
for focused efforts

Requires a shift in mindset for the State to assume
a leadership role in business attraction
WCS Interim May 27 Presentation-v06302010.pptx
Potential Implementation Challenges
Jobs Created in New Projects
Supporting Information
Recommendation # 7: Deploy a statewide “shovel-ready”
sites program with expedited permitting procedures
Description
Priority
Deploy a statewide “shovel-ready” sites program resulting in
certified, pre-permitted industrial sites
Lower Priority
Rationale

Potential Benefits
Site readiness/permitting is a key location factor for most
manufacturing projects (including the benchmark industries of
food processing, renewable energy, and medical devices)
Most Midwestern states offer some type of “shovel-ready”
certification program, providing a competitive advantage over
Wisconsin

Expedites implementation timing for various
project types

Helps mitigate Wisconsin’s reputation as a
cumbersome permitting environment

Ready-to-go sites can influence business
attraction and expansion projects
Supporting Information
Potential Implementation Challenges
States with “shovelready” sites
programs

Requires funding and coordination with DNR to
complete the various certifications (wetlands,
environmental, geotechnical, etc.)

May create competition among local jurisdictions
to participate in the program
Source: uscertifiedsites.com, supplemented by Deloitte/NKF research
- 39 -
WCS Interim May 27 Presentation-v06302010.pptx

Higher Priority
Recommendation # 8: Implement new incentives geared
toward capital-intensive and startup projects
Description
Priority
Implement new incentive programs geared toward capital
intensive investors, and an equity fund to invest in start-ups.
Remove $5M cap on refundable jobs tax credit. Consider
refundable tax credit programs for start-ups.
Lower priority
Rationale


Potential Benefits
Wisconsin’s current incentive programs do not reward the
capital intensive investments of advanced manufacturers

Wisconsin’s venture capital availability is lowest among
benchmark states
Increased ability to compete for advanced
manufacturing expansion and attraction projects

Additional resources to nurture capital-deficient
start-up companies

Increased rankings/perceptions of Wisconsin’s
business climate
The job tax credit is one of Wisconsin’s most powerful
programs and is tied directly to job creation. Removing the
cap will enable and encourage even greater job creation by
qualifying companies
Potential Implementation Challenges
Total Capex (in Millions $USD)
Supporting Information
Source: FDImarkets.com (Financial Times); database consists of major business investment
announcements and may not be fully comprehensive
- 40 -

Requires additional funding (for select programs,
e.g. VC equity fund)

Requires legislative support, particularly from
regions without significant manufacturing presence
WCS Interim May 27 Presentation-v06302010.pptx

Higher priority
Recommendation # 9: Deploy technology to enable and
underpin Wisconsin’s economic development strategy
Description
Priority
Adopt modern ED technologies including CRM software, webenabled sites/buildings database, online GIS capabilities,
enhanced website, etc.
Lower priority
Rationale
Higher priority
Potential Benefits

Current site and building inventories are fragmented across
multiple entities and technologies

Greater speed to value and recognition of the
pace of business in 2010 and beyond

Attraction and retention efforts are not visible across
economic development entities (upstream, downstream)

Enhanced website will offer a more favorable first
impression to existing and prospective investors

Wisconsin has invested less in economic development
technology than most Midwestern states

CRM software enables greater structure, visibility,
and coordination of attraction and retention efforts

Commerce website is outdated, difficult to navigate, and not
aligned with industry best practices

Sites/buildings database can benefit attraction and
retention/expansion projects
Factor
WI
Potential Implementation Challenges
MI
MN
IL
IA
IN
GA












…
CRM System Administered by
State Agency
…
Sites and Buildings Database
*
* Currently under development by WEDA – expected to be live in Fall 2010
- 41 -

Requires funding to implement new technologies

Requires dedicated resources to update and
administer databases

Requires close collaboration among entities (e.g. if
WEDA manages sites/buildings database, must tie
to Commerce efforts)

Avoid redundancies with local/regional groups
WCS Interim May 27 Presentation-v06302010.pptx
Supporting Information