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Whither Wisconsin manufacturing in the new global economy?

Sun Prairie, Wis. -- Where Progress Way meets Technology Drive, "old" manufacturing meets the new. And at the intersection, they decide that they really need each other.

That was one of many messages promoted Tuesday in a new, 400-page analysis of the state's manufacturing industries, commissioned by the Wisconsin Extension Manufacturing Partnership (WMEP) and produced by the Manufacturing Performance Institute (MPI) of Shaker Heights, Ohio.

The report includes detailed statistical analyses of Wisconsin industry sectors, by type and by region. It was funded by grants from the UW Commerce Department and the Kern Family Foundation.

It introduces a new term, "driver industries," describing them as Wisconsin's most currently competitive and profitable and which include papermaking, machinery manufacturing and fabricated metals production. But to stay afloat and grow in the face of global pressures, those industries must adopt new high-tech processes and consider ways to make its traditional products more valuable, its authors contend.

The report was presented at a news conference at Thermal Spray Technologies of Sun Prairie, which makes custom sophisticated coatings for a variety of industrial products, including surgical scissors and auto pistons. Thermal Spray was selected as an example of a traditional industry that's gone high-tech.
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Auto parts have always required some kind of shield against heat and wear, but technological advances have shifted strategies from electroplating to more environmentally friendly processes using aluminum oxide ceramics and metal alloys. The coatings are often sprayed on at temperatures as high as 30,000 degrees and at speeds of up to Mach 2. The new processes have allowed dramatic increases in wear resistance.

Thermal Spray's technologies grew out of its owners' graduate studies in a materials science laboratory at UW-Madison. The company, located at 515 Progress Way in the Sun Prairie Business Park, was founded in 1992 and now has 75 employees, including 11 with college degrees, said Bill Lenling, company vice president.

Manufacturing and related industries account for nearly one-half of Wisconsin's economy, according to the report. Last year, they generated $46 billion in "gross state product," exported $14 billion worth of goods and employed 512,000 workers. However, manufacturing suffers from an undeserved image problem, said Mike Klonsinski, WMEP chief executive officer.

"I think we still suffer from an old Charlie Chaplin image," Klonsinski said, referring to "assembly-line, no-brains kind of work." That perception is fueling a shortage of skilled workers to replace those now on the job. The study recommends that Wisconsin promote manufacturing as an advanced technology industry with a strong future.

Other study findings include:

• Wisconsin's output per manufacturing employee is 86 percent of the national average, a statistic that puzzled business leaders when they heard it. "I don't know why," said Nickolas George, public affairs director for Wisconsin Manufacturers & Commerce, a statewide business lobby group, when asked for an explanation. "Manufacturers say they are becoming more productive, so 86 percent is a surprise." More research is needed, he added.

• Manufacturing executives predict a decline over the next five years in corporate headquarters, R&D and production.

• Smaller export-oriented firms are being formed twice as fast in the US as larger firms and will represent a significant growth opportunity.

• Shifting from mass-produced commodities to those with higher value - called "value-added" -- will help industries to succeed in the face of competition from China and other countries with lower overhead and labor costs.

Value-added can mean something tangible, such as Thermal Spray's machine parts that last far longer due to technological advances. Or it can mean selling intangibles, such as image, or security or comfort. "We try not to only sell them a solution of a new coating, but ask further: What else can we do for you?" said Lenling.

MPI chief executive officer John Brandt, who detailed the study's findings at the press conference, likened it to a Harley Davidson model of marketing. "What do they really sell?" he asked. "They sell a lifestyle. They let middle-aged guys like me think we're kings of the road."

Recommendations include a renewed focus on Wisconsin's "driver" industries; understanding successes and copying them; taking actions to ward off projected labor and skill shortages; and preparing a legislative package to focus on policies affecting "driver" industries.

Katherine Esposito is the senior staff writer for WTN in Madison. She can be reached at kesposito@wistechnology.com.

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