Milwaukee Biz Blog

Once upon a time, I was called in to a local company to discuss their quality problem. They had been selling water treatment devices into Japan for more than three years, with no complaints.

They were very proud of these sales; not every American firm had the product quality and performance to sell in Japan. Now, however, their agent in Japan reported that the major purchaser had done a complete tear-down inspection on 15 units, out of a shipment of 600, and found that four of the 15 were missing a stop valve ball.

What did the company plan to do to correct the problem on this shipment and any future shipments?

I was told that the missing part was only needed once a year when the device was flushed. Why had the customer inspected new units? The customer had not given any complaints for the last three years; why were they concerned now?

It developed that the missing part had been changed to a darker color, so the assembly operators no longer noticed when it was missing. The marketing people would not budge on the new color, so one question would be how to assure that the operators assembled the units correctly.

I knew that an inspection of 15 units out of 600 qualifies as a “falling out of bed” test.

The sample size and method is only large enough to determine flaws that are obvious; it can detect if you fell out of bed or not. If a customer is using this method of inspection after three years, it suggests that they still don’t trust the supplier very well. Clearly, that mistrust was warranted in this case. The supplier did not assemble their own product correctly over one-fourth of the time, and didn’t know it until a customer told them.

As if to confirm my fears about the company’s attitude toward its product reliability, a side discussion revealed that American distributors always scheduled a call back for each installation of this firm’s water treatment devices, while European competitors’ units did not get, or need, that care. This fact was dismissed; it was not considered a contributing factor to a long term sales decline.

A CEO friend calls this whole situation a “self-correcting problem.” In due course, customers will find other suppliers with more reliable, functioning products. The real question is, how far can a firm ignore the warning signs before it is sold to a far away place, or simply withers away? Any way it goes, it will take down jobs and business activity with it, not to mention the collective creative spark that generates new patents and innovative products, which this company had a lot of in the years before I met them.

Today we hear about the possibility that Milwaukee could become a center for “water technology,” meaning the treatment, handling, and distribution of clean water, plus the cleanup of “used” and contaminated water.

My experience with this company that was in the midst of this industry tells me that in addition to developing superior ways to treat and handle water, those firms need to learn or remember certain business basics. Namely, how to reliably manufacture their own designs, how to assure themselves that the finished product does what they claim and how to respond, reactively and proactively, to clear examples of performance failings.

Of course, you say. Everyone must do that. As for the company I mentioned earlier?

It's been sold twice since then. The brand name still exists, but the company's web site doesn't mention any new patents, despite their historical track record. And I wonder if they still tell themselves that distributor call-back frequencies are unimportant details.

Jay Warner is the principal scientist at Warner Consulting Inc. in Racine.

The controversy over Gov. Jim Doyle’s proposed Clean Energy Jobs Act illustrates a deep philosophical divide that is emerging within Wisconsin’s business community.

In some ways, the emerging chasm pits the politics of tomorrow against the politics of yesterday.
On one side of the divide – in favor of the green jobs plan - stand the coalition for Clean, Responsible Energy for Wisconsin’s Economy (CREWE) and the Wisconsin Business Council.

The CREWE includes venerable companies such as CleanPower, Alliant Energy, EcoEnergy, Johnson Controls Inc., Xcel Energy, C5•6 Technologies, Axley Brynelson, Madison Gas and Electric, Orion Energy Systems, Forest County Potawatomi Community, Wisconsin Energy Corp., Poblocki Sign Company, Emerging Energies of Wisconsin, MillerCoors, American Transmission Co., WPPI Energy, DTE Energy Services and Kranz, Inc.

"CREWE strongly supports (Doyle’s) Global Warming Task Force recommendations and will support legislation that preserves the careful policy balance reached by the task force. We are currently reviewing the draft bill,” the CREWE companies said in a joint statement. “We appreciate the strong leadership of the sponsors and thank them for hard work in preparing the draft.  We look forward to working with them in the coming weeks and months to pass and implement legislation that will address climate change, increase energy independence, and create new, clean energy jobs for Wisconsin."

The plan also has the support of the Wisconsin Business Council, which includes leaders from several of the state’s key businesses, including American Transmission Co., Anthem Blue Cross Blue Shield, AT&T Wisconsin, Commerce State Bank, Dean Health System, Midwest Natural Gas, MillerCoors, Mortenson Construction, Orion Energy Systems and Park Bank (in Madison).

“Achieving the vision set forth in the Clean Energy Jobs Act will require diligence and innovative thinking,” said Scott VanderSanden, chairman of the Wisconsin Business Council and president of AT&T Wisconsin. “But we are confident that Wisconsin leaders in manufacturing, energy production, trade and service industries are up to this challenge. We look forward to the public discussion and the give and take that will be part of the legislative effort to fine-tune this proposal. The Clean Energy Jobs Act sets the stage for the creation of thousands of well-paying, family-sustaining ‘green jobs’ over the next decade, and if implemented in a way that recognizes the needs of our key industries, it will enhance Wisconsin’s business climate.”

The nonpartisan Wisconsin Business Council, which was formed last June, includes both conservative- and liberal-leaning people who believe that “better jobs and a stronger economy are critical to Wisconsin’s quality of life.”

Phil Prange, president and chief executive officer of the Wisconsin Business Council, held several key positions in the former Wisconsin Republican Gov. Tommy Thompson’s administration.

“The Wisconsin Business Council was established to provide a forum for business leaders to come together in the search for mutually beneficial solutions, and we’re cautiously optimistic about the potential of the Clean Energy Jobs Act,” Prange said. “A flourishing private sector is critical to our quality of life and it is clear that environmental innovation also makes sense from a competitive standpoint.”

On the other side of the divide stands the Wisconsin Manufacturers & Commerce (WMC), which is joined by 22 other business organizations, including the Metropolitan Milwaukee Association of Commerce (MMAC), in opposition to Doyle’s proposal.

The WMC cited a study by the conservative Wisconsin Policy Research Institute that contends the proposed green legislation would kill 43,093 private-sector jobs in Wisconsin.

“Many families in this state are hurting,” said Scott Manley, director of environmental policy for the WMC, which has long supported conservative political candidates and causes. “We cannot afford to lose any more jobs, but that is exactly what this legislation will do.” Wisconsin has lost 160,000 high-wage manufacturing jobs since 2000, and the proposed legislation will continue the high-wage job loss. We need to reverse the current trend, and find a way to bring family-supporting manufacturing jobs back to our state. But hitting Wisconsin’s economy with the expensive new energy regulations proposed today will significantly increase our cost of electricity, and kill jobs while doing nothing to address global warming. Lawmakers must understand that increasing the cost of energy for Wisconsin families and employers is a recipe for further job loss.”

Adding even more intrigue to this philosophical divide among Wisconsin’s business community is the fact that many members of the CREWE and the Wisconsin Business Council in favor of the green jobs plan also are dues-paying members of the WMC, the MMAC and the other organizations that are against the plan.

“It’s really created massive fault lines within the business community between the deniers (of global warming) and those that think something must be done,” said Thad Nation of the CREWE. “It’s probably going to get messier before it gets better.”

As for Doyle, he said an economic assessment of the Clean Energy Jobs Act (State Senate Bill 450 and State Assembly Bill 649) found that the package would directly create at least 15,000 green jobs in Wisconsin by 2025. More than 1,800 jobs would be created in the first year alone, he said. Doyle’s assessment also found that between 800 and 1,800 construction jobs would be created each year from 2011-2025, and more than 2,000 manufacturing jobs would be created once the laws are fully implemented.

“Addressing climate change is not just an environmental issue, it’s about creating green jobs,” Doyle said. “The Clean Energy Jobs Act offers new standards to help accelerate Wisconsin’s green economy. I am calling on the Legislature to update renewable portfolio standards to generate 25 percent of our fuel from renewable sources by 2025 and set a realistic goal of a 2 percent annual reduction in energy consumption by 2015.”

What will really happen if the bill is approved? For now, I guess it depends upon whom you believe.

Steve Jagler is executive editor of BizTimes Milwaukee.

The sun is the source of all energy on Earth. Yet, here in Wisconsin, the direct use of the immense energy of the sun is not considered a renewable resource. Most people do not believe this when the concept is first introduced to them because they know - intuitively - there is nothing more renewable than the sun … at least for the next 5 billion years.

But it’s true.

It will take a majority vote of both the Assembly and the Senate at the state Capitol and the signature of Gov. Jim Doyle to make the sun’s direct energy a renewable resource in Wisconsin.

The good news is that a broad list of business, trade and environmental groups, including Orion Energy Systems Inc., are working with the governor and the legislature to make this happen.

“Direct-use” renewables such as solar hot water heating, geo-thermal heating and “light pipe” technology would soon be included in Wisconsin’s Renewable Portfolio Standard (RPS) as a result of the passage of either the Clean Energy Jobs Act (LRB-3883/1), or independent legislation authored by Sen. Jeff Plale and Reps. Jim Soletski and Ted Zigmunt (SB273/AB401).

The Renewable Portfolio Standard (RPS) identifies those technologies defined as “renewables” in our state.

Why is this good for the people of Wisconsin? Well, the new law will create jobs, reduce our dependence on fossil fuels (Wisconsin imports all of its fossil fuel resources from out of state) and dramatically reduce the emission of greenhouse gases and other health threatening pollutants.
Let’s take a look at the Clean Energy Jobs Act and the independent Senate and Assembly Bills uniquely in regard to the impacts of the direct use technologies being included in Wisconsin’s RPS and particularly, light pipe technology.

As a result of the passage of the direct-use legislation, Orion’s Apollo Solar Light Pipe will be included in Wisconsin’s RPS. Once included, Renewable Energy Credits (RECs) will be developed for the installation and use of this innovative, “direct-use” renewable, which directly converts solar energy into the light used to illuminate the interiors of large commercial and industrial buildings. Due to the advent of the “tradable” RECs – which can be used to meet their renewable generation requirements – utilities will provide incentives for the installation of light pipe and other direct-use technologies spurring jobs creation in both the manufacturing and construction sectors of our economy.

It is estimated that the passage of these bills would provide as many as 1.4 million person-hours of work for unemployed Wisconsinites for the installation of the Apollo® Solar Light Pipe alone.
In regard to reducing Wisconsin’s dependence on fossil fuel, light pipe technology provides extreme energy savings by allowing major facilities to operate “off the grid” for their lighting needs for eight to thirteen hours per day. Thirty-five percent of commercial energy consumption is dedicated to lighting building interiors.

The installation of light pipe technology across the state would also drastically reduce the demand for electricity, which in turn reduces the need for generation and therefore causes a reduction in the emission of greenhouse gases and other pollutants. Reducing emissions would have a positive impact on Wisconsin’s environment and the health of our citizens.

Orion’s Apollo Solar Light Pipe is customarily installed with Orion’s highly efficient lighting technology and energy control system, known as Intellite II.

When this fully integrated lighting system is installed, including the Apollo Solar Light Pipe, the total annual CO2 reduction for Wisconsin would amount to 732,237.9 tons.

Passage of either the Clean Energy Jobs Act or the independent legislation that will include light pipe and other “direct-use” renewable technology in Wisconsin’s Renewable Portfolio Standard will create at least 1.4 million person-hours of work for our state’s unemployed, help rid our dependence on fossil fuels and create a healthier environment for all by limiting the emission of carbon and other pollutants. These bills speak to Wisconsin’s most critical needs: jobs creation, energy independence and a healthy environment.

Neal Verfuerth is founder and chief executive officer for Orion Energy Systems Inc. Based in Manitowoc, Orion designs, manufactures and deploys energy management systems.

We’re not out of the woods yet, but the economy is starting to show signs of stabilization and recovery.

The nation’s gross domestic product (GDP) grew at a 3.5-percent annual pace in the third quarter, higher than anticipated. Consumers are getting back in the game, with retail sales showing strength in October after a year of decline.

The Institute for Supply Management (ISM) reports that the nation’s manufacturing sector grew for the third consecutive month in October.  The ISM’s barometer PMI index rose 3.1 - from 52.6 percent to 55.7 percent, fueled by strength in new orders. Any reading over 50 percent indicates expansion.

These developments are hopeful signs for Wisconsin manufacturers who have endured a long and painful recession. But it’s not time to break out the champagne yet. In addition to the lingering problems of tight credit, unemployment and economic uncertainty, 2010 will present new challenges - and opportunities - as the economy continues to improve.

The post-recession reality is that markets, customers and competitors have changed.  Increased volatility, spikes in demand and hyper-competition are here to stay. The customer that once wanted your quote in 24 hours now wants it in half the time - and may not even bother to tell you until it’s too late. To thrive in this environment, manufacturers must be highly innovative, lean and agile. They need to create products that customers want and get them to market quickly.

Change on this scale can be daunting for manufacturers, especially smaller firms. That’s why it’s important for manufacturers to know there is assistance available to help them implement lean transformation and growth strategies.

Authorized by the Wisconsin Department of Commerce, the Next Generation Manufacturing grants are targeted to small and midsize manufacturers with less than 500 employees. Grants pay up to 50 percent of project costs for services delivered by the Wisconsin Manufacturing Extension Partnership (WMEP) with the remaining project costs paid by the company. Eligible projects are:

Lean Transformation - Up to $5,000 per company is available for Enterprise Business Transformation projects, which include a comprehensive assessment of a company’s operations, identification of key competitive priorities and an action plan to achieve them.  This lean transformation approach improves performance across all facets of the business enterprise and generates significant financial results.
Business Growth - Up to $6,500 per company is available to help manufacturers implement Eureka! Winning Ways, a nationally recognized system for rapidly generating and testing new product ideas.  Many Wisconsin manufacturers have successfully launched new products as a result of the Eureka! system.

Funding is limited, so manufacturers should act quickly if they want to take advantage of this opportunity to get ready for recovery and build a strong foundation for future growth and profitability. 

Mike Klonsinski is the executive director of the Wisconsin Manufacturing Extension Partnership (WMEP), which helps small and midsize manufacturers grow and succeed.  For more information on the grants, contact WMEP at 1-877-856-8588 or results@wmep.org.

All of those naysayers who believe Wisconsin is a terrible place to do business need to take a deep breath and do some serious recalibrating.
To be sure, like every other state, Wisconsin has its share of challenges - its high taxes and the dropout rate at Milwaukee Public Schools always quickly come to mind. And no doubt, Wisconsin has taken it on the chin with the closures of automotive plants in Janesville and Kenosha.
The losses have made the Milwaukee 7 a convenient target for people who make a habit out of trashing Wisconsin's business climate.
However, the negative drumbeat news cycle needs to take a break sometimes, and Tuesday was one of those days.
BizTimes had known for weeks that Milwaukee is one of two cities to be finalists in a Spanish company's search to build its new North American headquarters. We were told by city officials that we should not report that fact, however, because doing so could jeopardize Milwaukee's chances of landing the project.
Well, Wisconsin Secretary of Commerce Richard Leinenkugel blew those concerns out of the water Tuesday when he reported by phone from Bilbao, Spain, at the Metropolitan Milwaukee Association of Commerce (MMAC) all-member meeting that he had just concluded a "12-hour cage match" presentation to a Spanish company.
Leinenkugel is courting the Spanish firm with a southeastern Wisconsin delegation that includes officials from the Milwaukee 7, We Energies and Richard "Rocky" Marcoux, commissioner of the Milwaukee Department of City Development.
Milwaukee is "at the finish line" of landing the company's North American headquarters that would bring hundreds of jobs to southeastern Wisconsin and could also generate more work for vendors in the region, sources said.
"It's between us and one other city," said one source close to the negotiations.
Officials representing the Spanish company have been studying the business climate in southeastern Wisconsin for weeks, BizTimes has learned. The company sent representatives to the MMAC's Future 50 program in September, and they toured several southeastern Wisconsin factories, including the GenMet metal fabrication plant in Mequon. The plant tours were designed to give the Spanish company some insight about the array of potential partners and vendors in the region, sources said.
Sources said they expect the Spanish company to make a decision on the site for the North American headquarters by the end of the year.
Sources declined to identify the Spanish company that is being courted by Milwaukee.
We've got a pretty good hunch, however. Think alternative energy. Spain has become the world's second-largest producer of solar and wind energy in the world (behind Germany).
Spanish companies such as Gamesa, a manufacturer and installer of wind turbines, Iberdrola, a power group, and Acciona Energia, a wind park developer, are becoming global players in the fast-emerging alternative energy markets.

Republic Airways jobs
The news that Milwaukee is a finalist for the Spanish company's jobs came on the heels of Republic Airways Holdings Inc.'s announcement earlier Tuesday that it will save 800 jobs in Oak Creek and move 800 new jobs to the region by the end of next year.
Republic, the new parent company of Midwest Airlines, plans to move the jobs to Oak Creek and Milwaukee's General Mitchell International Airport.
Republic chief executive officer Bryan Bedford confirmed the creation of a Milwaukee hub during the MMAC's meeting at the Bradley Center.
Wisconsin Gov. Jim Doyle announced the use of the state's Enterprise Zone tax credits to help convince Republic to bring the jobs to the state.
Indianapolis-based Republic Airways will consolidate operations in Milwaukee from other cities such as Las Cruces, N.M., and Denver, Colo.
Republic acquired Denver-based Frontier Airlines on Oct. 1.
Bedford praised Milwaukee's pro-business climate as a reason for deciding to bring the jobs here, rather than Indianapolis or Denver.
"We spent a lot of time in the last three months trying to figure out where we can be our best and most competitive," Bedford said.
Bedford also announced Republic will add new routes from Milwaukee to San Francisco and Raleigh, N.C. The company is considering adding service to six more routes.
"Midwest Airlines today is about 45 percent to 50 percent of what it was at its peak. Our goal is to get back to its peak as soon as possible," Bedford said.

Mercury Marine jobs
Step back for a moment and recall that Wisconsin also recently beat out Oklahoma to keep Mercury Marine's production plant in Fond du Lac. Wisconsin provided about $70 million in public assistance, along with about $50 million in a loan backed by a Fond du Lac County sales tax and $3 million from the city of Fond du Lac. With the combined package of incentives, Mercury Marine plans to move up to 2,700 jobs to the Fox Valley.

Biotech jobs
In addition to the wins with Mercury Marine and Republic Airways, eight biotechnology companies have recently moved from other states to Wisconsin.
Biotechnology in Wisconsin is an $8.7 billion industry with 400 companies and 34,000 employees. Biotechnology is the fastest-growing segment of the Wisconsin economy, with an annualized growth rate of nearly 7 percent.
The state is benefiting from the formation of the Wisconsin Angel Network and the Wisconsin Venture Fund to help facilitate deal flow, investor exchanges and network creation.
In February, Doyle expanded the investor tax credit law as part of an early economic recovery bill. Enhancements included: raising the cap on tax credits for angel investments from $1 million to $4 million; tripling the annual pool of credits available for angel credits, from $5.5 million to $18.25 million per year, and venture credits, $6 million to $18.75 million; and allowing angel investors to claim the entire 25 percent credit on their investment in the first taxable year.
The eight biotech companies moving to Wisconsin are: RJA Dispersions LLC; VitalMedix; Rapid Diagnostek; Aldevron; Flex Biomedical Inc.; Inviragen Inc.; Exact Sciences Corp.; and NanoMedex.
They're moving here from Minnesota, North Dakota, Massachusetts and Florida.
Those relocations recently prompted the Star-Tribune in Minneapolis to write a series (and a related blog item headlined, "Wisconsin kicks our butt") about how Minnesota is losing out to a better business climate in Wisconsin.

Jobs from the Flatlands
Meanwhile, Uline Inc. of Waukegan, Ill., will move across the Wisconsin border to its new headquarters in Pleasant Prairie in 2010, bringing 1,000 jobs to a state that is supposedly a terrible place to do business. Uline is investing about $100 million in this God-awful place.
Uline received more than $6 million in incentives and aid from the State of Wisconsin to come here. In addition to Uline, several other Chicago area-based firms recently have opted to build facilities in Kenosha County instead of northern Illinois, including Vernon Hills-based Rust-Oleum Corp. and Lake Forest Village-based Hospira Inc.
And guess what? Business advocates in northern Illinois are now screaming because Wisconsin is luring away so many of their businesses. At a meeting of the Lake County Chamber of Commerce in Independence Grove, Lake County Partners president Dave Young blamed Illinois' "unfriendly business climate" for the flight of businesses TO Wisconsin.
"We have a governor (in Illinois) who goes out of his way to antagonize the business community," Young said at the luncheon, according to the Lake County News-Sun. "Unfortunately, right next door in Kenosha County, Gov. Jim Doyle is very adept at business recruitment and actually enjoys it."
Oh, and there will be more good news. Look for the efforts of the Water Council and Badger Meter Inc. CEO Rich Meeusen to pay off with more freshwater technology jobs in the next couple of years.
On Wisconsin!

Steve Jagler is executive editor of BizTimes Milwaukee.

I have never played poker with Harley-Davidson Inc. chief executive officer Keith Wandell. But if I did, and he went "all in" with his chips on a crucial hand, I'd look him in the eyes. And then I'd probably fold.

Wandell is "all in" with Harley. The stakes are high, and he's playing his hand accordingly.
As they say, drastic times call for drastic measures. Harley's core customers - people willing to plop down $40,000 or so for a new motorcycle - have been steadily dwindling. And even if they are willing to fork over that kind of coin, good luck obtaining the financing.

Harley's earnings have fallen for nine consecutive quarters.

Wandell, who built a track record of squeezing efficiencies out of operations in his years as an executive at Johnson Controls Inc., was brought in last year to do the nasty, painful hatcheting at Harley.

So far, he's been up to the task.

Wandell is laying off thousands of people and closing plants. He recently ended the Buell Motorcycle line.

Wandell is divesting Harley's MV Agusta venture in Varese, Italy.

He's threatening to close Harley's plant in York, Pa., unless the company receives the right concessions from the employees there and the right incentives from the local governments there. That decision will come in December.

With all of that chaos and all of that carnage, you might think Wall Street would be skeptical about Milwaukee Iron. You would be wrong.

Stock analyst Craig Kennison of Robert W. Baird & Co. Inc., is downright bullish on Harley, raising his outlook for the company to "outperform." Kennison is predicting a "cyclical rebound and turnaround story" for Harley.

"We expect shipments to bottom in 2009 following efforts to slash dealer inventory. Meanwhile, we see a dynamic turnaround story led by a bold CEO driving better performance. We see an opportunity to earn $2.25-$2.50 per share at modest production levels as Harley exits unprofitable brands, renegotiates York, and expands internationally. At 11-12x that expectation, we consider Harley the best value in our recreation space," Kennison wrote.

"Operations meet expectations. Harley reported a noisy quarter, reminiscent of bar-time at a Harley rally. Beyond the noise, however, key operating metrics met our expectations … Focus on post-restructuring earnings power. We see the potential to earn $2.25-$2.50 per share on a modest improvement in shipments (250K bikes) as the restructuring plan unfolds. New CEO Keith Wandell is taking bold action to refocus the business and build around the Harley-Davidson brand," Kennison stated.

Kennison is predicting that much of Harley's new growth will come from overseas, as the company plans to add 100 to 150 international dealers to drive shipments to 40 percent of bikes sold by 2014.

So, Wandell's legacy at the Harley helm awaits him. He could go down as a cruel butcher who cut the life out of one of America's proudest brands. Or he could follow in the footsteps of predecessor Richard Teerlink as a corporate savior and a turnaround genius who pulled Harley out of the scrap heap.

Either way, it will be a painful, bumpy ride.

Steve Jagler is executive editor of BizTimes Milwaukee.

The question is being asked at dinner tables and water coolers throughout Wisconsin:  Why would those union workers at Mercury Marine's Fond du Lac plant vote against the company's last contract proposal?

Why, indeed. At first glance, the consensus rejection by members of the International Association of Machinists and Aerospace Workers (IAMAW) Local 1947 on Sunday makes no sense. The company had flat-out threatened to leave Wisconsin for Stillwater, Okla., unless the Fond du Lac workers bent over and took substantial cuts in pay and benefits.

So, why would the Fondy workers cut their own throats? Isn't a job with reduced wages and benefits better than no job at all?

Why, indeed.

I will not try to justify the workers' vote. But I am happy to try to shed some light upon the mindset and the events that led to it.

The first thing to understand is the history that brought the Mercury Fond du Lac contract dispute to this point.
The company signed a contract extension through 2012 for the workers in Fond du Lac only last year.
"Now, they turn around and say, 'We need a complete rewrite, from cover to cover, of the contract THEY negotiated. It's union busting," said Mike King of the IAMAW. "When it's told to you across the table by a union-busting consultant (hired by the company), it really leaves a bad taste in your mouth."

In recent years, Mercury Marine had laid off about 600 people from the Fond du Lac plant and shifted production to China. The laid off employees could not participate in Sunday's contract vote.

The layoffs left the Fond du Lac plant with a senior-laden workforce. Most of the employees who still have jobs there have 25 to 30 years of experience at the plant. For many of them, retirement is on the near horizon.

Put yourself in their shoes. You are very near retirement. You are making a fine living wage. You have negotiated health care and pension benefits. The company is proposing a new contract that will slash your pay and eliminate most of your benefits, including severance pay for outgoing workers. The contract will cut benefits for retirees and will cut wages for new hires.

Even if the contract is rejected by the union, the company will need two to three years to move all of its production out of Fond du Lac to Oklahoma. If you can ride that time out, you'll walk away with the severance pay from the current contract. And then you can retire.

Or, you could take the figurative kick in the teeth - a pay cut and loss of benefits, including severance - and retire with less.

Union officials say the company's latest proposal is a "suicide offer."

Which option would you take?

"Mercury Marine never intended for this offer to be accepted," said IAMAW Midwest territory vice president Philip Gruber. "Despite progress on every major issue and a commitment by the IAM to continue bargaining, the company balked in the final hours and added terms and conditions that assured members would reject the offer … Mercury Marine has been threatening these workers and this community for weeks. Some companies may hint at dire consequences as a bargaining tactic, but rarely do we see such extortion in plain view. It's unethical, it's un-American and I respect any worker who stands up and refuses to be bullied."

"They (company officials) knew these were deal-breakers. It's gut-wrenching. We really, really tried to work with them," King said.

Company officials say they already have begun the process of shifting the headquarters and production from Fond du Lac to Stillwater. Company officials said they will continue to abide by the terms of the contract they negotiated with the union last year.

The company says it is doing what it needs to do to survive in a global marketplace. The company says it must reduce its labor costs.

The company said it expects the full transition to Oklahoma to take between 24 and 36 months.

"We appreciate the patient support of our employees and communities as we’ve gone through this process," said Mark Schwabero, president of Mercury Marine. "This has been a very difficult and stressful process for all involved. We will work closely with our team in Fond du Lac to develop and communicate a transition plan for this 24-36 month process."

The company has said it will stand by its offer to the union until Saturday, Aug. 29. It's possible that an 11th-hour solution could emerge. But you best not hold your breath.

In the end, the company is doing what it believes it needs to do. So is the union. Unfortunately, that doesn't make the pain any less severe in Wisconsin.

Steve Jagler is executive editor of BizTimes Wisconsin.

As the next chairman of the Fond du Lac County Economic Development Corp. (FCEDC) board of directors, it is my job to look to 2010 and assess, with staff, what the near future will hold for our communities, our businesses and our residents. The outcome of the vote by Mercury Marine's union on Sunday will most assuredly affect our future.

This is a difficult situation for everyone involved, especially the employees who will be casting their vote. I truly empathize with them for they must feel like the weight of the world is on their shoulders. It is not only their job at stake, but the jobs of approximately 4,000 of their neighbors in Fond du Lac County who work for companies who are suppliers to Mercury Marine or work for organizations who will be greatly affected by the potential loss of the company. The responsibility of each voting employee is incredible.

It is important that everyone understand the impact of Mercury Marine on Fond du Lac County. All told, an estimated $353 million in annual income in our county is on the line, and it is an impact that extends far beyond the boundaries of Fond du Lac County. In the seven-county region (Fond du Lac County and its adjoining counties), the direct and indirect impact is expected to result in the loss of almost 8,000 jobs and $450 million loss in annual earnings. Bump the scope to the state level, and loss climbs to over 11,000 jobs and $600 million in annual earnings.

As incoming chair of FCEDC, I have to look at how it would affect our business climate. Approximately 1,000 companies in Wisconsin provide products or services to Mercury Marine, 250 of which are in Fond du Lac County. Among the hardest hit industries will be local governments, restaurants, health care and a wide-range of manufacturing businesses.

Our stakeholders are also the citizens of Fond du Lac County.  So how does this decision affect us as individuals?  Mercury Marine is a significant water and sewer customer of the City of Fond du Lac. If no new customers took their place, the water and sewer rates would possibly have to increase by up to 5.5 percent, which equates to approximately $44 a year for the typical residential customer. In addition, Mercury pays over $620,000 in total property taxes, $219,000 of which is to the City of Fond du Lac. If the buildings were vacated, the value would decrease significantly leaving the other property taxpayers in the city, county, school district, and technical college district to pick up the difference.

The negative impact will be felt in all communities in Fond du Lac County. Nearly 400 of Mercury Marine's employees live in Fond du Lac County communities outside the Fond du Lac zip codes. The potential loss of population could impact some of the smaller communities quite severely. For example, Oakfield is home to many Mercury Marine employees and their families.  The loss of the company could directly affect over 12 percent of the 1,038 residents. This is not taking into account supply chain and those additional job losses previously mentioned.

The list goes on - property values, the impact on the area technical college system, the effects of higher unemployment rates, etc., but you get my point. The vote of the workers is a responsibility I wouldn't wish upon anyone, but it is a challenge they face none-the-less. I would like to personally thank each and every one of the employees for making an educated decision based on facts, integrity and conviction.

Russell Kamphuis is president and chief executive officer of the Bank of Oakfield and currently serves as vice chairman for the Fond du Lac County Economic Development Corp.

Editor's note: The following blog was written as an editorial in Central Penn Business Journal by Chris Passante, editor of the publication, which is based in Harrisburg, Pa. Milwaukee-based Harley-Davidson Inc. operates a production plant in nearby York, Pa. Harley is weighing its options. The editorial is reprinted with permission.

When Harley-Davidson chief executive officer Keith Wandell told the Central Penn Business Journal late last month it's his way or the highway, folks at the York plant - and around the country - sat up straighter.
And for good reason.

The new CEO of both the American icon and the 106-year-old company hemorrhaging employees and profits wasn't mincing words. Harley sent a clear message to the union, Local 175 of the International Association of Machinists and Aerospace Workers: It must cut $100 million in operation costs at the York plant, where it builds its Softail and Touring bikes. If it doesn't, the plant would pack up and leave behind some 2,000 hourly workers.

"…We'll either come to an agreement, or we won't," Wandell said. "And if we won't and can't, then we'll move the plant."

That's a tough-as-nails corporate stance, but one that should be taken seriously.There's simply too much at risk for one of York County's biggest and most valuable employers.

But Wandell ought to look again at his hand.

Does Harley really want to leave behind a highly skilled workforce that includes people with 20-plus years of experience?

Does it want to sever relationships with suppliers who can perform quality work and have a history with Harley?

Does it want to shake a region that for all its workforce problems still has a strong manufacturing commitment and initiatives to foster workers?

Would it risk tarnishing its image since Harley is so big on promoting its factory tours?

Can it turn its back on a state with a history of committing to Harley - including previous infusions of cash?

Would it throw away its $145 million investment into the Softail factory?

And maybe last but not least, would it not take advantage of a union that seems much more willing to compromise than back in 2007, when it went on strike?

In other words, Harley, you appear to have a partnership with the union in seeing the company through these challenging times.

Harley needs to stay in York, for York's sake, for the workers' sake, and for the company's sake. Concessions must be made now on both sides, so that when the economy grows again, so too will the company, the workers and York County.

Chris Passante is the editor of the Central Penn Business Journal. For additional information, visit www.centralpennbusiness.com.

Editor's note: Linda Kiedrowski, chief executive officer of The Paranet Group Inc., a Brookfield-based consulting company for manufacturing companies, recently wrote the following letter to President Barack Obama and is sharing it with readers of BizTimes Milwaukee.

Mr. Barrack Obama
President of the United States of America
1600 Pennsylvania Avenue
Washington, D. C. 20500
Re: An Idea to Stimulate the Economy

Dear President Obama:
I am a small business owner in Brookfield, Wisconsin. My business, The Paranet Group, is a development and network organization for manufacturing company executives located primarily in southeastern Wisconsin.

I have approximately 250 members. Paranet has been in business for about 20 years.

While there is much buzz about the Stimulus Bill, I have to be honest and say that I am not sure how it will stimulate my business or most of the manufacturers in my network. This is probably ignorance as I find the 750 page document daunting. I will, over time, invite "experts" to advise my members on how and what the stimulus plan holds for them.

However, that is not why I am writing today. Today I am writing with an idea that would spur the economy immediately. What we need in this country is for people to start buying. The media needs something positive to tout to help our country get out of the depressed state it is in. I am tired of the gloom and doom and want to see some positive action. So, here is my idea:

National Buying Day.

Let's pick a day and designate it as National Buying Day. Everyone will be encouraged to spend about $100, if they can, to help stimulate the economy. Buy that small appliance, new outfit, lawn mower, a couple shares of stock, etc! If people buy things, manufacturers can make them, service organizations can provide services, etc. That is the people's part. The government's part is to provide everyone with a tax credit equal to the amount (there may be a maximum tax credit limit) they spend on that day. People just need to present their sales receipts with their tax returns. Perhaps we even go as far as to say that all states with a sales tax forego that tax on National Buying Day.

Businesses could have special sales that day, etc. I am sure that there are probably lots of holes in this idea, but I believe the premise is good.

The media would have something positive to promote. It seems pretty simple to me. I really think this would be a win/win proposition. I look forward to your response.

Yours truly,

Linda G. Kiedrowski
CEO
The Paranet Group Inc.
13005 W. Bluemound Road
Brookfield, WI 53005
www.paranetgroup.com