Archive for the ‘Development’ category

Stronger UWM=Stronger Wisconsin

July 11, 2016

Sometimes one story leads to another. My Isthmus piece on the critical role of the UW System in rebuilding the Wisconsin economy got me thinking about the importance of urban universities in anchoring  prosperous metropolitan regions.

I make the case in this Journal Sentinel opinion column that a bigger state  investment in UW-Milwaukee would be a key ingredient in revitalizing Milwaukee.

A strong Milwaukee is good for us all — Madison, the Milwaukee suburbs and the state as a whole. “You can’t move the state forward economically unless Milwaukee and southeastern Wisconsin are leading the pack,” as former commerce secretary Bill McCoshen puts it.

Indeed, most prosperous metro regions — the Austins and Seattles of the nation — are usually enriched by strong central cities, research shows. The weakest — the Clevelands and Milwaukees — are hobbled by weak central cities.

Look no farther than Minnesota, which has soared ahead of the Badger state. Our median income of $52,622 a year is almost $9,000 less than our sister state’s. The contrasting impact of Minnapolis-St.Paul’s muscular economy to Milwaukee’s lingering Rust Belt decline is the key reason for the prosperity gap.

 

To read more on the history and important role of urban universities, please go here.

What Would Tommy do?

April 19, 2016

Last fall I had lunch with a friend who covered Wisconsin’s Capitol when Tommy Thompson ran the state for 14 years. By the end, he said, Thompson had tired of the constant grind. Only when Thompson talked about his plans for the UW System did the old fire return
That stuck with me. A few years earlier I wrote a Capitol piece for Milwaukee Magazine that discussed the politically surprising partnership between the Republican governor and  liberal-minded UW-Madison Chancellor Donna Shalala in launching a huge and transformative building program for the university.
Times have changed. Today the Capitol and the university see one another as an unreliable partner. I write:

The disharmony stems in part from the tensions of a generally liberal-minded university working with a decidedly conservative state government. Further exacerbating the relationship is the obliqueness of UW System bookkeeping and the Republican belief it hid a huge slush fund. (This became a key factor in the GOP-enforced tuition freeze and UW budget cut.) Add in the troubling geographic complaints that the UW System is Madison-centric and shorts the rest of the state and Milwaukee in particular.

UW advocates, in turn, are reeling from the $250 million UW budget cut, the four-year tuition freeze, the stripping of tenure protection from state statutes and Gov. Scott Walker’s surprise attempt in an earlier budget to bowdlerize the “Wisconsin Idea” that guides the UW’s mission to the citizenry.

All this makes for an unpleasant stew of missed signals, aggravation, suspicion and wheel spinning. Not to mention a nagging sense that the state as a whole is grievously hurt by the failure of the pols and profs to make nice.

Once upon a time it was different. Governors, Democrat and Republican alike, would tap top UW talent to serve and help run their administrations. Over the past 40-plus years this included Govs. Patrick Lucey, Lee Dreyfus, Tony Earl and Tommy Thompson deploying such UW luminaries as David Adamany, Walter Dickey, Ralph Andreano, Charles Cicchetti, Steve Born, Kenneth Lindner and Donald Percy in government service.

But under Jim Doyle, a Democrat, and now Scott Walker, a Republican, a new dynamic has emerged — governors ignoring the UW’s best and brightest to rely almost exclusively on their loyalists and apparatchiks to set policy and run the huge army of state employees.

More than one UW person I talked to spoke approvingly (if not longingly) of the Tommy Thompson era. That’s when an activist Republican governor with Hamiltonian ambitions for a greater Wisconsin found common ground with the university to unleash a major expansion of the UW System, including several billion dollars in campus construction.

How did he do it?

“I realized the university had to be my ally,” Thompson, 74, explains matter-of-factly, as if he were addressing a Poli Sci 101 class. “I had to make the university much more responsive to the needs of Wisconsin. And I said to myself I have to do it in a collegial way, because I don’t have the political power to do it alone. I’ve got to make sure the university understands I’m going to be its best friend. And for that friendship — quid pro quo — they’re going to help me build every part of this state.”

You don’t hear talk like that anymore in Wisconsin. An obvious question calls out: What would Tommy do to improve the sad state of campus-Capitol relations?

To find the answer, please go here.

There are two sidebars with the story. (The whole package is about 5,000 words.) The first reports how Thompson, a life-long UW booster, will be honored at UW-Madison’s spring commencement. The second details how the state’s failing efforts at economic development ignore the recommendations of UW researchers.

 

Abandoned Mine Ahead

November 30, 2015

A few weeks ago, The Financial Times reported that  the price of steel rebar (the reinforcing rods used in concrete construction) had plunged to a record low on the Shanghai futures market. And the price of iron ore had dropped as well, meaning that mining companies would likely cut production.

That was bad news for the Wisconsin economy. The Badger State has a substantial — but struggling — mining equipment industry in the Milwaukee area.

More to the point, the cooling of the Chinese economy is a major reason why the pipe dream of a revived iron ore mining in northern Wisconsin quickly burst. I examine the flawed thinking of the mine promoters  — notably Gov. Scott Walker and the business group Wisconsin Manufacturers & Commerce–in a piece for Isthmus.

 

Thomas Power, 75, an emeritus natural resources economist at the University of Montana, has studied mining for almost 50 years. He chuckled and said “certainly not” when I asked him in a phone interview if mining iron ore in northern Wisconsin was a good bet for producing jobs and wealth.

“Mining in the United States hasn’t been a growth center or a source of regional prosperity for at least a half century,” he says. “Just look across the country. When was the last time the Iron Range in Minnesota was prosperous? Or the last time when Butte, Montana, was prosperous? Or the Appalachian coal fields? Or the Ozark lead fields? Or the Arizona copper towns?”

The only contemporary success story he could cite was gold mining in the middle of nowhere Nevada, where the workers commute to work.

Reality is that mining operates on a recurring boom-and-bust cycle, he notes, and the bounce-backs are inevitably fueled, in part, by technological advances that reduce the workforce.

Mining jobs, as a result, has been greatly reduced. “It’s like agriculture,” Power says. “The rural Great Plains is losing people. Its not because we’re producing less and less wheat. It’s because we need almost no people to produce the wheat. It’s the same with mining.”

“It’s hard to imagine how some sort of sustainable prosperity can be built around an industry of that sort,” he adds. “That’s not badmouthing mining. That’s just the facts of the matter.”

To read more, please go here.

UW Tech Transfer: Challenge and Promise

October 15, 2015

Few things are as important for energizing the listless Wisconsin economy than capitalizing on the great research conducted at UW-Madison. I write in this Isthmus cover story:

A game-changer is what UW-Madison sorely needs. Historically one of the nation’s leading research schools, the campus secures more than $1 billion a year in research grants. Yet between 2009 and 2014, Wisconsin ranked 42nd among the states in patents issued, according to federal data. And we were dead last in a survey of entrepreneurial activity taken by the Ewing Marion Kauffman Foundation.

Reality is that despite Dane County’s tech-led boom, the Wisconsin economy is in parlous condition. The state suffered the largest percentage decline of middle-class households in the nation between 2000 and 2013, according to a Pew Charitable Trusts study. Median Wisconsin household income in this period dropped from $60,344 to $51,467 in inflation-adjusted dollars.

Obvious questions follow: Why isn’t all this UW research igniting a wave of business and tech startups across the state? Why hasn’t the UW dynamo reversed the state’s economic decline?

UW-Madison, it’s fair to say, is feeling the heat.

The hostility of the ruling Republicans at the Capitol is as plain to see as the UW System’s $250 million budget cut and Gov. Scott Walker’s initial plan to gut the Wisconsin Idea, the university’s once sacrosanct pledge that its “beneficent influence” would extend statewide.

But that notion of “the boundaries of campus are the boundaries of the state” draws a sharp retort from skeptics who think UW-Madison’s reach seems to abruptly end at the Dane County line. Local folks may be proud that Dane County claims 73% of the new jobs created in Wisconsin over the last 10 years, but outstate observers see this as evidence of how UW-Madison beneficence is highly parochial.

Enter UW-Madison’s Discovery To Product program. I write how this bootcamp for campus entrepreneurs has nurtured a potential breakout campus discovery. Researchers Mark Cook and Jordan Sand have come up with a technique that could dramatically reduce the pervasive  use of human antibiotics in animal feed. That farm industry practice is blamed for producing deadly drug-resistant superbugs.

To read more about their discovery and the complaints that insiders make about UW-Madison’s hostility towards commercializing research, please go here.

Organic Valley At The Crossroads

July 28, 2015

The Organic Valley farmers coop has been a huge success. With national sales hitting almost $1 billion, this upstart challenger of conventional agriculture has helped create a massive consumer market for chemical-free farming. Small family farmers in Wisconsin and across the nation have gone organic because of the premium prices their milk, eggs and meat attracts in the organic marketplace. But in researching this story for The Progressive magazine I found the coop in a surprisingly precarious position. I write:

Surging consumer demand for organics has created supply shortages for dairy products, and immense opportunities for profit. That has attracted some of the nation’s largest American food corporations to step up an already sizable investment in organics. These aren’t people motivated by protecting the environment, says David Kaseno of the National Farmers Organization. They are “people who think: ‘Hey we can make a lot of money in organic milk.’”

The $46 billion merger of Kraft Foods Group and the H.J. Heinz Co. in March will prompt its rivals to bulk up by buying fast-growing organic food labels, both The New York Times and Bloomberg News predicted. The food giants already produce a stunning 70 percent of the items stocked in a typical co-op grocery, says Philip Howard,a Michigan State University professor who tracks corporate consolidation in the organic world.

For organic industry observers, this poses stark questions for Organic Valley: Is it smart enough and big enough to compete with the corporate giants? Will it yield to the temptation to compromise organic standards to maintain market share? More to the point, will it hold on to its all-important dairy members, who have been abandoning the co-op for the significantly better pay offered by some Organic Valley competitors?

This is the paradox of Organic Valley: At a moment of great success, it faces something of an existential threat.

To read more, please go here.

I interviewed a ton of people for the story, including Organic Valley CEO George Siemon. Some of this views can be found in the story. I wrote an online sidebar that touches on other matters. I suspect that some people will be surprised at his positive impressions of Walmart. You can read about it here.

I also wrote about the Organic Valley coop for Isthmus. You can find those earlier stories from 2007 and 2008 here and here and here.

Old School Politics And The New Economy

March 19, 2015

The disconnection between Wisconsin’s growing tech sector and the state’s governing political dynamic has never been greater. This Isthmus story discusses how the Legislature’s decision to enact union-breaking “right to work” legislation left Madison area tech leaders puzzled and dismayed.

“As an employer, I can tell you this has zero bearing on my decision to stay in Wisconsin or to hire more people,” Dan Wilson, a founder of Moxe Health, told me. Other leaders had similar comments.

I write:.

It’s tempting to dismiss the comments of the techie execs as inconsequential because they represent startups and boutique businesses with small workforces. They are midgets compared to the titans of Wisconsin industry who have promoted right-to-work through their powerful lobbying arm, Wisconsin Manufacturers & Commerce.

But ignoring the new kids is a big mistake.

“In every single state, in every single metro area, young firms create the most jobs. That’s true everywhere,” says Dane Stangler, vice president of research and policy at the Ewing Marion Kauffman Foundation, which advocates for startup businesses.

The tech component has certainly paid off in Dane County.

It’s fueled, of course, by homegrown Epic and its rise as the dominant electronic health records vendor in the country. The workforce tops 8,000. Revenue in 2014 reportedly hit $1.8 billion. And because founder Judith Faulkner insists on running the entire operation through its fairyland campus in Verona, the region has boomed economically. Epic alone accounted for 27% of all the new jobs created here from 2001 to 2012, according to Kennelly.

The city staffer’s presentation on the Madison area’s economic dynamics makes a persuasive case that the Dane County metro area is impressively outperforming the rest of the state. With 10% of the state’s population, Dane County accounts for 12% of the state’s jobs, 15% of its economic output and 16% of the businesses created since 2000 and 73% of the net new jobs created in Wisconsin between 2004 and 2014.

The Milwaukee Journal Sentineldiced the numbers in a different fashion and came to the same conclusion: Dane County led the state in job creation between 2003 and 2013, with nearly 20,000 new jobs. That’s three times as many as second-place Waukesha County. Milwaukee County lost 19,000 jobs in the same period.

For anyone who still sees Madison as a cossetted government town — well, they need to think again. Kennelly’s report shows that the private sector is driving job and wealth creation in Dane County. “Our government workforce is effectively flat,” he says.

Even better, the growing industries here support good-paying jobs, namely in the biomedical/biotechnical and information technology business clusters.

“The Madison area is really an economic engine for Wisconsin,” Kennelly says. “State policymakers sometimes like to pick on Madison. A more constructive approach would be to say: ‘What are they doing right, and how can we replicate it in other parts of the state?'”

To read more, please go here.

Good News For Health IT?

March 19, 2015

If Madison and Dane County ever rise to a top ten metro area for technology, the driver will almost certainly be the growth of health-related technology companies led by former employees of  Epic Systems, the  Verona-headquartered leader in electronic health records.

It’s a good bet that Madison-area software writers, many of them bright Epic expats, jumped up pumping their fists when they read that Epic would shortly launch the “App Exchange” and “open the floodgates” to developers, as pioneer Madison tech entrepreneur Mark Bakken told the Wisconsin State Journal.

Bakken compared the App Exchange to Apple’s wildly successful App Store.

This was huge news. For all the good Epic has done for the Dane County community, it has shown steely indifference to the local health IT industry. The company’s intense focus on serving its worldwide 315 customers has never included playing Big Sister to expats dreaming of devising health software to piggyback onto the company’s proprietary system.

Bakken begged off from further commenting on the App Exchange, emailing, “My hands are tied on anything related to this and Epic in general right now.” Epic spokesman Shawn Kiesau also declined to comment.

But Bakken may have been overly exuberant in his prediction. A local tech leader, who asked for anonymity for business reasons, says Epic insiders say it’s a misnomer to compare Epic’s soon-to-launch App Exchange with Apple’s App Store.

To read more,  please go here.

This longer related story appeared in the same issue of Isthmus.

Epic’s Long Reach

December 5, 2014

Writing about software giant Epic Systems in its hometown is always interesting and always a challenge. The company is famously reclusive, and its former employees, who are at the heart of the Madison area’s emerging health IT industry, are afraid to say anything that might offend the powerful tech company.

In this story for Isthmus, I tease out the controversy over Epic’s noncompete policy for those expats.

The Huron Consulting Group’s announcement in April that it was buying Vonlay, a 130-person Epic-specialty consulting company, set off alarms locally when it became known than Epic had successfully intervened at the 11th hour to insist that Huron not hire Epic employees within two years of them leaving the company.

The one-year separation that Vonlay leaders observed in their hiring would be doubled for the acquiring firm. It also seemingly meant that former Epic employees who had signed an employment contract with a one-year noncompete clause when they had started at Epic would now be subject to a two-year stipulation they hadn’t agreed to.

Huron and Vonlay officials did not respond to queries, but Epic spokesman Brian Spranger confirmed that Huron had agreed to a two-year noncompete term. And then the shocker: “This is being reverted to a one-year term.” Spranger offered no explanation in his email for the reversal. “We’d rather not comment on the policy as a whole.”

There is no shortage of speculation. Most of it circles around Epic fearing it might be treading on federal antitrust laws and being accused of anti-competitive business practices.

To read more, please go here.

Epic’s New Focus

November 5, 2014

Epic Systems, the electronic medical records pioneer, has put Dane County on the map. I sketch out four strategic moves by the reclusive giant in this Isthmus story.

Epic is the big winner in the federally subsidized effort to shift American medical care from paper to electronic records. As part of President Obama’s economic stimulus plan, Congress approved a $27 billion incentive program in 2009 that touched off a mad scramble to modernize health systems in the name of improved efficiency and better care.

These health systems, which involve hospital and physician networks, can be complicated contraptions, and no company was better situated to harmonize its knotty internal operations than the well-seasoned Epic, which was founded in 1979 in the shadow of UW-Madison by the charismatic computer wizard Judith Faulkner.

Epic cleaned up in that gold rush. Today, one out of two Americans have their medical records on Epic software, and revenues at the fast-growing privately held company hit $1.7 billion in 2013.

Famously insular and only occasionally open to nosey reporters, Epic declined to provide an executive to be interviewed about its recent strategic moves. But local Epic watchers, a few on the record and more speaking not for attribution (they’re reticent because Epic is feared as well as respected), see a new strategy taking hold.

To read about those moves, please go here.

Lots of other Epic stories can be found by using the search engine at the right

We Need A Generational Change In Leadership

September 23, 2014

I spent a lot of time in early 2014 researching and pondering how Wisconsin’s economy stagnated after rising to pre-eminence in the 1970s. Among other things, I found Wisconsin’s leadership was resolutely stuck in the past while the national economy had moved on.

[T]hose old fights define Wisconsin, economically and politically. It’s as though our leaders are historical reenactors at Old World Wisconsin. They fire their muskets and shout the old-time shibboleths. Most of this is just spectacle — not really connected to resolving Wisconsin’s precarious economic position in the 21st century. But old habits don’t easily die.

Looking back at old glories, Democrats embrace the unions. Indeed, nothing rallies the base like a pledge to repeal the union-gutting Act 10. But unions are a declining force and face a questionable future in an era when worker-filled assembly lines are disappearing. Nationally, only one in nine workers is a member. In Wisconsin, union membership plunged from 33.5% of the non-farm workforce in 1965 to 12.4% in 2013, according to the economists at the Unionstats.com website.

The future is not bright. The expanding IT field, with its mix of collaborative teams, creative work and 1099 workers, seems particularly ill-suited to old-school unionism.

Republicans, meanwhile, embrace big business, especially traditional manufacturing, and have decisively tilted the state’s tax, regulatory and development initiatives to its benefit. That’s a king-size problem. Manufacturing jobs may have led Wisconsin’s modest recovery from the Great Recession. And Wisconsin does rank with Indiana as one of the top two industrial states in the nation. But Wisconsin’s glory days of manufacturing have decisively passed.

In 1979, manufacturing and its high-paying unionized work accounted for 33% of the jobs in Wisconsin. By 2012, it was 18%, according to the Center on Wisconsin Strategy (COWS).

Reality is that Wisconsin never recovered economically from the crushing recession of 1981-82. The bloody harbinger of Rust Belt de-industrialization, it laid waste to the huge manufacturing base in the eastern half of the state that runs from the Fox River Valley through Milwaukee, Racine and Kenosha and out to Janesville and Beloit.

I make the case that we sorely need of a generational change in leadership. Both the techies and the Millennials are the sort of pragmatic idealists Wisconsin needs.  You can read a lot more here. Also, posted below is a related piece that ran in the same issue of Isthmus.


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