Wisconsin Competitiveness Study Executive Summary July 29, 2010 Deloitte Consulting LLP and NKF...

Wisconsin Competitiveness StudyExecutive SummaryJuly 29, 2010

Deloitte Consulting LLP and NKF Global Corporate Services

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A collaborative effort by

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Wisconsin’s economy has struggled based on a wide range of indicators, and for many yearsPer 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)

4 Secretaries of Commerce in past 3 years

Outreach to efforts to businesses and site consultants have been minimal – for decades

Wisconsin’s Change Imperative

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Project ObjectivesThe 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

Create consensus with economic development stakeholders across the state related to the conclusions of this study and proposed next steps

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Project ScopeOur study does:Build on the findings and

recommendations of existing studies

Rely on rigorous, fact-based objective analysis to draw meaningful conclusions

Identify actions that will tangibly impact the state’s overall ability to attract, retain, and grow business

Our study does not:Engage in “just another target

industry analysis”

Develop public policy for local or state government or advocate any political party’s platform or approach

Develop a detailed, tactical economic development plan for Wisconsin

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Step C

Project Approach

CMM Analysis

• Leverage maturity model framework

• Define leading practices in Economic Development

• Utilize past experience with Economic Development organizations

• Interview economic development stakeholders

Cost & Conditions

• Research relevant costs and conditions influencing business location decisions

• Utilize collective experience in benchmark states

Recommendations

• Determine gaps between current operations and leading practices

• Determine criticality of the gap

• Determine alternatives to close the gap

• Recommendations for improvement

• Prioritization of improvements

Our overall approach includes four primary work steps:

Benchmark Industry Analysis

Step B Step B

Step D

• 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

Project Kickoff Past Study

Review

Step A

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Review of Past StudiesOur 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

Grow Wisconsin Momentum West (Eau Claire) StudiesGrow Wisconsin (updated) La Crosse StudyGrowth Agenda for Wisconsin M7 (Milwaukee Region) Studies2 Measuring Success – Competitive Benchmarking WI

Thrive Study (Madison)

Moving Wisconsin ForwardNext Generation Manufacturing Studies

State of Working WisconsinThe Wisconsin WayVision 2020 for Wisconsin

1 This study was prepared with the assistance of NKF Global Corporate Services2 This study was prepared with the assistance of Deloitte Consulting LLP

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Common Themes from Past StudiesThe 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

The studies identified a few common recommendations to improve Wisconsin’s economy:– 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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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

Recommendations typically are not focused on economic development organizational change or operational process improvements

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How successful do you think Wisconsin is, as a state, in terms of economic development?

Sample Stakeholder Survey Results

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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Currently, what do you think are the largest obstacles to advancing economic development in Wisconsin?

Weighted Scores from Survey (1 = Biggest Obstacle)

Sample Stakeholder Survey Results (Continued)

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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Capabilities Maturity Model (CMM) IntroductionThe Capabilities Maturity Model (CMM) assesses each State’s economic development organization based on multiple operating dimensions

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Capabilities Maturity Model for Economic Development

Capability Leading – IV Advanced – III Common – II Outdated - I

Strategy

•Integrated industry-based strategy• Strategy impacts all primary procedures and tools•Measurement and external accountability (defined metrics)

•Industry-based attraction strategy•Metrics are used internally by organization to measure performance•Mission statement has achieved buy-in throughout organization

•General business attraction and retention focus• Mission statement defined fororganization• Some metrics created to measure organization’s performance

•Reactive strategies for attraction and retention•No (or outdated) mission statement• Limited metrics to define success

Organization/People

•Market-leading turnover and compensation levels•Will hire top-talent from industry•Defined career path

•Relatively low turnover•Above-average compensation•Industry-specific training

•Average turnover•Average compensation•Economic development skills training, but no industry training•Defined roles and competencies

•Above-average turnover•Below-average compensation•Training is not a focus•No established career path

Partnerships

• State acts as funding resource for local stakeholders • Catalyst for strategic partnerships on an ongoing basis

•Structured relationships between state and local agencies•Regular interaction with local agencies•Regular contributions by additional stakeholders (utilities, community colleges, workforce development, etc.)

•Periodic interaction with local partners•Proactive efforts with partners (e.g. marketing)

•Limited interaction•Partnerships generated on reactive/ad-hoc basis•Partnership value is not leveraged

Marketing and Branding

•Well-funded and responsive to market opportunities•Industry-focused outreach through multiple mediums •Leading brand in target industries

•Significant marketing budget•Use multiple mediums for general outreach (print, TV, online, social media, etc.)

•Moderate but consistent marketing budget•Sporadic participation in industry conferences/tradeshows•General outreach efforts, including visits to site consultants

•Limited marketing budget•Inconsistent messaging•Inconsistent delivery •Lack of outreach

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Strategy





Organization/People





Partnerships










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Strategy





Organization/People





Partnerships










• Retention Process

• Entrepreneurship/Innovation Economy

• Budgeting / Funding

• Incentives

• Technology

Inputs into the CMM framework

• Secondary research on economic development organizations

• Past experience with economic development organizations

• 100+ factors

• Quantitative and qualitative criteria

10 Dimensions of Capability

• Strategy

• Organization

• Partnerships

• Marketing / Branding

• Attraction Process

Individuals Interviewed

• Current high ranking state economic development officials

• Past employees of state economic development organizations

• State EDO Partners and collaborators

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Characteristics of State Economic Development OrganizationsLeading/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

Common/Outdated Characteristics:

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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CMM Approach and Wisconsin Interview List

Name Role

Aaron OlverWisconsin Secretary of Commerce

Zach BrandonDeputy Secretary at Department of Commerce

Cory NettlesFormer Secretary of Commerce

Bill McCoshenFormer Secretary of Commerce

Gale KlappaChairman & CEO of Wisconsin Energy

Pat O’Brien Executive Director of M7

Jerry MurphyExecutive Director of New North

Sean Robbins Executive VP - THRIVE

Noel EggebraatenExecutive Director – Momentum West

Barb Fleisner Executive Director - Centergy

Vicki Markussen President, 7 Rivers Region

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

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Key Themes Emerging from our InterviewsObservations Opportunities

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

Wisconsin appears to have been relatively successful recently in expanding and retaining several large employers within the state, including Mercury Marine and Oshkosh Truck

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

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Wisconsin Department of Commerce

CapabilitiesLeading

IVAdvanced

IIICommon

IIOutdated

I Rating Rationale

Strategy• Focused strategy on manufacturing growth and entrepreneurship

• Role as facilitator and enabler, especially for regional or local organizations

Organization/Staff

• 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

Partnerships

• 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

Marketing/Branding• No state-wide marketing effort (previously done through Forward

WI); marketing primarily driven through local / regional initiatives

Attraction• Reactive to client inquiries

• Supportive of regional efforts

Retention• Highly focused on manufacturing innovation and broadening

existing industry

• Responsive and creative solutions to opportunities

Entrepreneurship• Focus on VC tax credits

• Some acceleration capabilities through university partnerships/MEP

Budgeting/Funding• Business Development operating budget of $3.4 Million + ~$43.2

Million funding for partner entities

Incentives• Several new incentive programs recently passed

• Complicated and poorly communicated to potential customers

Technology• Some utilization of social media; current Commerce website

contains outdated information and is hard to navigate

• Outdated CRM system based in MS Access

CMM Observations for Wisconsin

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General Benchmark Assessment – Cost and Conditions Summary

Benchmark Operating Conditions

WI MI MN IL IA IN GA WI Comments

Business Climate Rankings1 Consistently ranked in lower quartile (#48 of 50 in Forbes)

Recent Project Activity2 Last among benchmark states in most Governor’s Cup measures

Entrepreneurship3 Based on entrepreneurs per capita (300 per 100K population in WI)

Education Attainment4Near US average (~22.8% with bachelors or above)

Air AccessMKE airport ~50th busiest in US (by passenger enplanements)

Labor RelationsBased on right-to-work status, union membership

Benchmark Operating Costs

Labor (Production)Moderate production wages (average of $16.52/hour)

Labor (Software)Software eng. average of ~$32/hour, 2nd lowest among benchmark states

TaxesRanked #42 in US (Tax Foundation)*, 20th highest tax burden per capita5

Real Estate (Metro Office) Based on Milwaukee rate (~$15.00/sf)

Utilities (Industrial Electric)Moderate electric costs (6.58 cents/kwH - similar to US average)

IncentivesSome programs are underutilized and/or unknown

More Favorable Moderately Favorable Less Favorable

1 Forbes, 20092 Site Selection Magazine, 20103 Kauffman Index, 20094 Bachelor’s or greater5 Milwaukee Journal Sentinel, “The Tax Tale: 50 State

Comparison”, April 2010.

* Primary source used for shading of heat maps

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Industries and Locations Included in the Analysis

Target Clusters

Sample IndustriesCommon

Benchmark Locations

Leading Benchmark Locations

Advanced Manufacturing

Renewable Energy

MichiganNorth CarolinaCalifornia

Texas Oregon Singapore

Financial Services and Insurance

Financial Services Connecticut Iowa Ohio

Technology Software Development Virginia Texas India

Life Sciences Medical Devices Minnesota Massachusetts Ireland

Ag/Dairy/Food Processing

Food Processing Pennsylvania Idaho Texas

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Benchmark Industry Location DriversIndustry Functional Focus Life Cycle Applicability Select Critical Location Drivers1

Agriculture, Dairy, and Food Processing

Manufacturing Growth / Mature

Operating costs (labor, utilities)

Utility capacity / quality

Sites/permitting

Market access

Medical Device Manufacturing R&D

Growth / Mature

Operating costs (labor, taxes)

Sites / permitting

Quality of life

Research / scientific cluster

Software Development

Development Center / Back office

Emerging / Growth

Quality of life

University presence and educational attainment

Perception as a software hub

Access to capital

Operating costs (labor, taxes)

Financial Services, Insurance, and Real Estate (FIRE)

Headquarters Back office /

support center Mature

Operating costs (labor, real estate, taxes)

Air access

Quality of life

Natural disaster risk

Regulatory environment

Renewable Energy Manufacturing R&D

Emerging / Growth

Operating costs (labor, freight, taxes, utilities)

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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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


˗ Poor value proposition to attract solar manufacturing

˗ Lack of certified, shovel-ready industrial sites


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Software Development – Conclusions


˗ 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)


˗ 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


˗ 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


˗ Low concentration of biomedical engineers

˗ Lack of certified shovel-ready sites


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FIRE – Conclusions


˗ 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)


˗ Low LQ in certain occupations (e.g. financial analysts, and select higher-end 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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Framework for Recommendations Development

Controllable

•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 decision-making and global competitiveness?

Executable

•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?

Defensible

•Is the recommendation supported by facts and objective evaluation?

•Can it stand the test of varied interests and stakeholders throughout the state?

•Does the recommendation represent a tangible and realistic change event that will impact the economic well-being of the State of Wisconsin?

•Will the recommendation consider the unique economic geography of the state?

Measurable

•Would there be organizational ownership of the recommendation?

•Does the recommendation lend itself to measurable KPIs?

•Can accountability and transparency be built into the recommendation with reasonable performance management methods?

•Can the recommendation be appropriately resourced and affordable?

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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)

The Recommendations are designed to help Wisconsin reach two overarching goals…

… with the ultimate objective of raising per capita income and creating greater opportunities for Wisconsin residents

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The recommendations may be summarized into Change Imperatives

Structure and Strategy

Change Imperatives

Capability and Focus

Tools and Technology

Image / Branding: Reposition Wisconsin’s brand through an aggressive and targeted marketing campaign

2

Attraction: Reinvigorate and focus Wisconsin’s business attraction capabilities6

Incentives: Implement new programs geared toward capital-intensive and startup projects8

Alignment: Align State economic development efforts, educational programs, and public/private sector leaders around select targeted industries

3

Innovation: Create a statewide, not-for-profit entity to centralize and streamline the state’s innovation programs

5

Sites / Permitting: Deploy a statewide “shovel-ready” sites program with expedited permitting procedures

7

Technology: Apply technology to enable and underpin Wisconsin’s economic development strategy

9

Retention: Develop a structured, pro-active approach to business retention4

Structure: Create a quasi-public entity charged with crafting, delivering and overseeing Wisconsin’s economic development strategy

1

Recommendations

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2 FDImarkets.com database (published by Financial Times); database consists of major business investment announcements and may not be fully comprehensive

Recommendation # 1: Create a new quasi-public entity to oversee statewide economic development efforts

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

Description

Current mission / responsibilities of Commerce do not enable it to be effective in proactive retention or attractive efforts

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

Growing trend among states, including recent proposal by Arizona to replace Commerce with a new quasi-public entity

Rationale

Enables focus on economic development by removing extraneous responsibilities

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

Supporting Information

Pushback from existing organizations (Department of Commerce, Forward Wisconsin, etc.)

Significant administrative change which requires new legislation

Potential Implementation Challenges

Potential Benefits

Factor WI1 MI MN IL IA IN GA

Primary Responsibilities (#) 6 2 5 5 7 1 3

Public / Private

Jobs from New Attraction Projects (FDI Markets - 2009)2 2,053 5,158 218 967 2,010 8,874 7,938

1 WI Department of Commerce responsibilities include: Business Development, Community Development, Housing, Export and Trade, Petroleum and Tanks, Safety and Buildings

Priority

Higher priorityLower priority

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Recommendation # 2: Reposition Wisconsin’s brand through an aggressive and targeted marketing campaign

Develop a cohesive, statewide marketing campaign which rallies around targeted themes, industries, and success stories

Description Priority

Wisconsin spends substantially less on non-tourism marketing / branding than most competing Midwestern states

Current marketing efforts are often led by local or regional economic development groups with disparate value propositions

Wisconsin has been unable to react to the new realities of economic development marketing (internet, social media, etc.)

Rationale

Critical to business attraction efforts

Important to business retention efforts

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


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


Potential Benefits


* Based on interviews with economic development officials in each state

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Recommendation # 3: Align state economic development efforts and resources around select targeted industries

Identified Target Industries WI1 MI MN IL IA IN GA

Life Sciences NA

Renewable Energy NA

Automotive NA

Defense NA

Agribusiness/Food Processing NA

Advanced Manufacturing NA

Identify target industries for the state. Tailor educational programs (university, community college, etc), economic development personnel, and private sector efforts around targets

Description

Limited connections between universities and State economic development efforts

Wisconsin’s government leaders and business leaders are often misaligned

Target industries are typically central to effective state economic development marketing campaigns and resource allocation

Rationale

Provides universities with the direction they crave to assist with economic development

Promotes greater success in attraction and retention of target industries

Provides a foundation for training, infrastructure, targeted incentives, talent development, and marketing / branding


Requires leadership from State agency to determine target industries

Must balance the interests of companies / industries which are not primary targets


Potential Benefits

Priority


1 Per discussion with WI Department of Commerce, the State does not follow a target industry strategy

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Recommendation # 4: Develop a structured, proactive approach to business retention

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.

Description

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

Rationale

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


Likely requires additional personnel to manage statewide program

Timing/costs of installing a CRM software system

Requires coordination among state and local/ resources


Potential Benefits

State Retention Effort WI MI MN IL IA IN GA

Web-enabled CRM capability

Proactive calling program

Rapid response teams

Regional reps supported by industry-oriented resources

Priority


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Recommendation # 5: Create a statewide not-for-profit entity to centralize and streamline innovation programs

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.

Description

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

Investment capital can provide the bridge between angel financing and venture equity

Rationale

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


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


Potential Benefits

Source: National Venture Capital Association MoneyTree Report – Per Capita VC dollars

Venture Capital Funding ($ per capita)

Priority


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Recommendation # 6: Reinvigorate and focus Wisconsin’s business attraction capabilities

Develop a focused business attraction program with dedicated State resources, consistent/streamlined processes, and targeted outreach

Description

Intake through execution processes are highly fragmented, resulting in local or regional groups taking the lead

State lacks dedicated resources to provide timely, effective response to Requests for Information (RFIs)

Efforts are currently highly reactive – minimal outreach to prospective corporate investors, decision makers, and leading industry associations

Rationale Faster, more streamlined response time to RFIs

Can help enhance perception of Wisconsin as a “can do” environment

Likely to result in more “at bats” and greater conversion rate for new attraction projects

Can help advance high-potential industries and clusters within the state

Attraction wins reinforce Wisconsin’s value proposition to existing industry


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


Potential Benefits

Source: FDImarkets.com database (published by Financial Times); database consists of major business investment announcements and may not be fully comprehensive

Job

s C

reat

ed in

New

Pro

ject

s

Priority


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Recommendation # 7: Deploy a statewide “shovel-ready” sites program with expedited permitting procedures

Deploy a statewide “shovel-ready” sites program resulting in certified, pre-permitted industrial sites

Description

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

Rationale

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


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


Potential Benefits

States with “shovel-ready” sites programs

Priority

Higher PriorityLower Priority

Source: uscertifiedsites.com, supplemented by Deloitte/NKF research

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Recommendation # 8: Implement new incentives geared toward capital-intensive and startup projects

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.

Description

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

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

Rationale

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


Requires additional funding (for select programs, e.g. VC equity fund)

Requires legislative support, particularly from regions without significant manufacturing presence


Potential Benefits

Source: FDImarkets.com (Financial Times); database consists of major business investment announcements and may not be fully comprehensive

To

tal C

apex

(in

Mill

ion

s $U

SD

)

Priority


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Recommendation # 9: Deploy technology to enable and underpin Wisconsin’s economic development strategy

Adopt modern ED technologies including CRM software, web-enabled sites/buildings database, online GIS capabilities, enhanced website, etc.

Description

Current site and building inventories are fragmented across multiple entities and technologies

Attraction and retention efforts are not visible across economic development entities (upstream, downstream)

Wisconsin has invested less in economic development technology than most Midwestern states

Commerce website is outdated, difficult to navigate, and not aligned with industry best practices

Rationale Greater speed to value and recognition of the

pace of business in 2010 and beyond

Enhanced website will offer a more favorable first impression to existing and prospective investors

CRM software enables greater structure, visibility, and coordination of attraction and retention efforts

Sites/buildings database can benefit attraction and retention/expansion projects


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


Potential Benefits

…

…

Factor WI 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

Priority


Wisconsin Competitiveness Study Executive Summary July 29, 2010 Deloitte Consulting LLP and NKF...

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Transcript of Wisconsin Competitiveness Study Executive Summary July 29, 2010 Deloitte Consulting LLP and NKF...