This week, Governor Scott Walker announced he was creating a council to help better prepare Wisconsin students for college and careers. The announcement comes amid complaints by manufacturing companies that they cannot find highly skilled workers to fill open positions. As WUWMs Erin Toner reports, businesses have placed some blame on the states schools, while others insist companies should pay more to support public education.

Manufacturers in Wisconsin pay property taxes on their land and buildings, and just like homeowners, that revenue supports local government, including public and technical schools. Until the early 1970s, companies also paid property taxes on their machinery, but then-Gov. Patrick Lucey signed an exemption into law to help firms replace outdated equipment.

If they were willing to buy additional machinery, the machinery would not be subject to property tax. It created a better climate for them. It ensured a higher productivity of the workers. They could pay their employees better, Lucey says.

According to the state Department of Revenue, today, more than 10,000 manufacturers in Wisconsin do not pay property taxes on about $13.7 billion worth of equipment. The exemption has shifted the tax burden, with homeowners paying more to support local governments and schools.

Jack Norman is research director for the non-profit progressive group, Institute for Wisconsins Future. He calls it hypocritical for manufacturers to grumble that high schools and colleges are not producing qualified workers.

Its really annoying, I find, when companies that dont pay a full share of taxes at the same time complain about the quality of public services theyre getting, Norman says.

Norman says he is not suggesting Wisconsin abolish the 1970s tax exemption, but he wants companies to step up in other ways. For example, he says he did not hear many business leaders criticize Gov. Walker when he cut billions from K-12 schools, technical colleges and the UW System to help balance the state budget.

Im really intending my criticism at the political leadership in the business community, which has influence. So really my disappointment is with the business people who understand the need for the public investment and who are just too quiet about it, Norman says.

Business leaders do understand the importance of education and its role in producing high-skilled workers, according to Tim Sheehy. Hes president of the Metropolitan Milwaukee Association of Commerce, and hints that money is not necessarily the key.

It is a K-12 problem. It is a technical college problem. It is a problem with parents who dont view these as viable careers for their kids, so there are plenty of areas to look at, Sheehy says.

Sheehy defends the property tax exemption for Wisconsin manufacturers, saying they need it compete nationally and globally. And if they succeed, local communities benefit through jobs and taxes. Instead of asking businesses to pay more, Sheehy recommends they help promote manufacturing to students as a viable career and business owners seek spots on school boards.

And so I think that manufacturers have a lot to do on their own and we also have to have an environment that turns out the kind of skilled folks that manufacturers are looking for, or quite frankly those jobs will go somewhere else where they figure this out faster and better than we are, Sheehy says.

Sheehy says perhaps manufacturing firms could invest financially in targeted training programs.

Mike Mallwitz says hes already making a significant investment in creating a high-skilled workforce. Mallwitz is the president of Busch Precision, a century-old machine shop on Milwaukees northwest side. He says despite the struggling economy, his company is hiring.

We added 12 in 2011 and our job openings, this year, were looking to add another 12 people, Mallwitz says.

Mallwitz says he found people to hire last year, but had to spend a quarter-of-a-million dollars to train them to use his high-tech equipment. He says while technical schools provide a basic education, graduates are not prepared to work on his shop floor.

We do need somebody thats got a real high skill base, not just an entry level but beyond that and we really dont have any educational process to be able to develop something beyond a technical college, Mallwitz says.

Mallwitz says he has high hopes for Gov. Walkers plan to better align the workforce and state businesses. Walkers newly created council will focus on improving student readiness for college and the job market, including by designing shorter and cheaper degree programs for specific technical careers. Members may also expand programs allowing high school students to earn college and workforce training credits.

For a generation American manufacturing has been widely seen as a declining sport. Yet its demise has been largely overplayed. Despite the many jobs this sector has lost in the past generation, manufacturing remains remarkably resilient, with a global market share similar to that of the 1970s.

More recently, the U.S. industrial base has been on a powerful upswing, with employment climbing steadily since 2009. Boosted by productivity gains and higher costs in competitors, including China, U.S. manufacturing exports have grown at their fastest rate since the late 1980s. In 2011 American manufacturing continued to expand, while Germany, Japan and Brazil all weakened in this vital sector.

To determine the best cities for manufacturing my colleague Mark Schill at Praxis Strategy Group measured the 51 largest regions in the country in terms of how they expanded their heavy metal sector  think automobiles, farm and energy equipment, aircraft, metal work and machine shops. We averaged absolute growth rate and momentum in 148 heavy metal manufacturing industries over ten-, five-, two-, and one-year time frames.

Our top ranked area, Houston, is one of only four regions that enjoyed net job growth in manufacturing in the past 10 years. This year its heavy manufacturing sector expanded by almost 5%. Houstons industrial growth is no fluke; over the past year its overall job growth has been about the best among all the nations major metros.

Houstons industrial success owes much to the citys massive port and booming energy sector, says Bill Gilmer, senior economist at the Federal Reserve office of Dallas. Houston is about energy  its about fabricated metals and machinery, he says. Its oil service supply and petrochemicals. Its all paced by a high price of oil and new technology that makes it more accessible.

This shift towards domestic energy augurs well for a huge and economically beneficial shift in Americas longer term economic prospects, he points out. Cheap natural gas, for example, makes petrochemical production in America more competitive than anyone could have imagined a decade ago. Linkages with Mexico in terms of energy as well as autos has made Texas  which is also home to No. 4 ranked San Antonio and No. 15 ranked Dallas  the nations primary export super-power, with current shipment 15% to 20% above pre-crisis levels.

The energy and industry connection also can be seen in No. 10 Oklahoma City, where heavy industry has been booming through much of the recession due to its strong fossil fuel industry. This synergy between energy and manufacturing could also spread to other regions, including many not associated with large fossil fuel deposits New finds in the Utica shale in Ohio, for example, could be worth as much as $500 billion; one energy executive called it the biggest thing to hit Ohio since the plow.

These gas finds may help ignite the heavy metal revival. As coal-fired plants become more expensive to operate due to concerns over greenhouse gas emissions, the region will have a new, cleaner and potentially less expensive power source.

Already the boom in natural gas has sparked a considerable industrial rebound in parts of eastern Ohio including the building of a new $650 million steel plant for gas pipes in the Youngstown area. Karen Wright, whose Ariel Corporation sells compressors used in gas plants, has added more than 300 positions in the past two years. Theres a huge amount of drilling throughout the Midwest, Wright says. This is a game changer.

But the industrial rebound is not only about energy. Another critical factor is rising wages in East Asia, including China. Increasingly, American-based manufacturing is in a favored position as a lower-cost producer. Concerns over knock offs and lack of patent protection in China may also spark a growing Made in the USA trend.

The shift back to U.S. production may be a great sign for many regions. Our No. 3 ranked area, Seattle-Tacoma-Bellevue, is picking up heavy metal jobs associated with the aerospace industry. A growing focus on domestic production for Boeings new aircraft could bring even more prosperity to the high-flying region, which also ranked No. 1 on our recent information industry ranking.

If new industrial growth is just another piece of good news in the Pacific Northwest, its manna from heaven to the long suffering industrial heartland heavily concentrated in the Great Lakes region, which includes much of Ohio, Michigan, Indiana, Illinois , Wisconsin and Minnesota. Long reviled as the rust belt this area now leads in the industrial rebound with over 100,000 new manufacturing jobs in just the past year.

Particularly well positioned is No. 2 ranked Milwaukee, which is home to a wide array of specialized manufacturing firms ranging from machine tools to energy. Over the past year alone the region added almost 3900 heavy metal jobs and has consistently led other Great Lakes communities in job creation.

But Milwaukee is not the only rust belt rebound town. The greater Detroit area, No. 6 on our list, actually added the most heavy metal jobs  more than 12,000  than any region of the country. The areas ranking, however, was dragged down by its legacy; greater Detroit still has lost almost 130,000 positions in the past decade.

The heavy metal revival has a long way to go. And we cannot expect it to produce the same kinds of jobs produced in the last century. For example, the new jobs will be more highly skilled; even as the share of the workforce employed in manufacturing has dropped from 20% to roughly half that, high skilled jobs in industry have soared 37%, according to a New York fed study.

Regions seeking strong industrial growth will have to focus more and more on training more skilled workers. Even after years of declining employment and surplus numbers of graduates in the arts and law, manufacturers in heavy industry are running short on skilled workers. Industry expert David Cole predicts there could be demand for 100,000 new workers by 2013. According to Deloitte Touche, 83% of all manufacturers suffer a moderate or severe shortage of skilled production workers.

The resurgence of heavy metal should lead regions, and the federal government, to consider shifting their emphasis toward productive, skilled based training and away from a single-minded focus on the BA or graduate degree. Few regions suffer a shortage of art history or English graduates. This more practical emphasis is particularly critical for the Midwest, which is home to four of the ten highest-ranked industrial engineering schools in the nation.

Even more important: training workers for the assembly lines of tomorrow. These jobs, notes Ariels Karen Wright, will require not BA degrees but high degrees of math and mechanical skills that can be apply to expanding companies like hers.

As we enter a new economic era, regions should look beyond the current obsession with creative and information industries. Instead, they should focus on a resurgent industrial economy  which then can provide a customer base for advertising, graphics and software companies  as a primary driver of economic growth. Turn down those soulful Adele tracks: Heavy metal is back.

Many fabricators, job shops and OEMs consider the energy market viable for business today--and tomorrow

May 2010- On any given day in the United States, millions of people wake up, hop in their car and head to work. When they get home, they will probably eat dinner, watch some TV, maybe read a little, then go to bed.

In the course of that 24-hour period, although they might not have been conscious of it, all those individuals used some form of energy probably every second of the day.

From the electricity that powered their alarm clocks to the oil that fueled their cars, people rely on energy. And it is everywhere.

Between its ubiquity and all the emerging technologies related to both more traditional and alternative sources, energy holds--and has held--promise for different sectors of the manufacturing industry, according to Richard Hadley, president of Esab Canada, Mississauga, Ontario, and general manager for Esab Welding Automation North America, Florence, S.C.

"Energy makes the world tick," he says. "Were going to always need energy, and in the future, and maybe even today, youre going to see different forms of energy, including wind. [And there are also] hydrogen-based fuels, gas-to-liquids--very complex production systems that will convert, for instance, the heavy oil in northern Canada to natural gas from the Middle East to liquid fuel. Youre going to see more and more things like that."

Opportunities for OEMs
Esab was founded more than 100 years ago, and it has been involved in energy-related work from the start. Today, energy is the largest segment of Esabs entire business, and the company serves oil, gas, wind, electricity, liquified natural gas and hydro dams, among others.

"We supply our products to builders and customers who actually transform it--we supply welding and cutting products," says Hadley. "For example, pipelines. We make the products and machinery to make pipes, then we also make the machinery to weld the pipes as they install the pipelines in the ground; pressure vessels, which are used for refineries and cracking fuel and many other purposes. We do a lot of welding for offshore drill rigs and offshore drill platforms, which are used to drill to recover oil and gas under sea. These industries drive secondary industries, which are very important, such as earth-moving equipment to install pipelines and shipbuilding to support the offshore work.

"And, of course, theres wind energy and wind tower, which is a very, very large sector. Its growing worldwide but especially in North America."

Hadley also says he sees energy overall as a large growth area for Esab and that wind, solar and gas-to-liquid fuels, among others, seem to offer a lot of opportunity.

"Some of these are fairly new and emerging technologies, and we certainly plan to grow right along with them," he says. "Wind is a good example. Wind energy was popular in Europe for the last 25 years. Our company was largely European-based in those years, so our technologies and skills grew alongside our customers in the wind energy business in Europe. Around 2000 or so, wind became much more popular in North America, especially in the United States. So when it started to really grow here, of course, we were absolutely ready."

Esab provided all the cutting, welding, material handling and positioning products at the worlds largest wind turbine factory, which is in Colorado and owned by Denmark-based Vestas.

"That was about a $350 million project, and it completes Vestas expansion in North America," says Hadley.

In addition to benefiting individual companies, energy has the potential to boost the overall manufacturing industry, according to Hadley.

"Back in the 1970s, North America kind of stopped making big and heavy products, which is quite a shame," he says. "But what were seeing now, especially with things like wind energy and nuclear, North America is rebuilding its heavy industry base. And thats a good thing."

Another OEM that has found success with wind power is Faro Technologies, Lake Mary, Fla. The company recently partnered with ATI Casting Service, Alpena, Mich., a foundry and machine shop that has been involved with wind-related work for 15 years.

Bill Anderson, Northeast regional sales manager for Faro Technologies, says ATI Casting Service uses the Faro Arm and Laser Tracker to measure hubs it creates for the wind energy market.

"These tools give ATI the ability to measure their parts on the machine and gain valuable information," says Anderson. "This allows them to catch and address issues, making engineering decisions based on this data. The tolerances on these cast hubs are extremely tight. It is critical that they are built to the correct dimensions to ensure fit, safety and reliability."

In addition to wind, Faro Technologies serves the hydro industry, as well as the oil and gas industry. In regard to the latter, this relates to oil rigs and refineries, according to Anderson.

"All facets of the energy market have a need for accurate portable measurements," he says. Appleton, Wis.-based Miller Electric Mfg. Co. and its parent company, Illinois Tool Works, also serve a wide range of energy sectors.

Within Miller itself, one business unit is primarily geared toward oil and gas for pipe fabrication, field construction of refineries and petrochemical plants, pipeline construction and pressure vessels.

"To me and my group, [energy] is very important because thats what were focused on," says Michael W. Roth, marketing manager for pipe welding products. "It was important enough for ITW and Miller to say, We want you to focus on this, so they carved out a group of people to go work on it. I think that speaks for itself."

Miller provides welding, cutting and induction heating products to myriad customers in the oil and gas industry all around the world. And in North America, there is a great deal of potential, according to Roth.

"There are several unique fabrication opportunities due to the use of new materials and extreme work environments," he says. "[For example], the use of higher-strength materials to reduce fabrication costs and corrosion-resistant materials to increase the pipe life in sour gas applications is creating the need for newer, innovative welding and heating processes."

Machine shops make it happen

Walco Tool and Engineering, Lockport, Ill., machines products for a variety of customers, mainly OEMs and first-tier suppliers, in a wide range of industries.

Its niche is high-quality, high-value-added, low-volume production, and it is capable of manufacturing parts small enough to fit in a persons hand to as large as 33,000 lbs.

Walco Tool and Engineering has been serving the energy market since its inception in 1968, and because its co-founders were machinists for Argonne National Laboratory, much of its early energy-related work was for the nuclear industry.

About two years ago, the company began to branch out and serve the wind market too. Karen Schultz, business developer, says Walco Tool and Engineering has worked closely with The Timken Co., Canton, Ohio, to support its ramp-up of new bearing products for the wind industry with its green machining efforts.

"Given [our] growth of talent and capabilities over the years, moving into wind-related work was a natural development," says Bill Bucciarelli, president of Walco Tool and Engineering. "We started producing smaller complex parts, with smaller equipment. And as weve grown, weve done so in size, adding our ninth addition in 2006, but also in adding larger-capacity machines.

"Looking at the wind industry specifically, these are typically large parts that require this kind of large capacity. And only recently, in the last five years, have we added both building capacity and larger machines that would be capable of doing these parts. So strategically, our growth is in this larger equipment, and its a good fit for the wind industry."

Additionally, Walco Tool and Engineering is in communication with other interested companies regarding potential wind-related work and recently participated in roundtable discussions about the midsize wind turbine industry.

"Its somewhat of a missing niche, and its definitely a big opportunity for our company to be involved in, supporting the economics of new wind turbine products," says Schultz. "These are going to be very critical markets going forward. Energy is a limited resource, and its going to be more important each year."

Michael Mallwitz, president of Milwaukee-based Busch Precision Inc., strongly agrees that the energy market is viable for his company, as well as the overall manufacturing industry.

Busch Precision has a long history of serving various energy sectors, specifically, oil, gas and electric. "Weve served electricity since the 1960s--we repaired Babbitt bearings for utilities," says Mallwitz. "And since 1980, weve worked for the oil industry, machining components for the wells."

Last year, Busch Precision began serving the nuclear industry.

"For these sectors, we machine components and the polishing or hand scraping of bearings," says Mallwitz. "In some cases, we weld or remachine components, as well as assemble components. For the most part, the work that we do is of a very precise nature--close-tolerance type of work. Occasionally, we work on prototypes."

In addition to these markets, which make up about 10 percent of its business, Busch Precision seeks to serve the wind power industry.

"The U.S. population is growing, and there will be greater need for energy," says Mallwitz. "Theres also a stronger emphasis on the environment, so cleaner, alternative sources of energy will constantly be the focus, as well as the traditional ones, which weve already been in.

"And because we have future mandated alternative energy requirements in our state, we feel wind is something that is going to grow in our area. But how fast, we dont know. We dont have a crystal ball."

Busch Precision has taken the initiative, though, participating in wind-related conferences and expos, with plans to attend more. It was through one of these events Mallwitz and his associates made a contact at New North Inc., De Pere, Wis., and eventually toured a wind farm.

"And last fall, Gov. Jim Doyle and Mayor Tom Barrett of Milwaukee toured our shop, along with a wind manufacturer of rooftop units, as well as the Milwaukee Area Technical College (Mequon campus), to talk about the partnering of government, education and manufacturing to promote energy and that industry in the city and state," says Mallwitz. "It was a first-effort, exploratory type of tour and meeting."

Focus for fabricators
At Mequon, Wis.-based GenMet, a 70-person metal fabricating plant that does custom steel, stainless steel and aluminum work, CEO Eric Isbister sees a great deal of opportunity in alternative energy for both his company and the overall manufacturing industry.

"My employees and I have a passion for alternative energy, and we have started to manufacture parts for the wind industry--we make lifts and tower internal parts," says Isbister. "The alternative energy industry is well suited for metal fabricators. We are excited at the amount of light-gauge (less than 1/2 in. thick is GenMets niche) cosmetic parts needed that are similar to the parts GenMet already fabricates.

"Parts for the wind industry are often large or integral with large parts. The size makes transportation difficult, and this will fuel growth of local metal fabricators located in proximity to wind farms. The established wind industry OEMs are largely European. They are seeing the U.S. market potential, and many are establishing facilities in this country. This synergy will be beneficial for local manufacturing companies."

Isbister also says he hopes GenMets passion for alternative energy will be contagious and help inspire young people to get into manufacturing, something he considers critical for the long-term health of the industry--and the country.

"I use any excuse I have to get in front of young people and tell them about manufacturing," says Isbister. "Because the country that manufactures innovates, and the one that innovates is going to prosper. If were all just service trades or pushing paper around, and nobodys manufacturing, the good ideas, the improvements, are going to be made in some other land. Im convinced that we need to manufacture in the United States to support our lead position in the world.

"If you go to a job fair or college career day and say, Hey, Im a job shop, Im a custom metal fabricator, thats one thing. But if you say, Im a custom metal fabricator thats making parts for wind turbines, the students that are interested, that have a passion for wind--they perk up and ask more questions. It will give them a job they have a passion for that will help the country, as well as give them a paycheck and a challenging career."

Anchor Fabrication, Fort Worth, Texas, also serves the wind industry, in addition to oil and gas, as well as nuclear.

Tra Willbanks, president and CEO, says the company makes frac tanks and wind tower components, among other products, and that being based in Texas has helped shape Anchor Fabrications participation in energy-related work.

"Since our business is located in a hub for energy production, exploration and supply, we should continue to see a strong demand from the energy industry," says Willbanks. "Even during times of relative slowness, we have experienced a great deal of manufacturing in this industry. 2008 was unique, but obviously, when the price of oil was at nearly $150 per barrel, we saw record manufacturing from this sector."

He acknowledges challenges associated with delivering energy from wind generation but also says there seems to be potential for this sector of the energy market.

"We will continue to service the industry as opportunities arise," says Willbanks. "We are definitely seeing things pick up in the wind sector."

Schuff Steel Co., Phoenix, the largest structural steel fabricator and erector in the United States, also considers alternative energy to be a source of great potential.

The company has about 1,600 employees at 10 steel fabrication plants and two steel joist manufacturing plants across the country, and it built University of Phoenix Stadium, home of the Arizona Cardinals, and Chase Stadium, where the Arizona Diamondbacks play baseball.

Schuff Steel has been involved in alternative energy manufacturing for about six years, starting with solar energy.

"We could see there are a lot of things going on with wind, and it looked like a developing, emerging industry," says Dennis Randall, executive vice president and general manager of Schuff Steel, Midwest Division. "So we looked into it as sort of an extension of our involvement in alternative energy, and I was given the directive to research wind and how we could participate. Ive been doing that for about a year.

"During that year, weve determined that it really is an emerging industry and theres just tremendous potential out there for U.S. manufacturers and the U.S. wind market. So weve actively pursued getting involved in building wind towers."

Schuff Steel plans to build a plant in Bismarck, N.D., and successfully applied for and received manufacturing tax credits under the American Recovery and Reinvestment Act for the project. "Weve always been innovative at looking at ways to come up with new ideas and new concepts for utilization of our skills, and there seems to be some adaptability into the alternative energy markets," says Randall. "Alternative energy, as a concept, is growing at probably a faster rate than a lot of industries in the U.S. right now, and were simply trying to position ourselves to take advantage of what we see as a growing market." FFJ

• Measuring Range: X = 1200mm (47.2"), Y = 1800mm (70.9"), Z = 1000mm (39.4")
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