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Federal Reserve Bank of Chicago
Sixth Annual Summit on Regional Competitiveness
Understanding Competitiveness and a Call to Action
Morning -- October 29, 2018
KELLY O’BRIEN: Good morning everybody. My name is
Kelly O’Brien, and I’m the Executive Director of the
Alliance for Regional Development. I have received many
messages from attendees, trying to get here. If you saw
the news this morning, the Dan Ryan was closed down
northbound. So, while we wait, we are going to kick off
the program in just a minute.
But what I am going to ask is, if you would please
move into the middle and kind of fill the middle of the
room, instead of being out on the outskirts. And, then as
people are able to get into the city, it won’t be as
disruptive. So, again, I do apologize; but if you could
please get up and move more towards the middle that would
really be appreciated, and we will start the program in
just a minute.
So, everybody over here, come on in. Everybody over
there, come on in. I promise the tables in the middle of
the room are just as comfortable.
Good morning again, if everybody could please take
their seats. Thank you for being here for the Sixth Summit
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on Regional Competitiveness. If you attended the summits
in the past, you will have heard me say, when we started
the Alliance there were a lot of skeptics. People didn’t
think that we would get to a year one. So, I am extremely
proud to be at year six, and it’s really because of
everyone in the room. So, if you could give yourself a
round of applause.
When we started the Alliance, as I mentioned there was
a lot of skepticism. People did not really understand
Regional Economic Development and thought that it was
something that could never really be embraced. And,
although we still have our challenges, it’s more important
than ever to work together.
And, obviously by virtue of you being here today, you
realize how important this is. There are so many people
that we have to thank, and you’ll see our sponsors, and I
hope if your logo is not on this page, that after today’s
event that you’ll say, we need to get more involved.
You’ll have the opportunity to hear why Regional
Economic Development is important throughout the course of
the day. And, one of the things that I hope that you’re
able to take away from today is really a better
understanding of what is happening in our own backyards.
You don’t even understand the assets and the
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investments that are happening, and how connecting the dots
can make such a difference for each individual state and
the mega region as a whole.
Now in terms of today, with technology, again, if
you’ve been here in the past, you will recognize that we
use what they call the Sea Vent App, and this is a very
powerful tool. Not only will it give you the listing of
the people that are registered, but if there’s somebody
that has registered to attend, let’s say it’s a name that
you’ve seen on different speaking materials, or just in
your own sector and you thought I’ve always wanted to meet
this person, but you may not know what that person looks
like; through this App today, while you’re sitting here in
the room, you’re able to send that person a message, and
you can agree to meet outside, you know, by the orange
juice or the coffee and become introduced.
One of the real values of today is that networking
component. So, please take advantage of that. And, what
we’re going to do really quickly is play a video, so that
you better understand how to download and use the App.
You’ll also find that today’s program and all of the
speaker’s bios are on the App, so be sure to download that.
So, without further adieu, -- is there a question?
Q What’s the name of the App?
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MS. OBRIEN: Sea Vent. You should have received an
email when you confirmed your registration from the Bank,
and there will be a link.
I want to also to say just a quick thank you to the
team at the Federal Reserve Bank of Chicago that we have
the privilege of working with and to the leadership of the
Alliance for Regional Development. Again, together we
worked very hard all year to make today hopefully a
memorial experience and something where you will take away
a lot of lessons learned, information to share, and
opportunities to work together.
So, what I’d like to do next is to introduce our host,
Jerry Boyle, who will kick off the program. Jerry?
JERRY BOYLE: Well, good morning, I’m Jerry Boyle, and
I’m an Assistant Vice-President here, and I’m the Managing
Director of Community and Economic Development for the
Federal Reserve Bank of Chicago, and it’s my pleasure to
welcome you here again for the Sixth Annual Summit. I do
want to call your attention to a table back in the back
room there. I’m going to ask Alicia Williams, my boss, the
Community Affairs Officer, to wave her hand, and then if
the rest of you would stand up at the Fed table back there
so that everybody can see you. Two things, number one, I
want to thank them because they’re the ones who actually do
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all the work to put this together. So, I appreciate all of
the work that the team has done.
But secondly, I want you all to see who they are,
because if there are any questions or anything, any help
that you need, any, anybody there, or I can help you with
that throughout the day.
Two other minor housekeeping items, if you want to log
onto our guest WiFi for today, there are forms like this on
the back credenzas which give you all the instructions,
including the password if you need it. And, secondly and
as always, the most important thing, the restrooms are
across the atrium, and if you go to the second exit sign
and turn left, that’s where you’ll find the restrooms.
And, that’s it. That’s my job which for today is
done, other than to introduce our opening speaker today.
If I could bring Charlie Evans, who is the President and
Chief Executive Officer of the Federal Reserve Bank of
Chicago; Charlie?
CHARLIE EVANS: Good morning. I’m Charlie Evans,
President and CEO of the Federal Reserve Bank of Chicago,
and let me welcome you here to Chicago and our Fed
Conference Center. I’m pleased to welcome you to the Sixth
Annual Summit on Regional Competitiveness. It’s a pleasure
for us to work with Kelly O’Brien and the leadership team
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at the Alliance Regional Development to host these
convenings each fall.
In 2012, the creation of the Alliance was spurred by
the release of a territorial review of the Chicago Tri-
State Metropolitan area by the Organization for Economic
Cooperation and Development, otherwise known as the OECD.
Since then, the Alliance has focused on strengthening
the economic competitiveness of the 21 county tri-state
area covered by that report. And, in many ways the
Alliance’s interests aligned with some important work the
Chicago Fed does across our five-state region. Today, my
remarks will highlight some of these common interests and
underscore their importance in the current economy. And,
I’ll close my remarks with some food for thought for the
discussions that will follow.
And, let me begin by noting that any opinions I will
express this morning are my own and not those of my
colleagues on the Federal Open Market Committee or anywhere
else in the Federal Reserve System. That’s just our
standard disclaimer. I’m not here to talk about monetary
policy anyway.
A major part of the Federal Reserve’s mission is to
foster the stability, integrity, and efficiency of the
nation’s monetary, financial and payment systems in order
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to promote optimal macroeconomic performance. Fulfilling
this mission includes our work addressing the economic
challenges faced by workers, families, businesses, and
communities at both the regional and local levels.
We know that competitive metropolitan areas contribute
to a strong and stable national economy; however, to keep
ours competitive, we have to address several ongoing
challenges. Some of these challenges include encouraging
the efficient movement of people and goods within our metro
areas, matching employers and workers in an increasingly
specialized labor market, and promoting innovation and
entrepreneurship.
Additionally, there’s a growing realization that
equity and inclusion across the social economic spectrum
are essential to the sustained economic success of a
region.
The 2012 review of the Chicago Metro area was the
first of its kind conducted by the OECD in the United
States. It assessed the region’s capacity to contribute
effectively to the midwest and national economic
performance and quality of life.
Although its seven years old, the OECD report and
others like it are motivated by a key principal that is
explained in the forward to the report. The need to pursue
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regional competitiveness and governance is particularly
acute in metropolitan regions. Although they produce the
bulk of national wealth, metropolitan economies are often
held back, not only by unemployment in distressed areas,
but because opportunities for growth are not fully
exploited. Effective metropolitan governance is called for
if a functional region as a whole is going to reach its
full potential; and I think Kelly’s earlier comments got at
that that it requires everyone to come together.
According to the OECD’s territorial review that call
for effective metropolitan governance in the Chicago area
rests mainly on four thematic policy issues; the
effectiveness and coordination of workforce development
programs, the metro areas capacity for innovation, its role
as a major center for logistics in North America, and its
capacity to encourage green growth over the long term.
I’d like to highlight some key Chicago Fed initiatives
that closely parallel the work of the Alliance, and that
address some of the OECD’s policy themes. First, it’s
worth recalling that the twelve Federal Reserve banks are
by definition regional entities charged with responding to
the specific credit access challenges and economic
characteristics of their respective parts of the country.
The 21 county tri-state area covered in the OECD report is
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the core of our five-state region, which, you know, I think
leads off Michigan and Iowa in your three-state alliance.
We have a research group dedicated to studying our
regional economy, including its industries, strengths, and
growth opportunities. Our community development and policy
studies or CDPS team has both research and outreach staff.
CDPS focuses on our districts economically marginalized
communities, and populations, and works to inform sensible
and inclusive policy development. I want to take a few
minutes to delve further into some specific components of
our work in CDPS that I think is particularly relevant to
today’s discussion.
A key component of the Chicago Fed’s Community
Development mission is to understand how economic
opportunity extends to communities and households. So, in
addition to analyzing macroeconomic and broad financial
developments, CDPS promotes the identification and study of
trends at the local level especially in those communities
and households facing the greatest barriers to labor and
housing markets. Not surprisingly, these communities and
households also face tremendous obstacles to new skills
attainment and investment capital. Over the past several
years, CDPS has developed a body of work that explores
regional trends in older industrial cities. This work has
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explored how leadership in these places connects their
residents to regional labor markets so that they may take
advantage of the opportunities and benefits of economic
growth and mobility.
Beginning with the industrial cities initiative, we
looked at 10 industrial cities around our district,
including Racine. This initiative coincided in many ways
with our early engagement with the regional alliance.
Although the ten cities all shared a common manufacturing
legacy, some of them were experiencing higher income,
population, and job growth. We wanted to understand why
and whether there were lessons or strategies that could be
shared or scaled. Through more than 200 interviews with
city and regional leaders, we identified three key
principals they said would be critical to the success of
their city’s economic development.
The first one is investing in human capital. Many
places are making efforts to attract a more educated work
force, often through downtown revitalization efforts. But
the places that out-perform their peers are those that are
working to expand opportunities for existing residents.
Most industrial cities lag national averages for post-
secondary educational attainment. Closing this gap is
likely to be essential to meeting employer demands for
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skilled workforce.
The second is addressing diversity. Some of the
cities profiled were destinations which during the early
20th century had great migration of blacks from the south.
Other places profiled saw increasing diversity through
recent waves of immigration. As I mentioned before,
insuring that all residents can benefit from economic
growth is an important component of the success of a city
and its region.
The final principal is that cities that are more
connected to their regions tend to thrive. Cities that
provide their residents with more links to regional labor
market opportunities, perhaps through education and
infrastructure, strengthen the potential for business
attraction and retention. During those interviews with
local leaders, we also heard that they wanted to better
understand how they are faring, relative to other cities
that share common traits. They also wanted to learn from
others who may be facing similar challenges, for example,
around housing affordability or demographic shifts that
affect their labor force. We developed the pure city
identification tool to help leaders identify potential
peers in terms of economic resilience, equity, housing
affordability, and demographic outlook. The PCIT, as we
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refer to it, is accessible through the Chicago Fed.org
website and is one of our most visited pages. I encourage
you to explore this tool when you have a chance.
Our current work is around efforts to understand what
older often smaller cities are doing to ensure positive
labor market outcomes for all of their residents who are
affected by regional, national, and global economic trends.
The next generation of our industrial cities work will
explore how economic growth and inclusion can be achieved.
Let me offer a preview of some of the findings from a
forthcoming paper that summarizes extensive qualitative
research. I encourage you to think about how these
findings to connect to today’s discussions. First, labor
markets matter. Whether a labor market is tight or loose
will shape how opportunities are extended to individuals.
A tight labor market provides an opportunity to bring some
individuals who have dropped out of the labor force back
into the labor force. In places where there is little or
no economic growth, the practice of labor market inclusion
becomes much more challenging.
Second, cities can become more inclusive by addressing
barriers to employment. These often include substandard
public transportation, limited childcare options, scarce
workforce training resources, and underfunded education and
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training. Affordable housing shortages near employment
centers represent a long standing issue in many regions.
City leaders can expect more demand for affordable
workforce housing if labor market inclusion is made a top
priority. And, I have to say we have a number of advisory
councils. I go out and speak to people in the region, and
I hear many of these issues raised as, you know, business
leaders and community leaders are trying to forge a better
working environment for everyone, and increase business
opportunities for everyone.
Substandard public transportation -- we had an
advisory council just last week, and they were talking
about this current, very nice, low unemployment rate
environment. Everyone is struggling in order to get
workers, find them, and get them to the places where they
can be productive. And, we heard about the innovative
plans about putting buses together to go around and, you
know, get the workers who are in more rural, remote
locations and to bring them onsite. These are great
strategies when the unemployment rate is at 2 percent, as
it is in some of the regions. What you need presumably is
a more robust transportation system so that throughout the
cycle as the unemployment rate is more elevated, there are
still opportunities for people to get to the workforce.
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Affordable housing; I was in Fort Wayne and Flint not
too long ago, and I think around the region that sweet spot
of affordable housing for workers and homeownership
continues to be a challenge in most places.
And, third, coordination among several actors of
different backgrounds is needed to account for the
diversity among current and potential workers. Some people
are more attached to the labor market than others. It
takes careful coordination across a diverse set of actors
to ensure that economic growth provides real opportunities
to all, or at least a much broader set of prospective labor
market participants than in earlier times. Our CDPS group
will continue to leverage the benefits of connecting
diverse places. Facilitating such connections allowed
cities to keep on learning about effective strategies for
inclusive growth from each other.
Over the past couple of months I’ve met personally
with leaders in, as I just mentioned, Fort Wayne, Indiana
and Flint, Michigan. I’ve also spoken to a national
convening of community development financial institutions.
Today we will hear from leaders in Spartanburg, South
Carolina and Racine, Wisconsin; areas that may share some
common demographic and economic straits that might not be
readily apparent. Employers in Spartanburg and Racine draw
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workers from broad geographic footprints, which cross
county and state lines. Both Spartanburg and Racine
counties have seen increasingly tight labor market
conditions with unemployment at or below four percent, and
have significant concentrations of manufacturing jobs.
However, these two places also include communities with
persistent barriers to economic conclusion, as well as
poverty rates exceeding the national average.
You can use our peer city identification tool to see
that both Spartanburg and Racine exhibit high levels of
racial segregation which present challenges for the
economic and social inclusion of communities of color. In
our growing economy, tight labor market conditions in these
places currently allow for labor market opportunities to be
extended to more people, including those traditionally
marginalized. While monetary policy is too blunt a tool to
address labor force challenges at the regional and local
level, we continue to work with leaders and practitioners
like yourselves to find efficient and effective ways to
expand the opportunities that economic growth provides in
our region.
Over the next several hours, you’ll hear a variety of
perspectives around the themes to human capital, workforce,
and talent development. My job this morning is meant to
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offer some framing observations that have emerged from our
current research.
In closing, I want to recall some of the findings and
recommendations of that OECD report that was the genesis of
the Alliance and the Annual Summit. When the report was
released in 2012, our regions’ economic growth had slowed
in the wake of the Great Recession. In more recent years,
we’ve seen signs of a stronger recovery. Our workforce is
aging; which some of our research suggests will be a
headwind to economic growth. The overall unemployment rate
in our region is at a near all-time low, but black and
Hispanic workers are continuing to experience much higher
rates of unemployment than white workers. Concentrated
poverty and the spatial segregation of minority populations
compound this problem. Also making this problem worse is
the chronic educational attainment gap between whites and
blacks and Hispanics.
While regional economic conditions have changed
somewhat since the publication of the OECD report, it
nonetheless calls attention to challenges that persist.
Our work within the Federal Reserve has shown us that
extending economic opportunities to all individuals is a
complex task that must engage a broad range of
participants. Gatherings such as this one help us make
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progress.
So, I’m sorry that I can’t stay for today’s discussion
myself, but I look forward to my staff’s report on what we
learned from the rest of the proceedings and how they will
inform our work. I congratulate the Alliance on its
successes today, and I thank all of you for your
participation and engagement in this important work. I
hope you have a great day. Thank you.
MS. O’BRIEN: By a show of hands, how many people in
the room are active on social media, or are involved with
organizations that are active on social media; show of
hands, excellent. So, please note this important slide,
just quickly, you can maybe jot this down. Send it off to
your respective organization or log in to your own
accounts. Our Twitter handle is @alliance4RD. Our hash
tag for this event is #MegaRegionsummit and you can follow
us on Facebook. We are going to be posting on Facebook
throughout the day, so we do ask again that you maybe share
those postings, and really kind of get the word out about
what’s happening today.
And, speaking of today, when we decided again to
engage in the Sixth Summit, Jerry Boyle; I want to give
credit where credit was due, on wanting to set the bar very
high, said to me, “You know Kelly, this year, Foxconn,
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there’s a big buzz around Foxconn. There’s something
really exciting happening, and our stakeholders, all over
the region, they’ve heard of it, they may understand what
they’re doing or they may not, but we need to hear directly
from Foxconn, make it happen.” Oh, okay, Jerry. So, then
the phone calls to our stakeholders in southeast Wisconsin,
many of whom are in the audience today and a profound thank
you; and one in particular, Dr. Carmel Ruffolo. Carmel, if
you could stand for a moment.
DR. CARMEL RUFFOLO: Yes.
MS. O’BRIEN: Carmel is one of the founders of the
Alliance and has been struggling with some health issues,
and she’s really quite a champion to be here today. So, if
we could please have a round of applause for Dr. Carmel
Ruffolo.
So, with Carmel’s help and many others here in the
room, I was able to connect with Dr. Louis Woo, who I found
to be, you know, so approachable and charming and Dr. Woo,
thank you again, for agreeing to help kick off the Summit
today.
And, we are also very, very pleased to have Mike
Lovell, who back before taking the lead at Marquette was
again really at the table day one with the Alliance. So,
we’re very, very proud to have you here today, and I’d like
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to invite Mike Lovell and Louis Woo to the stage.
DR. LOUIS WOO: Hi, Mike, how are you doing?
MIKE LOVELL: Good, good.
DR. WOO: I must tell you this story first, I was
asked to speak but, I know that I am not a very good
speaker, so I need someone to help me out, you know, to jog
my memory or ask the right question, and things like that.
So, I could not think of a better person, except Mike, you
know, we have known each other at least almost a year now,
right, yeah. And, so, I’ve got a lot of respect for him,
but do not underestimate the bargaining power of a
President of a University.
And, he said, unless I give him half an hour, I want
my half an hour to talk about Marquette, and he would not
be able to do so. So, at the end, he bargained, I will
give him 15 minutes to talk about Marquette. So, Mike, why
don’t you tell us about Marquette University?
MICHAEL LOVELL: Well, thank you, Louis and thanks for
being here, and I will keep the remarks about Marquette
brief, because I know everyone here wants to hear more
about Foxconn. Marquette was founded in 1881. We’re a
Jesuit institution in Milwaukee with about 12,500 students,
and most people know about us because of basketball. As a
matter of fact, when Louis first got here, I gave him a
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gift. Do you want to tell them what gift I gave you?
DR. WOO: You probably framed it up and put it in my
office.
MR. LOVELL: Yeah.
DR. WOO: Right?
MR. LOVELL: Yeah.
DR. WOO: So, that would be a Marquette basketball
jersey. Yeah.
MR. LOVELL: I told Louis, the only way I would
interview him today was if he wore the jersey up here when
we talked, but he didn’t -- he wasn’t responsive to that.
So, Louis when we think about how exciting the past years
have been for us, it’s that that response was really within
the mega region, a lot of people have now heard the name
Foxconn. But, they may not really know exactly what
Foxconn is. And, maybe you could give us a little bit of
background about the company; how large it is, you know,
when it was founded and a little bit of information about
Terry.
DR. WOO: Sure. So, I think most of you might not
have heard of Foxconn. We founded about 45 years ago in
Taipei, Taiwan, and now we have become one of the, not one
of the, I think we are the largest consumer, electronic
manufacturers in the world.
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If you add up the revenue to the number two to all
number 11; their total revenue is less than ours. So, when
we said that we’re the number one consumer manufacturers,
we are not kidding you. And, last year, our revenue was
about $157 billion. So, we were ranked as number 24 in the
global 500 companies, and if you look at us as a nation,
and I would go to that a little bit here. Of course, we
are not a nation, but we would be number 36 of 37 in terms
of GDP when you look at assets of revenue.
The reason why I mention that as a nation is that we
employ about 1.3 to 1.4 million people. So, that’s quite a
lot of people, and also that the average age would be from
18 to 25. So, I was trying to be one of the outliers to
try to kind of add up the average a little bit more;
otherwise, they would be all very young.
And, what more could I tell you about Foxconn? We
certainly have a lot of ideas, new ideas, and to be the
high technology company, a high technology provider in the
world. So, we have been very successful in doing that for
the last 40 something years.
MR. LOVELL: Great, so, for those of us in southeast
Wisconsin, we are seeing actually the changes in terms of
the construction of the sites from I-94. Maybe tell us a
little bit about the cities you’re making up your mind
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about, and what do you expect to do in them?
DR. WOO: Okay. Well, first of all, I just want to
make it very clear that we are not really building a
factory in Wisconsin, and the reason is the following. If
we are building a factory, we should not be doing that in
Wisconsin. In fact, we should not be doing that anywhere
in the U.S. The reasons are very simple, the construction
cost of any facility in the U.S, is about 2.8 times that of
what it would cost if we built the same thing in Asia.
If we look at the average wage of assembly line
workers, in the U.S. it’s about five times more expensive.
So, unless we are manufacturing something very different,
that maybe there is no market for here today that you might
be able to afford that kind of cost structure, yes. So,
the thing that we are trying to build in Wisconsin is
really a high tech hub. So, that again when we talk about
that, I need to share with you the vision of my Chairman
and also with Governor Walker of Wisconsin. I think when
they met up about April 30th of 2017, I think they came upon
the idea that we should build something like a Wisconn
Valley in Wisconsin so that would one day become the rival
of the Silicon Valley in the west coast or the Boston
Corridor on the east coast.
The reason why they see that could be a reality, and
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what is it so exciting to build a high technology hub that
could one day rival the Silicon Valley or the Boston
Corridor? It’s the following, and, how many of you are
from Wisconsin? So, quite a few; so you would know how
beautiful Wisconsin is, but at the same time, the cost of
living is relatively inexpensive, especially compared to
the west coast. I was told that they fast graduate in
terms of entering the market. In Wisconsin, you might earn
about $60,000 a year, right when you first graduate.
On the west coast, if you’re lucky enough to be hired
by Apple or Goggle, you will start at $125,000 to $150,000,
right? But do not forget how much you have to pay for
housing. In the Silicon Valley, if you’re lucky, you can
buy a house under $2 million, where you might have to be
driving for at least one hour transit each way, every day.
In Wisconsin, I was told that you can buy a very
decent house for about $200,000 to $300,000, which is
probably a few minutes away from where you work.
So, I think it’s an alliance, Kelly. I think we
should continue to tell people that you need to be looking
at the total cost of living or the total cost of owning
your own career. So, not only just the pay per se, but
also the opportunity to work in Wisconsin, and also pass
the cost of living to make sure that the standard of living
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is not the same, but it would be certainly higher than the
west coast or the east coast.
So, for any kind of high technology industry, you
really need the components. The first thing, of course, is
the human being; the human tolerance is the people. If you
look at Wisconsin, we have probably one of the best
universities, which is Marquette. So, I remember that,
yes. And, if you’re looking at the mega region, including
Chicago, of course, you have been west of Chicago. So,
those would be the prime examples of private universities,
which would be similar to Stanford in the Silicon Valley.
If you look at the UW system, again it would be similar to
the UC System in California, right. So, every year alone
we know that in Wisconsin, we have close to 300,000
students, faculty, and staff that we can take advantage of.
And, plus, if we want to reach out to the mega region, then
you have Illinois, Indiana, and you have certainly Chicago
to tap on, right? So, all we need now is really a company,
somewhat that can become a catalyst to shore up a critical
mass of either scientists or research engineers, or putting
enough investment to make it happen.
So, I think that is one of the objectives of the
Silicon Valley in order to put together a Wisconn Valley,
science and technology apart. So, let me come back to one
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we are trying to build there, the first thing we are going
to build is a Generation 6-TFT5. Now, to you what is a
TFT? TFT is basically the thin film that would be made
into glass of what we call substrates. So, we look at
your; and, I think most of you own a smart phone. So, the
display, the monitor is made by a substrate.
So, when you look at a television and you look at the
television display, that’s made by the substrate, right?
So, what we are saying is that for any kind of high
technology devices, one of the critical components has to
be display. At Foxconn, we have the largest in immerses in
display. In 2016, we bought 66 percent of these shops.
So, we have the latest display technology that can rival
that of South Korea, or any company in Taiwan, or mainland
China.
So, we want to build a part of that in Wisconsin, but
somebody must ask me the question; why not Generation 8;
why not Generation 9; why not Generation 10 from 5? Why
Generation 6? So, please bear in mind the larger the
number doesn’t mean the better it is. In this case, the
larger the number simply means that the size of the display
that is going to be manufactured by that particular
factory. So, let’s take 10.5 for example. The size of the
substrate that is the glass that can be manufactured is
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about nine feet, seven inches long, and 11 feet, one inch
wide, as immersive Generation 6 that would be 4 feet, 11
inches, and also 6 feet and 1 inch.
Of course, I can just make up those numbers, because
you guys would not know anyway. But for a change, I can
share with you, size doesn’t matter. It’s the technology
that brings it in. So, what we are trying to sell up is
first, a unique one. Nobody has ever done that in the U.S.
We’re setting up the tier team fabrication in Wisconsin
that would be able to help us to continue to develop a new
generation of this space, and plus advanced semi-conductor
packaging technologies on glass. So, that’s what we are
trying to build.
With that we’ll be able to grow with a lot of
universities, academics, and research institutions to bring
along a lot more critical mass of development of new
products.
MR. LOVELL: Well, thanks. And, I would say you talk
about being a catalyst. If I can just tell you, in my
fifth year at Marquette in the past year, I’ve met more of
my colleagues at the other universities both from
technology systems and other systems which you’re going to
hear about in the next session. So, you’re definitely
filling the room.
27
One of the things you’ve already done is you’ve
recently announced a $100 million partnership with the
University of Wisconsin, Madison. You’re in cost
discussions right now.
DR. WOO: That’s part of your system.
MR. LOVELL: Yes, and you’ve actually since arriving,
you’ve been to all of our campuses almost on a daily basis.
When you think about what you’re trying to accomplish by
partnering with the universities in play, what do you hope
to get out of these partnerships?
DR. WOO: Well, first of all, we are serious about a
Wisconn Valley science technology partnership, or the
concept of Wisconn Valley to one day rival that of Silicon
Valley. We cannot do it alone, but even though we are
committed to hire and to create 13,000 jobs, but 13,000 is
nothing. So, we have to take advantage of the deep
learning, the deep knowledge in the university systems in
Wisconsin and also beyond. So, we see that partnering with
the university, partnering what the technical colleges, and
partnering with private universities is certainly the thing
that we have to do, otherwise, we would not be able to
create something like Wisconn Valley.
MR. LOVELL: So, one thing you look to is the jobs,
the 13,000 jobs. Obviously, Foxconn is going to create a
28
lot of jobs themselves, but we’ve also heard a lot about
the supply chain that will develop around you. Can you
talk a little bit about that and what you expect to happen
in the next few years?
DR. WOO: Sure. I think maybe I should talk about the
creation of 13,000 jobs. I think a lot of people might
have misunderstood that, you know, since we are, you know,
basically a manufacturer. So, would we be hiring mostly
assembly line workers out of the 13,000? And, the way we
are looking at it is that it’s probably about a 75 to 25
split. So, I would imagine 75 percent would be knowledge
workers and 25 percent would be assembly line workers to
start with. And, then some of you might be interested to
know why that is the case; because I believe that there is
a certain national division of labor. I think in China or
in Asia, we still see the benefit of labor, more on the
side that is relatively inexpensive. But in the U.S., the
benefit of labor is not on the purely economic side of
being cheap labor. But in the U.S., we have a huge
abundantly available pool of talent; so, that’s what we
want to take advantage of. So, that’s why the split of
what we want to hire, the jobs we want to create would be
at least 75 percent knowledge workers, and the other 25
percent would only be assembly line workers.
29
And, about supply chain in our past, at least in Asia,
for every one job we create, there will be another four
jobs that the supply chain would create. So, more likely
than not, the supply chain would follow us to come to
Wisconsin to invest. But that would be most likely a year
later than after our plaza is complete. So, I’m very
excited to see the supply chain coming over, yes.
MR. LOVELL: So, within that I would say at least
would be right on your campus. For those of us not from
southern Wisconsin, but maybe one of the mega regions, how
do you think Foxconn could impact say the Chicago area?
DR. WOO: Well, first of all, in terms of talent,
given the tight labor market today, and so, we are looking
for talent all over the place. And, certainly, I would see
that that should be people taking the commuter train from
Chicago all the way to Wisconn Valley Science and
Technology Park, and so, basically that would be, you know,
having the best talent in Chicago, who want to join us to
work in Wisconsin, but they seem more comfortable with the
city life in Chicago. And, they can have the best of both
worlds.
So, talent alone I would see that we would have to
reach out and go beyond Wisconsin per se and certainly we
have to reach out to go beyond just the southern part of
30
Wisconsin, but to Madison, to other parts of the state.
That’s why we are also building the Foxconn Place to
attract them. So, not only just the physical building, but
also so that it would attract more people to join us, even
not exactly in the Milwaukee area.
MR. LOVELL: So, we heard this morning that, you know,
how unemployment is near record lows. It seems to me that
what you’ve talked about earlier about how attractive it
may be for someone from the Silicon Valley or Boston, given
the cost of living and the kind of life to come. Do you
have any efforts underway that would actually bring people
from outside of this region into the Wisconn Valley?
DR. WOO: Yes, I think that we have a very concerted
effort especially that would attract veterans. So, we are
participating in the next six months or so, there are about
11 upcoming veterans hiring events in their own military
bases. Some would be in the south carrier called Kissel in
Korea and Japan, and also in Germany. And, there would be
also many military bases that would be participating in
that kind of event. And, at the same time; and we made
this announcement I think a month or two ago, we put
together a $100 million venture fund, together with
Northwestern Mutual and parts from Rolla Health Care, and
also Johnson Controls to make sure that we be would keen to
31
help start-up companies, not only in Wisconsin, but at
least in this region to be aware of the high technology
potential that Foxconn, and the Wisconn Valley can bring
about. So, we are seeing that there are many ways to reach
out to the start-up companies to the new generation of
entrepreneurs.
MR. LOVELL: So, you know, I noticed that you recently
announced a smart cities competition.
DR. WOO: That’s right.
MR. LOVELL: Can you talk a little about what that is
and what you hope to accomplishment with it?
DR. WOO: Well, there are a couple of things at least.
One is that we believe that high technology has made an
impact in a lot of industries. These are in trade, in
medical care, and even transportation, but we see that
there is very little movement in terms of the construction
industry. So, we see that there is a lot of new ways that
we can bring the internet technology that includes cloud
computing, mobile devices, the internet of things, and also
the spectator, artificial retail intelligence, and
automation and robots into the construction business.
That’s part of the smart construction, as part of the smart
living, and smart future.
And, we also see that in the future we should bring a
32
lot more technology into our homes so that would impact our
house, especially in preventative medicine. Just imagine
today, how many of you would do an annual medical check-up?
That’s still quite a few, but instead of a medical check-up
on the annual basis, why can’t we do it on the daily basis;
daily basis in terms of not necessarily having to go to see
the doctor, but everything you eat, every time we take a
leak, that could be documented, right? That could be
analyzed by the IOT and can be going up to the cloud
computing. They can put together that data to analyze how
one changes over time. That’s what preventative medicine
is all about, and mind you, preventive medicine would be a
lot more cost-effective than medical care because you would
only see a doctor when you are not feeling well. So,
that’s how I see it, the future living and the smart
future.
MR. LOVELL: Yes, so that’s one of the things we’ve
talked about since you’ve arrived in this part of the
country, part of the world --
DR. WOO: You do mean last night, right?
MR. LOVELL: No, no, no, you know, there have been a
number of things culturally here that are things that have
surprised you. Can you talk a little bit about some of the
challenges that Foxconn has had coming to the U.S. for the
33
first time?
DR. WOO: Is any media in the audience?
MR. LOVELL: There’s always media.
DR. WOO: Always the media. To put everything in a
context, please, just generalities. So, you have to put it
in context. I was asked the question by Mike, I really
didn’t want to answer it because it would put me in a bad
light. Yeah, I was a little bit taken aback by the health
devices, also scientific, right? I would imagine somebody
like Foxconn, who wants to create 13,000 high-paying
knowledge worker jobs in Wisconsin with $10 billion
investment in the next five to ten years; I would imagine
that people would go roll out the red carpet and to say
hey, Mr. Terry Gou or Louis Woo, you know, have our back
and say, what can we help you out with, how can we make
your life easier? How can we make you to be part of the
community? You guys did that. I really appreciated it. I
truly appreciate it, yes. But not everybody, right, and
I’m really surprised, and some even saying that, you know,
that we are here to steal the water from Lake Michigan, and
I don’t, I thought Lake Michigan is relatively big right?
So, we were accused of doing so, but fortunately, we have
this plan to set up a zero lake discharge in our factory
that means that we will only use the water once that would
34
make sure that it would continue to be recycled, to be
reused again and again.
And, and also, everywhere we go, we are living here,
we are part of that community. Look at how beautiful
Wisconsin is, and, I don’t want to make a place worse than
when I first walk in, right? So, it’s in our hearts, in
our guts to do the right thing. Look at even in China,
there are very few environmental protections. We are
building a huge solar farm in China, and also we will
either build it by ourselves or working with our partners.
By the end of 2019, we will have sufficiently set up the
solar farm to produce electricity, which would be close to
half a gigabyte would be 500 billion watts of electricity.
And, so if we do that in China, we certainly want to do
that in Wisconsin. And, so we are here to stay. We are
just not immersing; we are not trying to make the quick
buck. It’s very difficult to make a quick buck by
immersing $10 billion dollars. By employing 13,000 people
there’s no quick buck to be made. So, when you ask me this
question, I just can’t understand it.
MR. LOVELL: Sorry about that question. Right now,
we’re having some growing pains, you know, as you’re trying
to move in; how can people maybe help or, you know, what,
how can we work together on to best help you to be
35
successful?
DR. WOO: Wow. The number one priority for 2018 for
the remainder of 2018, we have about two months and ten
days or so. I want to hire as many people as possible.
So, we are running hiring fares, left and right in
Wisconsin almost like every weekend. We do that on a
Saturday to make sure that, you know, people who are
working will be able to come and see us to talk to us and
see what the opportunities are.
And, I think it’s too late for the reelections. And,
but if you guys haven’t voted, you should go out and vote,
you know, to vote for people who are good listeners, you
know, for people who are trying to make a difference in
Wisconsin, that would certainly be helpful, yeah, because
that would be helpful for the longer time. And, because I
believe that when there is economic development, I think
that’s what the Alliance is all about, and the people would
be better off. And, so we can do that altogether, yeah,
and normally, I would ask you guys to just go out and tell
the Foxconn story and tell them that, you know, we are not
an evil empire. We actually want to do good things here.
With that maybe I should tell you one more thing, you
know, people would imagine in saying that we are getting a
$4 billion dollar handout and some said $4.5 billion
36
handout, and let me tell you this, we have invested close
to $200 million now to level the ground and we have about
3,000 acres, just by leveling the first 1,000 acres, so we
spent about $100 million there, and we also build the first
building to house some of our workers there. And, also we
set up the 611 in Milwaukee as our northern workers
headquarters. So, with all that, we spent about $200
million. We have not had one dime from the State of
Wisconsin.
So, the agreement with the State of Wisconsin is that
we would invest first. We would hire the people first.
So, the end of every year, we would submit an auditory cost
list. Of course, the WEDB, the Wisconsin Economic
Development Board would ask a third party to go back and
check all the data and make sure we have the payroll and
things like that. Only after that we will have the subsidy
to us. So, it’s not a handout. It’s basically as a
performance-based subsidy. So, I hope that, you know, you
are very well aware of that so when somebody tells you
we’re getting a handout, please tell them, we are not.
MR. LOVELL: So, let’s kind of, there’s enough time
for maybe one more thing before we wrap up. What one thing
would you like to do here to know or say about Foxconn as
they walk out of the room?
37
DR. WOO: Well, I see the tremendous opportunity for
all of us to work together especially for the mega regions
to build what we call a Wisconn Valley. I think that this
is really the hope of the future for the mega regions led
by so many good private and public universities. We have
plenty of talent, we have beautiful scenery here. We have
the most pristine living conditions in Wisconsin and also
in the mega regions. I don’t see why we cannot provide a
better working and also better living opportunity than the
folks in the Silicon Valley or the folks on the east coast.
So, I wish that we can all work together to make this
happen. It’s not going to be 1 year, it’s not going to be
2 years; it could 5, 10, 20, 15, 30, too, and I think we
can make it happen. But, we need the leadership to make it
happen. Leadership is not only from the political world,
but also from leadership of the private sector. I think
the leadership from the universities, but if all of us work
together, I think we will make it happen.
MR. LOVELL: Well that’s a great segue to our next
panel discussion about how the universities are working
together.
DR. WOO: They pay me a lot of money to do this.
MR. LOVELL: So, why don’t we all thank Louis for your
wonderful comments.
38
DR. WOO: Thank you, Mike.
MS. O’BRIEN: We are going to now take a 15 minute
break, but there is an assignment. Look around your table,
if there’s anybody that you don’t know, please introduce
yourself. If you know everyone at your table, look at the
table next to you. So, your job is to meet one new person,
during this fifteen minute break and engage in social
media. We’ll be back at 9:45. Thank you.
Ladies, and gentlemen, can we have everyone please
take your seats. The conference will continue, very
shortly.
MS. O’BRIEN: If everyone could please take their
seats. We want to try to do our best to stay on time
today, and you know, the next panel is going to start at
9:45, and it is now 9:44. So, if everybody could please
take their seats.
So, earlier I alluded to the fact that there were many
people in southeast Wisconsin that I reached out to in
order to get in touch with the right people at Foxconn.
Pretty much everybody sitting on the panel right here
helped us get Dr. Woo here and be able to network with
Foxconn, and I really thought it was also very important,
not only to hear directly from Foxconn, but to hear from
the people that made it happen. Everyone up here was
39
involved in either recruiting Foxconn and/or responding to
the needs that are going to be transformed in southeast
Wisconsin. And, so we have an elected official, economic
development, and higher education. We got it all across
the board, so I think this is going to be a very valuable
panel. It’s going to be an opportunity for us to learn
exactly what is happening right in southeast Wisconsin and
it’s something that, we again, can maybe understand from a
best practices standpoint, as opportunities like this
continue to happen in the mega region.
Our board member and really one of the best champions
that the Alliance could possibly hope for, Chancellor
Debbie Ford, will serve as the moderator. And, Chancellor,
I’ll leave it to you to introduce us to the panels. Thank
you.
DEBORAH FORD: Thank you, Kelly. And, before we
begin, join me in recognizing Kelly and Shalora for their
work in organizing the Sixth Annual Summit.
While I’m honored to be serving as the moderator today
for this particular panel and wanted to let you know that I
have a few prepared questions for our panel members. And,
then we will open it up for questions from the audiences,
towards the end. So, think about your questions and think
about what additional things you’d like to learn from this
40
very prestigious group this morning.
So, this morning we have with us Dr. Mark Mone, the
Chancellor at the University of Wisconsin-Milwaukee, Dr.
Bryan Albrecht, President and CEO of Gateway Technical
College, Jenny Trick, Executive Director of Racine County
Economic Development Corporation, and Jonathan Delagrave,
who serves as the County Executive for Racine County.
I am fortunate to be able to work with all of these
folks and I am very happy and pleased that you’ve taken
time to join us for this morning’s panel. I would invite
you to take a look on the App for a little biographical
information for each panelist, so you can take the time to
do that. But we’re going to go ahead and get started, and
I have asked each of our panelists first to briefly
introduce themselves and describe their professional
relationship with the Foxconn. And, so we’re going to
start with Jenny.
JENNY TRICK: So, I’m the Executive Director with
Racine County Economic Development Corporation. I’ve been
with the organization about 26 years. I have, I think
literally done every job at the organization, but the
controller. So, it’s a good opportunity if somebody says
the job can’t be done, I’ve done it. Yes, it can. Let’s
move forward.
41
We’ve done a number of different recruitment projects
over the years and never one certainly of the scale of
Foxconn as you might imagine. I mean the words that
everybody uses, unprecedented, transformational, all of
those and more, and it has been an absolute delight working
with Dr. Louis Woo, as well as every other person that I’ve
met through Foxconn as one is nicer than the next. So, our
relationship with the company is really, we’re about feet
on the ground, so to speak. The role that we fulfill in
Racine County is to be the county wide economic development
organization and just like we serve every other prospect
and company that chooses to locate in Racine County or
expand there, we’re that point of contact between business
and government. And, so we can fulfill that role for
Foxconn.
DR. FORD: So, Jonathan.
JONATHAN DELAGRAVE: I’m Jonathan Delagrave, Racine
County Executive. I kind of grew up in the county ranks.
I’m extremely fortunate enough to be County Executive, and
I’ve worked for the county for a long time. And, I’ve
certainly gotten a lot more out of the county than the
county has gotten out of me for sure. And, I’m very
appreciative.
With Foxconn, you know, I look at it as we’ve engaged,
42
but it’s turned from engagement to partnership. That
partnership has grown obviously over the last year, year
and a half. I can just tell you everything that Foxconn
has said or has advocated for has come true and then some.
And, there are numerous examples of that, but probably it
would be touched upon throughout this panel. But, I would
say this and this is kind of the story that I like to tell.
When they first came to Racine County and looked at what is
now the location for the manufacturing site in Wisconn
Valley, we walked that site on an extremely hot day and as
we were walking, Trevor Dillon and Dr. Woo, you know, they
turned to me and said, you know, you don’t understand John,
when we locate in Wisconsin, we want this development to be
as pristine as possible because we plan on being here for
generations to come. And, that embodied to me partnership
and their partnership has exhibited just that throughout
the past year and a half.
DR. FORD: Thank you, Bryan.
BRYAN ALBRECHT: Thank you, and good morning,
everyone. I appreciate the opportunity to be with you. I
live in the same communities as Jenny and Debbie and
Jonathan, Racine County. I serve as the President for
Gateway Technical College. Gateway was founded in 1911, so
we have a deep history in our community working with
43
business and industry helping to build our count strategies
for continued support and growth.
So, related to Foxconn we serve three counties,
Racine, Kenosha, and Walworth County, so we have facilities
throughout all of southeast Wisconsin. Fortunately, we
have one facility that it is one mile from the new Foxconn
facility. So, we are deeply ingrained in helping to not
only provide the adequate training, but really help people
understand the types of opportunities that are available
within the southeast Wisconsin region.
When Foxconn first came to our area, the SC Johnson
iMET Center was one of our campuses that they visited.
And, fortunately, we had some space available, and we
actually housed 40 of their employees at Gateway, while
they were doing their initial strategy and build-out for
the new fabrication facility in what’s now called Wisconn
Valley.
But, since that time, we have continued to strengthen
our relationship and develop an internship pipeline of
students so that they can obtain great opportunities at
Foxconn. We have built out four new curriculum pathways
for Foxconn. We’re expanding our facility at the iMET
Center to help increase capacity for advanced
manufacturing. So, there are a lot of day-to-day
44
activities taking place, but I would say just exactly what
Jonathan and what Jenny said; everything and more has come
true to what they’ve been able to bring to our community
and specifically to our campus, while generating exciting
expansion of the programs and facilities, not just for
manufacturing, but for all sectors across the services
areas that we provide for.
DR. FORD: Okay, Mark.
MARK MONE: Thank you, Debbie, now, good morning,
everybody, happy to be here. Mark Mone, Chancellor, UW
Milwaukee. We provide a lot of talent for organizations in
the region, and Foxconn is very interested in that talent,
and they’ve helped kick off some career affairs a number of
times on our campus, as well as across the state. We have
with the research partnerships had a lot of companies
already in place, and partnerships with the other
organizations that you’ve heard about already; we see the
work with Foxconn as incredibly catalytic. We’ll talk on
the panel this morning about a number of those specific
areas. But, it’s really strengthened our work together in
ways that we probably wouldn’t have had and certainly
hadn’t even envisioned.
So, we just have as an example yesterday, our provost
came back from Taiwan, and he spent only a few days in
45
Taiwan and he was finalizing an agreement that we have with
Foxconn and what’s known as CYC University, which we’ve had
a partnership with for probably a decade for our
engineering students to intern. But, today Foxconn
initially agreed to have five or ten students to serve as
interns that would learn there, and then come back and work
in the facilities in Wisconsin. And, they’ve already
doubled their commitment to that work already. So, we’re
working on a lot of the details on that and there are many
other examples that we’ll talk about. But it’s the talent,
it’s the research partnerships with companies like Johnson
Controls, Rockwell and many, many other firms in the region
that have specific technology that will be part of the
larger Foxconn and Wisconn Valley ecosystem.
DR. FORD: And, Jenny?
MS. TRICK: Yes, ma'am?
DR. FORD: Your organization, Racine County Economic
Development Corporation, was one of the first really to
respond and initiate the engagement with Foxconn, and at
that time you didn’t even know you were working with
Foxconn. So, many of our partners here today in the
audience are economic development professionals or are from
municipal governments, and also from higher education and
business and industry. So, can you talk a little bit about
46
the journey of the relationship with between our RCEDC and
Foxconn; and what you and your team have learned from this
experience and talk about the beginning, because I think
that would be very helpful for the folks here.
MS. TRICK: So, the beginning with this project was
very much similar to every other project. We’ll often work
with a site selector, and that site selector will send us a
request for information document, and they generally range
anywhere from a couple of pages to 50 pages. This one
happened to be on the larger side, and it was provided to
us by Ernst & Young, who served as the lead site selector
with this company. And, much like every other project, the
turnaround was very quick. And, so they wanted a lot of
information in a very short order, which was often referred
to as the Foxconn speed, if you haven’t heard that already,
but everything is in the warp speed.
And, so we began that way and to be honest, when I
first read the request for information document, I thought
it was a bit of a pipe dream simply because I think any of
us that are in this room in economic development know, you
will often receive an RFP on some of the mega sites you
refer to where you need to assemble up to north of a 1,000
acres or so of property and you hope and dream for those
opportunities, but often they go to communities kind of in
47
the south and unfortunately, we were not as successful.
But, that’s where it began and we worked with a team.
And, I must say even before this opportunity came to us,
economic developers are very resourceful, and they need to
know who their team is and those teams are often elected
officials, but they’re often also ripe with technical
knowledge, so engineers, attorneys and so on.
And, really from the very beginning, when we received
that information document, we quickly engaged Jonathan, as
well as a couple of communities that were pitching for this
project. And, I can remember the day Jonathan, where we
assembled for the entire day around this document and where
we pooled all these resources together, including
engineers, and some of our community leaders. So, from the
very beginning it’s been a very collaborative activity, but
it is just again another exercise in collaboration, which
already existed in Racine County, so we didn’t have to do
something unique. We just needed to draw on things that
had worked already in the past.
And, what I have learned in this whole journey, is
really probably nothing unique to this, but really through
our entire effort of doing international recruitment, which
began in 2007 on a much smaller scale, it was really
honoring what is the culture of that company that you’re
48
trying to attract, and what do I need to know about them so
that I don’t make an error and I’m not offensive;
understanding that. But, then also understanding what’s
important to them, what really trips their trigger so to
speak. And, of course, those are the same issues that we
deal with on domestic companies, but it adds a little bit
of a different flavor when you’re working with
international companies. And, so just honoring the
culture, understanding what that win-win solution is that’s
really akin to that culture, and then again, working really
very closely with your partners, overall.
DR. FORD: Great. Well, since we’re talking about
understanding the culture and particularly with our
partners from around the world you recently hosted a
business etiquette program for members of the Racine County
Economic Development Corporation. So, can you talk a
little bit about what you’ve learned and how RCEDC is
helping our region prepare more for international partners?
MS. TRICK: So, as I mentioned, more than 10 years
ago, we started in this whole international recruitment
endeavor. And, one of the ways that we thought we would
become more informed about it was to actually reach into
the Chicagoland area, where you have a number of
international chambers of commerce. And, we started with a
49
number of different countries, but one of them fortunately
was with Siva Yam, who is the President of the U.S. China
Chamber of Commerce, and we’ve been friends for the last 10
or so years and in fact, Siva was one of the first people I
called when we were in our final straits of trying to
secure this company for Racine County to be informed. What
am I missing? What do I need to know? And, so we drew on
that same friendship when we knew that the same challenges
and opportunities that Jonathan and I learned on the
frontline of this; we wanted to inform our local of
community and our companies, so that they wouldn’t fall
into the trap of perhaps having some challenges with some
cultural issues.
And, so we hosted a half-day session in that respect
and if anything, although it was a lot of information
shared with folks, it just encouraged people to think
differently. Begin your research and then go to the
different websites like Executive Planet and so on to have
a better understanding of how to work with international
companies.
DR. FORD: Alright, thank you. So, Jonathan there’s a
lot of things happening in Racine County and for any of us
who are traveling I-94, we know things get a little
different when you hit the county line. So, tell us what
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it means to you and to the county for Foxconn to establish
their science and technology park in Racine County, and if
you could also talk a little bit about how the county is
also working with the city in terms of the Foxconn Place
Racine as a center to advance smart cities, ideas, and
technologies.
MR. DELGRAVE: Thanks, Dr. Ford. This is a great
question, and it’s truly transformative and you asked about
the catalyst of the economic development opportunity that
Foxconn brings to Racine County; and we want to have such
great things going on in our county, but it’s really
transformational through our school districts, through
Gateway, and our universities in the area. It’s really
going to advance healthcare bringing two new hospitals
systems, and potentially another one, and building new
medical facilities in Racine County.
I mentioned our school districts getting on board to
talk about curriculum related to Foxconn and advanced
manufacturing, and just talking about the opportunities for
students that can go to a four-year university or a two-
year community college, or just get that certification
right out of high school to be able to work with these
businesses.
It’s working with those existing businesses to make
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sure that they have the workforce they need and all of that
opportunity that comes with it. So, we’ve leveraged that
with our partners from the state workforce development
grants. We know in Racine County that we have to make our
existing businesses a priority; quality of amenities for
our citizens are important, so just those opportunities for
recreation and family opportunities are going to be
enhanced. So, really this is transformational throughout
our county in so many ways.
I-94, we were kind the hole in the donut; Kenosha
County and Milwaukee County had their freeway systems
already built. We did not, and we were not going to
probably see that for 10 or 11 years. We went out and got
a $160 million plus grant from the federal government to be
able to do that. So, you know, I apologize to all of you
going back to Racine and Milwaukee. But we are really
truly grateful for all the opportunities that this brings
to Racine County.
DR. FORD: And, so talk a little bit about the work
with the city, and I know that you and Mayor Mason work
closely together and we are happy to have the Foxconn Place
Racine in the city and it’s about what six to eight miles
from the Science and Technology Park, so talk about that.
MR. DELGRAVE: Sure, so we have 17 municipalities in
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Racine County and I want all of our municipalities to be
able to benefit, and obviously, the city of Racine is our
largest municipality and they have, you know, obviously
some demographics that I want to make sure are included for
this project to make sure that everybody benefits.
But the innovations center is going to focus on two
things; one is smart cities, which we are grateful for, we
can do the hub and be looked at hopefully as a smart city
and smart county, and then second, they’re going to be
focusing on autonomous vehicles and whatnot, so, being able
to have routes from the Innovation Center to the site out
of Mount Pleasant along I-94 would be great. But, I would
just say that again Foxconn was a catalyst in bringing our
municipalities together. So, the city of Racine and the
Village of Mount Pleasant and the county came together to
work to create a water development agreement that’s going
to enhance economic development opportunities quite a bit
in terms of water usage and the cost of that water.
We were able to do a partnership with the Village of
Caledonia and Mount Pleasant to lower water cost from the
Village of Caledonia, saving the taxpayers $25 million in
Caledonia. So, working with all our municipalities and
specifically the city of Racine and the Innovation Center,
again it’s going to be transformative. We’re going to be
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looked at as the leader throughout the midwest and
hopefully the United States on a lot of these smart
community things. I know the city of Racine and their
mayor is really engaging in that opportunity, so just a lot
of exciting things to come and those partnerships I think
are going on a day-to-day basis.
DR. FORD: I think the keywords that I keep hearing,
and I certainly heard it from Dr. Woo this morning is
collaboration and partnerships and so, Mark, let’s switch
gears a little bit and tell us about the emerging Higher
Education Regional Alliance and how higher education is
partnering with Foxconn. And, Dr. Woo talked about this as
being one of the key reasons why they selected the midwest
and the state of Wisconsin, which was the strength of
talent and the strength of the educational systems across
our regions. So, can you talk a little bit about that?
MR. MONE: Happy to do it. You know, you’ve heard the
words transformational, unprecedented, and things like
that, but the Higher Education Regional Alliance is a very
clear concrete step forward in a way that you don’t
typically see. We have created an entity called the HERA,
Higher Education Regional Alliance, and it has 176,000
secondary education students, 18 academic institutions,
representing 96 percent of the students in the southeastern
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seven Wisconsin counties. We also have partnered with
Higher Expectation of Racine and a partner in Milwaukee,
which is Milwaukee Succeeds. We’ve got the greater
Milwaukee Committee, Metro Milwaukee Association of
Commerce, and Milwaukee Urban League, and a couple of other
organizations involved. They’re really going to help bring
together the Alliance between higher education and
industry. We’ve got three key goals. One goal is
completion; no region in terms of strong economic
development works well without higher education performing
at the higher levels. But nationally, we don’t get enough
students through in four or six-year rates, at a two-year
institution in a two-year rate. We all need improvement
around what we call completion or better graduation rates.
So, we’ve received already nearly a $.5 million grant
for technical support. We competed very effectively
against 45 other regions in the country, and we’re one of
three to receive that type of assistance. So, over the
next several years, we’ll be getting,; that’s just an
initial example, an initial starting point.
We’ve just started working together in a collaborative
way on completion, and we think there will be a lot of
sharing of best practices and a lot of great things that
will happen, as a result of that concentrated effort. Dr.
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Ford and also Dr. Vicky Martin of Milwaukee are at a
technical college, and the president there is co-chairing
that group.
We have another group under which I’ll call the
portal, and the portal is when you think about if you’re in
industry and you want to hire across those 18 academic
institutions, it’s pretty difficult to do that at 18 or for
that matter, anything more than three, four or five,
considering also companies that are large, the A.O. Smiths
of the world and others that would recruit globally. So,
this portal concept is how powerful it will be. Think
think about this, for you as an employer to access
simultaneously all those students, I want to say 176,000,
let me give you an example. UW Milwaukee alone, we put
5,300 people into the workforce every year. Now, go to all
the different academic institutions and think about all
that talent and rather than having to recruit one place for
some of those, you can have one portal. Now, similarly
from a student’s prospective, the portal is very powerful,
because you might be at any one of those universities only
able to interview with and find employment at those
companies that your campus has a relationship with. But,
this portal works both ways, so that’s a really powerful
concept.
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The third area I should mention on that portal is Dr.
Mike Lovell, as well as Dr. Bryan Albrecht, are the co-
chairs of that group, so we’ve got the right people at the
table.
We also have a third goal group and that goal group is
about innovative programs. So, one of the challenges that
we have right now is that a lot of tech college students
can transfer very easily to the four-year degree programs
in the state if they want to go on and continue to be an
engineer. We happened to work something out earlier with
UW Parkside, Gateway Technical College, and UW Milwaukee,
where we have a technology pathway partnership. But, if we
can scale that concept and have stronger articulation
agreements and also accelerated programs for the talent
that’s needed, that’s going to be huge. So, there are a
lot of examples, whether it’s in healthcare, whether it’s
in engineering, computer science, business; a lot of other
areas where we can really accelerate that. So, the co-
chairs of that are also represented with the technical
college, with Waukesha County Technical College, and
Milwaukee School of Engineering.
So, this Higher Education Regional Alliance, HERA is a
two-year, four-year, public, private, and for us something
we’ve not ever done before. We’ve had the interest, but
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boy, we’ve got the definite enthusiasm for it now.
DR. FORD: So, Mark, what would you say would be the
secret ingredient to bringing everybody together, because
in higher education, sometimes we’re natural competitors
not natural collaborators.
MR. MONE: Yeah, you know, what’s interesting is we
have been and I think it’s fair to say, we have been
swirling around this and we’ve had some isolated
partnerships. I want to say isolated, they’re good,
they’re great partnerships in their value, but to take it
to scale, I think the tipping point for us has been, we
have no choice now with Foxconn. I mean that has really
been the convener, if you will, even if Foxconn isn’t at
the table, their presence is there. So, I’m sure you
experience this no matter where you are in the midwest.
We’ve got this incredible talent shortage, and we’ve been
trying to meet this and now, it’s really exacerbated and so
to create that talent, I find reaching back to K12, looking
at this in a powerful way, it really is that, and the neat
thing about it too is which I think everybody really
appreciates is how collaborative we’ve all become and what
great leadership we have across our institutions.
DR. FORD: Great, so, Byran, Gateway Technology
College and the Wisconsin technical system, you have been
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national leaders in partnering with industry to prepare the
workforce of the future. Can you share with our audience
today some of the workforce development initiatives that
you have developed with Foxconn and talk a little bit more
about your co-location at their facility in Racine and then
your build out at the iMET Center.
MR. ALBRECHT: I’d be happy to. This should take
probably the rest of our time here today.
DR. FORD: You don’t have that much.
MR. ALBRECHT: So, I might just start out by kind of
peeling back a little bit the fortunate relationship we
have with our local industries, which doesn’t happen
without other partnerships. So, the HERA group, working
with the universities is really critical for our long-term
success, reaching down into our K-12 programs. We served
over 7,000 high school students with dual credit programs.
That’s essential to build a pipeline, whether it’s for the
two-year or the four-year post-secondary opportunity. With
Jenny’s support and economic development; Jenny’s office is
located on our campus, that really helps to really drive
the decision-making around where do we spend our time and
make our investments in trying to help companies begin to
think about our region as a great place to do their work.
And, Jonathan’s leadership at the county has given us
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the opportunity, whether it’s the funding mechanisms or
just helping to work through some of the policies between
municipalities, because we serve so many different people.
Having said all of that, I did mention that we were
founded in 1911, so we have 160 corporate training
partnerships that we’re nurturing right now. And, I say
nurturing because it’s a continuous evolution; things
change, leadership changes, whether it’s at the schools or
at the business partnerships, you have to work at that
every day and some of them are fairly mature, so we’ve got
buildings named after some of our great corporate partners.
The SC Johnson Integrated Manufacturing Center, Snap-On
Tools, we trained not only locally, but nationally and
internationally for Snap-On Tools. You know, you could go
to the InSinkErator, Twin Disc, Modine, Amazon; they’re all
great partners with the college, and they all have unique
aspects of how that relationship was developed. Many times
it was because they were trying to identify where they can
attract talent and how they can make sure that we have
skill sets that are going to be assimilated quickly into
their manufacturing facility, which is kind of the core
mission of Gateway, so that’s an easy lift for us.
Foxconn was a little different; it was a little bit
more around how do can sustain the whole idea of creating
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an ecosystem of not only talent, but also innovation. Now,
we’re fortunate to be living in a community that has really
been built around innovation, so Case Tractors’ world
headquarters is there and I mentioned some of the others,
SC Johnson, Twin Disc, and InSinkErator. So, there are a
lot of innovative practices that are going on. Maybe they
weren’t necessarily always the driving force of what we
need to start thinking about. So, entrepreneurship, smart
cities, how do we take the best ideas from the brightest
students in the region and really make those into practical
applications for our communities?
And, I think the Foxconn initiative has really not
only elevated that level of discussion with this, but
changed the way that we think about the programming we
offer. Jonathan led a team, along with Jenny to visit
Osaka, Japan and I had the good fortune to go along. With
100 years of history in manufacturing, I thought we were
pretty good until I saw how manufacturing is done in Osaka,
Japan. We needed to ramp up very quickly, so what we did
was put together four new training partnership programs
with Foxconn, including IIOT, the Industrial Internet of
Things. We’ll be the first college in America to offer
ZDT, Zero Down-Time Technology and Robotics. I probably
wouldn’t have even known what that was six months ago, and
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now we’re building a new facility to support that. The
Industrial Dating and Analytics Program, very unique; it
integrates our IT program with our manufacturing program.
We may have gotten there at some point, but it might have
taken 10 more years, and now we’re going to do it in 10
months.
So, supply chain management; I don’t know if it was
mentioned earlier today about the massive infrastructure
for the supply chain for our region. We need new
specialized skills in those areas, both at the two-year and
at the four-year level. And, then cyber security, which
I’m sure everyone talks about, how we protect our IT
systems, but how do we protect it in a world that is now
globally competitive in our backyards. So, it’s IT, cyber
security in manufacturing, cyber security in healthcare
which changes the way we think about the types of programs
we offer. So, now instead of separate IT disciplines,
we’re going to get a degree in, you know, software
management, it’s integrated in the manufacturing centers so
students will be working hand and glove with our computer-
integrated manufacturing systems. So, that led to a
different prospective and maybe a different vantage point
of where we think we need to position our campus to get our
students ready.
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We still offer all of the terrific programs to support
all those 160 other partnerships. They’re essential to our
long-term stability within our community, but we’re trying
to project out at a much more rapid pace as to what we need
5 years from now or even 10 years from now on how we
position the college to do that. So, working with the
state of Wisconsin and the county and the municipality of
Mount Pleasant, we were able to generate support for
funding to expand our manufacturing centers as I mentioned
earlier to give us about 36,000 square feet of totally
automated manufacturing systems, which will not only I
think revolutionize the programs we offer, but serve as a
model for students that want to go on to four-year
engineering degrees, because we’ll have advanced technology
in their home community.
And, I think sometimes seeing is believing, and maybe
Jonathan and Jenny, if we saw it we believed it, didn’t we?
We walked away from our visit to Osaka, Japan with a
different vantage point of what Foxconn was intending to
do. And, as you mentioned earlier, they’re not only
maintaining that level of commitment, but expanding our
viewpoints at a much greater rate.
I would just conclude by saying that the development
of the downtown center is also one mile from our Racine
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campus, so we’re fortunate to have two campuses located
very close to Foxconn. So, our students and our faculty
are very actively involved in the Smart City Smart Future
competition. We want to be a demonstration campus both at
the iMet Center and at the downtown Racine campus center,
so we can become a smart campus environment, help our
students assimilate into that technology environment, so
that when they become citizens and working in our
community, they’re more accustomed to those types of rapid
changes. So, we’re real excited about what Foxconn has
brought to our business partnerships.
DR. FORD: That’s great, thank you and I can see parts
of Dr. Woo’s visions coming through, in terms of the
Wisconn Valley right here in the midwest. So, Jonathan,
one of the things that everybody’s talking about and we
know this from the OECD report and the presentations today
that talent and workforce development are key, and it’s
probably one of the things that keep many folks up at
night. So, Racine County recently received funding from
the state of Wisconsin to support workforce development.
So, can you talk a little bit about your priorities as
County Executive and the partnerships that you are forming
and sustaining in order to meet the increasing demands for
talent across all industries in Racine County?
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MR. DELEGRAVE: Sure, great question. We really
started I think in really three buckets. One is, you know,
we want to make sure as a county that our residents,
especially those where the barriers to employment in the
past, have those opportunities. So, whether it’s
transportation or childcare or a single female head of
household who has barriers to employment, we want to make
sure that those individuals have that opportunity. And,
we’ve shown some great success in the last year, the city
of Racine’s unemployment rate has dropped comparatively
speaking to other cities in the state of Wisconsin by quite
a margin. So, we are making inroads there. When I got
elected, we had an ambitious goal to have the city of
Racine’s unemployment rate match the state’s, and we
drilled down the data and it was at first 900 jobs, and now
we’re down to about 300 plus jobs or so. So, we want to
make sure that we hit that 300 and accomplish that goal.
Second, is we have to do a better job in Racine
County, but I guess really in detail what keeps me up at
night is we’re aligning services, but we’re not having a
duplication of workforce development initiatives. So,
we’re taking some of that fast forward money from the state
of Wisconsin, which is about a little bit over $2.5
million, or a little under $2.5 million to make sure we’re
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in alignment so our existing businesses have a workforce
and not worry that we’re creating that workforce demand
from businesses that demand our workforce, so individuals
will have opportunities as I stated.
And, then third is the talent recruitment aspect to
make sure that this is a success, we have to draw people to
southeastern Wisconsin, and UW Milwaukee, and Parkside, and
Gateway, and we need to draw people to southeastern
Wisconsin for employment purposes. And, and that’s not
just for individuals to work at Foxconn, but it’s also for
individuals who have a husband or a wife who’s going along
on the trek; what are available, what do each of our school
districts have to offer, what type of healthcare system is
available in Racine County. So, we need to make sure we’re
marketing Racine County for families that we want to
hopefully relocate to southeastern Wisconsin and Racine
County.
And, we’re going to partner hopefully with Manpower on
that, and we know what our county is good at and what we
help with, and obviously the county getting into the town,
and recruitment is something that’s new to us, and we want
to make sure our partners like Manpower can help us with
that, and we’ll have that expertise.
So, really to sum it up, it’s really three things.
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It’s one, making sure those who have barriers to employment
be given an opportunity, two, it’s making sure our existing
businesses have a Racine County ready workforce, and three,
is that talent recruitment that I mentioned and bringing
people to southeastern Wisconsin, but more importantly
bringing them to Racine County.
DR. FORD: So, Jonathan, one of the things you
mentioned also and I know that one of your priorities is to
work across the municipalities in Racine County and beyond.
It’s not just in Racine County. So, talk about really how
that’s going and what advice you would give to folks,
because again, sometimes it’s not as easy to work across
those geographic boundaries, because we like things the way
we like them in our area.
MR. DELGRAVE: We do, and so that’s for sure. As
County Executive, you’ll talk to, and other County
Executives will tell you, we have 17 municipalities in
Racine County and as County Executive, each of them are
like your kids, right? They all have their strengths and
they all have their weaknesses and you want to be able to
improve on the strengths and obviously make the weaknesses
into strengths. So, but Foxconn was a catalyst to bringing
everybody in alignment in Racine County, and as I’ve
mentioned, we’ve had so much success with our
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municipalities, whether it’s infrastructure and keeping the
cost of water down, or whether it’s creating an environment
where I think you’ve heard this term where business is
open; truly business opportunities are open in Racine
County. But, we also want to stress to our municipalities,
and to our existing businesses that, you know, if you want
opportunity, you also have to be proactive. You just can’t
sit there and say, well what is Foxconn going to bring me,
or what is the County going to do for my municipality. So,
what we want to do is encourage; look, if you have a
housing development, work with the Racine County or work
with Foxconn, develop partnerships. And, we got a number
of municipalities starting to do that and offer ideas and
facts and plans to partner with Foxconn. So, really
alignment of our municipalities is key, and I think we’re
there. I think everybody’s on the same page trying to make
this economic development opportunity work for the greater
good, which is taking a little bit of time, but like I
said, we’re there. And, then encouraging and fostering
innovation from our municipalities, two in particular,
Foxconn and Racine County, so they can have that diverse
community that they want in the future.
DR. FORD: Okay. So, one the things that Dr. Woo
talked about was supply chain, and we know that Foxconn is
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very interested in bringing that supply chain here. So,
could all of you talk a little bit about the impact of this
supply chain and our readiness? And, I believe it’s going
to take the mega region to meet their needs to be able to
supply what they need and their suppliers all the way down.
So, can you talk a little bit about that for everybody?
MR. ALBRECHT: I could maybe start. I think there are
so many moving components to it that it’s difficult to say
here is the list of suppliers that are going to be needed
since it changes every day. And, I think our challenge is
to prepare our organizations internally first. So, when
Foxconn first announced to everybody, at least at Gateway
we got advanced manufacturing looking through. It’s a lot
of time and attention going into robotics and automation,
and in reality, there’s so many other programs that have
already benefitted from Foxconn, from our HR departments to
our IT departments, and our healthcare departments. So, it
took a while to build the internal awareness of how an
ecosystem changes an organization. And, then to take that
outside of Gateway and start thinking about preparation
for, not only the partners that we have, but other new
partners coming to the area as well. What type of specific
training needs you might have, or access to resources and
grant programs for training; so, we’ve been spending an
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enormous amount of time just welcoming new people to our
communities, giving tours of the facilities, making sure
they understand all of the resources that are available. I
think they call it matchmaking events on campus, where
literally hundreds of people come out to these matchmaking
events to really see where they might fit within this
larger entity around supply chain, not only the
matchmaking, but then how do you build a relationship with
some of the people internally at Foxconn.
So, we’ve helped facilitate presentations to our
school teachers, whether it’s K-12 or postsecondary
awareness, tours of the facility, linking industry to how
they can meet the right people at Foxconn to get involved
in supply chain management, to identifying specific
training programs that could assist them in building out a
new capacity to support Foxconn and others.
And, so that’s been a really unique aspect I think
from our vantage point of helping develop a supply chain
infrastructure, not just a supply chain, you know, but also
a purchasing arrangement.
DR. FORD: Mark?
MR. MONE: I’d just add, you know, picking up on the
theme of kind of from the talent to the supply chain, you
know, the direct effect of Foxconn is anticipated to be
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anywhere from 10,000 to 13,000 jobs, initially. But the
supply chain and the suppliers for them in terms of the
larger context, it may be 25,000 to 35,000 jobs. We’ll
hear later today about some of the larger. So, if you
think about that as one of the major components and just an
example of the power of that’s happening in this region is
in a tech sector. And, virtually every company sees itself
as a tech sector in some way, whether in retail, so Kohl’s
with its headquarters there really sees itself as having a
lot of tech-related jobs. Some of the healthcare
organizations really see manufacturing, of course, and
others.
And, so, what we’ve helped create in the region and I
don’t know, I think it may well have happened without
Foxconn, but it certainly has created a greater appetite
for the tech sector is where 20 firms have come together,
most of them leading area firms, come together to create a
tech hub and one of the big anchors of that will be what we
call the Data Science Institute, which has as its partners,
Northwestern Mutual has really stepped up and put between,
at this point, a commitment of about $15 million, UW
Milwaukee and Marquette have put in another $12 to $12.5
million each. So, we’ve got about a $40 million initiative
that will be educating talent across the region for all the
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tech-related types of jobs. So, again if you think about
the region and supply chain that’s needed, the talent is
the necessity, as well as an enabler for future growth.
And, again if you come back to what we’ve got with a lot of
students in that region around areas Bryan and others have
mentioned, advanced manufacturing, cyber security,
artificial actionable intelligence, some are calling it; a
number of different areas in the ISIT world are very much
enabled in the supply team mode of talent.
DR. FORD: Jonathan?
MR. DELGRAVE: Well, let me just add that, you know,
and I think what Dr. Woo touched on is if this were a
basketball game, the national anthem would have just gotten
over with. We have a lot to do, but what we are going to
see the hugest ripple effect is through the supply chain,
and I think our partners from Spartanburg, South Carolina
are here and we’ve talked. What can we prepare for, and,
you know, the number one theme that we’ve taken away is
whatever you’re planning it’s not big enough. It’s going
to be much, much bigger and the supply chain issue has a
lot to do with that. I would just add that, you know, at
Oshkosh Corporation right now in the state of Wisconsin is
really taking advantage of this. They’ve significantly
grown over the last year, and so, with all that being said,
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you know, and roughly about 64 counties have already
directly been impacted in the state of Wisconsin because of
Foxconn; so, we know that the supply chain ripple effect is
just starting, and it may not cross for 5, or 10, or 15
years as Dr. Woo said, but we need to be ready for that.
MR. ALBRECHT: I might just add one last comment on
that. You know, I’ve been kind of watching cyclical
changes within the college as a result of the Foxconn
announcements, so you could take any occupation, but let me
give you two examples. Diesel technology; you want to make
$80,000 per year, become a diesel tech you could do it in
about 12 to 18 months. We had one really strong program,
but in the last six months now we have three. And, each
one of them is full. We’re running six days a week in
diesel tech.
So, as you watch the changes take place, it’s a
massive build out. There’s a lot of need for heavy
equipment operators and diesel technicians. That’s a key
element of our success. Welding; we’ve always talked about
a shortage of welders. Welding is up to seven days a week
at Gateway, three shifts a day. So, we’re seeing these
changes taking place, not only with new technologies like
artificial intelligence or an industrial internet of
things, but with existing core skills that are really not
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just for Foxconn, but for all of those supply chain
companies in order to be able to get the work to do that.
So, if Oshkosh Truck is going to need diesel techs, we’d
better start preparing. So, there’s a ripple effect
through the entire, you know, educational and training
arena.
DR. FORD: So, it’s key to keep an eye on all the
moving parts.
MR. ALBRECHT: Right.
DR. FORD: With the Foxconn selection of southeast
Wisconsin, but also the other industries that we’re working
with. So, I have another question for all of you. So,
what do you need from the mega region, that’s folks in
here, to be successful? What do you need from this mega
region to be successful?
MS. TRICK: I’ll go first. I’m always hungry for new
ideas. I mean that’s the thing. I really have appreciated
the relationship that has been formed between Spartanburg
and Racine County, as well as Reno and just people that
come into our space that understand the challenges and the
opportunities that we’re facing, but tell us, try this,
this worked for us. It worked or it didn’t. And, so I’m
really interested in new ideas so that we can rise to the
occasion and really have success, not only in Racine
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County, but the state and the region, so we all succeed.
But with everything in economic development and anybody
that’s in that space knows this, I can’t do this alone.
These guys can’t do it alone. We really need people to
rally around us to tell us what are the best practices that
have worked elsewhere so that we can follow that same
course.
DR. FORD: Great, so being open to new ideas and
because we don’t have all the answers and certainly at
times like this, we really do need to lead through
partnerships, okay. Mark?
MR. MONE: I’d offer two things that I think are going
to be important and it’s not just for what we need, but
basically wherever you are. One is the awareness and
engagement with the providers of talent and it’s got to be
a two-way street. We need to think differently. We need
openness. It’s got to come from leadership at the top and
so many of you represent so many important parts of your
organizations that can help both higher education and
business to create those stronger linkages that allow both
of us to thrive. And then of course, the second one and
this is my plea in any setting, send us students, send us
that talent that is going to be the talent of the future.
What we know is that higher education in the
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traditional model in terms of two-year, four-year, masters
degree; that’s going to continue to be relevant, but
increasingly relevant is the need for the badging or
stackable certificates, the types of things where we talk
about skills needed when and where really in a six-week
module, twelve-week module; things that are much more
portable. And, that type of linkage comes about from
closer working relationships and students that are needed,
not just the traditional 18 to 25-year-old, but really in
the workplace today. We have so many more programs in
organizations, and I know all of us do in terms of the
types of needs. So, you have to engage and be open to that
but also to be proactive. And, I can tell you that HERA is
a great mechanism for bringing a portal to you to be able
to bring those types of educational capabilities forward.
MR. ALBRECHT: I might just add we could use a little
more strength in our reciprocity agreements between
Illinois and Wisconsin as it relates to educational
pathways. We have great reciprocity with the College of
Lake County, but that’s really the strongest one we have,
and it’s not going to attract enough students to go back
and forth. If we should have some way to figure out, you
know, some sort of cost break even analysis, where students
aren’t paying out-of-state tuition to go to Wisconsin and
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Illinois, and then we could begin to think regionally and
not limit ourselves to what the current practices are
because once you cross the interstate border, it costs you
more to go to school. We want to try to help support
students as we can.
MR. DELAGRAVE: I have two things, one is for advocacy
for Foxconn and what Foxconn can bring to our region. I
think Dr. Woo touched on it a little bit when he was
talking about, you know, there is some adversity or some
negativity around that, so advocacy would be huge for our
partners around the region. And two, just generally, and I
mentioned it a little bit before is that there is not a
better time, whether it’s housing or development or
transportation or other quality of life issues to approach
Foxconn, or the colony, or our Chamber of Commerce, or
Racine County Development Economic Corporation for ideas
and development and just making our community better.
There’s no better time to do that, and I think I am
speaking for the county and I think I can speak for Foxconn
as we’re chomping at the bit for partnerships and ideas.
DR. FORD: That’s great. Well, I know you have ready
partners here at the Summit and certainly with the
Alliance. So, let’s talk a little bit about what keeps you
up at night in terms of how fast the economic development
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is changing across our region. So, what keeps you up at
night?
MR. ALBRECHT: I think for us right now, because it’s
such a high growth opportunity, it’s first of all, finding
faculty to become engaged in this dialog and to recruit the
right faculty to be able to deliver so that’s a key
element.
I think also taking a look at strategic investments
because we’re still balancing 65 degree programs, 23,000
students, and so we can’t put all our eggs in one basket.
You’ve got to balance that diversification of the
investments and then attract new investments so that we can
position our college and our community for potential
opportunities that we didn’t even know existed. But, at
this point mostly for me, it’s the understanding of the
cultural shift in our community. So, we’re teaching
Chinese classes at Gateway, which I probably would have
never guessed we were going to be doing. We’re really
advancing the way that our students think about their
global responsibilities. So, we have 16 international
partnerships right now and our newest one will be in China
as well. So, we think differently about the skill sets
that are necessary, but also about the social impact that
an organization the size of Foxconn will continue to have
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on the student population that we serve.
DR. FORD: Mark?
MR. MONE: I’d say, you know, in terms of, you know,
in higher education, so resources and I mean what keeps
most of us up at night, right? So, and I think that Bryan
spoke to it well. So, there is a mismatch in terms of how
much demand there is for a lot of programs within the
resources to really build those in the time that it takes.
And, so that’s one issue, and I think the second one is
around trust. To build these partnerships, you can’t just
put things together and have it work. There is a great
demand for that and that’s a real motivator for so many
people, but you still have some of the historic
impediments. You know, I’ve been at UWM for 30 years, and
there are a lot of partners, educationally and business-
wise, where there are a lot of established relationships;
to change those, it doesn’t happen overnight. We’re very
fortunate to have a lot of good things in place, but we can
only move at that speed.
And so, building that is something where I think
that’s the challenge because there is that, again, public,
private, two-year, four-year, a lot of history there and a
lot of perceived competition.
But, we have to look at the region much differently
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and I think that is what is so neat about the Alliance
here, where it’s not just Milwaukee versus Racine, versus
Kenosha, versus Waukesha. It’s not Milwaukee versus
Chicago; but, when you stand back and look at this
globally, we’re going to be so much stronger, bringing a
lot of forces to bear on this. We can really benefit, and
I think that’s what this panel has a great shout out to
say, there’s a lot of opportunity for Illinois, just like
when you look at this in a collaborative manner. But,
again it is history and overcoming, you know, some of the
trust issues that can be in place.
MS. TRICK: I think two things probably keep me up at
night, managing expectations is the first one. Not only
what we want to accomplish and what the demands are from an
external prospective, be it our municipalities of Foxconn,
or our other companies, because it’s again to the economic
development, people in the room; we don’t have the luxury
of one prospect or one company that we’re serving. But,
sometimes when there’s so much concentrated effort toward
one company, other companies and municipalities begin to
think that you’ve forgotten them, and that’s not true, but
it’s the perception versus reality situation. So, we
continue to balance that, and I’m very thankful we have a
very engaged staff that’s able to continue to do that work.
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The second thing I think and it’s probably somewhat
related that keeps me up at night, it’s just
communications. Again, we know communications for the
media is one, but the communications internally to our
municipalities to continue to keep our elected and our
chief operating officers apprised of the facts of what is
going on with Foxconn, versus they finishing the story
without factual information. I think that’s the most
challenging, and no matter how frequent the communications
are provided or in what mediums, it’s still never quite
enough, but it’s just constantly talking with people. And,
fortunately, with so many of them, we’ve had multiple year
relationships with them, so, there is that trust factor
that’s already developed, but it’s just trying to maintain
those communications so that people all remain informed at
the same time, and at the level and interest they want to
have.
DR. FORD: Okay. Well, those are great responses and
what I really --
MR. DELAGRAVE: Sure, well, if the question was what
allows me to sleep at night; I could give a lot short
answer. But, what I would say is what the number one most
affordable place to live in the world; it’s Wisconsin and
Racine County. We have rising property values, which are
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the good news; but, the bad news is we have rising property
values. We have transportation issues. We’re seeing great
new healthcare possibilities, but we want to make sure that
that’s managed right, and at the end of the day, after all
this is done, I hope that we are still the most affordable
place to live, or one of the most affordable places to live
in the world.
So, in the short term we’ve got to get a grasp on our
housing. We had a shortage of housing before, and now
that’s just been accelerated. So, just trying to be
proactive, we had a housing summit in Racine County just
recently, and we talked about ways to be able to manage
that issue, so housing worked for us, talent recruitment,
transportation, and all the other things probably that I
don’t have enough time to talk about, all that time to
answer, but those are the things.
DR. FORD: Those are great responses and what I really
appreciate is I can tell you’re really thinking about this
when you wake up, because you’re also processing on how you
might solve it. So, thanks for that.
So, now what we’d like to do is take just a few
minutes to open it up for your questions and Jeremiah and
others have the microphones. So, if you have a question,
please feel free to ask, and then I have one final question
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for them at the end, so questions? Let’s start right here.
Q So, I think what we’re all hearing, you know, on
the workforce training and so forth is scales are so much
more important than the job creation itself and what we’re
training for now is not going to be the job in five years.
So, how do you answer that question, scales versus jobs?
Are you looking at that more holistically, or is that
something that is really a focus, skills versus the jobs?
MR. ALBRECHT: That’s a really great question. It’s
kind of sort of the ying and yang, right? You need both,
you need both for sure. We’re certainly helping students
think about careers and career paths. We’re part of the
National Pathway initiative. We have career pathways,
credit for prior learning, due enrollment for every degree
program we have, but what I’ll suggest in this particular
case is that the short-term embedded credentials are
essential to long-term career success.
So, I’ve just introduced Roger Tadajewski from the
National Coalition of Certification Centers who is with us.
We’re really proud that we have 65 Associate Degrees, 100
one-year diploma programs; and we have 200 industry
certifications.
So, we try to align our industry expectations with the
academic experience the student is going to get, so even if
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you don’t stay with us for a year or two and get a
credential that says you’ve obtained a degree, you will at
least have a series of occupational certifications which
will get you a start in the workforce. And, then we will
give credit for that so that you can continue, whether your
company is going to support you, or whether you’re going to
come back later for a life change. We want to add value
through the entire journey, so short term embedded
certifications are a part of that focus that we have in
ensuring that whatever pathway an adult or young person
takes, they are at least going to have the skills that have
been measured against industry credentials.
DR. FORD: Mark, do you want to add to that?
MR. MONE: I would add that one important component I
think is that we have to also think about lifelong learners
and lifelong learning skills, so things such as social
skills, emotional intelligence, writing, communication,
negotiation, things that really instill with individuals
some of the critical aspects needed. I’m on a number of
different boards, National Presidents, Chancellors of
Universities, and what we’re seeing is that tech companies
in particular are really looking for that skill set. Go to
Silicon Valley, go to Boston, go to Route 128 Austin; and
they find that the shelf life of a lot of technology
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professionals is a year, two, or three, but the ability and
the appetite, if you will, and individuals that can think
broader and in addition, when a lot of companies and their
CEOs asked for a lot of tech talent, they say it’s not just
the tech talent, we need people who can play in the sandbox
together. Can you work on that? And, that really becomes
increasingly important.
So, those I think are critical, and I think that’s
where our partnership with Manpower has been great to look
at that and that’s what they see in terms of the world of
work as something that I think is important. And, tech
colleges I know in Wisconsin have been really good at
building that into their curriculum, as well what you get
with most of your four-year campuses. We need to elevate
that and make it more explicit as a brand, and strengthen
that more.
MS. FORD: Question right here?
Q Yeah, first of all I’m very grateful that you
talked about lifelong learning, because anybody who has
ever heard me talk, they know I talk about that all of the
time. And, what I often do though is I like to take a look
at lifelong learning beginning at a very young age. What
we’ve been focusing our attention on right now is post-
secondary education, right, and training. And, I love what
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you’re doing with the Gateway Technical University.
But you mentioned something before about the need for
diesel mechanics and the need welders. How many fourth
graders are being exposed to welding and diesel mechanics
because that’s where it starts, right?
We usually just ignore that. Back in the old days,
back when I was a kid, back in my day, right, we used to
have vocational education. We were exposed to all of these
things, and then we could make a decision as to which life
path we wanted to take. Well right now that’s kind of,
we’re not doing that anymore, as much as we probably
should, so what are your thoughts on actually exposing
young children in the pre-K through 12, you know, grades
for all the opportunities to go on into the future, because
I agree with you. We don’t know what the jobs are going to
be in 5 years, 10 years, and 15 years from now, what we’re
going to need. We don’t know what kind of skills they’re
going to need.
MR. ALBRECHT: Yeah, I think it’s a great question and
thank you for bringing it up. So, as a result of the
Foxconn initiative, we have as we mentioned had to go
through some really strategic thinking. We now invest in
eight elementary schools. We start our technology programs
in second grade. So, we have eight kid’s labs throughout
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our district. We’ll add more this next year. This year
we’re also adding eight new middle school robotics
programs. We already have 30 robotics programs at the
middle school. We align our high schools, like I mentioned
dual credit, 7,148 high school kids getting dual credit at
no cost, saving parents $2.5 million in tuition and fees.
So, we provide free teacher professional development, at
any grade level, preschool, first grade, third grade,
fourth grade; we do that all summer long. We have a mobile
training unit that we will take out to a school, bring the
equipment out so they don’t have to worry about making the
investments.
We co-run three high schools right now, including the
R.E.A.L School, R.E.A.L. High School in Racine, the
Lakeview Academy in Kenosha, and the Burlington Academy in
another community that we serve.
We support the alternative high school on our campus
for a direct dual enrollment. At the college, there’s a
list of things that we’re doing, but it’s still not enough,
right? And, it’s still parent awareness and parent
orientation that’s needed. We spent a lot of time giving
tours and open houses, and helping students and parents at
all grade levels understand that there is a resource in
their community, and it’s been there for a very long time,
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but it’s changed dramatically over the last 10 years or so,
and we welcome them to our campuses.
DR. FORD: Mark?
MR. MONE: I’d give an example, and I want to
reinforce what Bryan said. We can’t do enough of this. We
have a partnership in Milwaukee, called MQ. It’s MPSMATC,
Milwaukee at our technology college and UWM, the three Ms,
working in an exponential manner with 140,000 kids at the
K-12 level, and then at the two-year technical college at
UWM. And, we have a number of different things in place to
five different goals groups that have been working for the
last four years, involving parents getting kids to come to
highs schools, and, you know, from younger ages, get them
exposed to the types of things that they are going to be
learning later.
We have through these programs, students have come in
and they spent time at our school, Freshwater Science
Elementary School, and we’ve got this graduate school, and
we’ll be having undergraduate programs; but we want to have
coloring books, because when they spend time on a research
vessel, they don’t want to leave that boat. They want to
really, you know, get excited about the career
possibilities. But, having students from those schools
come on the college campuses and spend time with employers,
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it does a couple of things, it exposes them to life in
college, and, you know, earlier we had a keynote today that
talked about the equity lens, and that’s really what
undergirds a lot of the work that we’re doing
collaboratively to really try to keep opportunities
available and open. And, we because of the talent needs,
we really have to look at every possible student for the
future. So, those are the types of things that we want to
reinforce and get as much exposure as we can at early ages.
MR. DELAGRAVE: I would just add one thing. The
county is only as good as its non-profits, its faith-based
entities, and our school districts. We partner with Racine
County’s Higher Expectations. We take a focus as we’ve
piloted a program for 4-K kindergarten. We want to make
sure third grade reading and eighth grade out through
attainment, ninth graders have minimum credits, and
everybody has a plan when they graduate from high school
for a sustainable job, or for a higher educational
opportunity and it’s important for us to do that.
We’ve helped shape our high school academies in our
larger school district for the last few years, so we take a
great interest in making sure that exposure to technical
careers is a priority.
MS. TRICK: I’m going to have to add to this one too
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because of the importance of our reaching and developing
partnerships with K-12 is more important than ever, just as
we’re reaching out and having partnerships with business
and industry and so, thank you for your question.
And, in southeast Wisconsin, we are fortunate that
three of our communities, actually four have the strive
together relationships; Higher Expectations in Racine
County, Building our Future in Kenosha County, and
Milwaukee Succeeds in Milwaukee County. And, so those
efforts have really helped to align business and industry,
government, K-12, and higher education, so really great
work is happening in that space.
MS. FORD: So, we’re going to go to, we have one way
back here and then I’ll get yours and then we’ll close up.
I have one more question for them I hope.
Q So, this is a regional summit. I want to ask a
question about the Regional Education Alliance. Have you
reached out to educational partners in let’s say northeast,
Illinois and if you have, how has that been going? If you
have not, what’s the plan to do so?
MS. FORD: Mark?
MR. MONE: Yeah, I’ll start with that and I know Bryan
will have some thoughts as well. We’ve had our seventh
meeting together, so we’re getting our legs under us, and
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we want to figure out, first of all, our own goal groups,
figure out how we’re going to operationalize and deliver on
the expectations that we have internally. So, the thinking
in the first year is let’s get this figured out.
We do have linkages. Bryan gave an example of some
with Illinois. We have at least three other regional
groups in Wisconsin right now that are at different levels
of formation of their regional higher education groups with
business meeting those needs, and we’ve basically had
discussions with them, and said let’s figure this out first
ourselves and then bring that together. And, then the next
linkage that makes sense would be with northeastern
Illinois, and to look at both higher education and the
business opportunities that are there. So, we’re not quite
ready for prime time. Bryan, I don’t if you agree or
Jenny?
MR. ALBRECHT: I think you’re absolutely right. I
mean even in Wisconsin, we’re still trying to not take the
ball out of the end zone on the last play of the game, drop
a knee, and then let Aaron Rogers win the game for us. So,
first we got to get our act together, internally. So,
we’re working very closely with all the colleges and
universities, but independently, there are relationships
with many organizations outside of our regions. So, I
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mentioned that, you know, the College of Lake County, we
have great reciprocity and articulation, Harper College, we
have great reciprocity, City Schools of Chicago; we have
great partnerships there. So, we have individual elements
of that happening, but not collectable as a region yet, but
I’m sure that that will be part of our long-term growth
strategy.
MS. TRICK: And, I would just say that the Alliance is
the platform to help make that happen because higher
education is well represented from northwest Indiana, as
well as Illinois, and southwest Wisconsin, so, yes.
MS. FORD: One more question.
Q Yeah, just to Bryan’s point, and to your point on
reaching out to the vocational programs; and, one of the
things that the National Coalition of Certification Centers
is doing is that across the country this same issue resides
across the country. I was in Houston last week, and down
in North Carolina, and they’re having the same
conversations, but what they’re doing is reaching out and
engaging with middle school math teachers. I know last
week we had some teachers, Bryan, from Wisconsin that were
in industry certifications, just as Bryan talked about
getting those industry credentials to students, we’re also
delivering those to middle school math teachers and science
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teachers. So, we have a math teacher that’s going through
precision measurement with Starrett Corporation, sitting
right next to an instructor from diesel or mechatronics,
and getting those relationships, because, why that
important to us is that everybody and anybody that you’re
going to hire, we talked about the next 15 years, they’re
already in the pipeline. So, they are in elementary
school. They’re coming through, so, how do we engage them
and most importantly, how do we engage those math teachers,
science teachers about all the technology, as well on the
other side in working with the universities that are
producing those math teachers and those science teachers
that are coming into the system? So, how do we get that?
MR. ALBRECHT: So, we’re engaged with a little over
400 high school programs, already. We’ve got many more
coming. We run industry certifications about every six
weeks now across the country. So, we can’t get enough, as
the gentleman was saying. We’ve got to keep this going,
because the technology and the needs are there, so that’s
one of the things that we’re working on to help drive that
process. Thank you.
DR. FORD: Okay. So, I’m going to ask a closing
question for you all, and so you’ve talked a lot about the
importance of transformation, about perseverance,
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partnership, collaborations, how institutions of higher
learning are serving as conveners and catalysts and the
importance of life-long learning. And, so what advice
would you give to the folks in our audience today about how
really to either start or sustain these collaborations in
these changing economic development times? So, what’s your
best advice for our partners and colleagues here? Mark,
you go first.
MR. MONE: Minds have changed, one word, two words.
Minds have changed. What I mean by that is I talked about
this a little bit earlier, but let me just develop it a
little bit more. First, it’s about leadership, setting a
direction that we’ve got to look at this very differently
than we have historically. What’s worked in the past is
not going to solve the 100,000 plus talent shortage that
we’re going to see in southeastern Wisconsin. It’s also
not going to address the larger, mega region types of
issues from a leadership prospective. So, that’s one
thing, but then we have to drill down and just talk about
both higher education and business.
How does business hire? What do we look for in terms
of job descriptions, you know, the skill sets that are
required and there needs to be a lot more flexibility. We
need to look at things very creatively, quite a bit
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differently, as we work with employers, and we see some
that are very innovative, moving much quicker.
On the other hand, how colleges, how universities, and
the accrediting bodies in higher education; we’re held
hostage a lot of times. I hope nobody from, certainly some
of the accrediting bodies are here, but this couldn’t be
the headline; but that is something that really does
regulate us to very restrictive ways.
And, so as we work closer with industry and how
industry leaders help accrediting bodies, that’s exactly I
think what’s really needed to move us quicker, so that we
can get the talent to industry where it’s needed. So, it’s
a different way of thinking about this. So, it’s that
mindset change of looking at this very differently and
getting exposure to different ways of approaching issues.
DR. FORD: Great.
MR. ALBRECHT: I’d probably say internal capacity,
make sure that your organization is ready for a rapid pace
change like this. I mentioned we serve 160 corporate
partnerships. That division has done that work for a long
time. To add this size of expectation on them is a lot to
lift, so making sure the entire organization is prepared
and engaged and strengthening those internal
communications.
95
MS. TRICK: I guess I would say build your team, you
know, it’s the folks around us on the stage that are my
team, you know. I need to do a lot more than I did a year
and a half or so ago; and yet, my capacity as an
individual, as an organization has not changed. So, we
have to find those efficiencies, and sometimes those
efficiencies can be realized by expanding your own network
without expanding your immediate team on staff.
So, I would say build your team and it really begins
with relationship building, because I can make a call to
Mark, but if I hadn’t have had this working relationship
with him, he might screen me out. So, it’s having that
relationship --
MR. MONE: Never, never.
MS. TRICK: -- to build your team and beyond your
immediate circle, Mark’s team is just, it’s bigger; his
network is bigger, so my team grows by having that
connection to Mark.
MR. DELAGRAVE: I would just say when Foxconn came
into my vernacular in February of 2017, and one thing that
I am really, really proud of is that, and you can’t often
say this, is the public sector and Racine County Economical
Development Corporation has been ahead of the private
sector throughout this process, and when can you really
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ever say that. And, the reason why that is because we’ve
developed the partnerships, whether it’s with other
municipalities, the state government has been a great
partner in this, and then obviously our business community;
ahead of the private sector.
So, what I would say is first of all, participatory
leadership, allowing for thought processes, allowing for
entities and individuals to offer solutions, and make them
feel part of the solution and feel part of how the
transformation is working. And, then just continue to
build on that on a day-to-day basis. It’s something we’re
proud of in Racine County and, like I said, we’re lucky for
this transformational opportunity.
MS. O’BRIEN: That’s great, well please join in giving
a big round of applause to my partners and the panelists.
David if you could wave your hand; David leads a group
called the Urban Campus, and all of the Chicago-based
higher education entities are a part of Urban Campus. They
recently completed a study and there is a breakout meeting
following the last panel today.
The Summit concludes at 2:30, and then about 2:45
there will be this meeting, where David can share some of
the information from this report that is just being
released to talk about how we may want to scale the
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information that was obtained in the Chicago area to the
mega region, and then of course, building off of what we’re
hearing in Wisconsin, coming back.
I appreciate that Chancellor Ford did know that the
Alliance is the right platform to bring these groups and
decision makers together, and we are very proud of the very
strong support that we have from Indiana University, and
from Purdue, and the University of Illinois, both Chicago
and Urbana, and the University of Wisconsin, and just so
many, so many schools. In fact, I think we have some of
the Chancellors that are a part of the Alliance Board. If
you could please stand, here in the room, Chancellor Lowe,
Chancellor Keon, Chancellor Ford, yes. So, again if you
have questions in regard to the work that the Alliance is
doing in that space, please be sure to see our board
members, and if your schedule allows please attend this
breakout session with David Baker.
So, next, I’m actually going to be introducing the
Chairman of the Alliance, who will introduce the next
keynote speaker. This is an important conversation because
we’re all aware that our area is a major hub of
manufacturing in the United States. I wanted to briefly
though, again, give my profound thanks to Paul Jones, and
again, for those of you that are aware of the history of
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the Alliance, you’ll know that when the Alliance was first
formed we searched for leadership from the private sector
and immediately Paul Jones stepped up to the plate, as one
of the real influencers in the Milwaukee area with
relationships in the business community, and strong ties
with the public sector.
Paul has been devoted to this effort. We wouldn’t be
here today really without Paul and what he has brought to
the table. So, just in the matter of last few weeks, he’s
been in China, he’s been in Mexico City; he’s literally
still as a retired person as busy as any retired business
person can possibly be, and I am so grateful Paul for all
that you do for this effort. And, I know it’s your real
understanding of how important the mission of the Alliance
is and, you know, your continued support and the time that
you give to this. So, can I ask everyone a round of
applause for Paul Jones?
PAUL JONES: I appreciate that Kelly, but for everyone
here I think she knows I call her my boss for a good
reason. So, and I see Greg, nodding his head.
We are going to change gears just a little bit;
although, maybe not as much as I originally thought because
there’s a lot going on in global trade, trade policies; you
hear the word tarriff a lot more lately, and there’s just a
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lot going on there around the world, and we’re very, very
lucky to have the CEO of Rexnord Corporation. That’s a
company that does business around the world, has
manufacturing, pretty much around the world, they’re
involved in a lot of different things, and I think it will
be interesting to hear what our next speaker has to say.
The reason I said we’re not maybe changing gears quite
as much, because one of the things that Rexnord does is one
of their divisions is Zurn, and if you know Zurn, they make
flush valves for porcelain devices. And, Dr. Woo mentioned
the phrase, taking a leak this morning, so maybe we’re a
little bit more connected there than we had been before.
So, Todd, we’re going to have to figure out how to put some
sort of a medical recording device into our porcelain
devices as we go forward.
With that being said, and hopefully forgotten, it’s
now my pleasure to introduce Todd Adams, the Chief
Executive Officer of Rexnord. He’s been in that role now
for nine years and is just doing a terrific job, running a
global enterprise. Todd?
TODD ADAMS: Good morning. There are a couple of
phrases that I wasn’t expecting to hear this morning, and I
must have missed an interesting session. You know, Paul
and Kelly asked me to come and talk at this thing, and I
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said, well, I’m not sure I can add any value. I mean I
looked at the agenda, and I saw just the terrific panel,
and obviously Foxconn being sort of the name brand and then
sort of the hottest thing in town or in the region. And,
Kelly said, well, just think about it. And, I said, well,
you know, the thing that I can do is offer a perspective
for a company who’s been in the region for a long period of
time, and facing many of the same things that Foxconn is
facing here we face all over the world every day and have
for a very long time. And, so, you know, this is sort of
an alternate prospective of I think some of the things
where Foxconn is sort of bringing to the table and
challenging the region to do, but in reverse. And so,
we’re not unique, but I thought I’d take you through just
some of the realities of what it means to operate a global
business and some of the complexities that we see and how
we work through them.
You know, just to give you a two second Rexnord
commercial. Rexnord today is about, we’ll be over $2
billion this year, 67,000 employees globally, 1,800 people
in the region, so just about 25 percent, or a little bit
more than 25 percent of our employees in the world are in
the region. We do business in over 75 countries, and we’ve
been around for 127 years. We operate what you call a
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diversified industrial. So, we have a bunch of different
businesses that do different things; but there are a lot of
common threads to them. We solve customer’s problems. We
have a business that’s a process in motion control, which
is how the business was founded, and basically making
mechanical components that go into complex systems that
help customers move and produce goods.
As Paul mentioned, we thought we needed to diversify
our business a little bit because of where the world’s
water needs work, and now water conservation is becoming
increasingly important. And, 10 years ago we diversified
into a water management business called Zurn; so
professionally made home products.
The thing that we do really well is we figure how to
create a sustainable competitive advantage and exploit it.
So, you don’t stay in business for 127 years without doing
something right and being the best in the world at it. We
think we do that. And, we do that through something we
call a Rexnord business system, which is sort of a
disciplined operating system. It’s not a computer system.
It’s the language we use internally. It’s how we talk.
It’s everything from how we do strategic planning, to how
we develop people, to ultimately how do we make money for
our shareholders?
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So, a small business based in Milwaukee its entire
life, but it’s taken on many forms. The company has been
bought and sold in public and private and most recently we
went public in 2012, and so this is a little bit of a case
study/story around a regional business that’s been able to
thrive for a long period of time by adapting. And, that’s
really the emphasis I think that I want to sort of give you
some perspective on.
If you read this and let it soak in for a minute, it
doesn’t sound like it’s possible, right? But, it is. And,
I think rather than take you through a strange example that
you wouldn’t be able to recognize, I think it is something
that everyone knows. In 1985, if you wanted to rent a
movie, where did you go; Blockbuster, Blockbuster. So,
Blockbuster went public in 1997, had a terrific run, put
stores everywhere, and they dominated the market. Along
came a little company called Netflix doing very similar
things at the same time. If you remember, they were the
rental guys, right? They saved you a trip, it’s actually
two trips; and, you didn’t get hit with the invariable late
fee, because I was always late, which was a great business
model, but tough. What were they both doing? They were
delivering entertainment to consumers, right, but in very
different ways. Before you had to go to Blockbuster, pick
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out a movie, rent it, bring it home, watch it, bring it
back, hopefully, on time. With Netflix, you just pick out
what you wanted, they sent it to you, and you sent it back
when you were done. That was it.
What happened over the next ten years is an incredible
story, right? Consumers wanted convenience, and Netflix
figured out the easiest way to ship media to people was the
United States Postal Service, right? It saved two trips,
it was lower cost for the consumer, greater convenience,
and it started to build a business, and in 2006, Netflix
started to get into digital media, right? At the time,
2006, Blockbuster was number 366 on the Fortune 500. By
2011, they were out of business. Netflix shipped $13
billion of revenue last year, a recorded $13 billion of
revenue last year, and they shipped to and they have 136
million subscribers. So, in a span of 20 years, what you
saw is a market of consumer technology all coming together
to create a massive change and change what was before an
iconic American company.
So, I only bring that up because this happens every
day across every sector. It’s more obvious when it’s a
consumer-oriented sort of business. You see it, it’s more
visible, but this is the kind of change that’s happening
and only accelerating, not just in the region, but for
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companies like ours that many of you support and help.
Here’s, you know, sort of the way I think; a
perspective of the world. If you look at the last 100 plus
years, on the left, these are all the external things that
have happened to companies, right? You’ve dealt with the
industrial revolution, the great depression, globalization,
the great recession; all these things, political market
reforms, party changes, political views change, right?
And, here we are today, with all those same things, but
faced with a greater degree of globalization. Automation
is becoming increasingly important to survive. As Paul
mentioned trade policy and tariff, right, a brand new thing
that’s back on the radar creating huge disruption right
now. I understand why it’s being done, but I think what
you’re faced with is corporate America having generally
forgotten how to deal with inflation, and what’s happening
is there are massive amounts of inflation flowing through
the various supply chains because of that, and obviously
the fight for talent.
What you have here is you have to have a real
sustainable competitive advantage to compete, survive and
thrive, or else you’re going to go away. Like every day,
every week, every year, there’s going to be things like
this rippling through the world. And, if you’re a company
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that isn’t nimble, isn’t willing to adapt, isn’t flexible;
you’re going to get tripped up by all this. You’re seeing
it now, I mean you’re seeing these tariffs have massive
adverse impact on a lot of people. And, in part it’s
because they haven’t taken the time to step back, think
through what their real competitive advantage is, invest in
it, and also develop a supply chain.
I walked in on the last panel, and I think the first
18 words I heard were supply chain, which is incredibly
important. But, it’s also important to think about it how
to export basis. At Rexnord, there was no way for us to
solely survive serving the United States and the North
American market, and I think that’s true for almost every
company in the region. If you look at where the world has
grown over time, you have to be there, you have to figure
out how to tap into that. And, it’s also an area that’s
going to grow for a greater period of time. If you look at
Europe, if you look at the United States, those are fully
developed economies, the populations are not growing. You
have to be where the populations are growing. It is very
difficult to do it on your own. And, I think the Foxconn
example is perfect, right? They have an incredible amount
of resources, and they want to address the North American
market, but they need help. The same is true for many more
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companies with far fewer resources, who have frankly even a
greater need to continue to survive against global
competition.
So, it’s really an interesting way to think about it,
which is all these things are going to continue to happen,
they will happen at a greater pace, but helping businesses
in the region get out and expand while leveraging the base
they have here, I think is the biggest opportunity that I
see for the region. You know, this is a word problem,
right? If you Google supply chain you’ll see all these
different things, and in the middle of it what you’ll see
is flexibility. And, the reason Foxconn wants to be here
is to be close to their customers. They want to collapse
their lead times. They want to collaborate with people who
can bring the best products to market for the customers in
this market.
If you look at all the other words around it, things
like capacity, core competency, trade policy, low cost,
lead times, capital expenditures; these are all things that
go into the decision and it is a incredibly, complex view,
you know, we do business in 75 countries. In the last 10
years, we’ve consolidated down from probably 10,000
suppliers globally to only 5,000. Why; because the more
you manage a complex supply chain, the more difficult it
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is, the more costly it is, and, so, I think where I see the
biggest need in the region, and where I see the biggest gap
in terms of skill set and capability; we talked about
developing the supply chain in the region for Foxconn. I
think the biggest gap that I see is the talent and
capability to help businesses in the region go out and find
new markets and new customers.
The reality is it is customer and market driven,
right? If you think about some of these tariffs and trade
policies, it would be wonderful if you could rely on one
market and one supply chain to fulfill your customer’s
needs and have a great business. But I’m not sure that’s
the reality of the world today. There’s a great need to
find new markets and new customers, and in order to do that
and do it organically, as I said earlier, is just a very
difficult thing. So, you know, we rely heavily on a supply
chain. We’ve chosen to be outstanding in a few things and
work with partners and many, many others, and find just a
few partners, not too many, and help them to develop and
grow so that they can be part of our business and enjoy the
growth too.
That being said, you know, we also feel like the
region is just a terrific place to run a manufacturing
business. We started in 1891 making leather timing belts;
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yes, leather timing belts, and over time, the company has
grown and diversified into a lot of different industries.
We’ve pared back and really started to focus on processing
motion control. So, this is the movement of goods, through
revenue-earning process and water management. And, if you
look on I guess my left, you’d see we have an aerospace
business in Downers Grove. We just commissioned a $40
million new facility, state of the art manufacturing
facility, digital advanced manufacturing to sort of support
what we see as terrific growth. That being said, we can’t
support Airbus from Downers Grove, right? We’ve got a
sister facility in the UK because lead times, access to
people, engineers communicating real time back and forth.
So, it’s a combination, right? If we want to grow with
Airbus, we can’t solely do it based on the region. We have
to have partners. We have to have people out of the region
to be successful to help the companies in the region grow.
The same is true with Zurn. We acquired Zurn 10 years
ago and it was based in Erie, Pennsylvania, which at one
point was also a terrific place to manufacture. But, over
time the lack of investment, the lack of innovation, the
talent receded, and it became very difficult. So, we chose
to relocate the business to Milwaukee. We’ve got a 150
people that are in Milwaukee now that weren’t 10 years ago
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because of a lack of investment that was done in the region
and the lack of talent. And, right now as I said earlier,
over a quarter of our work force is in the region. We
don’t see that declining any, we see it growing modestly.
But, what we do see is growth of the business being
supported by leveraging external supply chains, both in the
United States, and all over the world.
You know, in the earlier panel they questioned like
what would you do differently, or what do you need help
with? And, you know, I’ll take all the help we can get,
but I’m not sure that the intent of the question was for
me. Supply chain management; everything from understanding
what it is to how to leverage it better, how to develop it,
how to develop people that understand it so that you can
focus on your core competencies. I mean if you think about
our business, some of the mechanical devices we were making
are made out of steel and forgings. Are we really best
suited to be vertically integrated, and run a foundry and
do all of that, or are we better off leveraging a supply
chain that does that? Somebody can be the best in the
world, and who does have better lead times, better quality,
and lower cost.
A quick story; it was 2004 and I had just been to
India, and my dad works with a small civil engineering firm
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in northern Illinois here, and he’s been there for 55
years. And, he was grousing about how difficult it was to
get new business; alright, he works with an eight-man shop,
pretty small. So, I went to India, and I had the fortunate
opportunity to tour the University of Mumbai. And, I
called him, I said, dad, have you ever thought about, you
know, hiring some engineers or at least interns from the
University of Mumbai so that you could work around the
clock? And, this little eight-man shop forged a
relationship with a university in India, and is now able to
do engineering around the clock. They’ve got lead times
inside of anybody else, and they’ve grown three-fold since
2004, and it was only because he’s leveraging a supply
chain, right? He’s leveraging outside resources that he
didn’t have before to do something as good or better than
he can, and as a result of that the business has grown
three-fold in the region.
So, that’s just a small, small example. Those
examples are multiplied by the thousands if you look at all
the companies that are represented in the region. The
second thing that I think as a region we need to do in this
sort of hotbed of manufacturing for the world, right? I
don’t know what the percentage is, but I was surprised when
you told me the amount of manufacturers in business that
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are in the region relative to anywhere else in the world,
and I think that the reality is the world is changing. If
you think about that Netflix example of how you buy
groceries today, it’s going to be different 5 years and 10
years than it is today.
Much is true with our products, right? Our products
we were usually selling to an engineer or a maintenance
technician. If you put this particular Rexnord product in,
it’s going to run forever. You’re going to eliminate
maintenance intervals, and it’s going to be fine. And, in
order to buy it, here’s a book six inches thick covered in
grease and it’s on page 475 in like two font. Try doing
that today. So, what we did was five years ago, we
launched what we call a digital productivity initiative
which was really two-fold, which was to take all the
information that we have, whether it’s drawings, whether
it’s lead times, whether it’s application engineering, and
converted it to digital form, right? Before you had to
pick up the phone, talk to somebody, we converted that to a
digital platform that anyone can access, 24-hours a day,
anywhere in the world.
The second thing we did is we took all of our products
and we’re making them smart. You might have heard the IOT,
internet of things discussion. I heard that a couple of
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times. And, so our products as an example and I think many
products are, typically, the failure mode in an
application, right? If a conveyor breaks that is bottling
beer, right, or moving grain, the cost of downtime is
enormous. But, over 127 years we figured out that these
are the types of conditions, whether it’s vibration,
whether its heat, that causes a failure. So, as the cost
of technology and the cost of sensors have come down, we’ve
embedded sensors into all of our products. So, our
customers can avoid that. The reason we’re doing it is
because you have to, right? In the next 5 or 10 years, and
I’m sure in the Foxconn factory, they’re not going to have
a guy walking around the conveyors that are moving product
all over and touching it to see if it’s warm, right? They
want to be told it’s warm, they want to be told when it’s
going to fail, and they also want to have a maintenance
tech before it happens, because the reliability and uptime
is so important in these continuous operating environments.
And, so the reality is this is going to happen more
and more, right? Everything you need to do in your life or
know happens on the net, and I think increasingly that’s
what’s going to happen in the industrial world. The
consumer world is ahead of the manufacturing world by 10
years, easily, but the curve is coming quick. And, so we
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made the decision to do that, and we’re seeing just
incredible growth because it’s saving our customers money.
And, at the end of the day that’s sort of what, you know,
these private manufacturers are here to do. It’s how to
make your customers more money.
And, then finally I think the prior panel there did a
terrific job of articulating the need for talent, and the
need for talent at all ages. You know, the region has got
so much to offer in Wisconsin in particular, you know,
sometimes is a tough place to attract people. Once they’re
there they never want to leave, because of the Packers and
the Brewers and all that kind of stuff. Is that a sore --
is that a sore subject? It’s a regional crowd, I’m sorry.
But continuing to grow in the region for us, it’s going to
be limited to a degree by the supply of new talent, right?
If you think about the Foxconn discussion this morning,
they’re going to absorb 300 percent of the available
workforce. Every other company in the region is going to
have to figure out how to get the same level of talent at
the same time. And, so I think early career programs are
incredibly important, get to the high schools, get to the
universities. We have 60 to 65 interns, every summer
hiring 10 to 12 full-time, and, you know, it’s incredible
what they can do. The amount of information that they are
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able to absorb and use quickly relative to someone my age
is just incredible. So, you give them real problems and
they start solving them right away.
So, hopefully, this has been a little bit helpful.
I’m far from an expert on regional economic development,
but I think just a little bit of a case study on a business
that’s been in the region for a long period of time, and
what we are doing and what we see as the big opportunities,
gives you a little bit of insight. I have one ask, you
know, what this region could do, could be very similar to
what other countries and regions do. If you go to Taixing,
China it’s loaded with German flags, and the reason is a
regional economic development group in southern Germany
decided to help these German manufacturers get to China.
And, what happened is they all got there, and they’re all
thriving and growing as a result of it because Germany is a
relatively small market, whereas China is a huge market.
And, so if the region could figure out how to create some
resources to help companies in the region get to other
places in the world, it just makes the companies in the
regions stronger and more sustainable over time. Thanks a
lot.
MR. JONES: I was struck by your interesting point
that in your view the number one priority for our region in
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economic development is to go more global, that’s what I’m
hearing.
MR. ADAMS: It’s an opinion.
MR. JONES: Sorry?
MR. ADAMS: It’s an opinion.
MR. JONES: It’s an opinion, of course.
MR. ADAMS: Yes, yes.
MR. JONES: One with which I agree, in fact, but I
wanted to see what specific advice you would have or
recommendations to this audience which is higher education,
economic development, public sector in the region, how
could they better help companies in their region go global?
What specific recommendations do you have for them to do a
better job there?
MR. ADAMS: You know, it’s a tough question, you know,
and I think it starts with one finding companies that have
a desire to do that. There are many companies in the
region that are thriving and doing perfectly well. So, I
think you’ve got to find companies that have a desire to
grow their business and perhaps expand their markets.
Secondly, I think it starts with probably the universities,
to be honest. I mean I think when you look at the resource
capability we have from a university’s perspective in the
region, it’s powerful. And, so companies are typically
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busy serving their current markets and their current
customers. They have an idea that they need to be
someplace, but they’re not quite sure.
I think leveraging the universities to help them
understand where the market opportunities could be, it’s a
great opportunity for students to get engaged, understand a
business and the market and how a supply chain could help
this particular customer, and also how to teach them to be
a little bit more competitive in that region, right? Price
points are different, lead times are different, competitors
are different. So, leveraging the resources at the
universities, working with the companies to find where
opportunities could be would be terrific. And, that would
be the place that I think would be a logical start.
Q Mr. Adams, this is Cindy Tomei from the Illinois
Manufacturers Association and if I remember correctly you
just, and I think you mentioned an expansion in the Downers
Grove area.
MR. ADAMS: That’s right.
Q What are some of the reasons that swayed the
investment to stay in Illinois?
MR. ADAMS: Well, you know, first of all we’ve been
there for 60 plus years. Aerospace Manufacturing requires
a degree of skill that’s not easily moved, and so, you
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know, there was competition but, you know, what weighed the
decision for us was the ability to retain the existing
workforce and build on it in a location where we’ve been,
you know, very successful. You know, we didn’t ask for any
money from the state. We got a little bit of help from
Downers Grove. We felt it was the right thing to do to
stay competitive, right? As part of this factory we’ve
completely automated most of the processes. We’ve kept all
of the same level of employment because we’ve reserved it
for growth. And so, for us it was really about retaining
this terrific workforce that we’ve cultivated and been able
to attract over time.
MR. JONES: Could you coach us a bit on getting smart
about tariffs? I recently had a breakfast with a CEO who
said in his 40 years he had never encountered a tariff cost
in his supply chain, and it manifested itself. Larry
Cudlow is coming to Chicago on Friday to talk about the
President’s trade policy that China is going to be
discussing, I hope, with the U.S. in the G20 meeting at the
end of November, and there’s 144 actions that they’re
supposed to take, they’re going to do 80 of them,
apparently. They may think about the second traunch, they
won’t touch the final 20.
So, how does an American business cope with that
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changing nature? You did say it’s necessary I think in
earlier remarks that, you know, tariffs are going to be
something we have to live with.
MR. ADAMS: Well, I don’t know, I don’t see these
being long term. I think the basis of it was to sort of
create a dynamic where there was a dialog on potential
trade reform. I think that’s probably a good thing. But,
the manner in which we’re doing it, you know, is sort of
open to interpretation. Well, first of all, it’s
incredibly complex, and I would tell you that, you know,
whether it’s Section 232 Tariffs or Section 201 Tariffs,
list one, two and three; it’s changing every day. The
codes that are subject to tariffs are changing every day.
The ability to go lobby exemptions has been frankly more
accommodating that I would have guessed meaning that if
there is a lack of capacity in the U.S. for a given
component or a given commodity, you know, there are some
exemptions.
But, the more interesting thing is the inflation of
the cost increase has started coming from the domestic
supply base faster. The things that are being most
impacted by tariffs, the capacity for most of that, whether
it be a semi-conductor, or steel, or capacity, left the
United States a long time ago. And, so the amount of
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capacity that is left couldn’t possibly serve the domestic
market, couldn’t possibly serve it. So, you had this
instance where the demand went through the roof in the
United States because of trying to modify your supply chain
to source domestically, but the capacity just couldn’t
respond, and so what happened was prices went up
dramatically. And, now what you’re seeing are companies
that are working to find alternate suppliers, not just in
the United States, but elsewhere, route materials
differently in the United States and ask for exemptions.
But, you know, to say it’s a full-time job is probably an
understatement. I mean, you know, we’ve treated it a bit
like a crisis because it is. I mean, you know, as a public
company to simply sit there and say, okay, our costs are
going up 25 percent tomorrow, sorry shareholders, it
doesn’t work. And, I think what you’re seeing is the
reaction to that because as you said, you know, this is a
sort of unprecedented territory, right, both with the
tariffs, the level of the tariffs, and the amount of
inflation that’s coming along with it.
So, be nimble, adapt, it will probably change, so
don’t over think it. I mean I think that’s part of the
reason why you’re not seeing capacity flowing into the
United States, right, because if this changes over time,
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the result of the negotiation with China, you know, then
there will be too much capacity in the United States for
some of these things, so, it’s really a wait and see, but
it’s a very difficult period for the United States
manufacturing companies having to deal with this sort of,
you know, uncertainty, and that’s really what I would call
it.
Q One last question? Thank you.
MR. JONES: Thank you.
MS. O’BRIEN: I had the pleasure to introduce our
Chairman, Paul Jones and next, I’m going to introduce our
Vice-Chairman, Greg Hummel. And like Paul, Greg has been
involved really from the very, very beginning. In fact,
when the OECD report was published, we sat in the
conference room of what was then Bryan Cave and talked
about the need to create the Alliance for Regional
Development. So, Greg is one of the founders of the
Alliance and Shelaura and I are very fortunate to office
out of what is now Bryan Cave Leighton Paisner. They
recently merged with a London firm and have offices all
over the world.
But, I can say for the six years that I have had the
good fortune to office with Greg and there’s a great team,
it’s a wonderful place, and we have so much support. And,
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Greg, again, we really appreciate the opportunity to go
work every day at Bryan Cave Leighton Paisner and to work
so closely with you. So, thank you for all of your support
and if we could get a round of applause please for Greg
Hummel.
GREG HUMMEL: Thank you, Kelly. We’ve been focused on
the midwest and certainly Wisconsin and the rest of the
region. This organization started with a territorial
review, actually the first one that was conducted by the
OECD in the United States, and we’re privileged to have
Karen Maguire from the OECD who flew in yesterday to
address us on the subject of global trends, local actions,
maintaining a competitive mega region.
Karen is no stranger to Chicago. She took her degree
from the University of Chicago, went on to Harvard’s
Kennedy School, then had a stint as an investment banker at
UBS, also spent time with the Urban Institute in
Washington. And, then she pivoted into really important
work at the OECD. As an author she’s written books and
articles on regions and innovation policy, collaborating
across borders, competitive regional clusters, and national
policy approaches.
Today she’s a senior counselor in OECD’s Center for
Entrepreneurship. And, so without further adieu Karen
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welcome to our podium.
KAREN MAGUIRE: Thank you very much for welcoming me
here today and thanks again to the Alliance for Regional
Development and the Federal Reserve Bank of Chicago for
putting together such a great event and for allowing us to
participate with you here today. I just wanted to share a
couple of reflections on some global trends, particularly
for large regions that have a strong metropolitan poll
within them, and a little bit about some considerations
regarding its global positioning, in terms of rankings in
other OECD metro regions and some ideas about the future
work to feed into some of the next discussions we’ll be
having on skills.
You know, the other thing is that being here today is
an opportunity to take back some very exciting examples
that we can share in our OECD work on what’s happening here
in this mega region to help others. So, what is the OECD?
So, the Organization for Economic Cooperation and
Development works with its 36 member countries that are in
green up here, and also engages with 120 overall. And, its
origins were in the Marshall Fund in the reconstruction of
Europe, and today it’s really a global hub for thinking
about different policies for internationally comparable
statistics; if you’ve ever heard somebody say, oh, well we,
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you know, the U.S. X percent of its GDP on healthcare
versus France. It’s probably coming from the OECD. We
provide a lot of evidence-based analysis and we promote
international standards. And, this goes into a wide range
of topics, and so if you’re interested in global trade, you
know, last month’s interim economic outlook, you can look
up and get some of the latest there on education policies
and all sorts of policies.
So, the things that we do with this Center for
Entrepreneurship in regions and cities is really to try and
help provide data internationally comparable data, at the
scale of regions. We also do certain types of reviews.
Now, we’ve done dozens and dozens of what we call these
territorial reviews at different scales national, regional,
some smaller metropolitan scales, and, we also have
networks of practice that we try to use as ways of sharing
knowledge. But the study that was mentioned and I would
not presume to resume it all, it’s 314 pages, but the idea
being that, you know, we heard about these four areas that
were a topic on the study on managing skills, innovation,
partnership, transport logistics and green growth, you
know, we heard about that this morning from the President.
Maybe just to highlight that a lot of what the study
was trying to do was say that there’s already so much here
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that the issue is really building, connecting, and
marketing what is there. And, that you really have a
chance because you’re lucky, I should say, I should say
lucky, and I’m thinking of French, that’s chanceux in
French. But, you’re lucky because there is so much here
and so many other regions don’t have that chance. And, so
it’s really exciting to see all the people that are here
today that are really dedicated to making this happen day
in and day out.
You know, one thing that Kelly was asking about was on
some of the other examples internationally and, you know,
we have a lot of these business and civic leadership
organizations internationally. Here’s, you know, just as a
reminder that there are potentially lots of things that the
Alliance and other actors can do and here’s some of the
actions here. We heard about housing as being an issue
earlier on in a couple of different presentations. Well,
you know, London first is also first in housing there, you
know, because it’s very expensive.
So, you know, these organizations that are thinking
about what is important for its business development, and
how to link in the higher education institutions and I
think, you know, the activities here really fit into this.
And, they bring something that a lot of other actors can
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help with which is really this vision and these catalytic
initiatives and the private sector know-how and the
convening power. And, I think with people here today this
is a testament to the convening power that these kinds of
organizations can have and how they can help overcome in a
sense sometimes the challenges that our public sector
divides create when we’re trying to promote this
development.
You know, one of the other issues that we’ve been
studying since the Chicago study has been how to support
activities across borders. Now, this was an example of a
study that was done around international borders, but I
think here sometimes it can be pretty hard to work just
across state lines. And, you know, one of the things that
is really a quick win, and I think we’ll hear a little bit
more about some of the analyses like in South Carolina, are
trying to understand what are the cluster-related support
for these common competencies across the mega region, how
to prioritize a bit this joint research. And, you know,
these are things that tend in other international examples
to be very effective and very, I would say, relatively easy
to implement.
Where it becomes a little bit harder is on the more
broad-based university collaborations where you have
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sometimes certain very formalized bodies that don’t always
last after certain public sector funding, and so really
these bottom-up private sector initiatives that we’re
seeing here are really an example, because in a lot of
other OECD countries often the private sectors aren’t
stepping up to the degree that they are here. Some of the
challenges and I highlight a little bit about branding
issues on this sort of broader regional scale. How many
people have heard of the Oresund? Okay, how many people
have heard of Copenhagen? Okay. So, this is one of the
things that have come up in a lot of the work that we’ve
been doing on these mega regions and that is that it’s
always sort of a political challenge between the tensions
about how everyone is represented and then how do you get
visibility internationally. And, so I think that is an
important issue that’s something that the adaptors here
today can work on, but it’s true that it’s this common
branding on an international scale, and showing really the
weight of the assets here that is something that
increasingly I think will help with the region’s
development.
Just a few trends, you know, big metropolitan areas
have been really gaining in prominence within the OECD, and
these are countries that are already developed. I’m not
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talking about, you know, developing countries, and what
we’re seeing here is that actually they’re gaining
population in general and they’re gaining in economic
significance, in terms of the share of the national
economies. They have higher rates, increasingly higher
rates of firm creation and innovation. We’re also seeing a
lot of re-urbanization in terms of business locations in
some cases. And, also in addition to these sorts of
suburban science parks, we’re also seeing a bit of a
movement towards more innovation districts. So, this is
sort of a city angle which is very hot right now. And, the
data shows it across the OECD.
You know, we heard Dr. Woo this morning say that size
doesn’t matter, well for some things it does, and one of
them is in terms of productivity statistics, and this is
where you have opportunities without necessarily growing
bigger, but being better connected. And, this is what the
economists like to call conglomeration benefits, but the
fact that you have these better connections within the mega
region are going to help boost those productivity figures.
Now, proximity to cities and exposure to international
competition are other drivers of these productivity
increases, and one of the things I want to highlight here
is the, you know, tradable sectors as we were just talking
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about global trade. And, in this case I’m saying anything
that is exposed to trade; it doesn’t mean you actually had
to go international, but what you’re producing is a good or
a service that is competitive on an international market if
it had to be. And, this is really where we’re seeing a lot
of the action in terms of the productivity growth.
And, in the cities it’s a lot of these knowledge
intensive services that fall into this category of tradable
sectors that are driving a lot of what we’re seeing in
cities today. However, one of the challenges, and we’ve
been doing some economic research about this since this
study is that actually when you have a lot of fragmentation
of local governments in a particular district, you have
some challenges and some penalties in terms of
productivity, and in terms of inclusion. And, the
statistics show that these create some sort of bigger
barriers to overcome, and that’s one that is particularly
challenging in the mega region which international
comparison with the three states, you know, at least 1,700
municipalities and even more with all the special purpose
districts. It’s a big challenge.
You know, one of the things in terms of the latest
statistics; now, I’m not going to presume to update the
study here. We just looked at a little bit of the data,
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but just to say that over time, you know, the mega region
remains, you know, big and it remains productive in terms
of its levels of productivity. However, its growth is a
little bit slower. Now, we don’t necessarily expect all
very large cities to grow at the fastest rates; economic
theory might predict that some of the smaller ones have
more potential for catching up; however, we do see that,
you know, that out of the 97 largest metropolitan areas,
you know, this mega region is a little bit slower on some
of those growth figures.
And, to be honest, one of the big issues that really
comes up as well is on issues related to the labor force
regarding how the labor force works, what share of sort of
the population that is eligible for working is working, and
what is sort of the growth there. And, so you could sum
this up a little bit to say that in recent years, you know,
some of this mega region’s increasing productivity might
not have come at the cost conclusion. I see there’s a
little error there on the screen when the computer reads
it, but Chicago is where the little arrow is. So, it’s
just so show that if you put all the dots on a map, whether
they’re more or less inclusive in terms of labor force, and
higher or lower in terms of productivity, you get to see a
little bit where Chicago fits in. And, it’s more in the
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category of becoming more productive, but not necessarily
as inclusive, and I think we’ve heard a few of the talks
this morning, talks about how this is going to be, you
know, an ongoing challenge for the mega region.
And, so that’s why I wanted to sort of make the
transition between this presentation and the next
discussion that’s going to focus mostly on skills and the
future work, because this is I think another big challenge
that the mega region will be looking forward to in the
future. And, you know, one of the big tendencies we see is
that with technological progress and digitalization, we do
have some skills polarization. So, basically in this chart
you have the orange is the middle skills. And, then you
have dark blue and light blue for the high and low skilled,
and the blue and green is where you got the United States,
but it’s just to show that we do have this challenge to
address in terms of where the jobs are on the skill
spectrum and what that’s going to mean for future workforce
development issues. Now the U.S. does a little bit better
than many other OECD countries, but it’s still an issue.
The next thing that I wanted to highlight was just
that we have been doing a lot of work at the OECD what’s
called the future of work, and a lot others have produced
estimates like McKenzie, etc., some academics. What the
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OECD has looked at and they looked at the occupations, and
they looked at the skills required, and they looked at
what’s the likelihood that these skills will be automated.
And, in overall in the U.S., it’s about a 10 percent,
they’re at very high risk of automation between, you know,
over 70 percent at high risk, 27 percent with significant
change. This is a little bit lower than the OECD overall,
but it just reinforces some of the messages that we’ve been
hearing today about the need to, you know, prepare for
quicker transitions.
So, of course this varies across regions. It varies
across all sorts of places. This one was done at sort of
the state level, and you can see, you know, where you got
the highest share and lowest share in a few countries,
you’ve got, you know, highest share is in Nevada and the
lowest share is in Delaware. But, we took a look and here
I guess the percents have trouble on the computer, but what
we did was we took a look at the U.S. metropolitan
statistical areas, and we see that actually Chicago has a
little bit of a higher share of its jobs at high risk, and
that might be related to its manufacturing base, which just
means that more work will need to be done to try and help
those firms upgrade. So, you have the region in the last
couple of years is going on the right track in the sense
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that it’s creating jobs that are less likely to be at risk
in the future. So, you kind of want to be in that dark
blue bar, and it just means that Chicago has maybe a little
bit more to work to do in the Chicagoland area, or the mega
region in a wider sense. But, you need to think about that
as the sort of cluster development, the supply chain
development, and all these other projects are going move
forward.
So, you know, the mega region will need to think about
a lot of different types of policies and, you know, I think
one of the things that the future of work will bring is
trying to think about the regional labor market with a
little bit of a new lens. You know, here we’re talking
about the list of automation. There are all sorts of other
information about the nature of work contracts that I won’t
get into here because that’s really into a lot of
regulatory differences, you know, across countries and what
gets qualified as non-standard work. But, the fact that we
have to think about how long the jobs that are being
created will last which is a question we had earlier is
going to be very important.
We’ve heard a lot today about the role that the mega
region can play in supporting this lifelong learning and
retraining in the programs to transition workers, and here
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in terms of the entrepreneurship and SME support I want to
just highlight the importance of the sort of
digitalization. And, we heard earlier in the presentation
about the automation in your firms, and how to support
maybe those SMEs that are not as up to the curve and
getting sensors into their conveyor belts, et cetera as
quickly, and what the region can do to help those SMEs,
because we need to think about both sides of the coin, both
the upgrading up the local firm base, and the skills that
they’re going to need.
So, I just wanted to raise a few of these issues as a
sort of follow-up in a sense to what we started in the
study, because I think there’s really a tremendous amount
more that can be done to address some of the challenges
that were raised in the study, and also to confront some of
the newer challenges that we’re all sort of focusing on
today with this future of work.
All right, so maybe what I’ll say, because I think we
have to close soon here, but what I might want to just
highlight is that if there are any areas where you think
OECD resources would be valuable; just feel free to come up
and ask me, and I’d be happy to direct you to different
parts of the OECD that have access.
Q Where do we get a copy? I’d like to get a copy
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of your presentation?
MS. MAGUIRE: I’m sure Kelly will be able to; she’ll
be able to make available presentations afterwards.
MS. O’BRIEN: The presentations will be available on
the App.
Q Great, thank you, very helpful information.
MS. MAGUIRE: Okay.
MS. O’BRIEN: We have time for maybe just maybe one or
two questions.
Q Yes, do you have any best practices in terms of
the leveraging of social innovation to help unrepresented
groups? And, the reason I ask that question is because in
the mega region that has to be something intentionally
done. It can’t be low on the priority list, and no region
is going to be prosperous with the underserved and minority
groups not being able to participate holistically. And,
that’s just a reality, so I’m looking for best practices,
because so far I don’t know if we’ve done an adequate job
in terms of articulating that in this particular region.
MS. MAGUIRE: Well, there are a couple of things then,
you know, and I can direct you to some work that our
colleagues are doing in this area. I mean there are some
examples that have worked with, you know, populations that
have particular physical handicaps, particular
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disadvantages in accessing the labor force. You know,
there has been work that they’ve done also on, for example,
with indigenous populations around the world.
You know, I think, you know, in the Chicago area, I
don’t know if you’re referring to just traditionally those
that are just having trouble accessing the labor market, or
if there are those that have, you know, even traditional --
yes, uh huh.
I mean I think, you know, I think in this case given
the, I mean, the ability to try some pilots and one of the
things that they have found is that if you make an effort
to involve yourself in the design of the projects, the
populations that you’re most trying to serve, that has a
huge impact. This whole creation of the programs has a
huge impact in making them more effective and being able to
scale up. But, I’d be happy to give you some more details
because I know we have several books on this topic for you.
MS. O’BRIEN: I also wanted to point out just because
we need to move on to another question, but Steve Freeman,
if you could just raise your hand? Sir, if you could just
try to meet with Steve. We’re actually in conversations
about watching some of that. And, then we just need to go
to a question back there.
Q You have a number of slides that showed jobs at
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risk. Was there a correlation to unionization, or how did
labor unions correlate with the percentage of jobs at risk
to automation?
MS. MAGUIRE: To be honest this is focused on skill
sets associated with particular occupations. So, I am not
aware that they have correlated that with human
participation. However, there has been some work on some
of the nonstandard work contracts where there is some
looking, it’s not union participation, but in terms of the
dynamism of the labor market and then in some of the labor
markets where there is a bit of less dynamism, there is in
some of those markets more active use of certain forms of
nonstandard work contracts. But, it’s a different issue
than the automation list itself which is related to the
actual skills associated with a particular job.
MS. O’BRIEN: One question.
Q I guess this will be the final question for this
session. But, you mentioned some of the cross border
issues. I would speculate that in some ways our cross
border issues are worse than some of the international
border issues. Do you have any thoughts on what the impact
of that has been to perhaps make people aware of how
serious a problem it is and ways to break it down?
MS. MAGUIRE: Well, I guess that’s sort of the big
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question, huh? That’s the purpose of having the Alliance
and others here. You know, I think the figures have shown
that there is this productivity penalty, and it’s
quantified as being 6 percent for a doubling of the number
of jurisdictions. So, if one wanted to, we could try to do
some back of the envelope calculations and try to say if,
you know, when you’re controlling for other factors and you
have this doubling in the number of jurisdictions that you
can see what that productivity penalty might be and that
could be one potential metric you could consider.
You know, the challenges that people were raising;
there were some discussions at dinner about what are the
kind of events that can get people mobilized and get people
to the table. We heard the example of Foxconn where
basically that just accelerated a huge number of
initiatives because there was a catalytic event. And, you
know, it’s hard to get everyone to coalesce, but I think
the kinds of projects that you try to create to make that
visibility is going to be the most important part because
it’s, you know, the report already came out and said, you
know, much more needs to be done to reduce the sort of
within mega region zero sum game kind of competition for
the region to grow, and you know, I think that maybe that
will be part of the work in the future program of the
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Alliance and others to try and identify what are those
catalytic projects that will inspire and give a sense of
urgency.
MS. O’BRIEN: Thank you, Karen. You know, Karen held
up that big book with over 300 pages. If you’re
interested, a link to the book is on the Alliance website
as is the synopsis which is about 23 pages. So, if you
want to make yourself familiar with the important messages
that the OECD brought to this region, please be sure to
check the Alliance website.
So, now we’re going to break for lunch and, of course,
we want to pack so much into today. So, as soon as you’re
able to get your plate, come back in. We’re going to kick
off with our lunch program in about 15 minutes or so. So,
please, the buffet is right out the doors, and we’ll see
you back here in about 15 minutes. Thank you.
Federal Reserve Bank of Chicago
Sixth Annual Summit on Regional Competitiveness
Understanding Competitiveness and a Call to Action
Afternoon -- October 29, 2018
Ladies and gentlemen, the next session will be
starting in 5 minutes, in 5 minutes the next session will
be starting.
139
KELLY O’BRIEN: I really appreciate everybody grabbing
your lunch and taking your seat so quickly. Again, we do
our best to try to pack so much important information into
one day.
And next for our lunchtime panel I have the great
honor of introducing Anne Edmunds and Rebekah Kowalski.
And I want to just to share with you quickly a little bit
about Anne Edmunds, because as I have talked about Paul
Jones and Greg Hummel, Anne too, has been at the table from
the beginning and the support that the Alliance received
and continues to receive every day from Manpower has really
been transformative in terms of our ability to work within
the workforce space.
Anne leads the workforce team and since the creation
of the team, Anne has brought together the leaders in
workforce in the three states as well as subject matter
experts from literally all over the world. And being
nothing but a great team player, Anne supports our
Transportation Team by really connecting the dots with a
very exciting workforce program that is designed for the
transportation sector.
There's more about that on the Alliance website.
There’s meetings that we host on a quarterly basis and
webinars that are conducted by request. So, if you are in
140
the transportation space and you’d like to learn more about
the work we’re doing, please make sure to email me or come
up to me today.
But for right now we want to get this important panel
started. So, Anne and Rebekah if I could ask you to come
up and share with the audience a little bit about your
backgrounds and then talk about the importance of
Tomorrow’s Talent and Seizing Opportunity in the Digital
Age.
A warm welcome please for Rebekah and Anne.
ANNE EDMUNDS: Well, thank you so much Kelly and your
kind words are very much appreciated.
It has been my honor actually to have been with the
Alliance for the past 5 years and chairing these large
committees. But we have a really tight program today so
I’d like to get started. Tell you a little bit about
Manpower. Manpower is a $22 billion company; it’s a global
company in 58 states. We understand employment; we employ
over 4 million people every year, year in and year out.
One of the largest employers in the world. Some of the
things that we have been observing is how technology is
changing the workplace. How productivity is changing in
the in workplace, as well as the demographics shifts that
we’re seeing across the world.
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We're also noticing that our customers are becoming
far more sophisticated in this space. One of the things
that I have observed is that I have been in the employment
business for 34 years and I have never experienced such a
tight labor market. At 3.7% unemployment everyone who is
employed or eligible to be employed is employed. It is
very very difficult - - just recently I was promoted to the
Director of the U.S. Western Division so I see operations
the size of Chicago, Seattle, San Bernardino, Phoenix but I
also see the Peru, Illinois, the Sauk Valley, Illinois,
some of the small markets and this is not just a U.S.
issue, obviously it’s a global issue. And I’m so fortunate
to have as my business partner Rebekah Kowalski, who
develops and designs strategic solutions for our client
base across the world.
So, Rebekah I’ll turn it over to you.
REBEKAH KOWALSKI: Thanks so much for that Anne. So,
just a quick road map for what we are going to cover.
We’re going to talk about what we call at ManpowerGroup the
double squeeze. So, what’s happening in terms of pervasive
shortage of brightly skilled talent on the one hand and on
the other hand a rapid evolution in the kinds of roles and
skills that are required.
142
Then we are going to dive into how employers are
looking at that and what those roles and skills are. For
those of you who were with me a couple of years ago right
here in this room, we talked a little bit about what was
happening in the world of digital manufacturing. We
touched on the evolution to workforce. If you saw Becky
Frankowitz last year, she talked a little bit more about
that. We are going to go a little bit deeper today and
Anne is going to be doing some story telling. So, not just
the scary stuff but also some of the amazing things that
we’re seeing, because we are capable of closing this gap
but it’s going to require more creativity and flexibility
then we have ever seen before.
So, I want to start with this, so this is the first
half of the squeeze, it’s what Anne was talking about:
we’re not alone in terms of how we’re experiencing a
challenge to employment, right? Since 2006, ManpowerGroup
has been tracking talent shortages around the globe. We
ask 40,000 employers every year some very simple questions
one of which is, “Are you have difficulty finding the
talent you need?”
We have never seen numbers this high. A global
average of 45% of employers report difficulty in hiring.
That is due to two reasons, one is in most developed
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countries demographics aren’t doing us a favor. So, we
have an aging out problem in manufacturing, on top of that
we have an opting in problem. So, people not selecting to
not go into that field and those occupations and we have a
rapid aging out. Very few countries are experiencing the
demographic dividends and when they do, it’s demographic
dividends of people that don’t necessarily have the right
skills for the jobs that are required.
On the other hand, we have a rapid evolution in terms
of roles and skills. So how many of you have seen the
McKenzie Report that talks about how roles and skills are
evolving? Scattering - - a couple of hands. Okay, so the
bottom line is that report talks about the fact that, yes
there will be some jobs that go away but it’s not as many
as people think, they estimated about 5%. What’s really
interesting is that 45% of the tasks that can be automated,
will be automated. So, if you just do the quick math that
means the work is going to look different, very very
different. And the question that we have facing us then is
not just the typical shortage, it’s a shortage and a need
to upskill like never before. That means that what was
important is not necessarily as important. So, in an
abundant world, a talent abundancy world what is really
really important is an exact match and we tuned and trained
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our applicant tracking systems and our HR teams to look for
that exact match. With all these wonderful key word
searches and filtration processes because we thought what
mattered was the discrete skill. But we lost sight of is
that what really matters is something that’s always
mattered, which is people’s ability to adapt and evolve and
to learn and grow with you. This becomes even more evident
in a scarcity environment because - - oh and a scarcity
environment at a time when we’ve got a lot of evolution.
Because we don’t even know some of the jobs that will be
required going forward, that’s that 65%of GenZ or jobs that
GenZ will perform that don’t exist yet, we’ve heard that
talked about a lot.
So, what matters then? It’s can’t be like it is
today. Hey python is a hot skill, well in two years is
python going to be a hot skill, Anne? Not really, - -
MS. EDMUNDS: No.
MS. KOWALSKI: - - no. What matters was that you
could actually learn the language to begin with, right?
So, things like creativity, emotional intelligence and
cognitive flexibility are what matter most. Anne, has that
ever not been true?
MS. EDMUNDS: No. You know being creative, being
adaptable in the workplace has always been part of the DNA
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of every corporation. I think we haven’t placed as much
importance on it recently because we’ve gotten so bogged
down in the fact that we need absolutely the right skill at
the right time and it’s just not there today.
MS. KOWALSKI: Yeah, yep. So, we have to go back to
getting good at something we used to be good at. At a time
where we have really cut down a lot of the learning and
development programs and corporations. We haven’t maybe
looked at workforce development in the most modernized way
that we could. We’ve got a lot of partners in the audience
in 4-year and 2-year institutions and workforce investment
boards that can be part of that solution. But we all have
to understand that it’s not just about landing on a
specific skill in a short period of time. It’s about the
journey and that journey is ever onward and upward.
So, I want to introduce the research component of
this. How many of you are familiar with UI Labs which is
just in the backyard here? Okay. So, UI Labs has City
Digital under it and DMDII which is the Digital
Manufacturing & Design Innovation Institute. This is part
of the manufacturing USA Network of institutes and their
remit has been to look at how to make manufacturing
globally competitive in the U.S. So, even though they are
all geo located they all have a national wingspan, if you
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will. And the Digital Manufacturing & Design Innovation
Institute has the broadest wingspan of all of them because
all manufacturing sub-sectors are looking at some degree of
digitalization. Some of them are just moving faster than
others. You see some of the partners that were involved in
this work. The goal was to outline what’s the degree of
change we’re looking at and over what period of time. So,
as digital comes in and remakes manufacturing processes
what happens to roles and skills, how will they change and
what is it that we need to plan for? And together we
identified a 165 roles that were either new or evolving
very very rapidly. And that’s really important for all of
us to understand, we’re all talking about a skills gap and
a crisis and trying to find the talent we need but we have
to remember that when we get people on the ladder, we’re
going to have to move them up very very quickly and for
those who are already occupying a place on the ladder they
can’t get comfortable, that’s not where you build a cot and
take a nap. It’s a continual progression.
From the prospective of a client, I just - - I present
this as a view that may be helpful. We talk to a lot of
clients around the world, we have 400,000 clients around
the world and a huge chunk of them are in manufacturing.
And I have spent the last couple of years sharing this
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research with our clients and one thing that I have found
is, they usually have a digital strategy, right. You see
it in their literature, you see it in the annual report.
So, they’ve got a direction and that direction is typically
how are we going to remake our solutions? How are we going
to remake our services and our products? And from a
process perspective, how are going to do it a more
efficient way than we have done it before?
The piece that is usually not as present, is do we
have the workforce to do what we are saying we need to do?
And if not, what are we going to need to do to get there
over a pretty rapid period of time? So, they recognize
that there is a pain but they haven’t necessarily
quantified it. That’s the challenge that companies are
running into, do we have the talent here, can we upscale
that talent? What’s the right mix of strategies from, you
know, trying to pull in exact match and trying to develop
the talent that we need. And so, it’s in this context that
the research was put together.
So, this is a map of all of the technical domains of
manufacturing and what we did is we looked at those 165
roles and said, “How are they distributed?” In other
words, what’s the degree of change? If I’m looking at my
production and processing which is the gray box, how much
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of a degree of change am I going to experience? Is it 2%,
is it 5%, is it 50%? And we identified it’s a pretty high
degree of change in most of these boxes. Although in
production and processing it’s pretty dominant. And some
of these are not a surprise, right? You’re already seeing
some of these evolution of skills and roles but depending
on where you’re at on the journey as an employer you may be
experiencing more pain and tension in certain areas than
others.
And there is this one called Omni here which is
basically those talents that actually have to span all of
those technical domains and understand a vast array of
information. And I’m curious as you go around and you’re
talking to clients in this area, how they’re fueling this.
I mean my experience is if I’ve got a company that has a
quarter of the roles inside of the organization changing,
that’s a lot, that’s very disruptive potentially.
MS. EDMUNDS: It’s a lot and from our observation we
are inadequately prepared. Some companies are doing it
better than others with great training programs and
investing at a very early age but we are seeing is a big
gap in not having the right skills to fill these new
opportunities in digital manufacturing.
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It’s a very tough situation for the U.S., I believe
going forward.
MS. KOWALSKI: Yeah, most definitely. And I just want
to give you guys a view of how pervasive the change is.
You are not expected to be able to read this, by the way.
But it’s just plotting those 165 roles in a diagram so that
you can see how wide this is. And we’ll give you access to
the full report, it’s free, you can just download it.
For those of you who touch workforce planning and
workforce development this is actually a really helpful
piece of information because what it’s doing is it’s
breaking down those roles by technical demand and it’s also
breaking down the timeframe in which they are likely to
come online for an organization.
So, based on the technology the organization has
adopted, which of these roles will they need when? Which
was a very important question to be able to answer because
it also gives you the timeline of how much time do I
actually have to develop that talent that is required?
Here is a more “eye friendly” chart of the kinds of
roles. So, this is just a representative sample. Two
years ago, I had never heard of a Digital Twin Architect,
ever. Any of you in this room that have heard of it? Know
what digital twinning is? I got a few hands going up. So,
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it’s really - - it’s like the most sophisticated version of
modeling that you can imagine in simulation, right? So, we
are creating Digital Twins of products and lines and
processes so we can, for instance, test out what it would
be to refit a line and work out the kinks before we
actually put something through. So, it’s an efficiency
play and the technology now exists to do that in a cheap
and accessible way.
What about digital ethicist? What happens when you’re
dealing with masses of consumer information, supply chain
information, how do you make the right kinds of decisions
and so now quality risks, ethics, legal all converge? So,
some of this is formation of new kinds of roles based on
new types of work and a lot of them are and roles, if you
will, these are very high-end positions. So, two years ago
(inaudible 0:17:33.2) Twin Architecture accepting GE’s
annual report. Now these are posted positions that you can
see and they’re growing in terms of their mass. What
happens on the shop floor, right? Because this is where
everyone feels that delicacy we talk about where jobs may
go away. Or how jobs may be reformulated, remember that
that represents a significant chunk of the workforce, that
28% if the 165 roles.
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We think about this as transition opportunity. So
those roles don’t all go away at once and some of them
don’t go away at all but new technologies come online which
means they may not touch as much equipment as they used to
touch. They may touch no equipment, right? But surely they
need to have a knowledge of manufacturing processes, they
need to have knowledge of the equipment and the tooling but
the way they interact may be in a purely digital way,
right? That swipe of the phone, right or left, right? The
tenderification of the manufacturing workforce as
horrifying as that may sound.
So, we pulled out 60 roles that we think are really
ripe to be upskilled over the next 1 to 2 years so that
they’re ready to enter workforce and mass and enable these
great manufacturing processes. Anne, I think it would be
great to hear some of your perspective on how you’re seeing
some of these transformations work out right now in terms
of what you’re seeing companies do. How you are seeing
individuals adjust?
MS. EDMUNDS: Yes, I will use an example of a northern
Wisconsin company who were just strapped for finding, you
know people even at entry level positions. And their
philosophy was go out and find more, let’s find more
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people. Let’s partner with every agency we can find to
draw in more people.
Well, there were not more people. So, one of the
things that we did with them was to create a training
center where we trained on product development as well as
soft skills for them to be able to grow in their
profession. This area has a very large Hmong population
and we brought in instructors to teach English to the Hmong
population. Train them in a progression for the
pharmaceutical industry and we were able to supply the
workforce. It was not something that happened overnight.
It’s been a 2 year span of putting this together. But I
think it’s important that you know it’s not going out to
find the people you want, it’s working with the people you
have and getting them upskilled.
I think Manpower does a very good job of that with our
associates. We have a whole group of university classes as
well as something called My Path. And what we are trying
to do is provide a college education free of charge to
anyone who is a Manpower employee. And that is to raise
the associated experience and it’s selfish on our part
because we want to retain this workforce. So, that’s what
I see Rebekah as the 2-year progression.
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MS. KOWALSKI: And I think the mindset shift you are
referring to is the most critical and it really starts with
leaders understanding we are moving from abundance to
scarcity. Because if you don’t understand that shift you’ll
do exactly what you are talking about, which is we’ll go
out, we’ll find more, we’ll go out we’ll find more. No,
you’ve got to work with what you have and be responsible to
the talent that you have inside of your doors to be
upskilling them and looking at your community and getting
creative. I will tell you, we’re in a space right now
where we have got to be just as creative and adaptable as
the individual. So, asking questions like, why not? Why
wouldn’t you work with limited eligibility pool? Why
wouldn’t you think about the kind of program that Anne
taught. Usually people’s response is it’s a cost, but it’s
really an investment which is what that employer is finding
is that return on investment has been tremendous because
they have people who are loyal. People who have put in the
effort to build up their skills and they’re being offered
the next step on the ladder continually. But it is a big
mindset shift and it starts with understanding the numbers
and the degree and the pace of the change. There just
aren’t any corners you can go to extract perfectly matching
talent anymore. And if digital means anything because it
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is the biggest business model change we have seen in
decades. But in a couple years it will just be how we do
business, right? There will be - - that will be our new
platform. It means that all of us have to be able to adapt
and evolve and change in a pretty rapid way.
So, we talk about four strategies to win with this
double squeeze work. The build, you’ve heard us talk
about. The buy, it’s not that the buy is not part of the
strategy anymore, it’s not that you don’t still do
recruitment campaigns and try to acquire talent. It means
- - just like your investment portfolio needs to shift for
the market conditions, your investment portfolio in these
four strategies needs to invest. What would you say before
- - let’s say in the last couple of years, before employers
were really feeling the pinch, was the percentage they
would put on buy vs. build?
MS. EDMUNDS: Seventy percent on buy, let’s go out and
buy. Let’s go out and find another agency, find somebody
else who can bring in this talent. So, it was all on buy.
It is not easy to change the mindset of the American
business world right now. There’s still a little bit in
that buy mode. It’s a constant education process about
building your workforce. And bridging the gap between what
you have and what you don’t have and really training and
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re-training. We’ve gotten to a point as well where we’ve
made it so difficult to go to work. We have so many
requirements, you know background checks and drug screens
and you can’t have a felony and you know it’s so difficult.
We have to start taking some of these requirements down
because there is a good solid workforce out there that can
be built instead of bought.
MS. KOWALSKI: And a lot of time what we - - what our
experience has been is that we really push on those
eligibility requirements that some companies have. Some of
them have them for very very very good reasons, right? But
they’re in some cases they’re a legacy carryover of an
abundance mindset, right? So, everyone has to have a high
school degree or GED because in the land of abundance, I
had to have some way of sorting through 3,000 resumes. Is
that really still what’s required or are there other ways
to get to, does this person have the right skills and
aptitude to be successful in my organization and will my
organization be more successful for having that person?
So, it’s really challenging some of that on the buy
side and buying is expensive.
MS. EDMUNDS: Very expensive.
MS. KOWALSKI: And you have to really think about the
fact that even when you buy, you’re still going to have to
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build. Particularly with our Millennials but really every
generation. The number one way to drive retention is to
continue to invest in their careers. That’s what the
research - - our research shows over and over and over
again. So, there is no get out of jail free card on
builds.
Borrow, just thinking more creatively about the kinds
of talent platforms that are out there to accomplish the
work. There is a piece that we can make available to you
called “Gig Responsibly” and it’s about next gen work and
how to tap into some of those platforms for some of those
niche requirements that you have. And then this last one
is bridging and bridging is really important because there
are some jobs that are going to fade away. What happened
to the people that were working the counter in the video
store, that gave you recommendations on their favorite
movies. It’s all sitting in an app or it's sitting in your
Netflix preferences, right?
So, where were their adjacent skills? What could they
be trained to do that they hadn’t really thought of doing
before and we’ve seen some amazing leaps. One example that
we have in this stack which we’ll also make available to
you is something we did in Italy which is just a fun
example, because it’s in motor sports, right? Fast cars,
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they were - - a real restructuring of workforce around the
textile industry which meant the falling away of
traditional textile workers. And we saw an opportunity to
re-train those textile workers as carbon fiber cutters for
the motor sports industry. So, we took those people and
through our academy we re-trained them into very well-
paying carbon fiber cutters but that was a bridge strategy.
They hadn’t gone to school for that, they were working in a
garment factory. So, this is the kind of creativity you
may need. We are seeing people say, “Hey I’ve got this
really smart person on the floor, perhaps they belong in
finance.” I mean I can’t remember a time when that was a
conversation but it does require that kind of “why not”
mentality to retain and build a terrific workforce.
Do you want to talk a little bit about some of the
other strategies, Anne, that you’re seeing?
MS. EDMUNDS: Yes, we’re seeing - - you know a lot of
I think, creativity from employers today. Definitely, you
know, providing more training, providing opportunities if
they can, to work from home. We’re finding incentives that
are being offered for further education. It’s just a
multitude of things and I think that when companies are
putting together their talent acquisition strategy, all of
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these things are extremely important as part of that - -
that strategy going forward.
MS. KOWALSKI: Yeah, most definitely. I would like to
point out that wage is still on here. So, when you do a
look at the kind of talent that is going to be in most
demand, one of the things that we end up finding is a lot
of times employers just like they haven’t re-tooled their
talent acquisition strategies haven’t really reset the
market expectations around wage. Just like they haven’t
reset the expectations around what people will expect from
a career trajectory. So, this is a checklist of things to
really think through and it’s the basic hygiene of
attracting, retaining and growing your workforce.
Notice that number 36% of employers are adjusting
education and experience, right? So, really questioning
what is eligibility really? Do we have anything arbitrary
that is standing in the way of getting the talent we need
in the door?
Couple of examples we wanted to leave you with, the
motor sports one is here. Land Rover, we partnered to set
up an apprenticeship program so we’ve got 18,000 people
we’ve placed into work, 8,000 apprenticeships over 5 years.
So, again it was something that we needed to look at.
Well, what are those skills that are required going
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forward, really how are they different? And can we
collectively invest in the upskilling of that talent and
make them career ready and ready to continue to attain
ongoing skills? We have a partnership in the UK we call
CTP. These last two are really addressing parts of the
workforce that have not really been tapped fully. So, the
untapped parts of the workforce. In this case the veteran
community. Again, how do you make it easier for people to
transition out and move in? I’ll tell you with the Academy
of Advanced Manufacturing our partnership with Rockwell, it
is incredible to see people that have commanded a unit,
been to 30 countries and they’re working as a picker packer
for $13.00 an hour. How is that acceptable? They have
been trained on state-of-the-art technology to deal with
complex processes without clear answers and they’re - -
they’re doing that?
So, how do we make it easier, how do we help them
bridge into really good opportunities? And a lot of that
is doing the hard work to figure out how what they did in
the military prepares them for these careers and advance in
digital manufacturing, because I promise you there is
excellent - - excellent correlation. That has been our
experience and you know we need more of these. There is a
lot room under the tent, right? You know this is not
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something that ManpowerGroup can fix on its own or one
economic development region can fix on its own. It takes a
lot of hands at the oars to change this narrative to where
we’ve brought in everybody that we can and gotten them
ready to fuel our, you know incredible surge in
manufacturing.
You heard what Foxconn shared today, the jobs that
they are talking about they may have these plain sounding
names like, Operator underneath them is this. So, when you
think about what manufacturing looks like for the future
and what’s really required, it’s the tip of the iceberg.
We have - - we don’t have a body problem, we have a skills
problem and the last I checked that’s fundamentally
solvable.
So, that’s all we have. So, we have about 7 or 8
minutes for questions, that we’d be happy to answer.
AUDIENCE MEMBER: I just would say, I come from a site
selection background, so I help companies find locations -
- and you’re seeing site selectors now look at how do I - -
because of the tight labor market how do I look at a
position and translate it into skills, instead of looking
at the job specifically? What are the skills that I can
now quantify in a region and I don’t know if you use the
program O*Net, if anybody is familiar with O*Net it’s a way
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to take a job and dissect it based on skill sets. So,
you’re starting to see that become more of a quantifiable
way of looking at - - at a location is the skills versus
the jobs.
MS. KOWALSKI: Yes so the only - - I’ll start then
I’ll let you comment. O*Net is great, right? We have - -
our jobs are all laid against the O*Net taxonomy so the
thing that I would just tell people to be thinking about is
that O*Net is telling what you have, right? And what we
need to get really good at from a workforce and economic
development perspective is then projecting, so here’s what
we’re able to do with that workforce over the next one,
two, three, four years. That’s where the excitement
happens because that’s giving you a baseline then you can
say, we’re really strong here and we know that with this
certification program, this badging program we can convert
those workers into what you need. I think that’s when the
magic happens. Anne?
MS. EDMUNDS: I don’t have very much more to add to
that, other than I think again part of that strategy of
where do you put your company, what location? The key to
that is what is the workforce that is available? What is
the workforce that can be trained or upskilled? If you
look at our - - I55, 57 corridor we’ve got distribution
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center after distribution center, after distribution
center, after distribution center. Do we have talent?
Absolutely not. It’s a fight and a war to find people.
So, every time we locate a company that critical
factor is how do we develop that talent?
AUDIENCE MEMBER: They’re not lowkey enough where they
can’t - - they can’t find the talent so they don’t locate.
MS. EDMUNDS: Right.
AUDIENCE MEMBER: And so, if that continues to be the
bigger nut to crack, they are going to be going further and
further where they can find. Regardless of where the other
cost variables are high or not.
MS. EDMUNDS: That’s right.
AUDIENCE MEMBER: The talent variable is the critical
location.
MS. EDMUNDS: The example I used in northern
Wisconsin, again, companies coming in building these large
pharmaceutical plants, no talent. So, now they're
constricted they can’t grow and I either have to think of -
- I have to move this company somewhere else and shut down
or I’ve got to figure out a different way to get the work
done.
So, it starts at the very beginning.
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AUDIENCE MEMBER: Hi, thank you. Coming from a local
economic development perspective there's plenty of
communities here I’m sure that would be interested in
knowing this. When a business is in town or coming to
town, we often thought the fact that we’ve got a very
strong community college system and we actually have a
campus in our community. Has there been a willingness or
reluctance on the - - for the most part from some of these
companies to actually use the community college to help
them with some of these issues that you’ve talked about
today. I never quite know whether it’s the community
college that’s, you know being successful at reaching out
to local businesses and finding out what their needs are
and putting together a program that helps to train their
workers. Or is there any sort of sentiment that you have
learned over time that can help us economic developers best
communicate and bridge those gaps? Basically, are the
community colleges delivering what the businesses want?
MS. KOWALSKI: So, I can start and hand over. So,
it’s interesting, I come from Wisconsin, we have what I
believe is a world class university and technical college
system. When I pressed that particular issue with
employers, I get a span of answers. So, and they're
timebound. So, a few years ago you would see that a lot of
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technical colleges have put their eggs in the basket of we
will actually become the low-cost alternative to the first
two years of university. So, the impact that that had on
employers is that they felt like, well you just shifted your
focus from me to that particular economic model to which my
response was but how much were you really aligned with them
from a regional growth perspective to begin with? So, there
always has to be two people on both sides of the table for
the conversation to really flow. And so, what I have seen
in the last couple of years is an adjustment to really
thinking about how do we actually get all of the right
people under the roof and get all of the wood behind the
arrow. And I know that’s a generality but it’s what Mark
Monee was talking about before. Which is getting all of
those educators together in the room with all of the
employers and with economic development and actually saying
this is how much we need to move the needle by and by when
and getting everyone aligned. Then you have a very powerful
story to tell when you’re trying to attract organizations
because they know that they really do have a one stop shop
and everybody is headed in the same direction because
everyone is clear on the vision. The vision isn’t guess at
what your economic model will be in the future or guess at
which employers want to partner with you. It’s we have
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these numbers, we have to hit them in this period of time
and this is how we need to move together. So, they took the
guesswork out of it and I think that that is a really good
pattern book to look at.
MS. EDMUNDS: Yeah, I also think in some cases in the
work that I’ve done in Chicago with City Colleges and with
some of the junior colleges is that they cannot change the
curriculum fast enough to adapt to what is coming next and
what employers need. And it really is a setback because
they’re training on things that are no longer relevant. You
know, I think we started off with a very good process with
City Colleges in Chicago and somehow we got a little lost
and I think we need to go back and revisit it and look at
the jobs of the future and what’s coming next. So, that
they can be out in front of that curriculum instead of
behind it.
MS. KOWALSKI: We are getting the one-minute sign.
MS. EDMUNDS: Okay.
MS. KOWALSKI: Does anyone want to sneak in a quick 30
seconder? Yeah, in the back.
AUDIENCE MEMBER: Have you worked with businesses and
employers to discuss concept of place and investment in
community for retaining talent? It’s great if you can get a
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person to a community but if they don’t like the community
they may be looking elsewhere within a few years.
MS. KOWALSKI: Do you want to take that one or do you
want me to take it?
MS. EDMUNDS: You can take it.
MS. KOWALSKI: Okay, so, yes. I have seen some really
good best practices around this. In Milwaukee in the M7
region there has been a group of people working on something
called the Tech Hub, that you know there are many different
desired outcomes for Tech Hub but one of the key ones is
creating a community in which when we attract people, they
don’t want to leave, right? So really thinking about the
kinds of workers we are trying to draw in, what are their
demographics, what are the kinds of things that appeal to
them. And that cut across transportation, arts, culture,
entertainment, ongoing education. And really, they did a
great job of getting the employers and educators in the same
huddle and civil leaders and trying to think about
intentionally how do we design a community that people will
not only be attracted to a job but they’ll be attracted to
the community. Which also means it’s not going to be for
everyone. If you haven’t seen a snowflake, you may not be a
good fit for the Midwest, or if you really hate the cold,
weather is a reality and a barrier. But for - - if you set
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that aside, do you have the kind of engagement and activies
that the people that you’re looking at will want to be
involved in and that has to become part of the economic
development roadmap too, because economic development is
workforce development which requires attraction and then
retention. So - - and we just got the red sign.
MS. EDMUNDS: Oh, all right.
MS. KOWALSKI: Thank you all so much for your time.
We really appreciate it.
MS. O’BRIEN: We are going to take a five-minute break
so if anybody needs to use the restroom, facilities
management is going to take the plates away and we will
start the 1:00 p.m. session at about 1:05 p.m. So, please
be back in your seats in about five minutes or so. Thank
you.
If everyone could please take their seats.
If everyone could please take their seats. We are
going to get the program started.
I don’t know if there are people out in the buffet
area, Jerry. I don’t know if you want to ask them to come
in.
Okay.
So, our two - - our next speakers, we have - -
actually I’m going to ask Dr. Joseph Von Nessen and Carter
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Smith to please enter the stage. I’m actually going to be
moderating this panel. So, we are going to have a little
fireside chat in regard to Spartanburg and the BMW
Experience.
So back when Jerry suggested that we contact Foxconn
to be a part of the program today. After we secured
Foxconn the next question was - - the next question was
where else in the country has a company been very
transformative? And if Jenny Trick is still here, I want
to give credit to Jenny Trick because she was the one who
provided some options for me to look into and it didn’t
take long at all to really zero in on BMW. And as luck
would have it, Dr. Von Nessen was already contacted by
stakeholders in Wisconsin and was going to Wisconsin to
make a presentation and we agreed to meet before his flight
left for South Carolina and I think it was really instant
that we discussed that a lot of his work is very applicable
to this mega region. And it was through Dr. Von Nessen
that I met Carter Smith and when I heard about Carter what
was really interesting is - - you know I said, I need
somebody who understands this BMW experience, somebody who
understand that, you know like way back when they went in
the 90s and then somebody who can speak to it today. And
they are like yeah, it’s Carter Smith and I said, “No, no,
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no but somebody that knew it back then too.” They said,
“Carter Smith was there back then.” So, talk about
institutional knowledge that we have.
So, I’d really like to begin the discussion - - Carter
if you could just share for the audience just a little
understanding of Spartanburg, South Carolina. For those
that may not have ever visited South Carolina, just give a
people a little bit of the lay of the land.
MR. SMITH: Okay Spartanburg located really at the
crossroads of Interstate 85 and I26, traditional southern
community. Background in textiles significantly through
the turn of the century and pretty much up until the late
80s. It’s a - - it’s somewhat of a college town. I think
we have about 7 institutions in town of a variety of size.
So, it’s in the neighborhood of 400,000 population
countywide. So, when - - I always put that perspective
when you think about South Carolina, alone is somewhat
rural particularly when I’m visiting an area like this
without a doubt and then you incorporate the counties
within South Carolina which are 46 and Spartanburg one.
And we are a small rural county so it’s exciting to see the
growth and the change from what one project has done at
least and where I’m responsible for. I’ve been there since
’91 so as they said it’s really - - when I started, I was
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very fortunate, this is one of the first projects that I
picked up there from Spartanburg’s perspective.
MS. O’BRIEN: Thank you. And Joey maybe you can talk
a little bit about the economic realities back in the 80s
and 90s when BMW did select Spartanburg.
DR. VON NESSEN: Sure, well the history of South
Carolina can be broken down, if you look at the 3 general
stages of economic development. So, sort of low-cost
economy is followed by intensive capital investment or
capital or an investment driven economy and an innovation
driven economy, so, those are your 3 real stages. And
South Carolina transitioned from low cost agriculture to
capital or investment driven manufacturing with the textile
industry during the mid-20th century as Carter mentioned.
Then to an innovation driven economy beginning in the 80s
and essentially what happened was that in response to
globalization in the 80s we began, as everyone knows, to
see a huge drop off in manufacturing at the U.S. level.
That affected South Carolina very much and so South
Carolina ultimately had to decide what to do - - what to do
next. And so, the automotive sector was not picked out of
thin air, there were trends that we saw as early as the
1980s.
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Number one was the a - - so, in the 1980s we so we
began to see specific trends in terms of an increase in
sales activity and an increase in demand for vehicles in
the United States and if you look at small vehicle sales in
the U.S., they went up significantly and other companies
had already taken notice of this and begun investing in the
United States. So, we began to see significant foreign
direct investment in the southeast.
So, South Carolina recognized that and then the other
piece is South Carolina looked to other regions of the
world. Who else looks like South Carolina and is having
similar problems and it turns out if you look at
Regensburg, Germany I could give you a 5- or 10-minute
description of Regensburg and if I didn’t tell you it was
Regensburg you would think it was South Carolina. Same
story, history of agriculture, textile, manufacturing that
declined in the 80s, and of course they have Munich right
down the road where BMW is headquartered. They recruited a
plant so very similar stories there. So, again, the
automotive sector didn’t just arise out of thin ; there
were market realities that made it a natural fit for the
state.
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MS. O’BRIEN: And so, Carter, what was it like when
you kind of got that call or how did it happen that you
became aware of BMW’s interest?
MR. SMITH: Well, at that time there and again this is
in late ’91 and going into ’92, South Carolina had been in
pursuit of BMW for a number of years. At that point it did
not include Spartanburg though they were concentrating on
another area along the I85 corridor and you know some of
the topics that have been here and one of them that was
really rang well with me was the relationships. And so
Governor Campbell, at that time had established a very good
working relationship with Mr. von Kuenheim who was the head
of BMW at that point. And so anytime Mr. von Keunheim
would come in and particularly as they were concentrating
more on site he would say, “You know the site that you have
planned for me is nice but it would look better as a golf
course.” He says if what you have up by the airport where
he flew into each time which was our regional airport,
Greenville/Spartanburg Air District. And so, then the call
kind of came to Spartanburg what do you have that we might
can put in the mix. Because the requirements initially
were for about a 300-acre site and they were contemplating
around a $300M to $400M investment and about 2,000 jobs.
And so, when the call kind of came in to me from Commerce,
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I said, “Well I’ve got a 300-acre site, off of the north
end of the runway that I think would work very well.” And
then obviously then they said, “Well, we’ll take a look.”
But then they came back and said it doesn’t have interstate
frontage. So, even through we are about a ½ mile apart and
so in short that’s how Spartanburg became involved in the
BMW project.
I think the interesting thing and that obviously
required a lot of my time when you look at this site the
original requirement was 300 acres and because of - - I
would say state leadership and private leadership within
the Spartanburg community kept saying 300 acres would not
be enough. And so, we went on a land acquisition, keep in
mind this was not even a site at this point. And so, what
we assembled at the end of the day and a very short period
of time was roughly 1200 acres and those were basically 115
different tax parcels with 100 different land owners. So,
that’ll give you an ideal of the challenge that we had to
pull this together. And not only that there the - - we
basically started really identifying the actual kind of
overall boundaries of the site and identified land and then
with partners we started moving forward to assemble that
land and we basically assembled all of that in about 120
days. And we went through - - we bought - - just to give
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you an idea, we bought a couple manufacturing operations.
We bought numerous residential subdivisions and these were
very nice homes and some were under construction. I had a
couple of - - one the ladies said, “Well, I’m almost
through, I want to finish the house and I want to spend one
night in it.” So, we did it. I don’t think she ever hung
any curtains or anything. The lights may have been on and
gone. Then we had other ones that when we just drew up and
pulled together an option, our options were very simple
because of how we were having to acquire all of this the
carpenters went home. And these were significant
subdivisions and very nice subdivisions and then the other
interesting aspect if you will look where the horseshoe
type building is, what they called their Automotive Museum.
That was actually an active dairy farm. So, not only did
we have to figure out how to acquire that but we also had
to figure out what we were going to do with a herd of cows.
Which we did and we moved them down the road but it was a
lot - - a lot of cooperation from the - - not only the
community as a whole but from the landowners when you think
about it, we really asked a lot of them because we are
basically saying we were putting a jigsaw puzzle together.
We had a few large tracks but most of them were not large
tracks and then to ask some of them with a dairy farm about
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that and those of you who might be familiar with history
that was actually, if I remember right Kings Grant Land
that was presented to that family and been in this same
family since colonial days.
Once, you know we - – everybody overall was basically
on board with it because I think they recognized the
significance that it would be for the community. They - -
we were timing is everything coming off the end of the 80s
was not necessarily best. That was kind of one of the down
turns in the economy, so jobs were on everyone’s mind. So,
we did that then and we basically pulled that together and
then obviously the next few years, because they were
actually, they announced in June of ‘92 we basically
started the land assembly, right around January or February
of ‘92. We had targeted, set up a game plan. We basically
had three individuals that went across these 1200 acres
because we couldn’t have too many real estate people out
there simply because if we did prices were going to
escalate and they did a little bit thank goodness we didn’t
have the internet back then and so, a lot of that there may
have escalated purely between the family members trying to
buy their families out so they could sell it to us. So,
it’s little things like that there but the property got
assembled and then we had to obviously through all of that
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process was basically do due diligence from engineering and
that’s where we relied on very heavily from our private
side partners. Engineering companies, you name it, but the
three guys out there we had one that kind of concentrated
in manufacturing. One that concentrated in agricultural
type land and one that was basically residential and so
they went through and basically just took a lot of it out.
And when you look at all of that that’s there today and
this slide here, the blue was what we - - our original
plant was. And so, when you think about the supply chain
and everything else that’s been a lot of discussion today.
It is significant and my first impression was, okay when
we’re doing this this was big, without a doubt and so we
are thinking about the supply chain, how are we going to
capitalize on that? How are we going get? So, we had
everything out from a parts manual from the BMW sales
place, you know down the road. To everything else trying
to figure out a game plan on it. But basically, at the end
of the day, one of the liaisons with BMW and the state of
South Carolina was a honorary German consulate who had
started a major chemical company for a German company in
Spartanburg. He said, “You just need to sit back, they’re
going to be coming to you as you needed.” Particularly,
there is a pecking order without a doubt in the supplier
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system. So, he gave us some very good advice and we did
that there and we were thinking well with this 1200 acres
that you see here we would have a supplier part and I think
that’s where our private side was thinking we want to do.
Well the suppliers aren’t in this and none of that that was
all BMW there. And what I found out real quickly was that,
I think that because of the sheer number of units and the
investment at that time suppliers felt that they did not
want to viewed as a capital supplier to BMW. So, they were
looking at Spartanburg as a beach head then they could
start looking at basically the big 3 at that time. And
some of them were successful with that but as the years
have gone by, we’ve seen that now we’re kind of in the mode
were the suppliers are and I think driven a lot by the
mothership there is really kind of bring them back into a
much closer radius, in particular the Tier 1s.
And so every so many years we would see what I would
call the wannabes come around and any time there is a
platform change on the car or a different model, it makes a
big difference in terms of activity and trying to be sure
that we’ve got product that fits their needs and
continually demonstrating that we’ve got the work force
that fits their needs and that’s much more of a challenge
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these days as all of this have been in discussion here
today.
So, that’s kind of a real quick involvement on that,
not to mention the engineering and infrastructure to
accommodate it.
MS. O’BRIEN: And you mention that when they first
really started to set up shop, they started about 2,000
jobs, is that what you said?
MR. SMITH: That was the goal - - they would get to
2,000 jobs and about a $300 to $400M investment.
MS. O’BRIEN: And where are they now?
MR. SMITH: Right now, we’re probably close to $9B and
about 7,800 direct employees with probably 10,000 to 12,000
on site at any given day. That sound kind of familiar?
DR. VON NESSEN: Yes, so - - roughly between 9,000 and
10,000 total direct jobs and then we’ve estimated that the
multiplier effect is about 4 to 1. So, 4.1 so for every 10
jobs sustains about another 31 in South Carolina. Which to
put that in perspective, the average multiplier effect in
South Carolina is 1.7. So, just compare 4.1 to that 1.7
and it’s far and away the highest multiplier in the state
for the automotive cluster but that didn’t rise overnight,
it wasn’t 4.1, you know in 1996/1997. But that’s a very
easy metric to use to capture the strength of the supply
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chain and how it’s been built up over time. It’s been very
successful.
MS. O’BRIEN: And that was really one of the reasons
that - - you know we zeroed in on BMW because as we heard
earlier with Foxconn, they’re talking about starting at
about 3,000 and ramping up to 13,000 was the number we
heard. So, there was, you know some synergy in that. I
wonder too, if you both can talk about just how the
experience of BMW has impacted the - - the state - - the
surrounding states as well as South Carolina.
MR. SMITH: I would say from a surrounding state they
have suppliers obviously in North Carolina since we are
border county but also into Tennessee and Georgia and
probably a little bit in Alabama. One of the things that I
saw was when Mercedes went to Alabama that kind of
triggered another little bit and a little bit of growth
because one of the things that I was pleased about was that
us being ahead with BMW a number of those same suppliers
they continued to produce in Spartanburg and then would
provide logistics with a Just In Time Warehouse in Alabama
for a long time but now we kind of see that shifting a
little bit back and forth and with the Chattanooga
operation as well too.
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MS. O’BRIEN: Another one of the reasons that I wanted
to make sure that the audience was able to hear from these
two great gentlemen today is when Joey and I first met he
shared with me, this is just a little bit of a teaser in
terms of what is going to be coming in just another minute
or so, after some questions, is that because of the work
that was done really when BMW first announced that they
were going to locate in Spartanburg and the right
investments that were made, correct me if I’m wrong, but
isn’t South Carolina now the number 1 exporter of tires in
the United States?
DR. VON NESSEN: Yes, exactly. And so, the - - one of
the key aspects of looking at industry cluster development
is looking at spin off clusters or related clusters or
tangential clusters, whatever term you want to use. But
once you have a good grasp of what the supply chain looks
like for particular sector. So, in our case BMW and the
supplier surrounding it, you can begin to look at those
specifically and say, well what other industries could the
supplier support, in part or in full and what additional
suppliers do you recruit or additional companies?
And so, in the cause of South Carolina, the tire
cluster and also the aerospace cluster. So, Boeing came to
South Carolina in 2007 and both of those are due in part to
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the follow up work to BMW with the supply chain and
actively, pro-actively looking at that cluster,
understanding who’s in South Carolina, who’s in
relationship with whom and how you can continue to grow
that over time.
MS. O’BRIEN: Carter can you comment on anything that
has surprised you or thing - - or something that you may
have learned during the process of the multiple expansions?
MR. SMITH: Well, there is actually, they can - -
they're somewhat consistent. It seems like that about
every 3 years we’re in discussions regarding some type of
capital investment - - additional capital investment and
growth a lot of times and employment as well and that kind
of sinks in between what is the platform of the car. They
seem to run about the same thing without major changes for
about 7 years. So, it’s like you’ve got one that’s
carrying it through then they are going to make it change
and then it goes again.
And then the other thing is that when they came here,
they were not looking for automotive expertise. They were
looking for manufacturing expertise and obviously with the
textile situation in the late 80s and going into the 90s we
were very well positioned to provide a workforce that
understands the manufacturing climate. That understands
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shift work and is willing to do a good day’s work for a
good day's pay.
So, all of those there - - I guess it shouldn’t be a
surprise but some of that is supply - - was a surprise too
me as far as consistency and the operation continuing to
grow.
MS. O’BRIEN: We are going to open it up to questions
before the second part of this segment but before we do, I
would like for each of you to just share with the audience,
because there are so many economic development
professionals, a piece of advice.
If you were in their seats in terms of knowing that
Foxconn is coming to town and other businesses potentially.
What do you wish someone would have shared with you when
BMW first announced that they were going to Spartanburg?
MR. SMITH: It’s a lot of fun, to say the least. I
think that there but I - - I think that cooperation,
collaboration and always a “can do” attitude when dealing
with - - with the 800-power gorilla in the room moving
forward and continuing to develop those relationships with
that company. And so that – we’ve seen probably with me,
I’ve probably got more time than any of the other people at
BMW to be honest with you when you think about it because
leadership has changed and rotated out. So, you’ll always
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get what were we supposed to do or what were y’all going to
do for us. You know it’s 10 years down the road from that
previous agreement. So, anyone, whatever it may be, I
think you want to be thinking about that from the local
developer’s side.
MS. O’BRIEN: Joe?
DR. VON NESSEN: And I’d say just be proactive and
recognize that the market environment is dynamic,
constantly changing. So, in South Carolina for example
right now if we’re looking at other ways to add value to
the automotive cluster. One of the things that we don’t
manufacture in South Carolina is engines and so we’re
looking for ways to bring that part of the supply chain to
the state as well, that’s down the road. And then also if
we look at changes in energy with respect to the fact that
in the automotive sector cars are becoming more electronic,
more electric and we are not just talking about electric
vehicles in the sense of having batteries but think about
all of the electronics that go into a car even if it’s a
traditional engine, right? So, the automotive supply chain
is quickly becoming more of an electronic components
cluster. The supply chain is evolving in that direction.
So, just two examples of what’s happening in South
Carolina but always being aware of the fact that things
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change very quickly and you have to stay on top of market
trends to be successful and be looking ahead.
MS. O’BRIEN: So, again we are just going to - - if
you have any questions for Carter, questions for Carter,
because what’s going to happen next is once - - we want to
give your opportunity to chat with Carter and then Dr. Von
Nessen is going to give a presentation very targeted
towards the supply chain and what we might consider here in
this mega region.
So, Carter and I are going to exit the stage but
wanted to give everyone an opportunity to ask a question.
AUDIENCE MEMBER: So, my question is, this morning Dr.
Woo talked about some of the and I’m not going to quote him
properly but maybe some of the resistance that Foxconn is
noticed to the initiative in southeastern Wisconsin. Was
there similar resistance of any kind in South Carolina as
the BMW project was coming online?
MR. SMITH: Initially there was and it was surprising
some of it came from the declining textiles in terms of
their - - the potential impact on the workforce and the
wage potential. It was probably more that, I don’t think
we ever really were concerned about from a union activity
or anything like that but I would say the impact from them
and occasionally some of the other companies felt that they
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were going to be losing their best workers to this
operation because it’s new and shiny and it’s a highly
recognized consumer name.
And so, a lot - - some of them we were very fortunate
when you mentioned tires, we have a Michelin truck tire
plant which is their largest truck tire plant at that time
in the world. So, sometimes we would get the comment that
BMW stand for “Best Michelin Workers.” So, that fear of
walking across the street but they were - - we were all
very targeted from the workforce people to the company and
all that they made sure that they were not depleting any
existing company within a significant radius in South
Carolina for workers. They kind of tracked them because I
think the first week, they probably took in like 65,000
applications after the announcement. So, the workforce was
obviously swamped to say the least.
MS. O’BRIEN: Any other questions?
AUDIENCE MEMBER: (Inaudible 1:15:04.4).
MS. O’BRIEN: Okay.
AUDIENCE MEMBER: Quickly on the Port of Charleston
was it affected significantly by either imports or exports
based on the siting of the plant or was that, is this
mostly a domestic operation?
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MR. SMITH: No, it’s - - they are highly affected by
exports. In fact, they - - the Port of South Carolina was
very involved in recruitment of BMW. BMW is the highest -
- greatest exporter of value automobiles in the country is
right there in Spartanburg and that’s because they export
about 70% of what they make. Also, they - - the port has
invested in the last 5 years of a inland part which
provides directly train traffic from the port to this plant
and back which is basically daily. Now two trains a day
and maybe might actually be 4, 2 trains both ways now. And
so, the export, this is where the port was just talking
about their five-year growth at Inland last week or so.
And so, they are about 62% of projected cargo movements of
what they were anticipating in 5 years.
So, very much a part of it.
AUDIENCE MEMBER: Couple of our subjects here are
being transportation, you suddenly, over several years but
not all that many having a huge increase in the number of
workers who are going to this location. What has been done
in terms of innovation or whatever to get - - to make this
happen?
MR. SMITH: Well primarily we have looked at the
traditional thought on how do you take care of
infrastructure when you put more on it? Build it bigger.
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And so, I think where we are at now is, we are having to
seriously consider not only the company's work but on terms
of shift times and shift releases and things like that for
the worker going out. But we are also looking to see how
do we disburse traffic off of the plant site and how they
may need to move more traffic within the plant site as
opposed to going out going around to the back gate for
instance. But basically, its been the traditional thing,
just make it bigger.
AUDIENCE QUESTION: Kudos to Kelly for this panel
session right here. I’m a former Political Scientist at
Auburn University and one of my former colleagues was the
City Manager of Auburn the City of Auburn, Alabama wrote a
book entitled “The New Civil War.” And that book was
basically looking at the south basically stealing a lot of
investment capital away from rust belt states. What’s
really amazing about this is that you’ve been invited up
here to the Midwest to share your expertise. So, from a
political competitiveness scenario, what are you going to
go back and tell the folk in South Carolina and Alabama
about please beware because I think Foxconn kind of tilted
the teeter totter towards the Midwest in terms of capital
investment?
188
DR. VON NESSEN: I can speak a little to that. Each
region is different and has its own competitive advantages
and from the perspective of the auto cluster, I would say
if you look at a map and look at the U.S. headquartered
firms and the foreign headquartered firms that there is a
very specific division and if you look - - and so the
domestic firms are anchored in the Great Lakes region,
foreign direct investment has come more to the south. So,
there has been somewhat of a division there for a number of
reasons but the bottom line is that each region has its own
specific competitive assets and that’s one of the reasons
that we are here today is to talk about that.
MR. SMITH: And we realize that and we also recognize
that our competition is globally. It’s not whether it’s in
this part of the United States or where - - more and more
small projects, all kinds but they are looking elsewhere as
much as just the southeast.
MS. O’BRIEN: Well, I could listen to that southern
drawl all day but we are going to transition now. Dr. Von
Nessen will do a keynote and Carter and I will exit the
state. So, thank you
DR. VON NESSEN: Thanks Carter. All right, well good
afternoon everyone once again and thank you for inviting us
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to participate today it’s great to be with you in Chicago
today.
And we’ve talked over the last 20 minutes or so about
really the logistics of the boots on the ground approach.
The interactions between BMW and South Carolina but I want
to pivot a little bit and talk more about the why and the
how of BMW. So, specifically why is it so important for
South Carolina to devote all of these resources towards
bringing BMW to the state and then how, how did we get the
link, what is that link between the announcement of BMW
itself and then this high rate of economic growth. How do
we basically maximize the benefits of a company like BMW?
What does that look like?
So, let’s talk about both of those questions. So,
first of all why? Why was BMW so important? There are
two main reasons, again some of these we have already
addressed briefly. But the first reason of course is the -
- perhaps the most obvious one and that’s the jobs and
incomes and overall economic activity that’s associated
with a large company like BMW coming to South Carolina.
So, the state is clearly going to benefit from that but the
less obvious benefits come down to this concept of traded
cluster development and the fact that BMW like any major
economic player or economic buffalo that we like to use
190
that term. Any major buffalo that’s going to service the
foundations for traded cluster development. And traded
clusters really are the key to linking a company like BMW.
A major announcement or Foxconn to maximizing its rate of
growth over time and maximizing the rate of economic growth
and a region over time. So, I think it’s important to talk
a little bit about what traded clusters are and why they
are so important and how they work. So, in economics any
time you want to talk about a concept it’s always best to
go back to the basics. So, let’s start by defining what a
traded cluster is. As you can see here it’s simply a
regional concentration of related industries in a
particular location. So, this is obviously a concept that
we are all familiar with, if not in name at least in
concept. And a traded cluster you can think of some of the
most famous ones that we’ve - - some of which we’ve talked
about today. Silicon Valley of course, the Biotech cluster
in Boston and the automotive cluster in the Great Lakes
region, just to name a few.
And why are clusters important? Why do companies - -
why are they willing to locate and congregate near one
another? And the answer is quite simply they have shared
resources that they can take advantage of or agglomeration
economies is the term that economists like to use for this.
191
So, anything from a shared workforce, a shared labor pool
to shared infrastructure, to a shared supply chain and
we’ve talked about the Port of Charleston being a - -
certainly a shared resource that automotive companies
coming to South Carolina can utilize.
So, in 2018 we have multiple major automotive
manufacturers in South Carolina that are export oriented
and therefore can take advantage of the Port of Charleston.
So, these common resources provide a significant value
there.
Now another concept about clusters that’s important is
this adjective that we use to describe them, traded
clusters. And those can be distinguished from local
clusters in the sense that traded clusters rely on demand
from outside of the local region. Whichever region that we
are talking about. Local clusters rely on demand from the
local region. So, just think about the difference between
a major automotive firm like a BMW that is selling cars all
over the world to a service cluster that is primarily
serving local residents. Services like restaurants and
barber shops and all different manner of local services.
So, very obvious difference there and the reason
traded clusters are so important is that when you're
integrated into a global economy that makes you less
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susceptible to local economic fluctuations. So, if we
think about traded clusters as a way to maximize economic
growth and to minimize disruptions over time, we want
consistent growth. Traded clusters is a way to do that.
It’s just like a retirement portfolio, diversity is good
you want to be integrated into more markets across the
world because if you’re wedded less to a particular market
particularly to your own market, that’s going to limit your
risks to a certain extent.
And then finally traded clusters also typically see
high rates of growth particularly in the early years once
they hit a critical mass. Once you get that supply chain
built up to a certain level. And they typically follow
what we call an “s” shaped growth path. That is fairly low
growth for awhile and then it shoots straight up like an
“s” once you hit that - - once you hit that critical mass.
So, why do traded clusters matter? What are some of
the major reasons? These are three of the big ones, number
one traded clusters scale up employment in ways that few
other industries can do and we’ve talked about that. One
of the specific factors there is the supply chain. When
you have a large supply chain and a new company comes in
that‘s in that cluster, that’s in that industry and they
can use that local supply chain that means that all of
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those dollars are staying local. All those dollars are
staying within the region and that’s going to generate
additional demand through the economic multiplier effect or
the economic ripple effect. So, scaling up employment for
a local region. Also, traded clusters tend to be more
anchored to a specific region. They don’t pick up and
leave and move from region to another very easily like an
induvial firm might. And then they also lead to higher
more consistent rates of economic growth as we’ve talked
about. This is a key feature of the traded part of the
traded cluster environment. Again, when you’re integrated
into a global market or at least into a national market
that is outside of your local region, you are looking at
demand from other areas and that helps to maintain
consistent growth over time. It allows you to maximize
your growth and, in many cases, minimize fluctuations
during economic downturns. Of course, every downturn is
different but in general traded clusters tend to fare
better in many cases during those downturns.
All right, so let’s talk about BMW as a story in South
Carolina and how they manifest these - - this potential to
develop traded clusters. Are they a good match for this
fit? And so, you can think about BMW and then think about
the similar patterns that you see here in the mega region
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with respect to Foxconn. So, does BMW serve as a good
anchor for a automotive cluster in South Carolina? Well
let me give you five reasons why we would say the answer is
definitely yes. Number one BMW is export oriented. As
Carter mentioned BMW exports about 70% of all the vehicles
manufactured in South Carolina outside of the United States
through the Port of Charleston. So, this shows us very
clearly that BMW is integrated into global markets. Which
again provides that advantage of being anchored to the
global economy and providing more - - more diversity and
again such that South Carolina is not necessarily going to
be limited or is going to be influenced as much by local
economic downturns, that’s not going to end influence
growth rates quite as much.
Secondly, BMW does not displace local business
activity. Once again because it forms the foundation of a
traded cluster in its access to international demand. So,
one of the common criticisms of large companies like BMW or
like Foxconn or like others is that they do come in and
they shut down a lot of local mom and pops. So, think
about a lot of the big box retailers, they are sort of the
typical example of this. But that has not happened with
BMW, again because they are selling to markets all over the
world and in the United States as well and so that makes
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the benefits of BMW far more clear. And so, these gains
that we see in terms of jobs for South Carolinians is
really a net gain. And again, it’s more obvious because
they are not displacing local demand and can actually do
the opposite and fuel local demand. So, when you have a
established supply chain, you have a lot of workers in high
wage, high skilled positions those are wages that are then
spent locally in South Carolina’s economy and fuel
additional demand for the local service sectors. So, the
local clusters often follow traded clusters in terms of
their overall growth partners. So, that’s an important
advantage for BMW.
Number three, BMW is very much forward looking so we
have to look at companies in terms of the buffalos that
were trying to attract and retain. Are they going to be
around? In BMW the case is definitely yes. They just
recently celebrated their 100th anniversary in 2016; they
are doing all sorts of work with respect to research and
development and innovation. And one of the really
interesting things that they are doing now in terms of
recognizing these changing market demands I mentioned
before that’s really a key factor here.
I was in Germany earlier this year and they’re very
very sensitive to changes in consumer buying patterns
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particularly among Millennials who are much more likely to
use services like Uber and Lyft and are far less likely to
get a driver’s license at a normal age. And are less
likely to own a car, particularly in major cities. So, if
you are a major automotive manufacturer that’s a real
trend, a market reality that you’re beginning to have to
deal with now. So, BMW is taking that very seriously and
looking ahead. And of course, any company in the
innovation or R&D space is going to generate more value-add
which leads to higher wages in general. And that leads to
another more obvious benefit of BMW -- that they generate
high wage, high skilled employment. I’m not going to spend
too much time here we have already talked about some of the
major benefits of BMW in South Carolina. They were
definitely a company that under-promised and over-
delivered. As you can see, 2,000 employees at the time,
2,000 jobs rather. Which has expanded to about 10,000
direct jobs as of 2017.
And then finally, BMW also provides what we call a
halo affect for South Carolina which is just another term
for the power of branding. Any time you land a major
marquee name in a region, that’s going to provide
significant branding power around the world because other
companies are going to stop and take notice of regions like
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South Carolina and ask, what is South Carolina doing
differently? Why would a company like BMW be attracted
there? So, all these advantages that we see, again, arise
out of this concept of traded clusters and that’s very
important. And we can see the evidence of this so I
mentioned the supply chain before this is a picture of what
the BMW supply chain looks like in South Carolina. That
actually shows you some of the names there which obviously
you can’t read very well so I can change the picture this
makes it a little more obvious, a little easier to see.
But one key point that I want to emphasize here is, notice
that the supply chain is statewide. BMW is in the
northwest part of South Carolina in the
Greenville/Spartanburg region. So, you can see that
cluster firms in the northwest part of the state. Columbia
the state capital is in the center part of the state and
then Charleston on the coastal region. So, three obvious
clusters, but what do notice there, again you notice that
the benefits of BMW are very clearly statewide so it’s not
as if an individual region would have any reason to be
upset that BMW located in one region versus another.
Because the benefit extends to multiple regions across the
state and even some outside of the state as Carter
mentioned before. So, the benefits are very clear and
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we’ve seen, again, a sizeable supply chain develop in the
last 25 years.
This is the employment multiplier effect that I
mentioned before in the conversation: a 4.1 in South
Carolina. So, for every 10 jobs that are created in the
automotive sector in South Carolina, another 31 are created
elsewhere in the state on average. So, this means that any
new automotive player, any new company that comes to South
Carolina is going to be able to take advantage or rather
South Carolina is going to be able to take advantage of
that multiplier effect and that’s been building up over
time. Again, you don’t just jump to 4.1 overnight but as
you expand the supply chain over time this is the type of
effect that you can potentially get. And just compare that
to what the other major sectors in the state look like.
These are just a handful of the larger sectors in South
Carolina that you could look at, but as I mentioned before
the average employment multiplier is right at about 1.7.
And here we can actually see the growth that the
automotive sector and the advanced manufacturing sector
more generally has contributed to South Carolina throughout
the current economic expansion that goes back to 2009 it’s
now in its 10th year. So, the redline there represents
South Carolina’s employment growth rate and the green line
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represents advanced manufacturing or transportation
equipment manufacturing the official definition there. So,
you can very clearly see that it’s been driving our growth
and in fact by many metrics South Carolina has been leading
the nation in terms of economic growth going all the way
back to 2010 due in large part to the - - the automotive
sector and the advanced manufacturing sector. And that
sets the state up for future expansions as well. So,
Volvo, one of the most - - one of the more recent
announcements in the state announced they were going to set
up shop in Charleston, that was back in 2015. A number of
reasons why they’re coming to South Carolina as you can see
that they have been quoted that it’s not all about the
supply chain of course.
We’ve talked about the labor force, we’ve talked about
the different regional assets that a particular area has.
All of those matter but the bottom line is that South
Carolina is setting itself up for future success as well.
All right, so, that tells us the story of what’s being
going on with BMW. But here’s the real question that you
all are interested in, we’ve landed a buffalo, so what.
What’s next? Where do we go from here, right? That’s –
that’s one of the reasons that we are here today. So, when
we think about where we are going next and what the process
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is going to look like in terms of traded cluster
development, I would invite you to think about this
question using the following flowchart. Because when we
think about an economic ecosystem and that term is being
used a little bit this morning, we can consider three major
steps, at least as a major part of the process.
So, the first step, of course is to land a major
economic player or a buffalo which, that part we can kind
of check off our list, right? And then we can move on to
the second two phases which are supply chain development
and then what I alluded to before - the creation of spin
off clusters or related clusters, and both of these
elements are important and this is a way, again to begin
conceptualizing where we move from here. So, how do we
begin to advance the ball on items number 2 and 3 there,
especially with respect to supply chain development, and
the answer is market research. Because what you all
effectively have and what economic developers in general
have is as much of a marketing problem as it is an economic
problem. Or a marketing opportunity as much as an economic
opportunity. And economic development in many respects is
taking the philosophies and the principles of both fields,
marketing and economics, and merging them and using
economic research to understand the landscape of the local
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region and from there building a strategy, a competitive
strategy, a market strategy to identify target markets and
then to go out and recruit them. Because effectively
marketing looks externally, that’s the philosophy of
marketing is always looking to the customer and saying, how
do we figure out what their needs are and how do we
identify way to fulfill those needs? And in this case in
the mega region, the needs are those of Foxconn and of
course the suppliers that we're hoping to recruit to the
region. So, all of that is very important, again market
research is a fundamental.
And so, it begins with environmental scanning so a
couple of different ways that we can - -a couple of
different first steps when you are looking at market
research and the principles behind it. What are the
existing businesses? Number one, in the region that can
potentially supply a principal player, such as a Foxconn.
So, going out and actually mapping - - mapping the firms in
the region, identifying which ones could potentially fit
the bill versus which ones are less likely to, and then
secondly to go and identify what Foxconn’s needs are or
what the major economic players needs are, and then thirdly
going out and identifying related clusters that may exist
elsewhere in the United States.
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So, what are other regions doing that might be
comparable to the mega region that would be helpful and
again I go back to what South Carolina did in the late
1980s and identifying Regensburg, Germany as having a
similar economic history, having a similar sized economy as
a template essentially for - - to learn from. So, what
other regions of the country are doing similar things to
what the mega region is doing?
So, three specifics in terms of environmental scanning
to look to. And so, once you engage in these three actions
you can do a SWOT analysis and a identify those gaps.
Identify your strengths and weaknesses and begin to create
an actionable plan, strategic plan to move the ball
forward.
So, let’s talk about an example of how this works and
work that’s been done in South Carolina that illustrates
this process. So, as I mentioned before Boeing in 2007 came
to South Carolina and since then we’ve been proactively
working in the aerospace cluster, the University has to
help the Department of Commerce and other economic
development officials identify the firms that are in the
supply chain. Identify others that could be potentially in
the supply chain and again comparing ourselves to other
regions. So, specially we started out by first mapping the
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supply chain, looking for Tier 1 and Tier 2 suppliers. And
then we actually went out and did interviews so- - - sort
of phase 1 of this research is to identify the firms in the
region, the potential players. And then phase 2 is to
actually go out and talk to them because fortunately or
unfortunately one of the only ways to get good data in this
case is to actually interview and talk to the firms. There
is really no good secondary data here. And so, the
Department of Commerce took these firm lists and actually
went door-to-door for over a year and basically interviewed
companies asking them very simple questions, why are you in
South Carolina? Where do you see demand going in your
industry over the next 10 years? What would you like to
see in South Carolina if the Department of Commerce or the
state could do anything to help you? Who are you hoping to
work with, right? Very basic questions but you get a lot
of good information from this process and so you can
develop the strategies over time.
So, two quick examples of some conclusions that came
out of the research that we’ve been doing in South Carolina
with respect to the aerospace cluster. Number one is
looking at the military aviation component and the
Department of Defense contractors. So, one of the things
in South Carolina that is true is that the aerospace
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cluster is largely about half of it as actually a military
base. We have a large military presence in South Carolina
and so we have a lot of military contractors that serve as
suppliers. And given the constant changes in DOD funding,
DOD priorities, these contractors are at risk of either
having to scale back or potentially in a positive sense of
scaling up. And so, if that happens, one of the important
things to be able to do, is to be able to mitigate
particularly in a negative direction some of those
potential losses to prevent a change in DOD priorities from
negatively affecting areas of South Carolina’s economy and
economic growth. And so, by going out and looking at those
contractors, talking to them, identifying their supply
chain, identifying their - - who they are working with, we
can identify which ones most easily transition into the
private sector and which ones can’t. Which ones are going
got need more help and which ones will need less.
So, that had become a very important part of this
research effort. A second research effort is that the - -
a second outcome here has been the - - the identification
of a potential new supplier - - or I’m sorry of a new
potential industry cluster, in terms of medical equipment
manufacturing and the supply chain looks like it might be
in place to start that development and which is a really
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cool concept because if you think about it, when you’re
creating equipment, advanced equipment to work on a
particular - - to work on anything. Whether you’re working
on a heart, a biological heart or whether you’re working
on, you know an airplane engine you can still see some
overlap there. So, that’s really exciting, so we are
looking into that right now.
And so, there’s some evidence here, I’ll go through
this fairly quickly in terms of the success that we’ve
seen. You can see the scale up in aerospace employment
also in the firm growth as well. And firm growths have
been anchoring the South Carolina as well so we have seen
evidence very high employment and revenue growth, fairly
lower firm growth. And we’ve seen this in interview work
that we’ve do too, that smaller and midsized companies are
coming to South Carolina, they’re anchoring there and then
they’re flourishing. So, that’s been some very positive
results that we, that we’ve seen.
So, just quickly wrapping up, a few key takeaways as
we look to the future, recognizing that initial investments
can generate exponential benefits over time. So, BMW was
very controversial at the time but it’s not in 2018. Not -
- Carter may disagree with me, he may be - - you may be
able to find somebody in South Carolina that thinks BMW was
206
a bad decision but I don’t think you’re going to find that.
But you have to be proactive in order to ensure cluster
development. There are likely hidden clusters that may
emerge but once again being proactive to - - to explore
what those are and again aerospace and the tire clusters
are those that have manifested themselves in South
Carolina. A strong R&D sector is critical as we mentioned
we’re continuing to work on this in South Carolina and
hopefully, eventually attract engine - - engine production
to the state.
And then finally workforce concerns of course, are
important too. So, four major takeaways to be thinking
about, but market research is an important next step and it
really will enable you to take economic development to the
next level. So, I am very excited to be - - to be
observing and participating in this exciting announcement
with Foxconn and look forward to watching your successes in
the coming years.
Thank you all very much.
MS. O’BRIEN: Because we are trying to get back on
schedule here, we’re going to go into the next segment but
I know that Dr. Von Nessen will be here at the conclusion
of the program. So, if you have questions, he’ll take
questions from folks after the program. Great, thank you.
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So, last but not least, we started the day looking the
Milwaukee/Racine area and we’re ending the day at the other
side of the mega region in northwest Indiana. And we’re
going to be asking three of the fantastic supporters of our
work to enter the stage. And I’d like to share, Violet
Sistovaris who is the CEO of the utility NIPSCO/NiSource.
NIPSCO/NiSource has been - - really again we talk about
Paul Jones being at the table from day one, this utility
has been supportive of our work. Prior to Violet taking
the role of President, Jim Stanly was the first Indiana
chairman of the Alliance and Violet you have really stepped
up and you have hosted business advisory meetings for the
Alliance in northwest Indiana. You continue to understand
the important role that the northwest Indiana has within
the mega region and with your support and visibility of the
company it does tremendous help for the Alliance, so thank
you for that.
And Mayor Karen Freeman-Wilson, the Mayor has also
been very supportive of the Alliance, she brings so much
expertise in terms of the renaissance that is happening in
Gary and there is really a lot of best practices from
around the mega region that can be shared and you know
connect the dots in terms of what’s happening where. We
208
have been involved with the Gary airport and with looking
at some redevelopment areas and some social programs there.
And then we’re very excited and truly the reason that
this segment came together is that I was reading the
newspaper when we saw that US Steel announced its $750M
investment in its plant and I said, “We have to have him.”
So, the phone calls started and Paul Vercher, we really
appreciate you being here today.
So, a round of applause for our next three speakers.
MS. SISTOVARIS: Thank you for that introduction
Kelly, it’s great to be here. I want to make sure that I
don’t clash with both my mics. It really is a pleasure to
be able to join you. It sounds like throughout the day
you’ve talked about a lot of exciting things that are going
on in the three-state area. And it’s really no different
in northwest Indiana as Kelly just talked about.
Continuing to attract new businesses and continuing to
reinvest in businesses that exist, including significant
announcement from U.S. Steel recently about their plans is
what you’re going to hear about today. The work that the
Alliance does under Kelly’s leadership is important and it
provides a platform for connectivity that really leads to
greater opportunities for all of us and certainly want to
thank Kelly and the organization for their continued great
209
work. I am honored to introduce the two major players in
some of our recent success stories. So, a little bit of a
background, Mayor Karen Freeman-Wilson, while I appreciate
our personal relationship, professionally what I would say
about Mayor Karen is that she’s the leader that I think all
of us strive to become. For nearly 7 years now, the Mayor
has been the Major in her hometown of Gary, Indiana
becoming the first female to lead the city and the first
African American female Mayor in the state of Indiana.
She’s a graduate of Harvard College and Harvard Law School
and has served as the Indiana Attorney General, the
Director of the Indiana Civil Rights Commission, and the
presiding Judge of the Gary City Court. She’s also a
leader in the National Drug Court movement, having served
as the CEO of the National Association of Drug Court
Professionals and Executive Director of the National Drug
Court Institute.
As part of her success in rebuilding of the city of
Gary she is very focused and I know this firsthand because
of the work that we do with her on new job creation, the
completion of the $100M airport runway relocation. The
creation of Art House, a social kitchen, it’s a work of
public art and culinary incubator supported through funding
from Bloomberg Philanthropics and the Night Foundation.
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And certainly, she’s very focused on the development of key
areas of the city including Miller Beach, University Park
and the downtown neighborhoods.
Let me talk a little bit about Paul Vercher. He is a
native of Montgomery, Alabama and welcome to the Midwest.
Having joined U.S. Steel in 2007 and currently serves as
the Director of State Government Affairs. Paul oversees
all government and political activities in Alabama,
Arkansas, Illinois, Indiana as well as Texas. Prior to
U.S. Steel, Paul held government affairs positions in the
Business Counsel of Alabama, the Alabama Rural Electric
Association, the Birmingham Regional Chamber of Commerce,
Alabama Governor Rob James and also worked with one of the
state senators. He’s a graduate of the University of
Alabama and a Juris Doctor from the Birmingham School of
Law. He’s serves on numerous Boards of Directors,
including the Indiana Manufacturers Association, the
Birmingham Business Alliance and Alabama Baseball Coaches
Association just to name a few. His current role enables
him to build the healthy relationships needed between a
city like Gary, Indiana and a corporation like U.S. Steel.
And the impact that such a collaborative relationship can
have on the entire community. We look forward to their
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discussion on how their renewed partnership has led to
investment and revitalization.
So, I’m going to join them and facilitate a brief
discussion. As I am getting settled, what I thought I
would do is maybe ask both of you to make a few brief
comments and then we will get into a couple of questions
and hopefully also allow some time for audience questions
and then we will definitely, I’m looking at Kelly, we will
work really hard to stay on track.
So, Mayor why don’t we start with you and any opening
comments you might make.
MAYOR FEEMAN-WILSON: Well first and foremost, I want
to thank Kelly and her team for allowing me to be a part
what we all know to be an extremely important conversation.
I think that as Mayors, and as business people and as non-
profits who want to drive our communities and promote our
communities there is a bit of tension in saying that we
want to also promote regional competitiveness so that this
region can be competitive with other regions. What I would
counsel us as we look at the whole notion of regional
competitiveness is that there are regions who have this
down to a science.
I had an opportunity recently, as recent as yesterday,
to participate with other Mayors and Bloomberg Philanthropy
212
in a Mayors Innovation Workshop, day long. And what I
noticed immediately was the comaraderie but not just the
comaraderie but the cooperation that is occurring in the
Austin area, that’s occurring in the Denver area among
Mayors and not just among Mayors but among Chief Innovation
Officers, among businesses in those regions and as a result
of that there was a city’s challenge that was announced
this morning where Georgetown was able - - Georgetown,
Texas which is the Austin region won a challenge and the
folks from Austin were just as happy. So, I think that’s
really instructive to us as a - - as a tri-state region to
think about how important it is for us to work together.
How important it is for us to support each other and really
how important it is not just because playing nicely
together is the thing to do but really because it benefits
the citizens that we have been entrusted in serving. It
benefits the business climate in our respective communities
and ultimately when we work together, we all win.
MS. SISTOVARIS: Thank you. Paul?
MR. VERCHER: Yeah, that’s a great point, Mayor. And
by the way I lived in downstate Illinois, to at Scott
Airforce Base, my dad was military.
MS. SISTOVARIS: So, welcome back.
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MR. VERCHER: So, I’m back in Illinois and I’ve also
lived in Kansas City, so I have a little Midwest
upbringing. But I wasn’t really going to bring this up,
but it’s a good point because our company U.S. Steel has
factories all over the country. So, we have a pretty big
footprint here in North America. We have a footprint in
Europe and then other places.
So, one of our mills in Alabama was shut down there
was a project which most of the economic developers here
are probably aware of the Tissen Corrupt Project at the
port down in Mobile, Alabama. And they went into direct
competition with United States Steel and I think they got a
$1B from the State of Alabama. Once of the first projects
I worked on out of school was a Mercedes Project in Alabama
and that I think was right before BMW but a lot of people
thought that was a bad investment, too but it turned out to
be one of the best things the state ever did. But getting
back to that point Mayor is when Tissen Crept came in and
competed with us in getting $1B from the state I told the
current Governor at the time, I said, “Governor, I
understand why you’re going to take this but you’re going
to put workers out of a job in Birmingham.” I said, “So,
you’re adding these new jobs at Port of Mobile but you’re
just taking away from Birmingham.” And we made an
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announcement last year that regrettably we closed our
Flatwell Operation down because of that. So, I think it’s
- - I think it’s good when communities can come in and work
together collaboratively, I think that’s the key word,
collaboration and I just want to say that our investment
that we’ve decided to make at Gary, you know it’s announced
that $750M, I think there’s a chance that it could be even
more than that, Mayor. But - -
MAYOR FREEMAN-WILSON: I’m counting on it.
MR. VERCHER: - - but it wouldn’t have happened
without the collaboration with the city. I mean one of the
things I get, I'm blessed to do is I go around and I talk
to different cities and communities and states and we have
a lot of projects. I’m going to talk about one in a second
and I get to go meet with a lot of people but the Mayor of
Gary is the best - - my favorite Mayor in the whole
country. And I really have a unique and really good
relationship with her and when it comes time to you know
look at a project and make an investment, a lot of that is
how you feel about the community and obviously Gary is our
flagship plant. So, we have a great relationship there but
you have to have great leadership and leadership starts at
the top. So, Mayor thank you for all of the things that
you do for the community and you’re a big reason why we are
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- - we’re coming here to your town and so just want to
thank you.
MAYOR FREEMAN-WILSON: Well, that’s very humbling and
I certainly appreciate it Paul. You know when we think
about the significance of U.S. Streel to the city of Gary,
obviously U.S. Steel created the City of Gary as its
flagship and you know gave birth to the city. But I think
we also had to really rethink what our relationship was and
for so long it was a - - a taking, what can we get U.S.
Steel to do? But I think when we thought about how we
might add value to the partnership, I think it made us a
better partner and ultimately gave more value to you from a
corporate standpoint and it’s not that there won't be times
when it has (inaudible 1:57:05.2) that we won't go to our
corporate sector and say, we need or we’d like to see or
we’d like to do to create that value-add in the city. But
I think that can’t always be the conversation.
MS. SISTOVARIS: Great conversations and Paul I agree
with you wholeheartedly, she’s one of our favorite Mayors
too. And Mayor to your point partnership has to be a two-
way street and you know you’re - - sometimes we can get off
track but collaboration, I think, only happens when there’s
a little bit of give and take at various points along the
way. Well as someone very much interested in economic
216
development certainly in northern Indiana and really the
entire state, I have to ask this question first. That
first initial meeting as an inquiring minds kind of
question - - that first initial meeting, how was it? Who
was there? What were your objectives? And what were you
able to leave coming out of that initial conversation?
MAYOR FREEMAN-WILSON: So, it was a very interesting
meeting. Because while we had had a meeting that Paul was
not in with a number of the leadership - - leadership team
in Pittsburgh when the National League of Cities met in
Pittsburgh, we just reached out to say we’d like to come
in, we’re going to be in town, we’d just like to sit down
and have a conversation. So, that was sort of the
precursor, I think to this - - the next meeting which
occurred late ‘17 early ‘18. And so, you know, my question
was where have you been? And it was in a very respectful
manner because we were glad to see them, but it still was a
way of us sort of saying you know there are ways that we
thought we could have been helpful and there are ways where
we thought you might’ve been helpful that did not involve
money. And so, we wanted to kind of reset that
relationship that if nothing else happened there would at
least be a rapport where I could pick up the phone and call
Paul or pick up the phone and the call the Plant
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Superintendent or pick up the phone and call someone else
in or out of northwest Indiana or Pittsburgh to develop a
rapport that would be lasting that would really transcend
any monetary investment. And what I will say in Paul’s
favor and really in the company's favor, I don’t think they
could have had a better Ambassador, could have sent a
better person to come and sort of reestablish that
relationship because he certainly acknowledges the prior
challenges but also said okay, that happened then, let’s
move forward and that was well received by our team.
MR. VERCHER: Thank you. And you know I think it’s
something that regrettably corporations can do sometimes we
can retreat into our silos and if you look at the cyclical
nature of the steel business you know we are up and we’re
down. When we were down from 2,000 - - and the cities know
it just like the company knows it. We were really down
2008 until really recently. So, we were in a lean six
sigma type environment. Our company we were - - we changed
from Gatorade to Squincher in our mills because it saved us
$3M a year. You know TV’s went out of the offices. I mean
we went down to, I mean where we didn’t have anything but
one of the things that we didn’t do a good job of was
establishing and maintaining relationships with cities and
municipalities and governments really at all levels during
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that time. So, when you go into survival mode, I think one
of the things that companies can do sometimes they lose
focus of the relationships. So, when you come out of that
survival mode and you got nothing, you know you have
nothing and so we realized really quickly and the Mayor was
kind and we promise, “Hey we are going to do a better job
of that.” I think we have different leadership, you know
at our company right now. You know we are looking to
merely maintain our even keel focus in the try offs, you
know at the peaks and the valleys and that includes our
relationships with the cities and sometimes it’s not - - I
think what I found more than anything is that it’s not
always about monetary things. I mean those are things that
need to happen in cities but a lot of times it’s just being
present on a board on a - - you know coming to an airport
meeting or just doing whatever that city wants. Having a
representative there doesn’t look good if the largest
employer is not sitting at a meeting when you bring in a
prospective new prospect or whatever. I mean we need to be
involved and I think we realize that and we decided to
change. And so, you know our - - we’re making this
investment, it’s called AMP (Accelerated Manufacturing
Production) it’s an asset revitalization project and the
kind of things that’s really neat about it, that’s
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different than a lot of other investments is that we don’t
create new net jobs so everybody, all the economic
developers know the big metric, you know when you go out,
you get money and investments is - - you know it’s - - for
incentives it’s all about job creation where we don’t
create jobs. But what we do is we stabilize the 3,800
employees that are at Gary right now. And it’s interesting
our company has 29,800 people in our company. Gary in 1970
had 30,000 employees. So, automations come in and our
technology is changing and we’re still producing the same
amount of steel. U.S. Steel, you know to put it in kind of
perspective, you know we make about 22M net tons of steel a
year, that’s what U.S. Streel produces. The United States
produces 100M tons, China produces 1B tons. So, and
there’s a $2B overall steel capacity in the world so it
just kind of puts that into perspective of where we are at.
MS. SISTOVARIS: So, if not jobs, Mayor may I ask you
what are you seeing as some of the key benefits of U.S.
Steel’s AMP program as it pertains to the city?
MAYOR FREEMAN-WILSON: So, there are two aspects to
that. While there are no new net jobs, we know that their
workforce is ready to retire a number of them. And so, we
do see the job opportunities that exist maybe not today but
next year, five years, ten years from now. To have that
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stability for 38,000 jobs now we can train, we can work
with Ivy Tech and other local educators and educational
institutions so that our young people will be ready for
those jobs as the workforce retires. But in addition to
that, the investment that is going to occur will add to the
tax base for the city and the question for us became how
does that happen. And we spent a lot of time crafting what
that would look like so that there would be a benefit for
U.S. Steel obviously, but that there would be an immediate
benefit for the city and that has not always been the case
in economic development because of the way that incentives
have been structured in the past. So, I think that was the
win for us, particularly given our financial challenges in
the city. We had to look very carefully at that both how
that would impact our bottom line immediately but also how
our citizens would receive that type of idea.
MS. SISTOVARIS: Great, thank you so much. And Paul,
it’s hard for me to have a steel representative up here and
not ask probably a question many folks in the audience have
and that just the impact of tariffs. You know, not the
political aspect of it but maybe if you could speak to
impact that it’s having on your industry and maybe U.S.
Steel specifically and then I’m hoping to have a few
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minutes to go to some questions from the audience. So,
please be preparing for your questions.
MR. VERCHER: And let me just add one thing to what
the Mayor just said, so AMP is a $2B project over a 5-year
period. So, our company is going to invest $2B over 5
years to revitalize existing machinery. So, the thing when
we were talking to Mayor in Gary and the other places that
we went. We went to all of our business operation
locations as we have redundancy in most of our product
lines and so these investments could have gone anywhere.
But where they go is going to be the most stable part of
our company. So, it was really a big deal and for Gary to
continue to be the flagship, you know that was important
because Gary doesn’t shut down in lean times. Our other
plants shut down and idle and there’s nobody working so
Gary kind of gets the - - when that happens everything
comes to your flagship, so I think that’s important. The
Mayor realized that and we just appreciate her working with
us.
On tariffs, so, I’ve heard some of the comments about
tariffs obviously, you know steel companies benefit from
tariffs, so I sit up here today as a beneficiary and I make
that caveat at the beginning but I think what you have to
do on tariffs is you have to ask yourself a question: Is
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steel something that the United States needs to produce?
If you answer yes to that question for whatever reason,
then you have to have tariffs because over the last - - you
know we can go back to - - you know 4 or 5 or 6 Republican
and Democratic Administrations and China and Russia and
other countries to a certain extent have been violating ITC
trade rules. So, you know in a real low level, you know
there’s rules that everybody has to play with to make sure
steel can be globally competitive, not to give one person
the advantage over the other but just make sure that
there’s a level playing surface.
If ou believe that steel - - the United States has an
interest in creating and having a strong domestic steel
industry, then you have to have the tariffs because the
people are not going to stop cheating and they come up with
new and creative ways to do that. China stole a lot of our
trade secrets at U.S. Steel and then they put that - -
those secrets in the marketplace working against us and
they manipulate their currency and they do transshipping
and just a number of other things. I have compared it to a
whack-a-mole game so as soon as you do one thing you know;
the other head pops up and you hit that one and another
head pops up. And at a certain point the number that I put
out there America produces 100M net tons a year. It’s a
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$2B capacity, China in 2016 was exporting more than the
whole United States domestic steel industry produces. So,
you have something that’s not going to change there and if
you lose your steel making ability, you know you have a
national security issue. So, 232 is an instrument that the
President has at his disposal but it’s a 9-month process
from the U.S. Department of Commerce and they studied the
issue and they came back with the recommendation and they
recommended that the president take some action. He took
the 232 action. We are glad he did, our business went up.
We are aware that there is, you know other businesses that
were harmed in that but you know President Trump said steel
was the backbone of the country, I agree. I work in the
industry but you know everybody uses steel every day of
their life, so you have to have it. And if you have to
have it, you’ve got to - - it’s like the bully, you’ve got
to stand up to the bully and there is some pain involved in
that but eventually you know you have to do something about
that. And that’s kind of what happened, on very simplistic
terms. So, I know we are at 5 minutes so I’ll be quiet.
MS. SISTOVARIS: I for one appreciate the clear and
direct response because I think many industries are still
kind of in the “wait and see” mode so it is interesting to
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hear you’re pretty emphatic that it was needed and a good
thing, so thank you for that.
MR. VERCHER: If you run a robust steel industry.
MS. SISTOVARIS: We have 5 minutes. What - - we’ll go
right here. Yes, go ahead.
AUDIENCE MEMBER: This is a question for Paul and it’s
a kind of a follow up. You’re talking about the tariffs
but what are some of the other economic drivers that led to
this investment as well as firing up the Granite City?
MR. VERCHER: Yeah, that’s a good point. So, Granite
City is our downstate Illinois plant outside of Bellville.
And that’s - - it produces, I think 2.7M tons of steel, has
two blast furnaces, about 800 jobs. So, tariffs played a
role in all of these things, our CEO is on record as
talking about that. The economy you know turning like a
lot of industries, we’ve kind of been sitting on our
capital for a while. When you’re a steel manufacturer
you’ve got a lot of heavy equipment and it bangs on it, day
in, day in, day in and if you don’t make adjustments to it
and if you don’t fix it or spend capital to fix it you’re
not going to have an operating steel mill. So we had sat
on it for a long time and so I think the economy turning,
the tariffs being implemented, certainly had an impact to
Granite City and reopening those mills, but it also played
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a role in our AMP process and our investment here and in
Indiana.
MS. SISTOVARIS: Great, thank you.
AUDIENCE MEMBER: Thank you.
MS. SISTOVARIS: We probably have time for one more,
we’ll go to you.
AUDIENCE MEMBER: Mini mills used to have a big factor
against fully integrated mills like Gary Works and Granite
City. How big of a factor is it as far as your competition
now?
MR. VERCHER: Yeah, I mean mini mills are - - they
have the biggest thing - - the biggest advantage they have
over an integrated - - we have an integrative process
which is basically you take minerals (inaudible 2:10:47.3)
makes steel mini mills you can flick them on and off. So,
in the cyclical nature of our business when you start to
hit a downturn a mini mill can just turn off that electric
art furnace. You can never totally idle a blast furnace
because you have to spend $7M or $8M to restart it when you
do that. So, you can’t totally turn it off so you low idle
them. It’s very inefficient and so the biggest advantage
that a mini mill has is just the flexibility. You know
that’s a big driver there but we do have a mini mill plan,
our first one that will come online.
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AUDIENCE MEMBER: Cost per ton?
MR. VERCHER: Yeah, you know it depends on - - that’s
a bigger question but it’s significant, you know.
MS. SISTOVARIS: All right, well we are going to go
ahead and wrap up. Please join me in thanking Mayor Karen
and Paul. And I’ll turn it back over to Kelly.
MS. O’BRIEN: All right, well we did it. We got
through the day and we’re ending at 2:30. So, just - - I
know people want to get to their train, just a few quick
things. We started the day by saying what a phenomenal
team exists here at the Federal Reserve Bank. So, I really
want to do a shout out to Jerry Boyle and Alicia Williams,
Mary Joe Kenistra, Brit Oliver, Rhonda Brawnham, Jenny
Shrader, Greg Fitzpatrick, Graham Justice, Amy Bickers.
For all of the names that I mentioned I cannot tell you the
amount of time that goes in to putting today together. So,
a round of applause to the team at the Federal Reserve
Bank.
By virtue of being in this room it means that you’re
on the distribution list for the Alliance Newsletter. I
know we are inundated with so many emails but please do try
to read the newsletter, follow what’s going on and
participate in where you think you can bring value. You
can see that there is a robust dynamic mega region but as
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the data showed that Karen Maguire told us about earlier,
we are not growing at the rate that we should and there are
things we can do about that.
And in our newsletter, we always have economic data so
I want to especially thank the economists at Indiana
University and our own resident economist. Morton, if you
want to just take a quick wave to the audience, he supplies
- - spends countless hours and sends me all kinds of excel
sheets and we always want to make sure that we translate
that back to our shareholders. So, Morton thank you for
everything that you do with that.
And the day cannot end without really a heartfelt
thank you to Shalora Jasper, our Director of Operations.
Shalora has become such a trusted confidante, such an
incredibly hard worker, she’s so talented, keeps the trains
on track and if every you ever really need or want
something, Shalora is the person to go to. Full
disclosure. So, round of applause for Shalora.
So, you can take your names tags off, leave them on
the table, we’ll collect them. For those that are
interested in the higher ed meeting it’s going to happen
right outside these doors in the Wisconsin Room starting at
2:45 and again thank you for being here today.
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Please don’t let this be a one time a year effort.
There are so many programs that we are doing and will do
and we need you involved.
I hope to talk to everyone really soon. Thank you and
have a great rest of your day.