CRW • Corporate Report • Wisconsin's Business Magazine

Racine and Kenosha Counties, the state’s fifth and eighth most populated counties, have historically thrived as a manufacturing hub, and manufacturing continues to hold its place as the largest industry sector in the area. With more than 54,000 manufacturing jobs lost in Wisconsin from December 2007 to April 2009, according to a Center on Wisconsin Strategy report, this area has felt the sting of the recession perhaps more than most areas in the state. Yet strides to diversify its economic base over the past several years along with its prime location along the Chicago-Milwaukee corridor position the Racine/Kenosha area well as the country comes out of the recession.

Making headlines over the last several months is the fate of the Kenosha Chrysler plant, a point of particular concern for a community that’s been associated with auto and auto component production since 1902 when a local inventor converted an old bicycle factory into a two-seater Rambler production plant. Through the years, Kenosha automotive workers produced vehicles for Nash, AMC and Chrysler, though the last Chrysler vehicle rolled off the Kenosha assembly line in 1988. Since then, the focus has been on engine production for Chrysler. The engine production plant in 2008 employed  580 hourly and 85 salaried workers. Those workers and others in the area await the July 31 deadline set in a Chrysler-Fiat agreement for its decision to purchase the plant, originally named on the list of eight plants to be shutdown in 2010 as a result of Chrysler’s bankruptcy/reorganization filing.

“The community and state are committed to working with officials from Chrysler and Fiat to do what is necessary to support future operations at the plant,” states Todd Battle, president of the Kenosha Area Business Alliance.

Governor Doyle and other state representatives have had ongoing communications and private meetings with Chrysler executives to discuss the future of the Kenosha plant.

Unemployment statistics in the area reflect the demise of the auto industry and that of manufacturing around the country. Both counties report higher unemployment rates than the state average: Kenosha County with a rate of 10.5 percent and Racine County with a 10.2 percent unemployment rate. The city of Racine comes in at one of the highest in the state with 16.1 percent, while the city of Kenosha is dealing with 11.6 percent unemployment.

“We continue to be a very strong manufacturing community with about 20 percent of our employment in that area,” says Racine County Executive Director Gordy Kacala. “So it’s not just the auto industry, it’s manufacturing overall.”

The impact of the auto industry’s collapse on Racine/Kenosha area suppliers is evident, though difficult to quantify. “Given bankruptcies at GM and Chrysler and the impact on their supply base, it clearly has affected other Tier 1, 2 and 3 suppliers,” notes Battle. “Firms that supply the auto industry in Kenosha are feeling the pain.”

But the area’s diversification of the past few years has softened that blow, at least slightly.

 “It should be noted that Kenosha’s economic and employment base is substantially more diverse today than it was just a few decades ago,” adds Battle.

While devoting significant time and energy to retaining Chrysler, Kenosha County and its economic development organization continue to “focus on various other opportunities to retain and grow employment and private investment,” says Battle.

Deborah Davidson, vice president of the Workforce and Economic Development Division at Gateway Technical College, reports area workforce development centers are seeing “unprecedented numbers of people” looking for training and inquiring about future opportunities, meaning that companies looking for an available and ready workforce might just find what they’re looking for in Racine and Kenosha Counties.

“We’ve been working with our area employers and workforce development centers to put together training to address unemployment, not just in the auto industry, but overall,” says Davidson.

Gateway Technical College works closely with area employers and workforce development centers in Racine, Kenosha and Walworth counties to design short-term training opportunities in various areas, including telecommunications and logistics; healthcare; and manufacturing.

Davidson says four major area employers at a recent meeting indicated that they expect to be in a hiring trend in the second quarter of 2010.

Focusing on the future in Kenosha County

Imagine opening up the Racine and Kenosha area to over one million jobs. That is exactly what could happen when the Kenosha-Racine-Milwaukee commuter rail is up and running. In addition to jobs, the KRM line would increase access to labor and customers for businesses throughout the region. “It is crucial at this point that we invest in this infrastructure, so we can be part of the global economy, particularly as it comes out of this economic downswing.” states Kerry Thomas, executive director of Transit NOW, an member-based organization whose mission it is to educate the community on transportation-related issues that impact Southeastern Wisconsin. Thomas is optimistic that the project is moving forward after more than 10 years in the planning. One reason for optimism is an opportunity to tap into the New Starts federal funding program, a funding source that Wisconsin has used minimally in the past. “The cost of building the train, buying vehicles, upgrading the track, putting in stations, is about $198 million,” says Thomas.  “Of that cost about half would come from the federal New Starts funding program.” Thomas says they should know if those federal funds are secured by early 2010. Some additional federal and state dollars would help pay for the project along with about $36 to $40 million in local funding from Milwaukee, Racine and Kenosha Counties. Annual Operating expenses for the KRM line would be about $10.9 million. Fares would make up approximately 42 percent of those costs with additional dollars coming from federal, state and local sources. The local share of the annual operating expenses would be around $4 million per year. With the Southeastern Wisconsin Regional Transit Authority  in place since 2005 and a recently approved $18 rental car fee to cover the local share, Thomas expects we could be riding the train in 2012. The KRM line would make nine Wisconsin stops along 33 miles of rail from Milwaukee to Kenosha before crossing the Illinois border on its way to Chicago.  It would utilize existing rail and make 14 daily weekday round trips and seven weekend roundtrips, bringing together people and jobs in the Milwaukee-Chicago Corridor.

Plans are underway for a high-tech incubator in the Kenosha County community of Pleasant Prairie. The incubator will focus on growing biomedical science and medical technology businesses.

“Given the competencies of area universities and the talent pool in this industry due to the presence of major Life Science firms in the region — Abbott, Baxter, GE Healthcare — we think this concept has tremendous potential,” says Battle.

Battle points to several examples of biomedical-type start ups that have grown successful businesses in the area, including Beere Medical, part of Teleflex, now employing around 200; and Bradshaw Medical, which currently employs 70.

Though funding for the Pleasant Prairie Technology Incubator was included in the state budget, Governor Doyle significantly reduced the size of the grant from $700,000 to $70,000.

“There is still considerable due diligence to be done with regard to the incubator concept,” notes Battle, who could not give any anticipated timeline for the project.

Despite economic challenges, this area reports several successes, including a recently opened 735,000-square-foot Affiliated Foods Midwest Distribution Center in Kenosha, which will eventually employ 300. Another 300 jobs will be available when construction of a 585,000-square-foot distribution center for Gordon Food Service is complete in fall 2009.

Completion is expected in spring 2010 on a corporate campus for Uline, distributor of shipping and packing materials. This Pleasant Prairie-based operation will include a 210,000-square-foot corporate office and a 1.1 million-square-foot distribution center.

 “These major projects along with significant education, health care, retail and infrastructure developments are keeping the construction community working,” notes Battle.

Though the challenging economy puts significant strain on the community and its resources, Battle notes, “We continue to help Kenosha County succeed in terms of assisting area firms with retention and expansion projects. And we continue to have success with attracting new companies into the area.”

Next Generation thinking in Racine County

Neighboring Racine County is home to more than 400 manufacturers, large and small, employing 23 percent of the labor force and providing an average annual wage of $54,000, higher than the state’s annual average. This area also feels the effects of the auto industry failure and has aggressively implemented strategies to deal with the challenging economy.

One initiative called DRIVE — Devel-oping Racine County through Innovation, Vision and Entrepreneurship — takes a proactive stance towards growing existing business opportunities and attracting new companies to the area. Targets of the DRIVE initiative include next generation manufacturing, professional services and foreign-owned companies.

The Next Generation Manufacturing initiative is a follow up to a Wisconsin Manufacturing Extension Partnership study that identified six factors to help manufacturers remain competitive: Customer focused innovation; advanced talent management; systemic continuous improvement; extended enterprise management; sustainable products and process development; and global engagement.

Working to assist entrepreneurs in the region is the Center for Advanced Technology and Innovation (CATI) in Sturtevant. CATI has control of over 300 private sector patents.

“What we are doing through CATI is attempting to identify entrepreneurs that are capable of licensing that technology around which to start new businesses,” states Kacala.

The village of Caledonia welcomes a new green business that will create 30 new jobs. CalStar Cement, a building material company, uses fly ash from nearby We Energies to make a façade brick used in commercial and industrial applications.
Another new business to add jobs in Racine is RexCon, which has constructed a 100,000-square-foot building in the Burlington Business Park.

“We are beginning to see a slow improvement in the manufacturing industry. We hope that continues,” says Kacala. “Relative to the manufacturing industry, we are starting to see companies that have weathered the recession moderately well, that are picking up sales or looking to acquire business from companies that have not done well.”

Kacala also reports investment by area companies in equipment that enables them to compete in a more cost-effective fashion. He says a new trend for Racine County is investor interest from China looking to have a greater distribution presence in the United States.

A new Enterprise Development Zone, included in the state budget, will mean $5 million in tax credits up to five years for businesses that create and sustain jobs in Racine. If there is enough economic activity, the zone could be extended for an additional five years and $5 million.

Department of Commerce Communications Officer Tony Hozeny reports that this zone along with other area economic development tools will work to foster econ-omic development in the region.  He notes that both Racine and Janesville, also named an Enterprise Development Zone, have “strong economic development organizations” and have made “great strides” toward diversifying their economies.

“We have been for the last two and a half years trying to position ourselves as a good alternative for development within the Chicago-Milwaukee corridor and that is going to continue,” notes Kacala. “I think this area, the corridor, still has great opportunities in terms of business development projects and ones we haven’t taken advantage of in the past.”

By Leah Call

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