Doyle plans manufacturing tax break $85 million credit aimed at job creation, training

Gov. Jim Doyle on Tuesday announced a combination of new and existing tax credits aimed at helping manufacturing companies.

By RICK BARRETT From the Jan. 16, 2008 edition of the Milwaukee Journal Sentinel

Gov. Jim Doyle on Tuesday announced a combination of new and existing tax credits aimed at helping manufacturing companies.

Doyle also said the state would provide $1.2 million for the Wisconsin Manufacturing Extension Partnership, a Madison organization that offers technical training on lean manufacturing and other strategies to help manufacturers remain competitive.

Wisconsin is home to some of the world’s most recognized names in manufacturing, among them
Harley-Davidson, S.C. Johnson, Kohler, Johnson Controls, Bucyrus International and Joy Global.
Continued foreign demand for U.S. manufactured products, combined with a weak dollar, should continue to provide export opportunities for Wisconsin companies, Doyle said in a news release.

Under Doyle’s plan, called “Next Generation Manufacturing,” five existing tax credit programs would be consolidated into an $85 million tax credit program meant to assist companies that are creating jobs and training workers.

Doyle made his announcement at General MetalWorks Corp., a diversified manufacturer in Mequon. General MetalWorks has quadrupled its yearly sales from $3 million in 1999 to $12 million last year. It has 80 employees, up from 50 in 1999.

Serious challenges came with the growth, which prompted General MetalWorks to take steps such as offering classes in welding and reading blueprints.

Welding was a production bottleneck at the metal fabrication company, which had difficulty finding welders who could pass its qualification tests. Most people who graduated from local technical schools couldn’t pass the test, even though they were certified welders.

It took three months for General MetalWorks to develop a curriculum, find an instructor and set the stage for its own school for employees who worked their regular shifts and attended classes at the plant on their own time – twice a week, four hours each session.

The company is installing about $2 million worth of high-tech equipment on the factory floor and has stepped up lean-manufacturing training for new employees.

The company also has adopted a management strategy that puts more responsibility in the hands of employees on the plant floor.

“Quite frankly, we lost some very technically capable people when we did that,” because they didn’t want the added responsibilities, said Eric Isbister, chief executive officer and co-owner.

General MetalWorks gutted much of its building and installed a flexible manufacturing system that takes up less space. “Before, we couldn’t even walk through here because there was so much inventory and finished goods stacked from floor to ceiling,” Isbister said.

The company is still in search of about a dozen welders but isn’t currently offering welding classes. The starting wage is about $9 per hour for laborers. Welders can make more than $20, depending on skills and experience. “You can work your way up in a small company,” Isbister said.

Some of Isbister’s emphasis on training and lean manufacturing probably comes from his high-tech background. Before he became involved in metal fabricating, he was a chief nuclear engineer for the submarine division of General Dynamics Corp., one of the nation’s largest defense contractors.

There are about 7,500 manufacturers in Wisconsin that haven’t done much yet with training in lean manufacturing, said David Barton, Wisconsin Manufacturing Extension Partnership marketing manager.

“As companies get more focused in lean methods, they learn that they can do more and get more focused on growth,” Barton said.

Full implementation of the $85 million in tax credits will require additional funding from the Legislature.

The partnership doesn’t yet know the details of Doyle’s plan.

The partnership programs have been helpful, said John Valek, president and general manager of RB Royal Industries in Fond du Lac. By removing bottlenecks from its manufacturing, RB Royal Industries cut the time it needed to introduce products to 32 days from 109 days. It reduced the time necessary to give price quotes on orders to four days from 24.