Photo: Benkrut - Getty Images
Allen-Bradley clock tower
When Keiding Inc. was starting to grow too big for its Milwaukee factory, top officials at the protective-packaging manufacturer contemplated moving the whole operation to a Southern state.
Keiding President Michael Gehl said he and his colleagues gave serious consideration to both Dallas and Atlanta. In the end, though, they chose a site a mere 15 miles away, in Menomonee Falls.
Gehl said the biggest influence on him and other company officials was their reluctance to uproot the families of employees who depend on the roughly 80-year-old company for their livelihoods. But there were also Milwaukee area’s long-standing strengths as a manufacturing hub.
Gehl noted that the main material Keiding uses in its special brand molded-pulp packaging is recycled cardboard. Remaining near a strong paper industry like Wisconsin’s was a necessity. “It was basically either Wisconsin or Georgia,” he said, “because that’s where the paper is made.”
Milwaukee’s Abiding Appeal
Far from being an anomaly, Keiding’s decision to remain shows the abiding appeal of the greater Milwaukee area to manufacturers after decades in which forces such as globalization and automation turned many other early-mid-20th century powerhouses into relics of the Rust Belt. And Keiding is far from the only manufacturer to double down on its Milwaukee area presence.
Komatsu, which acquired Milwaukee-based mining company Joy Global in 2017, recently completed work on its $285 million office and manufacturing campus in Milwaukee’s Harbor District. And Milwaukee Tool, a well-known maker of hand and power tools and related accessories, has embarked on string of expansion projects in recent years, including a 75,000-square-foot manufacturing plant in West Bend and a 207,000-square-foot addition to its headquarters on Lisbon Road.
Milwaukee Tool and Komatsu belong at the top of the list of best-known Wisconsin manufacturers, a distinction they share with the likes of Harley-Davidson, Briggs & Stratton, Rockwell Automation, Rexnord, A.O. Smith, Snap-On and Johnson Controls. These businesses are in turn supported and supplied by a bevy of smaller companies that may lack household names but are no less essential to the region’s economy.
Employment and Prosperity
The Milwaukee Metropolitan Statistical Area—comprised of Milwaukee, Waukesha, Ozaukee and Washington counties—consistently ranks near the top among large U.S. metro for its concentration of manufacturing jobs. According to the Bureau of Labor Statistics, about 111,500 people in the Milwaukee metro area, of a labor force of more than 800,000, were employed in manufacturing in 2021. The pay for many is good. Local tool-and-die makers, for instance, make $27.37 an hour on average, or $56,940 a year.
|
|
That manufacturing should continue to be such a source of employment and prosperity of course has much to do with the Milwaukee’s area current advantages. These include proximity to Lake Michigan and other shipping routes, direct links by interstate and rail to both Chicago and the Twin Cities, a ready supply of fresh water and other natural resources, a local population renowned for its steady work habits and a concentration of small producers who help ensure larger manufacturers need not go far for parts and materials.
But like so much of what makes any given city stand out in the present day, Milwaukee’s advantages derive from its history. It may have been beer that made Milwaukee famous. But in the late 19th and early 20th century, Milwaukee was better known to many as the “Machine Shop of the World.”
Historian John Gurda, in his book The Making of Milwaukee, notes that Milwaukee’s transition to being primarily dependent on manufacturing rather than wheat or other agricultural products was well under way in the late 19th century. By 1880, Milwaukee had the sixth highest concentration of residents working in industry, a full 44.6 % of the local labor force.
Industry Boomed in Walker’s Point
Beer, in fact, was ranked only once by the federal Census as the city’s No. 1 product by value—in 1890. By then, the city’s Walker’s Point neighborhood had already become the epicenter of its industrial boom.
Gurda said it’s nothing short of amazing that a few blocks around First and Florida streets were destined to become the cradle of a string of companies that would go on to change the face of manufacturing after the Civil War. Among the many still recognizable names of businesses started there are the Allis-Chalmers Company, Nordberg Manufacturing, the Chain Belt Company, A.O. Smith and Allen-Bradley.
When these companies were just starting and still hungry for workers, Gurda said, Milwaukee had yet to shed its frontier-town appeal. It remained a place that the young and entrepreneurial—both native and foreign-born—would flock to in search of opportunity.
“Where else in the entire world would you have that kind of capital and talent and engineering expertise?” Gurda said. “We were very much the Silicon Valley of the Midwest in the later 1800s.”
Product Diversity
Many of the industries that were Milwaukee’s strengths back then remain formidable today. Allen Bradley, for instance, was an early specialist in industrial controls and Allis-Chalmers and Nordberg were in the vanguard among engine builders. These are the sorts of products that, though much changed in design and means of manufacture, continue to make Milwaukee stand out. Such diversity has helped Milwaukee avoid the fate of Detroit or other cities that were far more dependent on a single industry.
“We have the entire ecosystem,” said George Bureau, vice president of consulting at Wisconsin Manufacturing Extension Partnership. “Wood, plastics, metal, wires, machinery—in some fashion, we’ve got it here, both in Milwaukee and greater Wisconsin.”
Add to these historic advantages the many new assets policymakers have been careful to acquire and cultivate over the years. These include the state’s 0.4% tax rate for manufacturing income and an exemption for industrial equipment from the state’s personal-property tax. There’s also a strong concentration of engineering schools, with the Milwaukee School of Engineering, Milwaukee Area Technical College, UW-Milwaukee and Marquette University all helping to supply the sorts of brainworkers needed for advanced types of manufacturing.
Then there are the region’s natural advantages. Lake Michigan of course ensures manufacturers have an almost endless supply of fresh water for use in their processes. Nearly as important to Jim Paetsch, executive director and senior vice president of the Milwaukee 7 Regional Economic Development Partnership, is the region’s insulation from disaster. With climate change helping to make fires, droughts, hurricanes and tornadoes all too common in other parts of the country, greater Milwaukee and Wisconsin as a whole stand out for being places where manufacturers need not be over-anxious about weather-related calamities.
Paetsch said people used to think he was being slightly ridiculous when he’d point out how well-protected Milwaukee is. Now, though, “they don’t laugh anymore.”
Cleaner, Safer, Better
None of this, of course, means Milwaukee is immune to the global forces that have cost so many Midwestern cities population and manufacturing jobs from the ‘70s onwards. The Milwaukee metro area went from having 220,200 manufacturing jobs in 1979 to 115,000 in 2009.
The good news is that the jobs that have remained are in many ways becoming safer, cleaner and better-paying. Automation is often denigrated as a job-stealer. But manufacturers’ long-standing struggles to bring new recruits into the industry in part reveals just how reluctant many people have become to take on the sort of work that had been so desirable to previous generations.
With machines now doing many of the most repetitive, dangerous and otherwise unappealing tasks, manufacturing is offering more and more opportunities to workers with special training in engineering, problem-solving and similar sorts of work. The increase in technical knowledge often comes with a corresponding rise in pay.
“There’s such a shortage of people,” Paetsch said. “And automation is one way to deal with that.”
Lower wages overseas will of course continue to tempt some manufacturers to offshore their operations. Now though—perhaps for the first time in decades—global events are causing some producers to rethink these calculations.
The war in Ukraine and China’s recent crackdowns on independent entrepreneurs have shown anew the risks of doing business in parts of the world with unstable politics or arbitrary legal systems. And COVID-19-related economic shutdowns revealed just how vulnerable global supply chains can be to disruption. Suddenly manufacturers who rely on just-in-time delivery to maintain healthy profit margins might start looking a little closer to home for materials and equipment.
All that makes Paetsch, Gurda and others confident that Milwaukee’s long-standing association with manufacturing is far from over.
When companies are considering either moving to southeast Wisconsin or expanding here, Paetsch said, “I don’t have to make up a story about why that’s a good idea. I have a more-than-100-year-old story that’s alive and well today.”
