http://www.frontpagemilwaukee.com/site/Viewer.aspx?iid=1072&mname=ArticleGroup Business closings en-us 60 By Julieann Hernandez An average of 79 businesses have filed for closure in Wisconsin each year since 1989. The number of business closures peaked in the early 2000s and has since gone down, despite recent rhetoric about Wisconsin's failing business climate. In fact, last year was only slightly above average, with 81 businesses filing for closure, according to hundreds of state records analyzed by a team of Frontpage Milwaukee journalists over the past four months. The journalists set out to study the state’s business climate after a series of recent high profile closings and layoffs sparked controversy about the direction of Wisconsin’s economy. Among recent headlines, the Milwaukee Journal Sentinel followed the General Motors Corp. layoffs in Janesville, the Harley-Davidson Inc. job cuts in Milwaukee, and the Home Depot closings throughout the state. These three companies alone will impact over 1,600 jobs in the state this year. The records of statewide business closings and layoffs are maintained by the Department of Workforce Development (DWD) in a series of spreadsheets. The student journalists analyzed and aggregated the data to see whether there has been an incline in business closures and layoffs in recent years. The top year for businesses filings for closure in Wisconsin occurred in 2003 with 133 businesses. The record low for business closures occurred in 1989 with 49 businesses. So far this year, 31 businesses have filed for closure, including Kerry Savory, Inc., a Germantown factory specializing in food seasoning production. In an effort to consolidate, the company is closing the Germantown facility and moving that production to its Sturtevant location. John Egan, director of communications for Kerry Savory, says that Wisconsin’s business climate is not as bad as rumors claim. He says that the company is vested in the state and that Kerry Savory “believe[s] in Wisconsin.” On the other hand, some argue that Wisconsin can be a difficult place for businesses. In an article by the Small Business Times, some of the Milwaukee area’s most prominent CEOs were reported to have strongly criticized the Milwaukee region as a terrible place to do business. Although many of the CEOs have since said that their comments were taken out of context, the rumors still persist. In reality, the worst year for business closings in Milwaukee occurred in 2000 with 19 businesses, but that number has since dropped. In fact, since 1989, the lowest number of Milwaukee businesses filing for closure occurred in 2004 with only three businesses. “Overall, compared to the rest of the Midwest, we’re doing well,” says Pat O’Brien, executive director of Milwaukee 7, a campaign group concentrating on the attraction and retention of businesses in the Metro Milwaukee region. The Data In compliance with the Worker Adjustment Retaining Notification (WARN) Act and State Plant Closing Law, businesses in the state with 50 or more employees are required to provide written notice 60 days prior to a closing or mass layoff. These notice documents are filed with the DWD. There are a few exceptions to the law, such as federal, state, and charitable institutions not having to file notice. During the course of analyzing the hundreds of documents, the student journalists did notice some discrepancies in the data. For example, some businesses filed a notification document more than once; like Grede Foundries, Inc., a steel foundry in Milwaukee, that filed for closure three times in 2003. Also, WARN notifications sometimes never result in actual closings or layoffs. Businesses are required to file if there is a strong potential for action, whether or not it actually happens. Despite some discrepancies, the WARN notifications filed with the DWD offer the best overall insight into how many Wisconsin businesses are closing on a yearly basis. However, the DWD does not systematically track business openings in the state, nor does the Milwaukee 7. Trends Since 1989, business closures have affected over 137,000 jobs in Wisconsin. Over 16 percent of those jobs were located in the city of Milwaukee. The worst year for jobs affected by business closings in Milwaukee occurred in 2003 with 3,038 jobs; that number has since dropped. For the past four years, the number of Milwaukee jobs affected by business closures has been near or below average. Overall, Milwaukee is not unique from other parts of the state when it comes to business closures. Looking at state-level trends in the data, there are two peak periods of businesses filing for closure. The first peak occurred in 1993 with over 90 businesses filing for closure in the state. According to O’Brien, “we were in a bit of a recession.” He says that manufacturing sectors were especially hit hard, and Milwaukee has a big manufacturing base. Then, as O’Brien says, globalization happened and there was a break down in trade barriers that led to a new era of global competition. The second peak period of business closures occurred between 2001 and 2003, during which, over 100 businesses filed for closure each year. O’Brien says this period was the end of another economic cycle, and whenever the economy is low, we lose the “weaker players” and the “other player must make changes to survive,” including finding cheaper labor overseas. Bob Lackie was human resources manager at the Emerson Motor Company’s Sturgeon Bay plant before it closed in 2003. Lackie says that Wisconsin’s liberal tradition makes it a very expensive place to do business. According to Lackie, not only are the taxes high in Wisconsin, but the Worker’s Compensation is more generous than other regions as well. “Michigan, only 50 miles from Green Bay, and their Workman’s Comp. is 1/4 of ours,” says Lackie. Yet, Lackie goes on to say that Wisconsin’s work ethic kept Emerson open ten extra years, and despite being an expensive place to do business, the workers’ output made it worth the expense. However, as Lackie says, it is one thing to compete against another state, but it is another thing to compete against “30 cent and hour labor” in Mexico or China. Small Businesses and Big Companies Three Rivers Bus Service (TRBS) is a privately owned transportation company that serves the La Crosse school district’s 16 schools and an additional eight private schools in the area. The buses make over 240 runs per day, transporting about 4,000 students, and the company maintains a good safety record. Yet, the company’s buses are currently being evaluated for condition so they can be sold, and their office that bustles with the sound of employees will be empty as of June 6th when TRBS shuts its doors. TRBS filed a business closure document earlier this year. The company was started five years ago when it entered into a contract with the La Crosse school district. Now that the contract is up, the school district filed FRP (request for proposals). TRBS put in a bid for the contract, but lost to a company called First Student. First Student is a subsidiary of First Group, a big transportation company from Great Britain that bought Laidlaw Bus Company 14 years ago. “The thing about this ordeal is that people are assuming that First Student is local, but it’s not. It’s got bases in Cincinnati and Illinois. I did my homework. I know all our revenue is not staying here,” says Thomas Tupper, manager of TRBS. Tupper says that the people of La Crosse will be the ones to suffer from the new contract, and gas prices have a lot to do with it. “When you set low prices in a contract deal, then that’s what they expect you to keep giving them even though expenses are going up,” says Tupper. The contract that TRBS made with the school district five years ago had the school district paying $1.40 per gallon, and since then fuel prices have been rising and the bus company has had to pay the difference. “We were paying for about 95 percent of the fuel cost,” says Tupper. “What the public isn’t aware of is that La Crosse taxpayers will pay more, the new contract says that the school district will be picking up the total fuel cost.” TRBS has over 100 employees who will lose their jobs. Some of those employees are seeking to transfer to First Student, others are less sure about their job futures. “I got a few things, unfortunately, nothing too sound. I’m certified to drive trucks. I could do that if I have to, I don’t want to, but I could if I have to,” says Tupper. Meanwhile, in Cudahy, BJ Law is making final preparations to clear out the Cudahy Tanning Co. building and finally close its doors after more than 50 years of business. Law is a third generation Milwaukee-area tannery owner who runs, both, Law Tanning Co. and Cudahy Tanning Co. A closing document was filed for Cudahy Tanning in 2007. The business is being sold to Prime Tanning, which Law says is a larger, stronger, international company. The merger will send the Cudahy Tanning operations to Hartland, Maine. Cudahy Tanning employs over 80 workers. One employee is moving to Maine to continue with the operation there. About eight employees will be transferring to Law Tanning Co., and most of the other workers have new jobs lined up as well. Law said that the sale had nothing to do with the local business climate going downhill. “I just got a good offer and took it. In my case, it’s not necessarily the city of Milwaukee that’s the problem. It’s just the business itself.” According to Law, there used to be hundreds of tanneries in America, but that number has since dwindled. “The tanning business has been going down for the past 50 years...The jobs are going to China.” The story is the same elsewhere. Duane Brzozowski is the owner of Trade Tech, Inc., a machine shop that supplies parts to the leather industry. Brzozowski says that as the leather industry has dried up in the area, his company has had to diversify its equipment to keep up. Milwaukee, Wisconsin, and the Big Picture Overall, Wisconsin’s business climate has been average the past few years, despite rhetoric. However, there is a trend of Wisconsin businesses selling out, or losing out, to big businesses. O’Brien says, “Of course we’d much rather have local ownership, but there’s nothing we can do about it. If they’re making good offers, businesses are going to sell.” So, what efforts are being made to keep businesses in the state? The Milwaukee 7 was started in 2005 with the goal of retaining and attracting businesses in the region. The point of Milwaukee 7 is to unite the seven counties of southeastern Wisconsin (Kenosha, Milwaukee, Ozaukee, Racine, Walworth, Waukesha, and Washington) in order to have a unified approach to business issues. For example, there are those that argue we lack skilled workers in the area. Sammis White, director of the Center of Workforce Development, said that Milwaukee's college graduation rate of about 19 percent looks poor compared to the 44 percent graduation rate of places like Austin, TX. Combine that factor with what White describes as a poor Milwaukee Public Schools graduation rate, and the future of keeping jobs in the state does not look good. Some of the Milwaukee 7's work is directed towards the need for skilled workers in the area with programs like the Regional Workforce Alliance, a program addressing skill-related issues so that technical colleges can offer appropriately tailored programs. The DWD also offers programs to assist workers who have lost their jobs. The DWD Rapid Response Team will help some businesses by providing funding for worker services, coordinating efforts among employment and training agencies, finding job-search and career planning assistance, etc. However, the problem of business loss is not unique to Wisconsin, and despite efforts, there is no easy answer to the problem. "It's the same situation elsewhere...these are universal problems and there is no simple solution, these are long-term issues," says O'Brien. Fri, 25 Jul 2008 22:26:00 CST http://www.frontpagemilwaukee.com/site/Viewer.aspx?iid=17903&mname=Article http://www.frontpagemilwaukee.com/site/Viewer.aspx?iid=17903&mname=Article By Andrea Dolnik In the past 28 years, 1,830 businesses have closed in Wisconsin, almost 16 percent of which were from Milwaukee alone, resulting in the loss of thousands of jobs for Wisconsin residents, a FrontPage Milwaukee investigation found. According to the Wisconsin Department of Workforce Development, a business must report that it is closing if there is a permanent or temporary shutdown of an employment site, generally 25 or more employees must be affected by the closing. Mass layoffs must also be reported. According to DWD, a mass layoff must be recorded if there is a reduction in the workforce, not a business closing, which affects at least 25 percent of the workforce or 25 employees, whichever is greater; or at least 500 employees. From 1989 to 2007, approximately 77,842 people have been affected by layoffs and plant closings in Wisconsin, according to the four-month investigation by a team of student journalists, who reviewed hundreds of plant closing records in multiple databases maintained by the state to assess the state’s business climate. This investigation was sparked by the warring rhetoric that has been flying around recently in the Milwaukee. Steve Jagler, Executive Editor of the Small Business Times, wrote several blog entries in early 2008 regarding the business climate in Milwaukee, which sparked a heated debate between Jagler, CEOs of Milwaukee businesses and local radio talk show hosts like Mark Belling. When you pair the rhetoric with what seems like weekly announcements of closings and layoffs from high profile companies such as The Home Depot, Harley-Davidson, and General Motors, it seems like Milwaukee must be doing something wrong to negatively affect business. There are also the high profile businesses that have decided, or are speculated to decide, to leave Milwaukee in lure of other locations, such as the Bowling Congress and Miller Brewing Company. To fully grasp the business climate in Wisconsin, the student journalists analyzed hundreds of business closing records obtained through WORKnet, Wisconsin’s Workforce and Labor Market Information System, and the Department of Workforce Development. These spreadsheets, dating back to 1980, captured the pertinent information about the businesses that where closing, or filing for a mass layoff. This includes the name of the business, what city it is located, what type industry it is classified as and how many people are going to be affected. Nineteen percent of those who lost their jobs were from Milwaukee. And even though the rhetoric about business closings has heated up recently, the toughest year for job loss was in 2003, when 3,038 people lost their jobs in Milwaukee, and 16,492 people lost their jobs in the state of Wisconsin. According to Pat O’Brien, executive director of the Milwaukee 7, the reason for this peak year was because, “it was the end of the dot COM bubble”. O’Brien explains this as the end of an economic cycle, and whenever the economy is low business is lost. The nineties were also a tough decadefor business in Wisconsin. In 1996 nearly 12,000 lost their jobs, and 126 companies filed for closure or mass layoff. According to O’Brien, “We were in a bit of a recession”. He says, this hit the manufacturing sector really hard, and it marked a new era of the globalization of business. This year is shaping to be a difficult year for workers as well with Harley-Davidson recently announcing that over 700 employees are to be laid off do to the slowing down of motorcycle sales. However, since 1989, Briggs & Stratton has been the company to lay off the most employees in the data set. About 10,000 people once employed by Briggs & Stratton have lost their jobs. In 1993 alone, Briggs & Stratton laid off over 3,000 people. Some of the reason for the job loss can be attributed to the global business market. According to O’Brien many businesses are going overseas to China and India, which is spurred by the rise in fuel and energy costs. Ernie Dex, United Steel Workers District 2 Sub District Director, the only way to combat the loss of labor to overseas companies is by holding them to the same labor laws and environmental standards as the United States. “(the United States) needs to at least enforce the trade laws that are already in place. We can’t compete if they are paying cents per hour,” says Dex. However, some of the business closings are not always as discouraging as they seem. For example, Kerry Savory in Germantown has recently filed for closing. However, according to John Egan, Director of Communications at Kerry Savory, the Germantown facility is simply being consolidated with another facility located in Sturtevant to improve efficiency. According to Egan, people who worked at the Germantown facility were given the option to transfer to the Sturtevant plant. Egan also says that Kerry Savory is vested in Wisconsin, and that they have no desire to move their company elsewhere. “We believe in Wisconsin,” says Egan. “Declining business has more to do with the economy, having to compete globally, dollar value dropping, business rates rising, all these things make for difficult business times. But this is not unique to Milwaukee or Wisconsin.” However, according to Mark Levine, Professor of Economic Development at the University of Wisconsin – Milwaukee, “the global market explanation is something of a cop out, it doesn’t explain why other cities are doing better on the employment and business development front than Milwaukee.” According to Levine, the biggest problems in Milwaukee revolve around the lack of adequate infrastructure investments. This includes, “the lack of regional rail, regional and racial fragmentation and overinvestment in production activities like convention centers and sports stadiums. Corporate Milwaukee bears too much responsibility,” says Levine. Another reason for the loss of business in Milwaukee is because over the years the nature of business has dramatically changed. According to Sammis White, Director of the Center for Workforce Development, the managerial culture has changed. “A hundred years ago a lot of businesses were family run, then in the fifties and sixties managers were hired. They managed but didn't see the big picture, take risks or make changes” says White. Family owned businesses are still dealing with the changing business climate today. Recently Anthony Farms INC, a potato farm located in Scandinavia Wisconsin, filed for closure, but they are telling a different side of the story. Anthony Farms INC, was a family owned farm and the time came for the owners to retire and the opportunity arose for them to sell their farm. According to a company spokesman, None of their children were interested in taking on the responsibility and an opportunity arose, so the decision was made to sell the farm to Wysocki Produce Farms. Their closure had nothing to do with the economy, it was all about timing and opportunity. Fri, 25 Jul 2008 22:31:00 CST http://www.frontpagemilwaukee.com/site/Viewer.aspx?iid=17904&mname=Article http://www.frontpagemilwaukee.com/site/Viewer.aspx?iid=17904&mname=Article