Wisconsin ranked second in the nation for manufacturing job growth in 2016 and 2017, according to recent data highlighted by groups celebrating the state’s “Manufacturing Month” throughout October.
“Wisconsin’s outstanding manufacturing industry not only provides excellent jobs for hard-working families, it tells companies that Wisconsin is open for business,” Rob McDonald, chairman of the board at the Institute for Reforming Government (IRG), said. “Creating an environment that would attract economic growth was a priority for Governor [Scott] Walker and the legislature and other states need to look no further than the results – thousands of jobs and increased business growth. These are the kinds of forward-thinking policies other states can learn from to boost industries in their own states.”
According to recent data published by the Wisconsin Economic Development Corporation (WEDC), Wisconsin’s 9,437 manufacturers employed more than 460,000 workers, or roughly 16 percent of the state’s total employees.
Wisconsin manufacturers produced more than $56 billion worth of output in 2016, accounting for 18 percent of the state’s GDP.
There is an “88 percent greater employment concentration in manufacturing than the national average,” which makes Wisconsin the “2nd largest manufacturing concentration” in the nation, according to a new policy paper published by IRG.
Additionally, “manufactured goods account for 86 percent of all Wisconsin exports, demonstrating a healthy worldwide demand for products and technologies originating in the state,” WEDC states.
Wisconsin’s manufacturing boom, IRG argues, was a result of several policies implemented since 2011, including the Manufacturing and Agriculture Credit (MAG), the Fabrication Laboratories (Fab Lab) Grant Program, and the Research Tax Credit.
The MAG “had a significant impact on manufacturing and total employment in the state,” a 2017 Center for Research on the Wisconsin Economy report found.
“Since 2013, manufacturing employment has grown on average 1.9 percentage points (at an annual rate) faster in Wisconsin relative to counties just across the border,” the study found. It also said the tax credit resulted in “significant spill-overs to the broader economy.”
By September 2016, “the cumulative impact of manufacturing employment in Wisconsin border counties was 6.6 percent higher and total employment 2.5 percent higher than they would have been in the absence of the tax credit,” the report adds.
Since its introduction, MAG accounted for a total gain of “over 20,000 manufacturing jobs (a 4.6 percent increase) and over 42,000 total jobs (a 1.8 percent increase) in Wisconsin,” the report states.
Fab Lab grants were initially funded with $500,000 from the 2015-17 budget, and again in 2017, 2018, and 2019 with the same amount “to establish or expand local fabrication laboratory (Fab Lab) facilities.”
The program is just one effort the state has pursued “in order to prepare students for careers in the manufacturing industry,” IRG notes.
According to WEDC, “Wisconsin’s education programs and support have helped fuel our workforce talent” and there are “100+ UW manufacturing programs that achieved Center of Excellence status.”
While research tax credits have been available to businesses for several decades, the Wisconsin Chamber of Commerce and the Wisconsin Manufacturers & Commerce (WMC) say they should be revitalized to make Wisconsin more competitive. Allowing currently unusable credits to become refundable would help put Wisconsin on par with some of its competitors.
“When companies decide where to invest in this expensive technology and skilled employees, they look at the total cost of the investment including incentives,” WMC explains, which points out that 36 states have such credits. Among them, 12 either have refundable R&D credits or allow excess nonrefundable credits to offset another tax liability. “To capture and maintain large research investments, Wisconsin should join the ranks of those states that offer a benefit above and beyond what most states do,” WMC argues.