Wisconsin Economic Future Study

Mid-America Freight Coalition 

In June, the Wisconsin Economic Development Corporation (WEDC) released The Wisconsin Economic Future Study—Statewide and Regional Analysis, prepared by the MPI Group, Inc. The study is a follow-up to a similar analysis published in 2005, and highlights statewide and regional industries that drive economic growth. It also highlights industries closely related to these driver industries, either by supply of inputs or sale of outputs. This study finds manufacturing to be a key driver of Wisconsin’s economy. Of 37 identified driver industries, 36 conduct some sort of manufacturing. Two-thirds of US research and development is devoted to manufacturing. And, manufacturing’s national multiplier is 1.43.1 It is these driver industries that “represent a future grounded in manufacturing with the potential for growth and global competitiveness – but not a guaranteed one” (page 4). More on this potential later.
A couple of definitions from the study to begin with: Driver Industries and Clusters.

From an economic perspective, DRIVER INDUSTRIES are relatively concentrated in a region and produce more goods than can be consumed locally. It is important to note that a single firm, no matter how large, does not comprise an industry in this study (page 3).

CLUSTERS are a geographic concentration of firms in the same industry that have close buy-sell relationships with other industries in the region, use common technologies, or share a specialized labor pool that, together, provide the driver-industry firms with a competitive advantage over the same industry in another region, state, or country (page 7).

The 611-page Economic Future study devotes the bulk of its material to profiles for driver industry groups at the state level (chapter 5) as well as at the regional level throughout the state (chapters 7-13). These industry profiles include a NAICS based definition, challenges, export statistics, related observations between the years 2009 and 2011, gross state product (GSP) and employment values, lists of top establishments (including name, description, employment size, and region), as well as associated industry cluster information (supplier industries for a typical regional and national industry, and consumer industries for a typical regional industry). These profiles provide a snapshot of both the driver industries and their geographical layout within the state.
While Chapter 3 provides a brief economic comparison between the Wisconsin and the United States as a whole, it is Chapter 4 that highlights Wisconsin’s standing in relation to the US average and its peer states (those of similar size, industry composition, and geographic location: Georgia, Illinois, Indiana, Michigan, Minnesota, North Carolina, Ohio, and Pennsylvania). The study provides and analyzes a number of economic figures. Summaries include:

  • GSP and employment are still recovering from the recession, and have the highest concentration within the manufacturing sectors.
  • The gap between the US average and Wisconsin productivity is widening.
  • While outpacing the US average, Wisconsin finds itself, ‘in the middle of the pack’, for capital expenditures2 (normalized by manufacturing’s gross state product).
  • Amongst the similar states, Wisconsin is ranked second in terms of total value of manufacturing shipments (normalized again by manufacturing’s gross state product).3

Chapter 6 analyzes Wisconsin’s business competitiveness in a number of ways. It begins by ranking Wisconsin’s recent export performance at the industry sector level (NAICS 3 digit) for its driver industries amongst its peer states (Table 1 summarizes Wisconsin’s export data). Next, the innovation capabilities (ability to create and capitalize) of Wisconsin manufacturers are evaluated by analyzing the technological intensity of its industries, patent activity, labor pool, and growth strategies employed (specifically ‘Next Generation Manufacturing’ strategies). This chapter also includes rankings concerning business competitiveness (various media sources), tax climate, broadband coverage, and healthcare, and ends with a discussion concerning the challenges and issues including workforce, global competitors, regulatory pressures, and infrastructure.

Table 1: Wisconsin’s Total Exports by Manufacturing Sector, 2011.

So what is the role of transportation in all of this? After all, this is an economic development study with an economic development perspective. And how does the Mid-America Freight Coalition fit in?
Transportation serves both as a driver industry and as an input/service provider for other industries. The Transportation Equipment Manufacturing sub-sector (NAICS 336) produces goods and services, and with its associated buy-sell relationships within its cluster, acts as an economic multiplier. In 2011, this sub-sector created $1,075,268,000 in GSP, and employed 7,186 people. The recent energy boom provides an example. An increase in a cheap supply of natural gas as a fuel has driven innovation and capital investments in plants, equipment, and labor in order to source and refine natural gas, as well as to manufacture equipment that can utilize this fuel source.
The second and more pervasive role of transportation is as an input/service provider to other industries. The Transportation and Warehousing industries (NAICS 48-49) are involved all along the supply chain from raw materials to intermediate goods to finished products—or, to think about it differently, from supplier to consumer. These services can be performed in-house or outsourced, but either way the costs associated with the supply chain factor into whether or not a business can compete domestically and ultimately globally. In 2010 the Transportation and Warehousing industries accounted for $7,328,000,000 in GSP while employing 89,631 people.
Wisconsin and the states of the MAFC share similar industrial compositions, and also share a geographic location with adjacent and interconnected transportation systems. This fact is highlighted by the authors and their choice of Wisconsin’s peer states: five of the eight are within the MAFC region. The states also have strong trading relationships with each other (in 2011, 52 percent of Wisconsin’s domestic export trade by value was with a MAFC state and 66 percent by volume) and similar international export partners (see Table 2). Canada is not only the top trading partner for the United States, the MAFC, and Wisconsin, but also the top export market for thirteen of the fourteen driver groups in Wisconsin (see Table 3).
Table 2: Top five international trade partners for the US, Wisconsin, and MAFC region by value and percent share.

Table 3: Wisconsin export data to Canada for 14 industry groups.

Before I end, I want to return to Wisconsin’s potential for economic growth and competitiveness:

States whose economies rely on manufacturing such as Wisconsin, can be expected to thrive in the evolving global marketplace, provided organizations and entities that govern and support them recognize the opportunities now emerging from the onshoring trend (page 13).

The onshoring trend does indeed offer substantial opportunities for increases in employment and output for manufacturers and associated clusters.4 Generally speaking, if we think of economic development as the seating arrangement at a dinner table, economic development officials would be sitting at the head of the table with the other chairs filled by transportation and other departmental perspectives such as commerce, labor, education, etc. Transportation does not lead the effort, but does play a crucial role.
And while the states of the MAFC have shown leadership in this regard by inviting private sector members and economic developers into the transportation world, we encourage members of the transportation world to reach out to the economic development and regional planning departments in your states and region, or vice versa. Introduce yourselves if you don’t already know each other, and discuss how your knowledge, expertise, and network of relationships can be integrated into the economic development effort in the communities in which you live.5


  1. Every manufacturing dollar in the US induces $1.43 of economic activity in other sectors of the economy.” (page 1)
  2. The authors add, “Adjusting this metric for inflation allows it to be used as an indicator of business investing in manufacturing, technology, and assets across time” (page 4-14).
  3. The authors add, “When controlling for inflation, these data create an indicator that shows the exporting capacity of manufacturing businesses located within the state” (4-16).
  4. Ben Zietlow, Location Quotients in the MAFC.
  5. Jason Fried, “How to Get to Know Your Customers,” Inc. Magazine. July/August 2013.

Note: All page-number citations refer to the PDF version of the Wisconsin Economic Future Study (611 pages).

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