January 2014: Issue 9Official magazine of Wisconsin Manufacturers & Commerce

War on CoalEnergy Use in Wisconsin

Dan Ariens, President & CEO of Ariens Company in BrillionWMC's incoming Chairman

Inside: Return on WMC Investment p. 29

Focus on Jobs Brings Results p. 25

Tort Reform Efforts p. 16

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Modernize your organization by leveraging existing applications and pair them with

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WMC Board of DirectorsWMC OFFICERSCHAIR, Todd J. Teske, Chairman, President & CEO, Briggs & Stratton Corporation, Wauwatosa

VICE CHAIR, Daniel T. Ariens, President & CEO, Ariens Company, Brillion

SECRETARY, Tod B. Linstroth, Senior Partner & Member & Past Chair of Management Committee, Michael Best & Friedrich LLP, Madison

TREASURER, *Timothy L. Christen, Chairman & CEO, Baker Tilly Virchow Krause, LLP, Madison

EXECUTIVE STAFFPRESIDENT/CEOKurt R. Bauer

PRESIDENT, WMC FOUNDATIONJames R. Morgan

SENIOR VICE PRESIDENTMichael R. Shoys

VICE PRESIDENT, GOVERNMENT RELATIONSScott Manley

VICE PRESIDENT, MARKETING*Katherine E. Pettersen

WMC BOARD OF DIRECTORS Randal W. Baker, President & COO, Joy Global Surface Mining, MilwaukeeSidney H. Bliss, President & CEO, Bliss Communications Inc., JanesvilleDavid H. Bretting, President & CEO, C.G. Bretting Manufacturing Company, Inc., AshlandMark D. Bugher, Chairman, Marshfield Clinic, Marshfield*Thomas A. Burke, President & CEO, Modine Manufacturing Company, Racine*Bradley D. Chapin, Executive Vice President, BMO Harris Bank, Milwaukee*Scott A. Fawcett, President & CEO, Springs Window Fashions, LLC, MiddletonPhilip B. Flynn, President & CEO, Associated Banc-Corp, Green BayJames D. Friedman, Senior Partner, Quarles & Brady LLP, MilwaukeeGary M. Gigante, President & CEO, Waupaca Foundry Inc., WaupacaRobert D. Kamphuis, Chairman, President & CEO, Mayville Engineering Company, Inc., Mayville

*Patricia Leonard Kampling, Chairman, President & CEO, Alliant Energy, Madison*Robert L. Keller, Chairman, J.J. Keller & Associates, Inc., Neenah*Scott E. Larson, Executive Director, Marshfield Area Chamber of Commerce & Industry, MarshfieldScott A. Mayer, President, QPS Employment Group, Brookfield*Patrick J. McConnell, CEO/Owner, FLASH, Inc., Green Lake*James J. McIntyre, President and CEO, Greenheck Fan Corporation, Schofield*John A. Mellowes, Chairman & CEO, Charter Manufacturing Company, Inc., MequonJ. R. Menard, Executive Vice President & Treasurer, Menard, Inc., Eau ClaireVan W. Nutt, Executive Director, Middleton Chamber of Commerce, MiddletonPaul Palmby, Executive Vice President & COO, Seneca Foods Corporation, Janesville*William C. Parsons, President, Palmer Johnson Enterprises, Inc., Sturgeon Bay

Gina A. Peter, CEO, Wisconsin Commercial Banking, Wells Fargo Bank Wisconsin, Milwaukee*Nicholas T. Pinchuk, Chairman, President & CEO, Snap-on Incorporated, Kenosha*Joseph T. Pregont, President & CEO, Prent Corporation, Janesville*Joel Quadracci, Chairman, President & CEO, Quad/Graphics, Sussex*Jerry G. Ryder, Chairman, InSinkErator Division, Emerson Electric Co., RacineMichael W. Salsieder, President & General Counsel, Kolbe & Kolbe Millwork Company, Inc., WausauEric W. Sauey, Chairman & CEO, Seats Incorporated, Reedsburg*Edward H. Schaefer, President & CEO, Citizens Community Federal, Eau ClaireKarl A. Schmidt, President & CEO, Belmark Inc., De Pere*Charles A. Schrock, Chairman, President & CEO, Integrys Energy Group, Green BayKristine N. Seymour, President, Wisconsin/Michigan Markets, Humana, Inc., Waukesha

Rajan Sheth, Chairman/CEO, Mead & Hunt, Inc., MadisonJay L. Smith, Chairman & CEO, Teel Plastics, Inc., BarabooKaren L. Szyman, Executive Director, The Chamber of Manitowoc County, ManitowocGlen E. Tellock, Chairman, President & CEO, The Manitowoc Company, Inc., ManitowocJohn B. Torinus Jr., Chairman, Serigraph Inc., West Bend*S. Mark Tyler, President, OEM Fabricators, Inc., WoodvilleDonald D. Wahlin, CEO, Stoughton Trailers, LLC, Stoughton*Todd Wanek, President & CEO, Ashley Furniture Industries, Inc., Arcadia*David J. Yanda, President & CEO, Lakeside Foods, Inc., Manitowoc*Not pictured

PAST CHAIRS, PICTUREDThomas J. Boldt, The Boldt CompanyArthur W. Nesbitt, Nasco International, Inc.Rockne G. Flowers, Nelson Industries, Inc.

WISCONSIN BUSINESS VOICEFrom the editorI never realized how many idioms there are using the word hill: Old as the hills… Head for the hills… Not worth a hill of beans. Right now I’m personally struggling with “Over the Hill!”

You see, I celebrated a milestone birthday in December. I’m not telling which one, but I suppose I’m still pretty young by most accounts. Especially when talking history. WMC was founded more than 100 years ago to help give a voice to Wisconsin’s employers. We continue that important work today.

WMC’s headquarters is located just four blocks off the Capitol Square in Madison. It’s an inspiring feeling to look up East Washington Avenue at the statehouse, which also happens to be one of our state’s most impressive architectural gems. At the same time, it is never lost on me that Wisconsin’s future is being decided in that building by a mix of elected officials and bureaucrats, including many who don’t understand free enterprise.

That’s where WMC comes in. It’s been our job since 1911 to monitor state government to make sure business has the strongest voice possible. Of course, WMC’s advocacy should be no substitute for your personal involvement in the political and legislative process. After all, businesspeople make the best lobbyists for business!

But we also know that you are busy running your business, which is why you belong to WMC in the first place. We know that many of our members expect us to keep watch on government so they don’t have to. And the evidence shows we do it pretty well. I hope you will take special note of the Return on Investment chart on page 29 of this edition of Business Voice.

I also hope you will subscribe to WMC’s YouTube channel, WMC501. The channel includes interviews we have conducted with Governor Scott Walker, Lieutenant Governor Rebecca Kleefisch and numerous key law- and policymakers.

We hope you agree it’s a pretty exciting time to be involved with WMC. We will continue to fight for the things that will help keep you competitive….and keep you from wondering “What in Sam Hill is going on in Madison?”

Katy Ryder Pettersen Editor, Wisconsin Business Voice kpettersen@wmc.org

In this issue…

4 Economic Metrics that Matter Most Kurt Bauer5 Ariens Committed to Wisconsin wmc incoming chairman ready to lead6 Why Affordable Energy Matters Scott manley10 Energy Is Good eric Bott12 An Uncommon Conversation Jim morgan13 Delivering Skilled Workers, Customized Business Solutions

morna Foy, wiSconSin technical college SyStem

16 WMC's Tort Reform Efforts Gain National Recognition JaSon culotta

18 Channeling Energy Resources to Serve Industry in Wisconsin and Beyond reed hall, wiSconSin economic development corporation

20-23 WISCONSIN AND THE WAR ON COAL where are we on the BattleField?

25 Focus on Jobs Brings Results chriS reader28 My First 100 Days pat Simonett24 Wisconsin is a Coal State ellen nowaK, wiSconSin puBlic Service

commiSSion

33 EPA’s Climate Regulations will Cool the Economy, Not the Planet nicolaS loriS, the heritage Foundation

34 Corporate Safety Audits Janie ritter & chucK palmer38 Business Leaders Need to Reach Out Now Jim pugh39 Legislative Priorities Scott Fitzgerald, chriS larSon, roBin voS, and

peter Barca

40 Chamber Corner: Energy Issues Looming for Wisconsin Business philip FritSche

Wisconsin Business Voice is published quarterly by Wisconsin Manufacturers & Commerce. WMC is Wisconsin’s chamber of commerce, manufacturers’ association, and safety council representing businesses of all sizes and from every sector of the economy. Send address changes to WMC, P.O. Box 352, Madison, WI 53701-0352. WMC's physical address is 501 E. Washington Avenue, Madison, WI 53703, (608) 258-3400. This publication is proudly printed on paper made in Wisconsin.Kurt R. Bauer, WMC President/CEOKaty Pettersen, Editor (kpettersen@wmc.org)Jane Sutter, Designer (jsutter@wmc.org)

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Follow Kurt on Twitter @Kurt_R_Bauer

Economic Metrics that Matter MostKurt R. Bauer, WMC President/CEO

The establishment news media in Wisconsin loves economic rankings, just as long as the data reinforces a narrative they want advanced. The most glaring recent example is how the mainstream media covered the Federal Reserve Bank of Philadelphia’s State Leading Index, which predicts a state’s six-month growth rate.

Several major media outlets covered the index in June last year when Wisconsin was ranked 49th in projected growth compared to the other 50 states. Obviously, that was not good news. The Milwaukee Journal Sentinel, the state’s largest newspaper, thought highly enough of the Philadelphia Fed’s pessimistic prediction that it decided to place a story about it on the top of the front page on June 6 (“State is 49th in Forecast for Economy”). Several other

media outlets also gave the story prominent coverage, including the Appleton Post Crescent and WISC-TV in Madison.But something interesting happened just a few months later; the Philadelphia Fed index began to improve Wisconsin’s economic outlook ranking and the state eventually hit number one in projected growth in September 2013. Many of the same media outlets that believed the poor ranking was news decided that a good ranking wasn’t. Instead, the media narrative suddenly shifted away from Wisconsin’s now positive growth outlook and onto dismissing the credibility of the Philadelphia Fed’s index as an appropriate measurement of the state’s current and future economic status.That kind of uneven (to put it politely) coverage is unfortunate, but all too common. In fact, biased and/or limited media coverage of business issues is the reason WMC began publishing this magazine two years ago and why we built our own video studio (see page 37). It is also why WMC’s Issue Mobilization Council, Inc. spent $1 million last fall on statewide television ads educating the public about Wisconsin’s improving business climate. But the Philadelphia Fed episode poses an interesting question: What are the most important measures of how the state’s economy is performing? No matter who does them, rankings are arbitrary and some, like the Philadelphia Fed index, are prone to erratic swings. That‘s why I think the best economic metrics to follow are the state’s fiscal condition, the unemployment rate and overall business confidence. Fiscal Condition: Stable state finances generally mean a stable state business climate, at least as it relates to the threat of tax and

fee increases. Under Governor Scott Walker Wisconsin has finally ended more than 15 years of running multi-billion dollar deficits. In fact, Wisconsin now has a $759 billion surplus and tax collections are up 8.4 percent over the last fiscal year.Perhaps the most objective third-party evaluation of our state’s improved fiscal condition is that Moody and Fitch both upgraded Wisconsin’s bond rating (Moody from AA2 to AA3, Fitch from AA- to AA). That is a big contrast with many other states and the U.S. Government, which have seen downgrades during the same period.Wisconsin also has a record balance in its Budget Stabilization Fund (a.k.a., rainy day fund) of $278 million and the state pension system is among the strongest in the nation. And let’s not forget how effective Act 10 has been at saving taxpayers money ($2.7 billion and counting), while also preventing mass layoffs of public employees by giving local officials more flexibility.Unemployment Rate: While admittedly not as fast as we would all like, Wisconsin is growing jobs and our unemployment rate has been, and continues to be, lower than the national rate; 6.3 percent for Wisconsin in November 2013 versus 7 percent for the U.S. Wisconsin’s unemployment rate was 9.2 percent when Walker took office in 2011.Of the jobs Wisconsin is creating, a significant number have been in the manufacturing sector and we could add even more if manufacturers could find more qualified and interested workers. In October, the federal Bureau of Labor Statistics said Wisconsin was number one in the nation in net new manufacturing job growth.

That is good news for two reasons: Manufacturing jobs pay on average about 30 percent above

the median and one factory job creates between 2.5 and 3.5 jobs in other business sectors.Other states may be growing jobs at a faster rate, but many of those states also

lost more jobs during the Great Recession so they have more ground to make up. And many

of the jobs being added in some states are part-time positions as opposed to family supporting ones.Business Confidence: Optimistic businesses hire and invest; pessimistic ones don’t. That’s why business confidence is important and why you have heard so many business leaders complain about the persistent “uncertainty” that has made the economic recovery from the Great Recession stubbornly anemic. The economists at the Philadelphia Federal Reserve Bank aren’t the only ones to take note of the positive changes to Wisconsin’s business climate beyond the fiscal reforms already mentioned. Reducing taxes, regulatory burdens and frivolous lawsuits are reforms that tend to get noticed by the business community as well. That explains why 95 percent of WMC’s members said in our most recent economic survey that Wisconsin is headed in the right direction, while 89 percent said state government is either very or somewhat pro-business. BV

“95 percent of WMC’s members said in our most recent

economic survey that Wisconsin is headed in the right direction.”

Wisconsin Business Voice 5

Ariens Committed to WisconsinWMC Incoming Chairman Ready to Lead

Dan Ariens feels like he has a stake in making Wisconsin a great place to live and work. The Ariens Company’s roots go back 80 years in Wisconsin when his great-grandfather, Henry Ariens, began designing some of the first rotary tillers in the U.S. Today, the company produces a range of outdoor power equipment for consumer and commercial use, and it operates a distribution business of niche outdoor brands in the direct marketing arena. Although Ariens Company has operations in Indiana, Nebraska, Europe and Australia, Dan is committed to solving Wisconsin’s unique economic development challenges.“The fact that jobs in Wisconsin go unfilled while we have an unemployed population is a very real structural skills mismatch that must be on the agenda,” says Ariens. “When you factor in the aging demographic in the state this has the potential for long-term implications.” Ariens has been a strong advocate for business-education partnerships as a way to resolve part of this skills mismatch and prepare for changing demographics. But his approach differs from business leaders who

might ask for the school system to deliver the candidates with all of the required skills intact.“Give me a good problem-solver and I can train him to weld,” says Ariens. “The challenges we face change so quickly that employees do best when they can adapt and resolve those challenges.” Dan has partnered with the Brillion High School to build the state-of-the art Ariens Technology and Education Engineering Center. Although the center is equipped with the latest technology, the core of the curriculum is built around problem-solving. Now more than three-fourths of the students at the school participate in technology classes – those planning to go into medical fields, teaching jobs or the service sector. “Our traditional hands-on culture in the workplace needs to evolve into a ‘minds-on’ culture. And I mean for every level of job,” says Ariens. “Problem-solving is not only the domain of the engineer designing a product or a system. It’s the domain of every

employee if we want to be successful.”Ariens developed this perspective on his journey of becoming a strong proponent of Lean manufacturing principles which he began implementing in 1998. Since then, he has been recognized with the Eli Whitney Productivity Award from the Society of Manufacturing Engineers and is frequently tapped as a mentor by organizations promoting Lean leadership. In 2012, Ariens was inducted into the Association for Manufacturing Excellence Hall of Fame. It’s the skills he’s developed as a Lean leader that he hopes to use in his role as WMC Chair.

“We each have our own agendas for our businesses and Wisconsin businesses certainly span a wide range of interests. But that is exactly where the strength of an organization like WMC exists -- bringing a consensus view to policy makers on our behalf.”Ariens is also looking forward to helping ensure the business perspective is heard

when it comes to public policy. “As the people who

make decisions every day that drive our state economy, we have a

legitimate voice that can enhance public policy debates,” says

Ariens. “We can bring the daily reality of what’s happening in towns and cities and workplaces across Wisconsin, one job at a time.” Dan holds other leadership roles in the Wisconsin business community, serving on several Boards of Directors for educational entities, for-profit companies and non-profit economic development groups in the state, including the role of Vice Chair for the Wisconsin Economic Development Corporation (WEDC) Authority Board created by Governor Scott Walker.But it’s safe to say one of the roles he relishes most is his position on the Executive Committee of the Green Bay Packers’ Board of Directors. He views this role through the lens of economic development as well, understanding clearly what that organization means to the city and the state. Dan and his wife, Julie, live in Green Bay where they are very active in the local community. They enjoy spending time with family that includes five children, each of whom are becoming involved with the family business in some way – the fifth generation of Ariens family members to do so. BV

“Give me a good problem-solver and I can

train him to weld.”

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Why Affordable Energy MattersAffordable energy is the lifeblood of any economy, and that is especially true for a state like Wisconsin which often leads the country in manufacturing jobs per capita.Businesses in Wisconsin consumed roughly 939 trillion British Thermal Units (BTUs) of energy in 2011. To put that number into perspective, it exceeds the amount of energy that every household in Wisconsin used for gasoline to fuel their cars, electricity to power their homes and gas to heat their houses -- combined.Given the magnitude of energy used by businesses, it is difficult to imagine a competitive business climate in Wisconsin without the availability of affordable energy. Our manufacturing sector, which accounts for more than 450,000 jobs and about 20 percent of our economic output, is a great case study in the importance of affordable and reliable energy sources. In total, industrial firms amounted to only 0.15 percent of all electricity customers in Wisconsin in 2012, but because they use so much energy, they accounted for about 33 percent of all electricity consumed.While the average monthly electric bill in Wisconsin was $92 per household in 2011, the average industrial electric bill was $31,570 per month that same year. With a typical industrial firm spending about $3.8 million per year on electricity, it’s easy to see why manufacturers remain keenly focused on the affordability of energy. Taken together, Wisconsin businesses spend about $4 billion per year on electricity, and another $1.5 billion on natural gas. That’s more than Wisconsinites spend each year on beer and cheese combined.Fortunately, Wisconsin has invested in coal as an affordable source of electricity for consumers. In 2011, the cost of coal per million BTU was $3.86, which was less than half the cost of natural gas, its next closest competitor. Unfortunately, the Obama Administration’s protracted war on coal threatens the affordability of energy in our state at a time when businesses and consumers can least afford it. Consider that more than 60 percent of the electricity in our state is generated from coal. That’s more than the amount generated from natural gas, nuclear and renewable energy combined. In July 2013, Wisconsin ranked 11th in the country in the amount of coal consumed for electric generation.Why do we use so much coal in our state? The answer is simple: it’s inexpensive and it’s abundant.The United States has more than 480 billion tons of coal reserves, which is the largest in the world. Our country has enough coal to meet our energy needs for about 300 years into the future. And

advancements in pollution control technology mean our air is cleaner today than it was 20 years ago, despite the fact that we continue to burn more coal.Coal’s status as the most abundant and affordable fuel source is now under fierce competition from another energy source: natural gas. Thanks to advancements in the hydraulic fracturing (fracking) process, our country’s proven reserves of natural gas have grown to 348 trillion cubic feet. This is great news for consumers because increases in supply have translated into significant reductions in price.Five years ago, the average price for natural gas was $8.16 per thousand cubic feet. The vast resources unlocked through fracking have reduced that price more than threefold, down to $2.65 in 2012. Fracking is having a similar effect on petroleum prices, as access to shale oil has contributed to a 15 percent increase in our country’s oil reserves. We now have 49 billion barrels of proven oil reserves, and that number is expected to grow.Although Wisconsin is not home to any of the shale oil or gas deposits driving this energy renaissance, it’s difficult to access

these newfound resources without our sand. Wisconsin is blessed with some of the

hardest and roundest sand in the country – the type that is ideal for use in the fracking process. Wisconsin’s sand mining boom has created thousands of new jobs and many prosperous businesses in the

northern and western portions of our state.The lower energy prices from fracking are helping businesses and households alike. A recent study by IHS Global Insight found that lower energy prices increased disposable income by $1,200 per household in the U.S. last year. That number is projected to grow to $3,500 per household by 2025.Lower energy costs are also helping speed the recovery of our manufacturing sector. For example, Wisconsin created 9,700 net new manufacturing jobs from October of 2012 through October of this year - the second-most in the country.Our state and our country are on the verge of a new era of economic prosperity and stability because of our domestic energy resources. The biggest question is whether misguided federal policies designed to bankrupt coal and hinder fracking activity will prevent us from realizing this enormous potential.BV

Follow Scott on Twitter @ManleyWMC

Scott Manley WMC Vice President of Government Relations

ENERGY

“…it is difficult to imagine a competitive business climate in

Wisconsin without the availability of affordable energy.”

Teske Turned Challenges into SuccessBoycotts of businesses, historic recall elections and the succession of WMC's chief staff executive. Those are just a few of the challenges Todd Teske faced during his two-year term as WMC Chairman, which will end later this month. Teske, Chairman, President & CEO of Wauwatosa-based Briggs & Stratton Corporation, met each challenge head-on and in the process logged an impressive success record.Under Teske’s leadership, WMC helped enact at least 60 pro-business reforms, including tax relief for manufacturers, farmers and individual taxpayers. WMC also helped protect those reforms by supporting pro-business candidates during the recall and general elections in 2011 and 2012, respectively.In addition, Teske took an active role in addressing Wisconsin’s professional and technical workforce shortage by, among other things, reconstituting Manufacturing Month, a statewide and collaborative effort to promote manufacturing careers.Teske also pushed for WMC to be more active on federal issues that impact business and to aggressively promote free enterprise via the Business World program, which teaches high school students about business and the opportunities available in Wisconsin. During Teske's term, WMC introduced Wisconsin Business Voice magazine and built a video studio to better inform member businesses. And if that wasn’t enough, Teske also served on the CEO search committee that eventually replaced 26-year veteran

Jim Haney with Kurt Bauer. “The last two years have certainly been full of challenges,” said Teske. “The WMC team did a great job working through the issues by being true to the goal of making Wisconsin a better place to do business. I am proud to have served with this talented group. It has been a pleasure working with Kurt in his smooth transition as CEO. The organization is well positioned for continued success under Kurt's oversight.” BV

Todd Teske’s (center) two-year term as WMC Chairman expires in January. He will be succeeded by Dan Ariens (right). The two men are pictured with WMC President Kurt Bauer during a recent WMC board meeting.

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PowerForwardMoving energy into the future.

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WMC StaffDenise Anderson, Accounting AssistantMary Anderson, Database SpecialistMegan Barlow, Members Relations CoordinatorKurt Bauer, President/CEOSteve Benzschawel, Director of Business World®Nancy Boehnen, Assistant to the President/BoardEric Bott, Director of Environmental & Energy PolicyUte Bruns, Employee Benefits Account ManagerRuss Cain, Director of Insurance ServicesThom Cox, Membership Development ManagerJason Culotta, Director of Tax & Transportation PolicyBarb Deans, WSC Education Coordinator & Member RelationsKeith Hudson, DB/Web Administrator

Pam Kelly, WSC Customer Service SpecialistKay Kertz, Director of FinanceAdam Kettler, Membership Development ManagerRich Laufenberg, Employee Benefits Administrative ManagerBryson Machonga, Membership Development ManagerKaren Mahlkuch, Associate Director of Government RelationsScott Manley, Vice President of Government RelationsBrian Mirr, WSC Membership & Customized CoordinatorJim Morgan, WMC Foundation PresidentSusan Nyffenegger, Executive AssistantAmanda Pavelec, Human Resources ManagerKaty Pettersen, Vice President of Marketing

Jim Pugh, Director of Public Relations & Issue ManagementSarah Prisacari, Accounting Assistant/ReceptionistRobert Ramsdell, Information Systems ClerkChris Reader, Director of Health & Human Resources PolicyDennis Reiter, Systems AdministratorJanie Ritter, Director of Wisconsin Safety CouncilSamantha Sepic, Marketing CoordinatorMike Shoys, Senior Vice PresidentPatrick Simonett, Director of MembershipJordan Smith, Associate Director of Government RelationsLeah Supensky, Associate Director of Public RelationsJane Sutter, Graphic Designer

www.wmc.org @WisconsinMC WisconsinMC WMC501 608.258.3400

You see the destination. We see your path.

Insight. Experience. Passion for business. And a promise that we’ll work as hard making your business a success as we do our own. Because to us, the only true measure of our success is yours.

OFFICES IN MILWAUKEE, MADISON, WAUKESHA, GREEN BAY AND APPLETON, WISCONSIN AND WASHINGTON, D.C. © 2013 Godfrey & Kahn, S.C.

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Energy Is Good Headlines don’t paint a pretty portrait of energy these days. The media is quick to bash coal as dirty and nuclear as scary. Matt Damon wants us to believe hydraulic fracturing is going to cause our kitchen sinks to catch fire. Even renewables don’t get a pass. Political scandals plague the solar industry while stories about windmills’ murderous wrath on avian populations frequent the front pages. The whole energy sector has a black eye, the net effect of which is to create a cultural mindset that energy is at best a necessary evil. It is not.Energy is good. It’s a virtue and a blessing. Energy, more than any other factor, is what allowed and allows humans to leave subsistence agriculture (or worse), organize as societies, and create and advance civilization. Throughout history the evolution of human societies has been sparked by advancements

in energy usage and technologies. Pre-agricultural societies were extremely limited by their lack of access to energy. Through caloric intake and limited use of fire, they were only able to muster ten gigajoules (GJ) of energy production per person each year, or less than the energy potential of two barrels of oil. When ancient Egyptians increased energy production to 15 GJ through advancements in smelting, the New Kingdom arose, art and culture flourished, monotheism was created and civilization took several great leaps forward.A millennium and a half later the Chinese adopted the use of coal, increasing per capita energy production to 20 GJ. The Han dynasty prospered for 400 years advancing astronomy, metallurgy and medicine and creating a helpful little invention called paper. Medieval Europeans doubled that production

through the use of peat and the application of water wheels. Along came the Renaissance. The modern era began when Thomas Savery and Thomas Newcomen partnered in developing a steam engine that could drain water from coal mines. Energy production in England rose to 100 GJ per capita and a revolution in industry and human advancement followed. This story continued through the work of

Thomas Edison and Enrico Fermi and it continues today.I’m not saying energy is the only catalyst for human advancement. Countless factors influence a calculus as complex as the evolution of human society; however, if one looks at each period of revolutionary human advancement they will find it inseparably tied to some innovation in humanity’s ability to harness and apply energy. In fact energy and human development are so inextricably linked, there’s even an equation for it: Energy=Progress=Civilization.Two centuries ago seven out of every ten Americans labored on the farm. Life for most was a brutal toil. Thanks to advancements in automation and energy generation, our stomachs no longer rely on the kinetic limitations of our bodies and work animals. Fewer than two Americans in a hundred now work the land to feed the nation.Humanity on a vast scale now has the ability to devote countless resources to scientific advancement, the time for philosophical and social contemplation, and the leisure to create and enjoy fine art, music, film and even the slow food movement, all because of our access to energy. So the next time you’re dining with friends, remind them their plates of locally sourced pan seared foie gras and organic micro greens are made possible by the availability of cheap, reliable energy (and yes that does mean coal and petroleum). You might also take the time to remind them electricity doesn’t come from the wall but I digress. Energy’s had a bad rap in this country for too long and it doesn’t deserve it. It’s time to face facts. Energy is good. BV

Follow Eric on Twitter @BottWMC

ENERGY

Eric Bott WMC Director of

Environmental & Energy Policy

Biomass Power PlantCoal Power PlantHydroelectric Power PlantNatural Gas Power PlantNuclear Power PlantOther Power PlantPetroleum Power PlantWind Power PlantWood Power PlantPetroleum Refinery

Register TodayCost: $165 per person; $1,220 per table of 8 Questions? Call (608) 258-3400

www.businessdayinmadison.com

FEATURED SPEAKERSRobert O’NeilTeam Leader, Naval Special Warfare Development Group; Retired Member, Seal Team Six

“Never Quit: The Story of a Life Built on Successful Missions”

Daniel ChristmanSr. Counselor to U.S. Chamber President

“A Tour of a Challenged World”

A.B. StoddardAssociate Editor and Columnist for The Hill

“Politics and Public Policy - 2014 and Beyond”

KEYNOTE ADDRESSCharles PayneFounder, CEO & Chief Analyst of Wall Street Strategies; Fox Business Network Contributor; Award-winning Author

“It Can Still be Morning in America”

PROGRAM EMCEECharlie Sykes Talk Show Host, WTMJ Radio-Milwaukee

CLOSING KEYNOTEGovernor Scott Walker Governor Walker will speak on Wisconsin's business climate and his legislative goals.

Business day in madison: FeBruary 6, 2014Monona Terrace Community & Convention Center, Madison

Business Day in Madison PartnersAmerican Council of Engineering Companies of Wisconsin

Consumer Rights Wisconsin

Independent Business Association of Wisconsin

Midwest Food Processors Association

National Federation of Independent Business

Plumbing and Mechanical Contractors Association of Milwaukee and Southeastern Wisconsin

Sheet Metal and Air Conditioning Contractors’ Association of Milwaukee

Wisconsin Association of Health Underwriters

Wisconsin Builders Association

Wisconsin Economic Development Association

Wisconsin Hospital Association

Wisconsin Insurance Alliance

Wisconsin Manufacturers & Commerce

Wisconsin Motor Carriers Association

Wisconsin Paper Council

Wisconsin Restaurant Association

Wisconsin Retail Merchants Association

The Wisconsin Utilities Association

Chamber of Commerce PartnersAdams County Chamber of Commerce & Tourism • Baraboo Area Chamber of Commerce • Beaver Dam Area Chamber of Commerce • Beloit Chamber of Commerce, Greater • Greater Brookfield Chamber of Commerce • The Chamber of Manitowoc County • The Chamber for Superior & Douglas County Wisconsin • Cross Plains Area Chamber of Commerce • DeForest Area Chamber of Commerce • Delafield Area Chamber of Commerce/Tourism • Dodgeville Area Chamber of Commerce • Eagle River Area Chamber of Commerce • Eau Claire Area Chamber of Commerce • Elkhart Lake Area Chamber of Commerce • Fond du Lac Area Association of Commerce • Fort Atkinson Area Chamber of Commerce • Forward Janesville, Inc. • Fox Cities Chamber of Commerce and Industry • Germantown Area Chamber of Commerce • Grafton Area Chamber of Commerce • Green Bay Area Chamber of Commerce • Hartland Area Chamber of Commerce • Heart of the Valley Chamber of Commerce, Inc. • Heart of Wisconsin Chamber of Commerce • Hudson Area Chamber of Commerce & Tourism Bureau • Jefferson Chamber of Commerce • Johnson Creek Area Chamber of Commerce • Kenosha Area Chamber of Commerce • Marshfield Area Chamber of Commerce & Industry • Metropolitan Milwaukee Association of Commerce • Middleton Chamber of Commerce • Monroe Chamber of Commerce • Oregon Area Chamber of Commerce • Oshkosh Chamber of Commerce • Platteville Chamber of Commerce • Portage Area Chamber of Commerce • Portage County Business Council • Prairie du Chien Area Chamber of Commerce • Rhinelander Area Chamber of Commerce • Rice Lake Area Chamber of Commerce • River Falls Area Chamber of Commerce & Tourism Bureau • Sparta Area Chamber of Commerce • Stoughton Chamber of Commerce • Sun Prairie Chamber of Commerce • Watertown Area Chamber of Commerce • Waukesha County Business Alliance, Inc. • Waupaca Area Chamber of Commerce, Inc. • Wausau Region Chamber of Commerce • Wauwatosa Chamber of Commerce • West Bend Area Chamber of Commerce

Platimun SponsorsAlliant Energy

DeWitt Ross & Stevens S.C.

Georgia-Pacific

Michael Best & Friederich LLP

Diamond Sponsors

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What should students know and be able to do?That question has set off an educational firestorm that we have not seen since “outcome-based education” was introduced. A recent series of public hearings and legislative proposals on the Common Core Standards - already in place in Wisconsin schools for English/Language Arts and Mathematics (Science to follow) - reignited the debate which continues as I write this article.During my almost three decades at Wisconsin Manufacturers & Commerce, I have always had one foot in the business arena and the other in the education arena. Two fields that seemingly would have a great deal of common interest yet were often on opposite sides of political and fiscal issues. And, as the husband of a Madison public school teacher, home was the setting for as many interesting conversations as at the Capitol.For more than 25 years, Wisconsin businesses (and employers everywhere) have been asking for accountability and measurement in schools. These companies are driven by data, and have struggled to understand educational measurement because so many different systems have been used throughout the years. How do we know a school district or school building is doing a good job educating students? How do we know what a high school student knows? How do we compare to the rest of the state? The country? The world? We live in a competitive environment, and the quality, knowledge and talent of the individual is going to be the differentiating factor.Also for more than 25 years, educators have been looking for consistent, measurable outcomes. In a system where the school board members and superintendents have tenure of just a few years, there have to be benchmarks that transcend the individuals. You cannot change direction every three years and hope to reach your destination.With that in mind, let me provide a little history.In 1996, at the National Education Summit, a bipartisan group of governors and business leaders decided to create and lead an organization dedicated to supporting standards-based education reform efforts across the states. Several initiatives were spawned and all of that work eventually led to the Common Core Standards. The National Governors Association and the Council of Chief State School Officers began working with local educators, businesses and

school leaders on the development of the standards in 2009, and Wisconsin adopted them in 2010. The purpose of the standards is to “provide a consistent, clear understanding of what students are expected to learn, so teachers and parents know what they need to do to help them. The standards are designed to be robust and relevant to the real world, reflecting the knowledge and skills that our young people need for success in college and careers.” This is a good thing, and here is why.Consistency. From district to district and state to state, we will establish a foundation of what students need to know and be able to do.Accountability. Common Core requires accountability, high standards and testing. We will have results and the ability to set a course for improvement where needed. Competitiveness. If we are to compete globally, we must ensure our students are truly ready for further education and a career that allows them to succeed in the global marketplace.

Innovation. The standards encourage creative teachers to continue to reach students in creative ways. Contrary

to what some proclaim, the standards are not a national curriculum requiring everyone to teach the same thing on the same day from the same book. The standards are the “what” and not the “how.”

Quality. The Common Core Standards have been benchmarked and are more rigorous than past standards. They focus on math, reading and science; require students to evaluate evidence and formulate conclusions; include problem solving and critical thinking; and evaluate what students will need to know to be workplace- and college-ready.While there is a great deal of concern being spread about a national textbook, cameras in classrooms to monitor teachers, and a complete loss of local control; the recent legislative review has resulted in clarity and an affirmation that, in Wisconsin, local control remains the authority on education. However, the reality is the standards have been years in development, are well documented and are in place in nearly all Wisconsin districts. They have given local communities a common purpose, the states a common goal and our country a tool to ensure our long-term success. The Common Core makes common sense for Wisconsin’s school districts. BV

Follow Morgan on Twitter @JimMorgan1960

An Uncommon ConversationWisconsin, Rightfully, Moves Forward with the Common Core Standards

EDUCATION

Jim Morgan WMC Foundation President

“The standards are not a national curriculum requiring

everyone to teach the same thing on the same day from the same book.”

Delivering Skilled Workers, Customized Business SolutionsBy Morna K. Foy

Since becoming president of the Wisconsin Technical College System (WTCS) in January 2013, I’ve appreciated the welcome extended to me by the leaders and membership of Wisconsin Manufacturers & Commerce. It’s clear to me the fundamental goals of our organizations – creating opportunities to experience success and prosperity – remain closely aligned.Wisconsin’s technical colleges do that by building skill pipelines in collaboration with businesses, K-12 partners, and local and regional workforce and economic development experts. These partnerships allow us to reach and teach those interested in starting or advancing in a promising career, or acquiring new skills to transition into one. Your role is vital: working with your local technical colleges to ensure our courses and programs are based in rigorous and relevant skills instruction.With your valued partnership, WTCS has remained at the heart of the state’s workforce, economic, and community development for more than a century. Whether delivering highly skilled graduates through industry-driven programs on campus, or enhancing competitiveness with customized business solutions on-site, the technical colleges are a first-call collaborator for Wisconsin’s employers.With 48 campuses and many outreach centers serving communities throughout Wisconsin, the technical colleges offer an unmatched breadth of learning opportunities. The colleges offer more than 300 programs awarding two-year associate degrees, one- and two-year technical diplomas and short-term technical diplomas and certificates. Nearly 370,000 individuals access the technical colleges for education and training each year.Applied associate degree programs combine high-end technical skills with general education, including math, communications, and social sciences, while one- and two-year technical diploma programs emphasize hands-on occupational skills. Short-term diploma

programs and certificate offerings focus on a specific skill set and take less than a year to complete.The colleges also deliver apprentice-related instruction, which combines on-the-job training with classroom instruction to allow students to learn the practical and theoretical aspects of a high-skilled occupation in a variety of construction, service or industrial occupations.In addition, the system is the premier provider of customized business solutions and technical assistance for Wisconsin’s leading businesses, large and small. For businesses looking to enhance competitiveness or expand, local technical colleges are cost-effective

and eager partners.Wisconsin’s technical colleges have also emerged as the state’s newest “graduate school,” offering a variety of advanced certificate options that complement two-

and four-year degrees to enhance job skills. Employers often look to applicants holding

advanced technical certificates to meet their need for highly skilled workers.The fact that nearly 90 percent of WTCS graduates consistently are employed within six months of graduation means our colleges and employer partners have found success in ensuring the skills taught are relevant and sought-after. Wisconsin technical colleges have been providing a demonstrated return on investment for employers and students for more than a century, and we look forward to continued, shared success.Visit www.witechcolleges.org/employers for more information. BV

Morna Foy is President of the Wisconsin Technical College System

“The technical colleges are a first-call collaborator for

Wisconsin’s employers.”

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WMC at Home and on the Road

1 WMC staff members were in Washington, DC in October to receive an award for state legal reforms. While there, they visited Capitol Hill to meet with members of the Wisconsin Congressional Delegation, including U.S. Rep. Paul Ryan (R-Janesville).

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2 Wisconsin and Chiba, Japan became sister-states in 1990 and participate in science and technology, education, health and culture exchanges. WMC’s Janie Ritter visited Kikkoman Foods' Walworth plant with a recent Chiba delegation visiting Wisconsin.

3 WMC staff visited Iron County last fall to tour the proposed site of an iron ore mine. During the visit, WMC also spoke with numerous local businesspeople about the need to create jobs in northern Wisconsin.

4 The WMC Small Business Committee heard from Lt. Governor Rebecca Kleefisch, seated center right, during their November meeting.

5 Four of WMC’s past chairmen were in town to visit WMC’s newly remodeled first floor. From left: Raymond E. Gregg, Jr., Randall S. Knox, Rockne G. Flowers, Arthur W. Nesbitt.

6 More than 70 chamber professionals attended the Wisconsin Chamber of Commerce Executives Annual Conference in Wisconsin Dells last fall.

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TORT REFORM

Jason CulottaWMC Director of Tax &

Transportation Policy

WMC’s Tort Reform Efforts Gain National RecognitionOctober marked a significant achievement for WMC when the U.S. Chamber of Commerce’s Institute for Legal Reform bestowed the 2013 Outstanding Organization Award to Wisconsin’s chamber of commerce. WMC earned this recognition in large part because of our efforts to restore fairness measures in state law in 2011, and driving subsequent civil justice reforms.Under Governor Tommy Thompson (R, 1987-2001), Wisconsin attained a relatively balanced civil justice regime that allowed businesses fair treatment under the law. The 2005 session of the Wisconsin Supreme Court changed that when an activist liberal majority struck down numerous rule-of-law statutes and tipped the scales of justice against the business community. WMC, working on behalf of its membership, was heavily involved in the 2008 Supreme Court election which effectively removed the liberal majority on the bench. However, the damage inflicted by the Court lasted until after the conclusion of the Doyle Administration in 2011.With the election of Governor Scott Walker and a new GOP legislative majority, Wisconsin’s civil justice climate was swiftly balanced again. The second law signed by Governor Walker was a package of reforms restoring the rule of law to Wisconsin’s civil justice statutes. These included:• Setting the same strict product liability

standard used in almost every other state;• Capping punitive damages at $200,000

or twice compensatory damages;• Ending the “risk contribution theory”

invented by the 2005 Supreme Court majority, which discarded the traditional proof or direct liability and instead adopted a guilty-until-proven-innocent test for manufacturers;

• Adopting the expert witness testimony standard used by the federal courts and most states; and

• Re-establishing a “frivolous claims” statute allowing those determined to bring these suits be held liable for costs and fees.

Other positive legal changes for the state’s business climate that have been signed into law since early 2011 include:• More reasonable interest rates on

judgments, using the Federal Reserve prime rate plus one percent rather than the fixed 12 percent rate under prior law;

• Adopting a standard for setting reasonable attorney fees and limiting those fees to no more than three times compensatory damages;

• Protecting property owners from owing trespassers “duty of care,” a legal obligation imposed on an individual requiring adherence to a standard of reasonable care while performing any acts that could foreseeably harm others; and

• Repealing compensatory and punitive damages as remedies under the Wisconsin Fair Employment Act while still preserving the three traditional remedies including reinstatement, up to two years of back pay and the cost of legal fees.

On December 13, 2013 Governor Walker signed three additional WMC-supported tort reform measures into law:• Sunshine legislation to

bring transparency to the process of the state hiring private-sector attorneys on a contingency fee basis;

• Lemon law reform that repeals Wisconsin’s status as the only state requiring mandatory double damages of manufacturers; and

• Reversing the Jandre v. Physicians Insurance Company of Wisconsin decision by the state Supreme Court, which threatened to dramatically increase the use of defensive medicine.

Among the reforms needed to pass yet in this legislative session is an asbestos trust transparency bill which would consider the role of bankruptcy trusts established to pay out claims. This would reduce liability for Wisconsin businesses to the level state law would normally apportion to them.Wisconsin’s civil justice system has come a long way in the past three years. Yet more work remains to be done to provide a fair state legal system that affords equal justice to all, including the state’s business community. It is reassuring to know that people outside our state are watching the improvements to Wisconsin’s civil justice system with a keen interest. WMC is honored to have been recognized for its leadership on these issues, and we are proud to continue fighting the good fight on behalf of our members. BV

Follow Jason on Twitter @JGCulotta

WMC traveled to Washington DC to receive the 2013 Outstanding Organization Award from the U.S. Chamber of Commerce Institute of Lawsuit Reform. From left; WMC’s Jason Culotta, Scott Manley, Kurt Bauer and Jim Pugh.

Come together. Leave your mark.

Wisconsin Business Voice | 8.75”w x 11.25”h | full bleed | cMYK

COMETOGETHER.

LEAVE INSPIRED.

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Channeling Energy Resources to Serve Industry in Wisconsin and BeyondBy Reed Hall

In addition to providing financial and technical assistance to companies to help them grow and succeed in Wisconsin, the Wisconsin Economic Development Corporation (WEDC) develops and deploys programs that help fuel the state’s economy. WEDC’s Business and Industry Development division leverages industry leadership to accelerate growth and produce high-quality jobs by advancing targeted, high impact economic development initiatives in Wisconsin. Our investment decisions require verifiable evidence that a project will offer sustainable, positive economic impact; create or strengthen a unique competitive advantage for Wisconsin; and attract significant co-investment funds. One area where we see great promise is in the state’s energy, power and controls industry.

Wisconsin’s energy, poWer and control advantagesElectrical machinery and controls manufacturing is Wisconsin’s fastest growing and most competitive industrial sector. Companies operating in this sector are committed to addressing the world’s energy challenges by continuously adapting to new market demands and opportunities. From making effective use of our natural resources, fossil fuels, biofuels, wind and solar energy to building energy efficiency technologies, Wisconsin companies are employing advanced applications and new products to power the world’s energy needs.More than 900 companies in Wisconsin’s growing energy, power and control sector employ more than 100,000 people and generate $38 billion in annual sales. The sector has shown 31.1 percent growth from 2008 to 2011. Export growth topped 18.73 percent from 2010 to 2011—compared to a national rate of 12.27 percent. Wisconsin’s capabilities are broad and widely disbursed and reflect particular strength in the areas of generation and transmission; storage and distribution; conversion, control and automation; and efficiency and conservation. Wisconsin also possesses the quality and quantity of necessary talent to compete on a global scale. Our highly educated workforce

is the foundation for a thriving energy sector. Our industry leadership is apparent in the variety of companies fulfilling the specific demands of the energy continuum and in the healthy collection of consortia, associations, academic programs, institutions, and energy advancement and research centers located here.

One of the nation’s most influential energy associations, the Midwest Energy & Research Consortium (M-WERC) located in Milwaukee, is helping to drive the Midwest and the U.S. to be energy independent. M-WERC works closely with industry leaders and companies that provide solutions and services tied to serving major energy, power and control segments. M-WERC, along with many Wisconsin companies that provide energy and maintain the state’s power grid, is actively promoting new technologies that will result in innovative products, new employment opportunities and vibrant technology transfer. The state’s abundant natural resources have created opportunities to excel in a variety of new tech sectors including solar, wind, biofuels and water. Here are some of Wisconsin’s unique assets within the renewable energy industry:• Wisconsin leads the nation in anaerobic digesters with more

than 30 digesters throughout the state—more than any other state in the nation.

• In 2013, the American Wind Energy Association ranked Wisconsin 18th in total installed wind capacity and 16th in the Nation on their list of states with the most wind energy potential.

• More than 140 solar companies in Wisconsin ranging from manufacturing to contracting to installation are helping to create and implement new technologies that draw upon the sun’s energy.

WEDC is assisting energy-related businesses and supporting organizations across the state to help maximize their potential through collaboration and innovation. Wisconsin’s specialized workforce, academic and private sector resources, and infrastructure provide opportunities for energy companies to succeed and for the state to be known as a global leader in energy innovation. A collaborative approach to leveraging industry leadership through forward-looking initiatives will advance economic development opportunities in Wisconsin. For more information on WEDC investment strategies, visit www.InWisconsin.com. WEDC’s Wisconsin Energy, Power and Control industry profile is available at www.InWisconsin.com/energy. BV

Reed Hall is Secretary and CEO of the Wisconsin Economic Development Corporation

To successfully develop a business you need support from a state that celebrates growth. As you look to take your business strategy to the next level, you can count on the programs, resources and opportunities available to you in Wisconsin.

From fi nancial incentives to tax policies, we are taking bold action to encourage expansion by offering business development programs customized to meet your needs. We are demonstrating our commitment to our industries by introducing the Wisconsin Manufacturing and Agriculture Tax Credit, which virtually eliminates the tax on income from manufacturing activity in Wisconsin. In addition, we are driving advancements in workforce development and site certifi cation to help meet the needs of your growing business.

As the state’s lead economic development agency, the Wisconsin Economic Development Corporation connects businesses to growth-oriented solutions throughout the state. We collaborate with a highly responsive and dedicated network of local and regional economic development partners to advance business development.

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ENERGY

Wisconsin Business Voice 21

“Reliable and low-cost energy is a key site-selection factor for companies looking to relocate or expand.”

ENERGYwisconsin and the “war on coal”Where are we on the Battlefield?By Mark Crawford

Energy has always been a critical commodity for Wisconsin businesses. Coal, nuclear and natural gas are the state’s three key energy sources for base load electricity. Most of this energy is shipped in from out of state. A moratorium currently exists on constructing new nuclear plants in Wisconsin, and if the recently proposed EPA regulations on CO2 emissions are approved, it will be very tough to build new coal-fired plants. As a result, more industries are looking at natural gas to fuel their operations. Even though today’s prices are low, natural gas prices are historically volatile. That leaves wind, solar, and other renewable resources, which only contribute a very small percentage of the daily energy needs of Wisconsin businesses.“The critical issue for any energy-intensive industry is having a supply of reliable and affordable energy that helps meet current and future demands,” says Gary Gigante, President and CEO of Waupaca Foundry. “Therefore the issues that impact the reliability and cost of the energy supply are of significant interest to industry. Given the current situation with fossil fuels, particularly coal, industries are concerned Wisconsin may not be able to develop a diversified energy plan that can maintain Wisconsin's economic competitiveness.”That’s a huge point. Reliable and low-cost energy is a key site-selection factor for companies looking to relocate or expand. This is especially true for big energy consumers, like manufacturing. Wisconsin's industrial sector, which includes energy-intensive industries

such as food processing, chemical manufacturing, plastics, and forest products, was the highest energy-consuming sector in the state in 2011 using 582 trillion British Thermal Units (BTUs). Without abundant, competitively priced energy, Wisconsin cannot be a contender for new industrial projects that would hire hundreds or thousands of workers and expand the economy.

Wisconsin runs on coalAbout two-thirds of the state’s electricity comes from coal. Wisconsin’s electrical capacity breakdown for 2011 is:

• Coal (62.5%) • Nuclear (20.7%) • Natural gas (9.1%) • Hydroelectric (2.6%) • Wind (1.7%) • Wood (1.2%) • Oil (1.2%)

The largest users of electricity in Wisconsin are foundries, pulp and paper mills and food processors—all key contributors to the Wisconsin economy. Industrial rate-payers make up less than one percent of rate payers in Wisconsin, yet account for 35 percent of the electricity consumed each year. This large-scale economic production and job creation is driven by coal.

the War on coalThreatening this relationship, however, are stricter limits on CO2 emissions proposed by the EPA in September 2013 for new coal-fired plants (1,100 pounds of CO2

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per megawatt-hour). New regulations for existing coal plants will be revealed sometime in 2014.One of the requirements for new coal power plants is the installation of a carbon capture and storage (or CCS) system. CCS captures CO2 and pipes it to underground storage reservoirs. This, however, will not work in Wisconsin. “Wisconsin does not have any of these underground storage reservoirs,” says Brian H. Potts, an attorney and Partner at Foley & Lardner LLP in Madison. “The closest one is in southern Illinois. The DNR estimated the cost of installing CCS for We Energies' Oak Creek

power plant would be about $4.3 billion. The estimated pipeline cost to ship the captured carbon dioxide to Illinois for storage was $750 million of that total cost, which led the DNR to conclude CCS is not an economically feasible control option.” “All of these new regulatory actions will increase the price of electricity, because they will require the construction of expensive new plants,” adds Dan Kish, senior vice president of policy for the Washington DC-based Institute for Energy Research. The proposed regulations would also have negative impacts on Wisconsin rail. Almost two-thirds of the railroad tonnage coming into Wisconsin is coal. If coal-fired electrical generation is limited, “a significant portion of our business could go away in the next several years,” says Sam Gratz, a state

legislative affairs representative for Wisconsin in the Association of American Railroads. “Without the revenues generated from hauling coal, portions of our rail system may be more difficult to maintain.”

regaining the Wisconsin advantageHistorically, lower-than-average utility rates have given Wisconsin a competitive advantage over other states in the Midwest. In recent years, however, this has changed, and today only one of the twelve Midwestern states has higher rates than Wisconsin. There are several reasons for this.“Wisconsin embarked on a significant series of investments in utility infrastructure over the previous 10-15 years,” explains Eric Bott, director of environmental and energy policy for WMC. “We invested heavily in renewables in the early 2000s to meet our 10 percent renewable portfolio standard (RPS). Wisconsin also constructed new coal power plants based on anticipated increases in demand, and continues to build massive new transmission systems

to improve the reliability of the grid.”At this point, Wisconsin

was on track to secure a better position in terms of its rates versus those of other states. Some neighboring states were

also mandating costly new renewables projects—

creating a situation where Wisconsin’s rates could stabilize while rates in neighboring states increased.“Now, however,” says Bott, “the proposed regulations for carbon emissions, on both existing and new coal plants, greatly jeopardize this outcome. Depending on how these regulations are ultimately applied, massive rate increases could result and reliability could be threatened.” An example of how these effects could cascade is the new source performance standard (NSPS) rule that applies to new fossil fuel-fired electric utility generating units (EGUs). “Although the rule does not apply to any existing EGUs, environmental groups are arguing that modifications to existing coal plants should trigger this rule,” comments Arthur J. Harrington, an attorney with Godfrey & Kahn in Milwaukee. “Given that our extensive base load power is dependent upon coal, these sorts of challenges will mean more cost for rate payers in the future.”

alternative strategiesAny uncertainties about energy supply make businesses uneasy. If regulations make coal too expensive to use, what other energy sources are available at a reasonable cost? “Although the current natural gas boom provides some relief, well-designed energy planning and regulation will be critical for mitigating the negative effects of coal-use reduction,” says Gigante.This approach includes lean strategies, conservation practices, technological improvements to increase energy efficiency, and onsite use of renewable energy, which continues to become more affordable.For example, Ariens Company in Brillion recently replaced its 45-year-old boiler system with a geothermal heating and cooling system. “We always look for the lowest project cost and the smallest

“The bottom line is there are no economically viable ways

to replace coal as Wisconsin’s primary source for base-load electricity

generation.”

Coal62.5%

Nuclear21%

Natural Gas9%

Hydro3%

Wind2% Wood

1%Oil1%

Wisconsin EnErgy gEnEration

Did You Know…WMC is party to the case challenging the War on Coal before the U.S. Supreme Court?The U.S. Supreme Court has agreed to review one question: Did EPA permissibly determine its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases? In other words, the court already ruled that EPA can regulate GHGs from cars but does that mean they have the authority to extend that regulation to coal fired utilities?Six cases were wrapped into one to be heard by the Court. WMC is party to American Chemistry Council v. EPA, however, the Court is likely to title the bundled cases as Utility Air Regulatory Group v. Environmental Protection Agency.Oral arguments are scheduled for Feb. 24, 2014. Stay tuned to WMC’s website for the latest information.

Wisconsin Business Voice 23

EnERgy FaCTS• Two-thirds of Wisconsin

households use natural gas as their primary fuel for home heating.

• Coal fuels about 2/3 of Wisconsin electrical generation.

• Four-fifths of coal for Wisconsin comes via rail from Wyoming.

• Hydroelectric and wood are the largest renewable sources of energy.

• Renewable accounts for about 8.4 % of Wisconsin's total electrical generation (2011).

• One in 10 Wisconsin households rely on electricity as their primary energy source for heating.

• Wisconsin's industrial sector is the highest energy-consuming sector.

• In 2010, Wisconsin produced 438M gallons of ethanol, ranking 9th among states.

• Wisconsin households use 103M BTU per home annually, about 15% more that the U.S. average. But lower utility rates result in households spending 5% less for energy than the U.S. average.

• Industrial ratepayers make up 0.15% of the electrical ratepayers in Wisconsin but pay about 22% of the rates.

carbon footprint, but there are always tradeoffs,” says President & CEO Daniel T. Ariens. “In this case, the long-term environmental impact of geothermal is minimal, but the installation cost was 50 percent higher than traditional systems. The tradeoff made sense for our long-term vision. Although geothermal is not our major source of energy, it is a significant producer that is reliable and efficient.”Waupaca Foundry has aggressively targeted energy use to reduce its carbon footprint and maintain global competitiveness. Energy-reduction activities include heat recovery for building/hot water heating, energy efficient lighting retrofits and the widespread use of premium high efficiency motors. Waupaca was among the first companies in the U.S. to volunteer for the U.S. Department of Energy's “Better Buildings, Better Plants” program. The goal is to reduce industrial energy intensity by 25 percent in 10 years. “This effort includes the development of energy use and energy intensity baselines, and the ongoing implementation of an energy management plan to meet the 10-year goal,” says Gigante.

staying competitiveThe ultimate goal for Wisconsin is to stay competitive—not just with other states, but other countries as well. “This ‘war on coal’ will make doing business a lot harder for Wisconsin's job creators,” says Bott. “Manufacturing drives Wisconsin's economy and we are dependent on affordable energy to compete in a global marketplace.”There are also huge economic development opportunities for cost-competitive states that can ride the “reshoring” wave—companies coming back from low-cost countries like China to establish their operations in the U.S. or Mexico. Boston Consulting Group recently reported that more than one-third of the companies they interviewed with offshore operations are considering returning to the U.S. To be in contention for these capital investments and new jobs, states must be able to deliver low energy prices. For Wisconsin, that means coal must be abundant and affordable.“Coal is a critical element of our diverse fuel mix and helps keep energy prices under control,” says William Skewes, executive director for the Wisconsin Utilities Association. “However, as increased regulation makes coal more expensive to use, energy providers are

increasingly turning to natural gas, which has a significantly lower emissions profile and is in increasingly abundant supply.”With the low cost of natural gas, there will be pressure on utilities to convert their old coal fleets to natural gas—for example, We Energies has proposed converting the Menominee Valley cogeneration steam/electricity plant to natural gas. Rail companies are also looking at hybrid and natural gas engines to power their locomotives.As attractive as natural gas is at the moment, it cannot replace coal. Wisconsin does not have the pipeline infrastructure needed to convert its coal fleet to natural gas. The coal plants in southeastern and southwestern Wisconsin also do not have sufficient access to natural gas to support conversion—building that infrastructure would be hugely expensive and difficult to permit. The bottom line is there are no economically viable ways to replace coal as Wisconsin’s primary source for base-load electricity generation.“As always, Wisconsin’s biggest challenge is continuing to provide reliable, affordable energy in an environmentally responsible manner,” says Skewes. “This means maintaining a diverse mix of fuels, including coal, as well as operating a highly efficient electric system. We must have a sound but flexible infrastructure to produce and deliver power, but also make smart investments so customers aren’t paying the capital costs of facilities that aren’t giving them the most value. It’s a delicate balance.” BV

Crawford is a Madison-based freelance writer.

Wisconsin EnErgy consumption & rankings

Commercial20%

Industrial32%

Transportation24%

Residential24%

U.S. RANKING UNITS U.S. RANKTotal Consumption 1,789 Trillion BTU 21

Consumption per Capita 313 mBTU 24

Total Expenditures $24,356m 20

Expenditure as % of GDP 9.6% 29

Total Net Electrical Generation 6,015 MWh (1,000) 24

Wisconsin EnErgy consumption

EPA Regulations Threaten Wisconsin’s Job CreationBy Ellen Nowak

Wisconsin is a coal state. Approximately 62 percent of the state’s electric generating capacity is coal fired. Wisconsin is also a manufacturing state.Those two facts are, undeniably, related. Wisconsin was recently ranked as the fifth best state for manufacturing job creation in the nation. But the multitude of upcoming Environmental Protection Agency (EPA) regulations, particularly the proposed rules regarding carbon emissions, threaten that ranking. Coal is a cheap and reliable source of power. Manufacturers need cheap and reliable power to function and prosper. They need certainty that the power will be there when needed and certainty that prices won’t skyrocket out of control. Manufacturing and its connection to the energy and utility systems of Wisconsin is well documented – the more the manufacturing sector grows the better the energy market performs which, in turn, means better security and rates for the average consumer.Over the last several years, the EPA has proposed regulations that attempt to

drastically reduce the amount of electricity generated by coal. These rules require utilities to switch to a different fuel source (i.e. natural gas), retire plants or build new sources of generation. All of these solutions are costly to ratepayers. Since 2003, Wisconsin utilities have already invested approximately $3 billion in emission controls to comply with EPA regulations. Those investments were made with the assumption the plants being improved would be used for the remainder of their expected lives. These controls are now at risk of being obsolete or insufficient to meet the newer, stricter regulations, causing utilities to abandon existing investments. But the costs to install these controls cannot be abandoned. As a consequence, the EPA regulations could result in a double hit to ratepayers. First, they may be on the hook for past expenses from which they receive absolutely no benefit. Second, they will be asked to pay for the expense of replacing that generation or adding even more, costly emission controls. Perhaps the rule that provides the greatest threat to Wisconsin electric rates is President

Obama’s proposed rule on carbon emissions on new power plants and the expected rule on existing plants. These rules, promulgated under Sections 111(b) and (d) of the Clean Air Act will impact Wisconsin in two ways. First, they would stop the construction of any new coal-fired power plant in Wisconsin. Second, the rule on existing coal plants is expected next June. If it doesn’t afford states flexibility on implementation, give credit to utilities for previously installed controls, or if it requires a control technology that is uneconomic, rates for Wisconsin residents will “necessarily skyrocket” as the President declared during his candidacy. I am working to ensure that Wisconsin’s voice will be heard. We need to work together to convey Wisconsin’s concerns and suggested approaches to the EPA to minimize the impact to Wisconsin ratepayers. BV

Ellen Nowak is a member of the Wisconsin Public Service Commission. The views in this column are her own and do not represent the views of the Commission.

WMC Members Say State Will Outperform U.S. Economy in 2014The stubbornly weak economic recovery, spiking health care costs and difficulty hiring qualified employees are the top concerns for Wisconsin business leaders heading into the New Year, according to a survey of 340 WMC member business executives conducted late last year.Fifty-three percent of employers say the U.S. economy will see moderate growth during the first six months of 2014, while 35 percent predict growth will be flat. Ten percent believe growth will be good and just three percent say the economy will contract.Survey respondents are more optimistic about the state economy during the first half of the New Year. Sixty-five percent say the Wisconsin economy will experience moderate growth; 31 percent say growth will be flat. Just two percent say growth will be

good and one percent say the state economy will weaken.When asked their top business concerns, respondents said the sluggish economic recovery was number one (33 percent), followed by health care (21 percent), regulations (18 percent), labor shortage (9 percent) and taxes (7 percent).Ninety-three percent said they offer employer-sponsored health insurance coverage to their employees. Of those, 87 percent said their costs will increase. Forty-two percent said their premiums will rise between 11-20 percent; 40 percent said rates will rise between 1-10 percent.Seventy-eight percent of business leaders blame the federal Patient Protection and Affordable Care Act (ACA) for the

rate increases and 55 percent say ACA compliance had led to changes in the plans they offer employees. Seventy-six percent of respondents say they will pass-on some or all of their higher health care costs to employees. Specifically, 54 percent said they will increase employee contributions and 22 percent said they will reduce benefits.Overall, 54 percent say ACA has had a negative impact on their employees, 30 percent say it is too early to tell. Just one percent said ACA’s impact has been positive.Despite a seven percent national unemployment rate, 60 percent of Wisconsin employers report having trouble hiring employees. Of that number, 69 percent say the reason is a lack of qualified applicants.

Wisconsin Business Voice 25

Chris ReaderWMC Director of Health & Human Resources Policy

WORKFORCE DEVELOPMENT

Focus on Jobs Brings ResultsFor several years, Wisconsin Manufacturers & Commerce has been discussing an apparent disconnect found in Wisconsin between manufacturing job seekers and the manufacturing jobs available. Even when the unemployment rate was at its high mark, manufacturers still struggled to fill open skilled positions, such as welders or CNC machine operators. The reason? For various contributing factors, the available workforce simply lacked the training and skills needed for modern manufacturing jobs. That was compounded by proper training becoming difficult and costly to obtain. Recognizing this paradox, WMC set out to advance an agenda over the last couple of years to tackle this issue and help connect willing workers with training and, ultimately, jobs. Working alongside Governor Scott Walker and the Wisconsin Legislature, we have made good progress advancing a number of key initiatives to close the skills gap found in the workforce. With a focus on training, apprenticeships, technical skills and connecting necessary skills with available jobs, real advancements have been made to reduce the skills gap and help people get back to work in manufacturing, the backbone of our state’s economy.In 2013, WMC and lawmakers have focused on directing resources where it matters most by investing in training and apprenticeships. $15 million was allocated for industry-specific training grants through the newly created Wisconsin Fast Forward program. The first round of grants, which included those aimed specifically at small manufacturers, were awarded late last year.

Similar grants will be awarded throughout 2014, and the training they will fund will bear fruit in the near future. Along with the training grants, the Fast Forward program includes the development of a labor market information system (LMIS), which is a modern website to help job seekers and employers connect. Additional reforms passed last fall include a series of new laws that continue to focus on developing the Wisconsin workforce. The state invested in youth apprenticeships by increasing funding to the Youth Apprenticeship program by $500,000 annually. This worthwhile program helps high school students receive on-the-job training and technical education while still in high school. An additional $500,000 was allocated for apprenticeship tuition reimbursements, to be awarded in up-to $1,000 reimbursements to successful apprentices. These awards will help reduce the cost of obtaining an apprenticeship and will encourage more individuals to enter the skilled trades. The Governor and lawmakers also created the Technical Excellence Higher Education Scholarship. Mirroring the current Academic Excellence Higher Education Scholarship, the new scholarship will be awarded to the top high school students who continue their studies at a technical college.This list is certainly not all-inclusive, but it shows the strong focus lawmakers have had on encouraging technical skills, apprenticeships and putting people back to work in

manufacturing. The results of this focus have been unmistakable. In the data released by the U.S. Bureau of Labor Statistics in late November 2013, Wisconsin’s manufacturing job growth of 6,000 new jobs led the nation for October 2013, and Wisconsin was the second highest state in the nation for manufacturing job growth for the period of October 2012 through October 2013. As the reforms mentioned above all come online, we have every expectation that the jobs picture, especially for manufacturing jobs, will only continue to improve into the future.Going forward, the focus must remain on improving the picture for manufacturing jobs along with all sectors of the Wisconsin economy. As the manufacturing industry continues to modernize, advance and become increasingly complex, so too must the available job training programs improve and adapt in order to keep our workforce ready to compete with the world. BV

Follow Chris on Twitter @ReaderWMC

WMC’s Chris Reader, third from right, at a recent bill signing with Governor Walker for Act 57, which created a reimbursement for apprenticeship tuition and fees.

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company neWsWisconsin’s Business Climate is Ripe for Expansion

Mayville Engineering Co. is planning to expand five of its plants in Wisconsin, resulting in 100 new manufacturing jobs. This is the result of orders from existing customers as well as new work the company has landed.

Linetec, one the nation’s largest paint and anodize finishers, built a 30,000-square-foot addition to its anodize facility in Wausau. To support the addition and growth of its business, the company is increasing its anodize staff by more than 10 percent.

Addison-Clifton, a Brookfield-based company specializing in global trade compliance solutions, has expanded its global footprint by establishing a new subsidiary in the port city of Ningbo, Zhejiang Province, China.

Pictured at left is Ulice Payne, Managing Director of Addison-Clifton, LLC.

The Sartori Co., a family-owned cheese company, announced in December that it will embark on a $14 million expansion and renovation project at its plants in Antigo and Plymouth – a project that is expected to create up to 53 new jobs.

advance announces Manufacturing award of Distinction Recipients

In November, Advance, the economic development program of the Green Bay Area Chamber of Commerce, announced the award recipients of the 2013 Manufacturing Awards

of Distinction: Ariens Company, Brillion (Large Company Award); Lindquist Machine Corp, Green Bay (Workforce Development Award); N.E.W. Plastics Corp, Luxemburg (Medium Company Award); Precision Machine Inc, Algoma (Small Company Award); and The Solberg Company, Green Bay (Environmental Sustainability Award). Nominees were judged based on company size, operational excellence, financial growth and community support.

Tom Howatt Elected Chairman of WPRI Board of DirectorsThe Wisconsin Policy Research Institute Board of Directors elected Tom Howatt as chairman. Howatt has been a WPRI board member since 2006, and is the Wausau Paper Corp. Chairman of the Board, where he served as the company’s President and CEO from 2000 – 2011. Howatt

replaced James Klauser, who served as WPRI chairman since 2006 and will continue to serve as a WPRI board member.

Super Steel Recognized for growth and HiringMilwaukee-based manufacturer, Super Steel, received the Inc. Magazine Hire Power Award in recognition of its growth and contribution to the American people and economy with its

continued hiring. The company is ranked #6 among private business job creators within the state of Wisconsin.

World Championship Cheese Contest names First Female assistant Chief Judge Masters Gallery Foods, Inc. proudly announced Sandy Toney was selected as the new Assistant Chief Judge for the Wisconsin Cheese Makers Association. She is the first woman to hold the position for the World Championship Cheese Contest since it began in 1957. Toney, Vice President of Corporate Quality and Product Development for Masters Gallery Foods, has been a licensed cheese grader for close to 20 years.

HnI appoints new President and Celebrates 50 years in Business

September was a monumental month for HNI Wisconsin – the appointment of their new President, Chad Tisonik, fell on their 50th anniversary and followed a record-breaking year of 35 percent growth! Tisonik’s new role as President is a milestone for the firm, as it marks the first time HNI Wisconsin will be managed by a non-family member of the founder since

the company’s inception in 1963. Chad is the nominating chair and immediate past chair of the Wisconsin Safety Council Advisory Board.

Wisconsin Business Voice 27

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governor Walker Participated in Lakeshore Technical College apprenticeship Program Tour Gov. Walker and Congressman Tom Petri (R-6th District) joined state and local political, education and business leaders in November at the “Kickoff Your Manufacturing Career” event hosted by Vollrath and Lakeshore Technical College (LTC) in Vollrath’s new distribution center. During the presentation, Vollrath President & CEO Paul Bartelt said The Vollrath Company has doubled in size since 2008, which includes the expanded manufacturing facility of P.W. Stoelting in Kiel.

First annual SkillsUSa Wisconsin Welding Challenge Held in October

SkillsUSA held the ‘First Annual SkillsUSA Wisconsin Welding Challenge’ in

October. The event was hosted by Advanced Welding Institute in Eagle River, and each of the twelve participating students competed in various manufacturing welding processes as well as a job interview competition. Students were awarded over $3,000 in scholarships, welding helmets and much more. BV

2014 Wisconsin Business Directories noW AvAilABle from WmcAccess to business lists is now easier and less expensive with our lineup of D&B products.The 2014 editions of Harris InfoSource Manufacturing and Business Services Directories are now available for order. These are the same directories our customers have depended on for over 90 years.WMC’s custom list service provides you with reference and prospecting lists to reach your target markets, not only in Wisconsin, but