Source: Dawn
Mapping Key Value Chains for Lakeshore
Wisconsin
September 2015
A Project of the Lakeshore Wisconsin Manufacturing Initiative
Report Prepared by EntreWorks Consulting and the Center for Regional Economic
Competitiveness
Mapping Value Chains in the Lakeshore Wisconsin region
Contents
Executive Summary....................................................................................................................................... 3
Introduction: The Lakeshore Wisconsin Economy........................................................................................ 5
Manufacturing drives the Lakeshore regional economy .......................................................................... 7
Value Chains: Identifying inter-industry linkages ....................................................................................... 14
Mapping target value chains................................................................................................................... 17
Cheese manufacturing ........................................................................................................................ 18
Metal fabricators/machine shops ....................................................................................................... 24
Plastics product manufacturing .......................................................................................................... 29
Cutlery, utensil, pot, and pan manufacturing ..................................................................................... 33
Company Survey Results ......................................................................................................................... 36
Progress Lakeshore/KCEDC Supply Chain Survey ............................................................................... 36
Survey Respondents............................................................................................................................ 36
Supply Chain Involvement .................................................................................................................. 36
Supply Chain Strategies....................................................................................................................... 38
Supply Chain Challenges and Opportunities ....................................................................................... 39
Overlapping Linked Industries ................................................................................................................ 41
Next Steps ................................................................................................................................................... 42
Enhance Understanding of Regional Supply Chains ............................................................................... 42
Build Stronger Local Supply Chain Connections ..................................................................................... 42
Develop New Markets............................................................................................................................. 43
Develop Talent ........................................................................................................................................ 43
Conclusion ................................................................................................................................................... 45
Appendix A: Maps of targeted value chains ............................................................................................... 46
Appendix B: Progress Lakeshore/KCEDC Supply Chain Survey ................................................................... 51
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Mapping Value Chains in the Lakeshore Wisconsin region
List of Figures
Figure 1: Lakeshore Wisconsin Total Employment ....................................................................................... 3
Figure 2: Percentage of manufacturing jobs by county ................................................................................ 7
Figure 3: Manufacturing employment trends............................................................................................... 9
Figure 4: Lakeshore Wisconsin top manufacturing industry sectors .......................................................... 10
Figure 5: Lakeshore Wisconsin top 20 manufacturing industry sectors ..................................................... 11
Figure 6: Lakeshore Wisconsin core industries........................................................................................... 13
Figure 7: Guide to reading value chain diagrams ....................................................................................... 15
Figure 8: Selected ‘core’ industries ............................................................................................................. 17
Figure 9: Cheese manufacturing value chain .............................................................................................. 19
Figure 10: Wisconsin CAFOs........................................................................................................................ 20
Figure 11: Biogas Value Chain ..................................................................................................................... 22
Figure 12: Metal fabricators/machine shops value chain........................................................................... 25
Figure 13: Plastics product manufacturing value chain .............................................................................. 30
Figure 14: Cutlery, utensil, pot, and pan manufacturing value chain ......................................................... 34
Figure 15: Percentage of Goods & Services Purchased within 150 m of Location ..................................... 37
Figure 16: Why Develop Supply Chain Partners?........................................................................................ 39
Figure 17: Manufacturers within 150 miles of Lakeshore Wisconsin ......................................................... 41
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Mapping Value Chains in the Lakeshore Wisconsin region
Executive Summary
Manufacturing is the driving force of the economy in the five county Lakeshore Wisconsin region. The
area is home to one of the densest concentrations of manufacturers in the U.S., and these firms
matter—employing more than 37,000 people and accounting for nearly a third of total area
employment. Thus, it is no overstatement to say that “as goes manufacturing, so goes Lakeshore
Wisconsin.”
In an effort to further bolster the region’s manufacturing competitiveness, Progress Lakeshore, Inc. and
the Kewaunee County Economic Development Corporation have sponsored the Lakeshore Wisconsin
Manufacturing Initiative. As part of this effort, they have also sponsored new research and analysis that
tackles a major challenge facing the region’s manufacturers: supply chain optimization. How can local
firms develop more effective and productive supply chain strategies? For many larger firms, this may
entail finding new local suppliers. For smaller firms, it may involve finding new customers and
identifying opportunities to participate in larger regional supply chains.
This report addresses key supply chain issues facing Lakeshore Wisconsin’s manufacturers. It presents a
deep value chain analysis of five key sectors where the region enjoys historic or emerging strengths:
cheese manufacturing, plastics products manufacturing, metalworking and machine shops, and cutlery,
utensil, pot, and pan manufacturing. The study “maps” these regional supply chains and also identifies
new areas of potential focus for small and medium-sized manufacturers, i.e. potential new customers or
opportunities to identify new supply sources. Over 800 firms, accounting for 80% of all local
manufacturers, are included in this analysis.
Our research suggests that many large and small firms lack a full understanding of how supply chains
and value chains work. Local firms should embrace new methods of supply chain optimization, a
process whereby firms develop a supply chain strategy that is closely aligned with overall corporate
strategy and execute this strategy in a manner that will improve the speed of delivery of the supply
chain, improve collaboration, reduce risk, and decrease overall total cost. Our survey of local
manufacturers found that only 46% of surveyed firms have a formal supply chain strategy, and only 26%
of firms do a significant amount of purchasing from local suppliers.
In addition to promoting more sophisticated supply chain management strategies, the project seeks to
encourage the development of more local connections between suppliers and potential customers. In
related work, we have developed an on-line supply chain connections portal to help local firms find local
partners, suppliers or customers. This directory can be accessed at:
www.progresslakeshore.org/manufacturingdirectory.
This research is the first step in a wider campaign to bolster the capacities of local manufacturers. Other
future policy recommendations include:
•
Enhance Understanding of Regional Supply Chains: Promote Training to Develop More
Sophisticated Supply Chain Strategies.
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Mapping Value Chains in the Lakeshore Wisconsin region
•
•
•
Build Better Supply Chain Connections: Link local firms in ways that help them do more
business together and identify other opportunities for collaboration.
Develop New Markets: Assist local firms in exporting and by providing other tools to help them
break into regional, national, and global markets.
Develop Talent: Assist manufacturers in development a local pipeline of talent, i.e. young
people and adults with an interest in manufacturing careers and the skills and competencies
needed to prosper in these fields.
As the Lakeshore Wisconsin Manufacturing Initiative moves forward, these steps will serve as priority
action items to not only enhance the responsiveness of regional supply chains but to also strengthen the
overall competitiveness of the region’s manufacturing base.
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Mapping Value Chains in the Lakeshore Wisconsin region
Like many regions of the country, Wisconsin’s Lakeshore region has been enjoying a slow and steady
recovery after the ravages of the Great Recession. In many regions, the downturn triggered a collapse of
the local manufacturing sector, with the loss of industries and jobs that will likely never return. In
Wisconsin, manufacturing took a hit but has come back even stronger. In fact, the state of Wisconsin,
and Lakeshore Wisconsin, in particular, are now among the nation’s leaders in terms of manufacturing
competitiveness.
In an effort to capitalize on these unique competitive advantages, Progress Lakeshore, Inc. (based in
Manitowoc) and the Kewaunee County Economic Development Corporation (KCEDC), with support from
the U.S. Economic Development Administration, the Wisconsin Economic Development Corporation and
New North, Inc.,1 have collaborated to develop new strategies to strengthen the region’s manufacturing
economy. This report, and related project materials, are part of a wider set of strategies designed to
help local manufacturers, especially small and medium-sized companies, better understand regional
supply chains and value chains and capture emerging and growing market opportunities.
The report summarizes a much larger research project that assessed various issues related to regional
manufacturing supply chains. This research used multiple approaches—including company interviews
and focus groups, an industry survey, and extensive data analysis—to develop a comprehensive look at a
number of core manufacturing sectors. In addition to the material presented in this report, an on-line
manufacturing supply chain directory and networking tool was developed. It can be accessed at
www.progresslakeshore.org/manufacturingdirectory and at websites for Progress Lakeshore, Inc.,
KCEDC and the New North, Inc.
Introduction: The Lakeshore Wisconsin Economy
This analysis assesses manufacturing-related opportunities in the Lakeshore region of Northeast
Wisconsin, an area composed of five counties: Calumet, Door, Kewaunee, Manitowoc, and Sheboygan.
The region is home nearly 300,000 residents and supported more than 125,000 jobs in 2015.
1
This project was funded with support from the U.S. Economic Development Administration and the Wisconsin Economic
Development Corporation. The views expressed here do not represent the opinions of these agencies or other project
sponsors. The report was prepared by Erik R. Pages of EntreWorks Consulting (www.entreworks.net) and Randall Arthur, Sarah
Gutschow, and Martin A. Romitti of the Center for Regional Economic Competitiveness (www.creconline.net).
5
Mapping Value Chains in the Lakeshore Wisconsin region
Number of Jobs
Thousands
Figure 1: Lakeshore Wisconsin Total Employment
135
133
Employment
130
128
125
123
120
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
In recent years, Wisconsin’s Lakeshore region has shown a pattern of slow but steady growth. Between
2010 and 2015, the population grew 0.1 percent annually, while employment grew at 0.8 percent
annually. Like much of the US, the region was hit by the Great Recession, but the downturn was less
severe than in other areas of the country. (See Figure 1.)
The region’s resilience is driven by its relatively diverse economic base and strong heritage of
manufacturing. Lakeshore Wisconsin remains one of the US’s most important centers of manufacturing.
However, unlike other regions that have specialized in a single industry, Lakeshore Wisconsin is home to
a wide array of manufacturing sectors. The regional manufacturing economy enjoys multiple strengths,
including food, metalworking, plastics, and cookware manufacturing. These firms, while locally
anchored, serve national and global markets and help create a vibrant regional manufacturing
ecosystem.
This report seeks to better understand what makes this ecosystem work and to identify how to enhance
its future competitiveness. It begins by documenting the manufacturing sector’s importance to the
Lakeshore Wisconsin regional economy. The report then takes a deeper dive into four critical or “core”
industries to the region’s manufacturing sector: (1) cheese manufacturing; (2) metal fabricators/
machine shops; (3) plastics product manufacturing; and (4) cutlery, utensil, pot, and pan manufacturing.
These industries share multiple characteristics: they have a sizable local presence in terms of both jobs
and establishments, and they have experienced substantial growth in recent years. Thus, they present
good opportunities where existing companies can grow, new ventures can form, and significant new job
creation is likely.
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Mapping Value Chains in the Lakeshore Wisconsin region
This analysis seeks to better understand the supply chain linkages found within these sub-sectors. These
linkages represent the elements of a value chain from raw inputs to final consumer demand. By
analyzing the value chains associated with these four industries, we can better understand the supplier
and market opportunities associated with each of these core industries.
We pay particular attention to the industries in the value chain that buy from and sell to multiple
targeted industries. The value chain structures are based on national buying and selling patterns, which
in turn help to identify regional economic strengths, emerging opportunities, and the gaps that might
eventually be filled through the economic development process. We have also compiled company lists
that identify the regional companies comprising the industries associated with the four value-chains.
Combined, this knowledge will help inform strategies to grow and strengthen the region’s targeted
industries clusters.
This report is further supported with a web-based supply chain connection toolkit available via websites
supported by Progress Lakeshore Inc., KCEDC and The New North. This website contains the value
chain maps developed for this report along with a web tool that allows firms and others to search for
local manufacturers operating in the Lakeshore Wisconsin region. By using this tool, local
manufacturers have a simpler path to
Figure 2: Percentage of manufacturing jobs by county
finding potential local suppliers and new
customers located in the region.
We conclude the report by highlighting key
findings that emerge from this analysis.
We also offer some insights into how these
findings can be used in support of efforts
to grow the region’s manufacturing sector.
This report supports the Lakeshore
Wisconsin region’s outreach efforts to
small and medium-sized companies, as it
will not only make small and medium-sized
manufacturers aware of the regional
assets available to them, but also
potentially introduce them to new market
opportunities.
Manufacturing drives the
Lakeshore regional economy
The manufacturing sector is the most
important driver of the Wisconsin
Lakeshore’s regional economy. It currently
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Mapping Value Chains in the Lakeshore Wisconsin region
contributes over 37,000 jobs in the region, a whopping 30 percent of total regional employment. This
makes manufacturing the region’s largest employing economic sector, with over double the
employment of the next largest traded sector, health care and social assistance. The number of
manufacturing jobs varies across the region, with 19,105 manufacturing jobs in Sheboygan County,
10,237 in Manitowoc County, 3,765 in Calumet County, 2,171 in Door County, and 1,954 in Kewaunee
County.2 However, manufacturing is central to the economies of every county throughout the region. As
shown in Figure 2, in every county in the Lakeshore region manufacturing employment as a proportion
of total county employment well exceeds the national average of 8.6%, and matches or exceeds the
state average of 16.6%. In Sheboygan, Manitowoc, and Calumet, manufacturing represents
approximately one out of every three available jobs.
2
Unless otherwise noted, all industry data in this report is derived from analysis by Economic Modeling Specialists, Intl. to learn
more, visit www.economicmodeling.com.
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Mapping Value Chains in the Lakeshore Wisconsin region
Figure 3: Manufacturing employment trends
100%
95%
Manufacturing Employment (2001=100%)
90%
85%
80%
75%
Lakeshore Wisconsin
70%
65%
Wisconsin
60%
United States
55%
50%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: Economic Modeling Specialists, Inc. 2014Q4 Covered Employment Data
Manufacturing remains important to the region despite significant job losses over the past 15 years.
Figure 3 shows that the Wisconsin’s Lakeshore region lost significant manufacturing employment since
2001, although at a slower rate than the rest of the country. The region was harder hit than the rest of
the state following the Great Recession and has only just begun to recuperate. At the height of the Great
Recession, regional manufacturing employment was 25% less than it had been in 2001. The region’s
manufacturing job losses during the 2000s stem from downturns in a few key sectors. Most of the job
loss was concentrated in industries affected by offshoring, such as wood product and furniture
manufacturing. These two manufacturing industries were particular affected by the 2012 closing of Two
Rivers’ Thermo Fisher Scientific facility, which made wooden laboratory furniture. While these sectors
floundered, other local industries, including food, paper, and chemical, experienced modest growth.
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Mapping Value Chains in the Lakeshore Wisconsin region
Figure 4: Lakeshore Wisconsin top manufacturing industry sectors
NAICS
3329
3261
3115
3315
3331
3327
3222
3231
3116
3332
3323
3339
3322
3371
3366
3118
3363
3391
3219
3328
Industry Name
Other Fabricated Metal Product MFG
Plastics Product MFG
Dairy Product MFG
Foundries
Agriculture, Construction, & Mining
Machinery MFG
Machine Shops; Turned Product; &
Screw, Nut, and Bolt MFG
Converted Paper Product MFG
Printing & Related Support Activities
Animal Slaughtering & Processing
Industrial Machinery MFG
Architectural & Structural Metals MFG
Other General Purpose Machinery MFG
Cutlery & Handtool MFG
Household & Institutional Furniture &
Kitchen Cabinet MFG
Ship & Boat Building
Bakeries & Tortilla MFG
Motor Vehicle Parts MFG
Medical Equipment & Supplies MFG
Other Wood Product MFG
Coating, Engraving, Heat Treating, &
Allied Activities
2010
Jobs
2015
Jobs
Annual
Growth Rate
10-15
413
1%
(212)
-2%
372
4%
386
4%
Change
10-15
6,976
3,016
2,366
2,305
7,389
2,803
2,739
2,690
2,148
2,608
460
1,186
1,126
1,073
1,026
602
558
813
918
1,591
1,234
1,070
1,020
859
837
804
788
1,467
920
333
507
413
601
343
LQ
2015
Average
Wage
2014
Est.
28.84
5.86
22.34
23.49
$58,601
$42,344
$55,722
$50,679
28
29
24
14
5%
11.00
$53,835
8
405
107
(3)
(6)
257
279
(10)
(130)
8%
2%
0%
0%
9%
11%
0%
-4%
4.68
5.22
2.75
2.32
8.73
2.58
3.36
23.53
$41,273
$52,824
$37,597
$60,000
$63,273
$47,571
$56,914
$63,950
48
7
41
4
11
20
19
4
777
763
519
499
499
461
(690)
(157)
186
(8)
85
(140)
-15%
-5%
12%
0%
5%
-6%
3.88
6.03
2.00
1.04
1.78
2.51
$35,881
$49,061
$24,546
$40,172
$48,045
$32,669
19
4
20
7
7
22
458
115
8%
3.63
$34,285
14
Despite these job losses in the 2000s, area manufacturers have prospered since 2010. Regional
manufacturing job growth (at 1.1% per year) has exceeded national averages. However, this growth rate
has been slightly behind the statewide annual average growth of 1.5 percent.
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Mapping Value Chains in the Lakeshore Wisconsin region
Figure 5: Lakeshore Wisconsin top 20 manufacturing industry sectors
$80,000
Animal Slaughtering &
Processing
Arch. & Structural
1,020
Metals MFG
Medical
837
Equip. MFG
499
Other Gen. Purpose
$70,000
Cutlery & Handtool MFG
788
Industrial Machinery MFG
859
Mach. MFG
804
$60,000
Convert. Paper
Product MFG
1,234
Ag., Construction, & Mining
Machinery MFG
2,608
Average Wage (2015)
$50,000
Ship & Boat
Building
763
$40,000
Dairy Product MFG
2,739
Lakeshore Wisconsin
Average Wage = $39,725
Source: EMSI
Plastics Product MFG
2,803
$30,000
Printing
1,070
$20,000
Motor Vehicle
Parts MFG
499
$10,000
Household & Inst.
Furniture MFG,
777
Other Wood
Product MFG
461
Machine Shops
1,591
Foundries
2,690
Coating, Engraving, Heat
Treating
458
Bakeries &
Tortilla MFG
519
Red=At-Risk Clusters
Green=Stable Clusters
Blue=Emerging Clusters
*Other Fab. Metal Product MFG
Rel. Conc. of 28.8; Emp=7,389
$0
0.0
Source: EMSI
5.0
10.0
15.0
20.0
25.0
Relative Concentration (2015)
While we often speak of the “manufacturing industry,” various manufacturing sub-sectors face differing
market conditions. Within Lakeshore Wisconsin, twenty sectors account for the bulk of manufacturing
jobs. (See Figure 4). Figure 5 depicts these sectors based on their average wages, local concentration,
and overall regional employment (bubble size). It also assesses their recent growth rates: stable (shown
in green), emerging (shown in blue), and at-risk (shown in red). Stable industry sectors are those that
represent both a large number of regional jobs and relatively stable employment levels over time. Stable
industry sectors often represent the foundations of the economy and traditional sources of
employment. At-risk industry sectors have sustained significant employment loss, often declining at a
rate faster than the corresponding industry sector nationally. Emerging industry sectors are
employment areas beginning to show signs of developing a critical mass of activity within the region.
They may not be as highly concentrated (as measured by location quotient or LQ)3 in the region as in
3
The relative concentration of industry clusters is traditionally measured via a location quotient, a measure that tracks an
industry’s local concentration (typically in overall employment) compared to national averages. An industry with a LQ of 1.0
has employment concentration levels equal to the U.S. average. While definitions vary, sectors with LQs higher than 1.5 are
often considered to be areas of special expertise or concentration.
11
Mapping Value Chains in the Lakeshore Wisconsin region
other regions, but they are frequently growing at a faster rate than the rest of the nation. These industry
sectors often represent sources of potential future opportunity in the region.
These data further bolster the case for manufacturing as a critical regional resource. Manufacturers
provide high-quality jobs. Among these sectors, 15 of the region’s industries presently pay their workers
average wages greater than the regional average wage of $39,725. In some instances, average wages
are significantly higher than the regional average. For example, the average wages for industrial
machinery manufacturing and cutlery and handtool manufacturing are over $63,000. The overall
average wage for manufacturing industries in the region is $50,108.
Figure 5 also highlights the region’s resilience thanks to a diversified manufacturing sector. As areas like
Detroit have learned to their peril, an exclusive focus on one manufacturing sector can create economic
challenges. In contrast, a diversified manufacturing sector offers a wider range of market opportunities.
It also brings stability to the region’s economy since it is not subject to any single industry’s economic
cycles.
Within these sectors, recent performance has varied. The region has multiple strong industry sectors, as
shown in Figure 5. The manufacturing industry sectors with over 2,000 employees are other fabricated
metal product manufacturing, plastics product manufacturing, dairy product manufacturing, foundries,
and agriculture, construction, and mining machinery manufacturing. Of these industry sectors, other
fabricated metal product manufacturing, dairy product manufacturing, agriculture, construction, and
mining machinery manufacturing, and foundries both had high employment concentrations and showed
stable employment levels between 2010 and 2015, with no major changes projected by 2020.
Despite a relatively high employment concentration, plastics product manufacturing is considered “atrisk” due to a large drop in employment between 2010 and 2015, with further projected cuts up to
2020. Cutlery and handtool manufacturing is another regional industry with a high employment
concentration that has faced significant employment declines in recent years. Though less highly
concentrated overall, the household, institutional furniture and kitchen cabinet manufacturing industry
sector recently experienced a very sharp drop, from 1,467 employees in 2010 to 777 in 2015.
Employment in the ship and boat building also declined after cutbacks at major regional employers like
Burger Boat and Bay Shipbuilding due to limited orders during the economic downturn.
“Emerging” sectors have enjoyed recent employment gains. Within this group, the sectors with the
highest current regional employment are machine shops, converted paper product manufacturing,
industrial machinery manufacturing, and architectural and structural metals manufacturing. Between
2010 and 2015 machine shops experienced the highest annual growth rate, while industrial machinery
manufacturing showed the highest gains in regional employment concentration. In 2010, employment in
industrial machinery manufacturing was six times more highly concentrated regionally than nationally,
while by 2015 it was nine times more highly concentrated.
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Mapping Value Chains in the Lakeshore Wisconsin region
Figure 6: Lakeshore Wisconsin Core Industries
$80,000
Metal Kitchen
Cookware,
Utensil, Cutlery, &
Flatware MFG
788
All Other
Miscellaneous
Fabricated
Metal Product
MFG
6,673
$70,000
$60,000
$50,000
Average Wage (2015)
Cheese MFG
2,615
Machine Shops
1,303
All Other Plastics
Product MFG
1,999
$40,000
Lakeshore Wisconsin
Average Wage = $39,725
Source: EMSI
$30,000
$20,000
$10,000
Red=At-Risk Clusters
Green=Stable Clusters
Blue=Emerging Clusters
$0
0.0
Source: EMSI
20.0
40.0
60.0
80.0
100.0
120.0
Relative Concentration (2015)
This study’s four core industries have special importance for the regional economy. (See Figure 6). They
have high employment concentrations in the region, employ more than 500 local workers, and provide
higher than average wages. They are what we might call “good corporate citizens,” anchoring the local
economy and providing good careers for local people.
Lakeshore Wisconsin is major force in several of these industries, especially metal kitchen cookware
manufacturing and fabricated metal product manufacturing. Both sectors are more than 100 times more
concentrated in the region than nationally. However, the sectors have faced different growth
trajectories in recent years. Miscellaneous fabricated metal product manufacturing has a very large and
mostly stable employment base in the region, with 6,673 local employees in 2015. Meanwhile, metal
kitchen cookware manufacturing has a much smaller and declining employment base, affected by
events such as the 2003 closing of Manitowoc’s Mirro Aluminum Company. This places the industry “atrisk” for future declines.
Cheese manufacturing and all other plastics product manufacturing also have large employment bases
in Lakeshore Wisconsin. Employment in cheese manufacturing is almost 60 times more highly
13
Mapping Value Chains in the Lakeshore Wisconsin region
concentrated in the region than nationally, and is one of the few manufacturing industries to have
experienced moderate employment growth since 2010. Conversely, plastics products manufacturing is
much less highly concentrated and is projected to decline by 2020.4 Of these industries, machine shops
is the only one classified as “emerging” due to recent gains in both employment and employment
concentration.
Value Chains: Identifying inter-industry linkages
The previous section analyzed the Lakeshore Wisconsin region’s manufacturing sector using a “topdown” approach to identify local industries that are more active and concentrated when compared to
the rest of the U.S. economy. In the following section, the analysis takes a “bottom-up” approach by
examining the connections between multiple industries. As a result, for the several targeted industries
we undertake a “value-chain” analysis that assesses industry-to-industry buying and selling
relationships, based on available quantitative data.5
We start with a single core industry that represents a significant contributor to the local economy, and
analyze its inter-industry linkages through buying and selling patterns. These core industries represent
key clusters important to the region and often serve in the same way that a grain of sand serves as the
core of the “pearl” that is the gem of the region’s economy.
The model used here, developed by Dr. Edward Feser of the University of Illinois Urbana-Champaign,
identifies backward and forward linkages for each industry.6 It therefore attempts to account for all the
buying and selling between all industries in the U.S. economy.7 For each sector, this analysis highlights
its leading suppliers (backward linkages) and its major customers (forward linkages). Once we have
determined these inter-industry connections, we can then apply regionally-specific data8 to better
identify regional economic strengths, emerging opportunities, and the gaps that might eventually be
4
As we note in the plastics industry discussion below, these industry projections may not fully account for the impact of recent
market developments such as the industry’s expanded access to low cost shale energy resources.
5
By contrast, a ‘supply chain’ analysis would examine individual firm to firm relationships that require extensive qualitative
research, close company cooperation, and access to internal company supplier and customer data.
6
The model is based upon the U.S. Census Bureau’s Economic Census and Benchmark Input-Output data developed by the U.S.
Bureau of Economic Analysis.
7
In an ideal world this model would be based on global buying and selling patterns, but those data are unavailable. However,
the U.S. economy serves as a reasonable proxy because it is well developed and a deeply integrated economy.
8
Unless noted otherwise, the analysis uses the Economic Modeling Specialists International (EMSI) representation of U.S.
Bureau of Labor Statistics data. We used EMSI wage and employment data at the metropolitan statistical area and industry
level for the value chain analyses. The EMSI data combine U.S. Bureau of Labor Statistics employment payroll data from its
Quarterly Census of Employment and Wages with EMSI estimates for data cells that BLS privacy standards do not allow it to
disclose publicly. EMSI utilizes available BLS data through June 2014 to project employment through year end. We analyzed
growth trends for industry sectors by comparing 2010 employment levels to EMSI-projected 2020 levels. For the employment
concentrations, we looked at each industry sector’s national location quotient (LQ) for 2014.
14
Mapping Value Chains in the Lakeshore Wisconsin region
Figure 7: Guide to reading value chain diagrams
filled through the economic development process. This knowledge will help inform strategies to grow
and strengthen the region’s targeted industry clusters.
For each of the core industries we will present a value chain diagram (or “value chain map”). These
diagrams lay out each core industry’s forward linkages (sales made by the core industry, or market
opportunities) and backward linkages (purchases made by the core industry, or supplier opportunities).9
The linked industries identified in these diagrams do not represent all of the linkages. Instead, they focus
on those relationships that are most extensive in terms of the size of the transactions and “close” in
terms of how directly the core industry interacts with other U.S. industries through either a buying or
selling relationship. In order to determine the most significant linked industries, our model considers
three factors:



The directionality of the flows. Are the linkages forward or backward linkages?
The structure of the flows. Who does the core industry buy from, or sell to, most directly?
The volume of flows. What industries does the core industry buy from, and sell to, the most?
9
This approach does not account for the ultimate consumer of these goods (final demand), therefore if an aircraft
manufacturer sells jets to the Department of Defense, “Government” would not appear as a forward linkage.
15
Mapping Value Chains in the Lakeshore Wisconsin region
Figure 7 provides a guide for reading the value-chain diagrams that will follow in the report.10 The
colored boxes indicate local concentration levels of each linked industry. The up or down arrows in the
linked industry boxes depict whether an industry is growing or declining regionally. The colored arrows
indicate the flow of trade–whether the core industry is purchasing or selling within the key sector. The
purpose is to identify industries and firms that have extensive trading relationships and are experiencing
positive growth in the Lakeshore Wisconsin region.
Linked industries that are growing or highly concentrated within the region reinforce the potential
strength of the core industry and bode well for efforts for further development of the core industry.
Conversely, where linked industries are not present or not heavily concentrated, there may be gaps that
need to be better understood in order to help grow the core industry.
The value-chain diagrams are not intended to map the connections between each and every firm within
an industry, but rather to paint an overall picture of how one core industry connects to related
industries. The focus is on linkages—what kinds of industries are more closely networked with the core
industry? It should also be noted that if an industry does not appear on the list, it does not mean that
those relationships do not exist. It does, however, suggest that strong connections and extensive
business relationships are less common and less direct.
10
It should be noted that the core industry often buys and sells with other firms in its own industry. As a result, the diagrams
regularly show that core industries are often closely linked to themselves.
16
Mapping Value Chains in the Lakeshore Wisconsin region
Mapping target value chains
The analysis presented here focuses on four core industries. These industries were selected in
consultation with the Progress Lakeshore Inc., the Kewaunee County Economic Development Council
and other key stakeholders. The key clusters and the core industries selected for value-chain analysis are
identified in Figure 8. These four clusters share several characteristics: they have a large presence in the
region, employ a large number of local employees, and have enjoyed some industry growth in recent
years. They represent some of the most important components of the region’s diverse manufacturing
base.
The next section presents key findings related to each of these four value chains. In our analysis, we will
consider the supplier and market opportunities associated with each of the core industries and will note
any potential gaps that may exist within the regional value chain. Regional companies in the core and
linked are mapped, by value chain, in Appendix A.
Figure 8: Selected ‘core’ industries
Key Manufacturing
Cluster
Selected Core Industry
Cheese Manufacturing

Cheese manufacturing (NAICS 311513)
Metal Fabricators/Machine Shops


Machine shops (NAICS 332710)
All other miscellaneous fabricated metal
product manufacturing (NAICS 332999)

All other plastics product manufacturing
(NAICS 326199)

Metal kitchen cookware, utensil, cutlery,
and flatware (except precious)
manufacturing (NAICS 332215)
Plastics Product Manufacturing
Cutlery, utensil, pot, and pan
manufacturing
17
Mapping Value Chains in the Lakeshore Wisconsin region
Cheese manufacturing
Cheese manufacturing is one of Lakeshore Wisconsin’s most prominent manufacturing industries.
Employment in the industry is 65 times more concentrated in the region than it is nationally. In 2015,
around 2,600 employees worked in the industry, representing a moderate increase over 2010.
Employment is projected to remain constant by 2020. In 2015, total cheese manufacturing employment
(at 1,670) was higher in Sheboygan County than in any other county in Wisconsin. The industry is
represented in the region by large manufacturers such as Sargento Foods Inc., Great Lakes Cheese, Land
O'Lakes Cheese, and Agropur Inc. Figure 9 diagrams the industry’s key forward and backward linkages.
18
Mapping Value Chains in the Lakeshore Wisconsin region
Figure 9: Cheese manufacturing value chain
CHEESE MFG
↑
Dry, condensed, & evaporated
dairy product MFG
↓
Fluid milk & butter MFG
↑
Seasoning & dressing
MFG
↓
Flavoring syrup &
concentrate MFG
—
ANIMAL PRODUCTION &
AQUACULTURE
↑
Paperboard container
MFG
↓
ALL OTHER CONVERTED
PAPER PRODUCT MFG
↑
Plastics packaging materials &
unlaminated film & sheet MFG
↓
Plastics bottle MFG
↑
Employment (2015):
Establishments (2014):
Ann. Growth (10-15):
2,749
21
4.3%
Cheese
Manufacturing
CHEESE MFG
↑
FOOD SERVICES &
DRINKING PLACES
↑
Frozen food MFG
↑
Cookie, cracker, &
pasta MFG
—
NURSING & RESIDENTIAL
CARE FACILITIES
↓
Dry, condensed, &
evaporated dairy product
MFG
↓
HOSPITALS
↓
BREAD & BAKERY
PRODUCT MFG
↑
RETAIL TRADE
↑
Fluid milk & butter
MFG
↑
Ice cream & frozen
dessert MFG
—
Market Opportunities
Supplier Opportunities
Supplier opportunities
The Lakeshore Wisconsin region has many strengths on the supply side of the cheese manufacturing
industry. One of the most important supplier industries is dairy cattle and milk production. This industry
is very well-represented; Lakeshore Wisconsin has more dairy cattle concentrated animal feeding
operations (CAFOs) than any other area of the state. (See Figure 10). Having a predictable supply of raw
dairy product gives the region a large advantage in cheese production. The largest dairy production
enterprises in the region are Maple Leaf Dairy, Grotegut Dairy Farm Inc., and Wholesome Dairy. In 2012,
the 156,200 dairy cows in the region produced 3.83 billion pounds of milk.11
With such a large number of dairy producers in the region, large manufacturers like Agropur are
currently able to source nearly all of their dairy supply within 100 miles of their plant, which is very
important to producers due to the high costs of shipping raw milk. However, the availability of the milk
supply is also the largest constraint on the future growth of cheese manufacturers. For this reason,
11
2014 Wisconsin Agricultural Statistics, U.S. Department of Agriculture. Accessed at:
www.nass.usda.gov/Statistics_by_State/Wisconsin/Publications/Annual_Statistical_Bulletin/bulletin2014_web.pdf
19
Mapping Value Chains in the Lakeshore Wisconsin region
some regional cheese producers have
recently begun sourcing their milk supply
from other regions. Incorporating
innovative dairy production techniques
into the current system may help increase
the region’s dairy supply without having to
increase the size of dairy herds.
Figure 10: Wisconsin CAFOs
Many of the other supplier industries for
cheese manufacturing are in related food
processing industries. Of these industries,
dry, condensed, and evaporated dairy
product manufacturing has the strongest
employment concentration, although it
declined between 2010 and 2015. The fluid
milk and butter manufacturing and
seasoning and dressing manufacturing
industries have moderately strong
employment concentrations, represented
by companies like Dean Foods Verifine
Dairy in Sheboygan. While fluid milk and
butter manufacturing recently experienced
moderate gains, seasoning and dressing
manufacturing had a slight decline. The
flavoring syrup and concentrate
manufacturing sector has no current presence in the region, representing a potential area for growth on
the supply side. Cheese manufacturing also has strong supplier linkages to other companies within its
own industry.
Another important group of supplier industries for cheese manufacturing is packaging manufacturers.
Innovative packaging techniques have historically provided one of the most important drivers for the
growth of cheese manufacturing in the region. For example, Sargento was the first cheese manufacturer
to package sliced cheese fanned out in single packet and continues to develop innovative new packaging
approaches.
The converted paper product manufacturing has over 800 employees in 2015 and a high and growing
employment concentration in the region, with large employers such as Georgia-Pacific Corporation and
Sheboygan Paper Box Co. Plastic bottle manufacturing and paperboard container manufacturing also
have high employment concentrations, although the paperboard container manufacturing industry
experienced a decline in employment over the past 5 years. These industries are represented in the
20
Mapping Value Chains in the Lakeshore Wisconsin region
region by companies like Scandia Plastics in Sheboygan. The plastics packaging materials and
unlaminated film and sheet manufacturing industry has a more moderate employment concentration,
and has also experienced a recent decline.
Market opportunities
There are fewer regional opportunities for cheese manufacturing on the market side of the value chain.
Large cheese manufacturers sell most of their product by exporting it wholesale domestically and
globally. The main retail customers for cheese manufacturing are food services and drinking places,
hospitals, nursing and residential care facilities, and general retail trade. All of these industries have a
low or moderate employment concentration in the region. Not surprisingly, these retail operations tend
to be located near population centers. Many cheese manufacturers also operate local retail operations.
These centers create some jobs, and the wholesale sector has a large local effect. Employment in the
dairy product merchant wholesale industry is 29 times more concentrated in the region than nationally,
thanks to companies such as Dairy Farmers of America, Pagel's Ponderosa, and Sargento Foods Inc.
The strongest current customer opportunity entails new sales to other food manufacturing
establishments related to the industry, especially other cheese manufacturers. Bread and bakery
product manufacturing has around 500 employees in the region in 2015, with a strong and growing
employment concentration. Dry, condensed, and evaporated dairy product manufacturing also has a
strong employment concentration, although the industry experienced significant employment declines
over the past five years.
The presence of more related food manufacturing establishments would greatly expand the ability of
Lakeshore Wisconsin cheese manufacturers to sell their products locally. Fluid milk and butter
manufacturing has a moderate but growing employment concentration, while frozen food
manufacturing has a very small but growing presence. Neither cookie, cracker, and pasta manufacturing
nor ice cream and frozen dessert manufacturing currently have any presence in the region. With the
region’s solid advantages in packaging manufacturing and dairy production, all of these industries
represent significant opportunities for regional economic growth.
Although not represented in the value chain, Lakeshore Wisconsin dairy manufacturers have been
exploring new avenues for selling two major byproducts of cheese production: cow manure and whey.
Cow manure can be processed through on-farm biogas systems to produce energy and heat. This
process also reduces odor and greenhouse gas emissions, reduces nutrient runoff into waterways, and
produces coproducts, such as organic bedding and fertilizer. Methane, a bio digester byproduct, can also
be processed to become a natural gas quality product called Liquid Bio Gas (LBG). This accomplishes the
goals of removing sources of pollution from the environment while simultaneously producing energy to
help run dairy production facilities, which have very high energy costs. (See Figure 11).
21
Mapping Value Chains in the Lakeshore Wisconsin region
Figure 11: Biogas Value Chain
Regional Biogas Value Chain
Regional differential value $186M,
CBG value + fuel value not purchased
RINS EXPERTISE – value $7 Mil
US Oil / Integris
Manure value
RINS Value = $3.20 per M Btu
438,000 head X
27,800BTU/day X
365 days/year = 4.8
T-BTU/yr
(6.8 cents/ lb. to handle)
Digester Infrastructure
Specs & Cost
• Head 1000-15000
• $1.8 M - $15 M
Food
Processing
By-Products
By-Products Value ?
Additional Benefits
•
•
•
•
•
•
•
Greenhouse Gas reduction
Waste Management
Odor Control
Sustainability Local
Ground Water Protection
Air pathogens
Reducing Fossil fuel use
Collection
Manure
Commercial
Waste?
Value = $48M
$10/M BTU
Example- Fair Oaks Farm
4 Dairys-14000 cows –
central cleaner
Co-op
Digester
Independent
Farm
Conditioning
Cost to build w/
digester $4 M
Heating Dry
Propane
Comparison 1.39 gal.
75K BTU/ Gal
$14/m BTU
11 sites
3.5 cents KW
10,000 BTU / KW/HR
Pipeline ?
Baldwin WI Build
interconnect / Gate
Station
Quality - Unknown
Transportation
Commercial
Electricity
27 in Wisconsin
Fertilizer Value Stays the same
Separator
Saxn
Vellito
Politics environment needs
to be considered and
assessed
Cleaning
CO2
Removal
Fleet
Site
Corn Dryers
75 vehicles
4 partial
$1-$16 M
Milk Trucks
Schneider
Pabl
Waste Mgmt
Vintor
Veino
UPS
Vessels
Badger – CNG Preferred Alternative
Marine companies retrofitting vessels
Solids
High Pressure – 3600 psi
Liquid
Not reviewed during session,
needs future analysis
Tube Trucks cost $250,000 to transport CNG
Gas Cheaper than Manure to haul
Currently, the Lakeshore triangle region (including Brown County) has 25 biodigesters in operation,
generally as an on-farm tool. Producers in the region are exploring innovative new biodigester
technologies being utilized in Germany and other European countries to help improve the efficiency and
capabilities of their biodigestion facilities. One potential source of growth for increasing biodigestion
activity in the region is to develop jointly owned biodigesters that would serve multiple nearby dairy
producers. In recent years, Progress Lakeshore and KCEDC have been devoting resources to help
support these developments.12
Another prominent market opportunity for cheese manufacturers in the region is whey processing.
Whey byproducts can be used as inputs to biodigesters or as a feed source for farm livestock. However,
a more profitable option is to process them into powdered whey, which is generally used as additive
nutrients in the dietetic and health food sectors. In 2014, the state of Wisconsin produced one third of
all whey products in the country.13 Of the eleven companies currently producing whey in Wisconsin,
three are located in or near the Lakeshore Wisconsin region: Agropur in Appleton/Luxemburg,
BelGioioso Cheese in Green Bay, and Packerland Whey Products in Luxemburg.
12
For example, see the article “Progress Lakeshore: Serves as convener on game-changing Clean Power Plan.’ February
11,2015. Accessible at: http://www.wisbusiness.com/index.iml?Article=341860
13
2014 Wisconsin Agricultural Statistics, U.S. Department of Agriculture. Accessed at:
www.nass.usda.gov/Statistics_by_State/Wisconsin/Publications/Annual_Statistical_Bulletin/bulletin2014_web.pdf
22
Mapping Value Chains in the Lakeshore Wisconsin region
However, due to the high capital equipment expenses involved in constructing a whey processing
facility, currently only larger manufacturers, such as Agropur, are involved in whey processing. Smaller
dairy producers face additional barriers that impede them from processing their own whey, including
low whey volumes, high transportation costs, and increasing quality requirements. As a result, despite
the growing market for whey products, smaller producers usually either sell their whey byproducts to
larger producers that have whey processing facilities, or dispose of them by dumping or land
application.
In 2012, the Wisconsin Whey Opportunities Working Group, a consortium of Wisconsin industry leaders,
collaborated to research the current state of whey processing in the state, the regional requirements for
expansion, and the advantages for cheesemakers considering expanding their whey handling and
processing capabilities.14 The study resulting from this collaboration made several recommendations for
increasing the whey processing industry in the state, including better coordination of the sale of whey
between smaller and larger producers, technical assistance for producers looking to invest in whey
processing facilities, and the construction of joint whey processing facilities to serve multiple small dairy
producers.
14
Wisconsin Whey Opportunities Working Group, “Opportunities for the Wisconsin Whey Industry,” April 2013. Accessible at:
http://datcp.wi.gov/uploads/Farms/pdf/WisconsinWheyStudy.pdf.
23
Mapping Value Chains in the Lakeshore Wisconsin region
Source: Phil Davis
Metal fabricators/machine shops
Metal fabrication and machine shops represent Lakeshore Wisconsin region’s most prominent
manufacturing industries in terms of both total employment and the number of business
establishments. This sector is the cornerstone of the region’s manufacturing economy, and many of the
area’s largest employers, like Kohler, Manitowoc, and Oshkosh, depend on a robust base of world class
metal fabricators and machine shops. Metal fabricators transform metal into intermediate or end
products or treat metals and metal formed products fabricated elsewhere. 15 This includes using metal
processes such as forging, stamping, bending, forming, and machining, used to shape individual pieces
of metal; and other processes, such as welding and assembling, used to join separate parts together.16
15
See North American Industry Classification System definition at: http://www.census.gov/eos/www/naics/
The industry definition excludes the finished production of machinery, computers, electronics, and metal furniture.
16
Ibid
24
Mapping Value Chains in the Lakeshore Wisconsin region
Machine shops are an important segment of this industry. These businesses are primarily engaged in
machining metal and plastic parts and parts of other composite materials on a job or order basis using
machine tools, such as lathes (including computer numerically controlled); automatic screw machines;
and machines for boring, grinding, and milling.17
Within the Lakeshore Wisconsin region, the level of manufacturing employment in these industries are
18 times more concentrated than it is nationally, with over 8,200 employees working in these industries
within the region in 2015. This total has risen by more than 500 new jobs in the past five years,
indicating the continued competitiveness and expansion of many of the 65 businesses operating in the
five-county area. However employment for the region is projected to decline slightly by 2020. The
industry is represented in the region by large manufacturers such as Manitowoc Company and Bay
Shipbuilding, along with mid-size and small manufacturers including D&S Machine Service, C & S
Manufacturing Corporation, and Kewaunee Fabrications. Figure 12 diagrams the industry’s key forward
and backward linkages.
Supplier Opportunities
Metal fabricators and machine shops are largely influenced by global business cycles that impact steel
and aluminum prices. Generally, domestic metal fabrications struggle to compete with comparable
Figure 12: Metal fabricators/machine shops value chain
Metalworking machinery MFG
NONFERROUS METAL FOUNDRIES
↓
Fluid power process machinery
↑
↑
TRANSIT & GROUND
PASSENGER TRANSPORTATION
↑
PLATE WORK & FABRICATED
STRUCTURAL PRODUCT MFG
↑
Industrial mold MFG
↓
Employment (2015):
Establishments (2014):
Ann. Growth (10-15):
8,231
65
1.0%
Laminated plastics plate,
sheet, and shape MFG
Fluid power process machinery
INDUSTRIAL MACHINERY
MFG
↑
Packaging machinery MFG
↓
Metalworking machinery
MFG
↓
Industrial Mold MFG
↓
Power-driven handtool MFG
↑
Ammunition MFG
↑
↑
Metal Fabricators
/ Machine Shops
Motor & generator MFG
17
Arms, ordnance, & accessories
MFG
Power boiler & heat exchanger
MFG
↑
FERROUS METAL FOUNDRIES
↑
Industrial process furnace and
oven MFG
↑
Special tool, die, jig, & fixture MFG
↓
Paint & coating MFG
↑
Turned product and screw, nut, &
bolt MFG
↑
NAICS definition. See link above.
Mining and oil & gas field
machinery MFG
Market Opportunities
Supplier Opportunities
Special tool, die, jig, & fixture
MFG
↓
Air Transportation
Miscellaneous MFG
↓
25
Mapping Value Chains in the Lakeshore Wisconsin region
foreign industries, particularly in China, given differentials in cost related to securing raw materials.
Firms in the Lakeshore Wisconsin region are affected by the disparate material costing structure as well.
However, given the region’s strong manufacturing employment concentration, the Lakeshore Wisconsin
region demonstrates supply side advantages in the metal fabrications and machine shop industry.
Two of the largest supplier sectors for employment include the nonferrous metal foundries sector and
the ferrous metal foundries sector. Represented by companies such as Nemak and Eck in Sheboygan
County and Manitowoc County respectively, the nonferrous metal foundries sector has 1,771 local
employees. The sector has experienced gains in employment over the past five years, and represents
the largest employment concentration amongst metal fabricator and machine shop operations in the
region. With companies such as Kohler Inc. and Brillion Iron Works in Sheboygan and Calumet counties,
the ferrous metal foundries sector has 920 employees and a strong employment concentration in the
region and experienced job gains over the past 5 years.
While power boiler and heat exchanger manufacturing experienced gains in employment, industrial
mold manufacturing, metalworking machinery manufacturing, and special tool, die, jig, and fixture
manufacturing experienced declines. These latter three industries are not as highly concentrated in the
region when compared to national industry averages. Other areas that represent potential growth
opportunities on the supply side, are most often areas that have no current employment presence in
the region. Areas with no current presence and therefore growth potential include laminated plastics
plate, sheet and shape manufacturing, and motor and generator manufacturing.
In-step with broader metal fabrications industry trends, several local companies have pursued means of
reorienting company functions. Some companies have moved toward consolidating their business
operations by vertically integrating their processes in order to facilitate both on-site metal fabrication
(i.e. assembly, painting, and finished manufacturing) as well as delivery to job sites.18 In order to
optimize operations and leverage growth opportunities, company strategies might also pursue
partnering with other finished-product companies.
A thriving metal fabrications industry is contingent upon proximity to market (local firms purchase the
majority of their goods and services within 150 miles of their location) as well as the proximity and
availability of a skilled laborers. Supplier opportunities consist of remaining in relatively close proximity
to supply chain and target markets, ultimately reducing adding cost associated with distribution.
Additionally, focus on addressing the observed shortage in available skilled, qualified workers might also
contribute to growth. An associated opportunity is in the heightened investment in resources that might
better encourage worker retention, job and workforce development, and talent acquisition.19
18
Company interviews conducted in region.
19
“Metal Fabrication of the Future.” Barker Tilly. 2013. pg. 4. http://www.bakertilly.com/uploads/Metal-Fabrication-of-theFuture.pdf
26
Mapping Value Chains in the Lakeshore Wisconsin region
Market Opportunities
The strongest current customer opportunity involves new sales in closely related sectors such as
machinery manufacturing and other establishments related to machinery manufacturing. These
industries include fluid process machinery, and industrial machinery manufacturing (led by Gardener
Denver Thomas Products in Sheboygan), power-driven handtool manufacturing, and packaging
machinery manufacturing. Each of these industries has strong employment concentration in the region.
Packaging machinery manufacturing, unlike the other aforementioned industries, has experienced a
slight decline in employment over the past 5 years.
While the region demonstrates solid advantages in machinery manufacturing, there are new
opportunities for growth in areas with low to moderate employment concentration and increasing
employment, or no current regional employment. Ammunition manufacturing has a moderate but
growing employment concentration, while transit and ground passenger transportation has a small but
growing presence. Areas with no current regional employment include arms, ordinance, and accessories
manufacturing; mining and oil and gas field machinery manufacturing; and air transportation. Each of
these industries, both representing low to moderate employment concentration and increasing
employment, represent significant opportunities for regional economic growth.
Local fabricators and machine shops engage in a diverse array of markets including, agriculture; compact
and sub-compact tractors; heavy equipment; light duty equipment; attachments; turf care; lawn and
garden; and landscaping. As demonstrated by sectors with no employment or low-to moderate
employment concentrations, a market opportunity is to continue to expand into and access new
markets. Traditional fabrications markets (i.e. automotive) are beginning to shift and new markets
suitable for metal fabrications suppliers are continuously emerging.20
Also central to market opportunities for fabrication firms are emphases on complete customer care—
ensuring customer satisfaction across the entire spectrum of customer needs.21 Closely tied to this
opportunity, are opportunities related to acquiring new equipment and technology in order to maximize
the capacity at which firms can operate. New equipment and technology is expected to enable the
expansion of in-house work capacity; therefore by accessing updated equipment and technology, firms
can most effectively realize the supplier opportunity of vertically integrating their operations. In
addition, incorporating original equipment manufacturers (OEM) into firm supply chains serves as a
market opportunity for local firms. By working more closely with OEM’s, firms will be able to secure a
20
Ibid
21
Company interviews conducted in region.
27
Mapping Value Chains in the Lakeshore Wisconsin region
steady, predictable flow of product rather than functioning as one-time suppliers within a larger
manufacturer’s production process.22
While location is integral to supplier opportunities, locating in smaller cities that currently lack metal
fabrications operations can serve as a market opportunity. By locating in smaller cities, competition for
clientele, and a sufficiently skilled workforce, might decrease, ultimately affording employment growth
opportunities to machine shops and fabrication firms.
22
Company interviews conducted in region.
28
Mapping Value Chains in the Lakeshore Wisconsin region
Plastics product manufacturing
Source: Creative Tools
Plastics product manufacturing has long served as one of Lakeshore Wisconsin’s most important
manufacturing industries. Industry employment is more concentrated within the region than it is
nationally. In 2015, nearly 2,000 employees found work in this industry, marking a slight decline in
regional industry employment from 2010. However, regional industry employment is projected to drop
heading into 2020.
The region’s plastics sector is highly diversified—much like other parts of the local manufacturing
cluster. Local firms serve a variety of markets and compete based on unique skills, products, and
technologies. Bemis Manufacturing in Sheboygan Falls manufactures a vast range of consumer products,
from resin furniture to toilet seats to plastic kitchenware. In Oostburg, Dutchland Plastics is a global
leader in rotational molding. In Manitowoc, Kaysun Corporation serves a diverse array of markets,
including automotive, industrial, and medical devices. Luxemburg’s N.E.W. Plastics manufactures a wide
range of packaging products and plastic lumber materials. Other local firms like Wisconsin Packaging
Group (Algoma) and the Cawley Company (Manitowoc) produce labels, packages, and badges used by
well-known companies around the US.
29
Mapping Value Chains in the Lakeshore Wisconsin region
Wisconsin has a long history with plastics, and hosts one of the largest concentrations of plastics
manufacturers in the US. According to the Society of the Plastics Industry (SPI), Wisconsin ranks 8th
among US states for plastic industry employment.23
Much of our data on future employment projects suggests that the plastics industry has somewhat
limited future growth prospects, but some of this data does not fully account for the impact of other
factors, such as the emergence of new shale energy resources. In fact, the plastics industry has been on
a bit of hot streak in recent years. SPI’s Global Business Trends 2014 report notes that the industry grew
at a record pace in 2013—the last year for which full data was available.24 In 2013, overall domestic
demand jumped by 6.5% while exports jumped 2.7 percent.
Many industry observers project that these growth rates will rapidly accelerate in coming years—thanks
in large part to the ongoing shale energy boom.25 These new energy sources have driven down the cost
Figure 13: Plastics product manufacturing value chain
Plastics & rubber industry
machinery MFG
↑
Laminated plastics plate, sheet
(except packaging), & shape MFG
—
Employment (2015):
Establishments (2014):
Ann. Growth (10-15):
1,999
17
-2.0%
Small electrical
appliance MFG
—
Magnetic & optical
recording media MFG
—
Small electrical appliance
MFG
—
Prefabricated wood
building MFG
↓
Coffee & tea MFG
↑
Plastics packaging materials &
unlaminated film & sheet MFG
↓
Sign MFG
↑
Engineered wood
member & truss MFG
↓
Household cooking
appliance MFG
↑
Wood kitchen cabinet &
countertop MFG
↑
Storage battery MFG
—
Other concrete product
MFG
↑
Other major household
appliance MFG
—
Concrete pipe, brick, & block
MFG
—
Totalizing fluid meters &
counting devices MFG
—
Broom, brush, & mop
MFG
↓
Custom architectural
woodwork & millwork
MFG
—
Plastics pipe, pipe fitting, &
unlaminated profile shape MFG
↑
Analytical laboratory
instrument MFG
—
Plastics
Product
Manufacturing
Market Opportunities
Supplier Opportunities
23 “Plastics
in Wisconsin,” Society of the Plastics Industry Fact Sheet. Accessible at:
http://www.plasticsindustry.org/files/public/pdfs/WI%20Fact%20Sheet.pdf.
24
Society for the Plastics Industry, “Domestic Demand for Plastics Products Reaches Record Setting Level,” December 1, 2014.
Accessible at: http://www.plasticsindustry.org/AboutSPI/NewsItem.cfm?ItemNumber=13590
25
For background and data, see American Chemistry Council, The Rising Competitive Advantage of U.S. Plastics, May 2015.
30
Mapping Value Chains in the Lakeshore Wisconsin region
of essential raw materials. Fossil fuel inputs can account for as much as 70% of the total cost of plastic
resins—a key building block for most plastics-related manufacturing. Thus, the new market dynamics
have spurred massive new investments. According to the American Chemistry Council, these
investments—underway and announced—now total more than $46 billion.26 Nationally, ACC projects
that the plastics products industry will grow by more than 110,000 jobs over the next decade.
Supplier opportunities
Figure 13 highlights the assortment of industries that serve as primary suppliers to the plastics product
manufacturing industry. Within this group, the region has strong concentrations of activity in three
sectors: prefabricated wood building manufacturing, other concrete product manufacturing, and
plastics pipe, pipe fitting, and unlaminated profile shape manufacturing. Within these groups, the
prefabricated wood manufacturing sector experienced a small decline in employment between 2010
and 2015. However, other concrete product manufacturing grew substantially during this period, more
than doubling regional employment, while plastics pipe, pipe fitting, and unlaminated profile shape
manufacturing grew steadily but at a more modest rate.
Other core suppliers but have lower employment concentrations here. These sectors face differing
market circumstances. Two sectors—plastics and rubber products industry machinery manufacturing,
and wood kitchen cabinet and countertop manufacturing—have enjoyed rapid growth. Plastics and
rubber products industry machinery manufacturing grew by 6.2% between 2010 and 2015, while wood
kitchen cabinet and countertop manufacturing almost tripled employment to reach around 110
employees in 2015. However, other supplier sectors with moderate employment concentrations have
seen job losses since 2010, including broom, brush, and mop manufacturing; plastics packaging
materials and unlaminated film and sheet manufacturing; and engineered wood member and truss
manufacturing.
Finally, several other important supplier sectors are not present in the region. These include laminated
plastic sheet, shape, and plate manufacturing, small electrical appliance manufacturing, and concrete
pipe, brick, and block manufacturing.
In addition to the sectors identified in Figure 13 above, many local plastics manufacturers are large scale
purchasers of plastic resins—the raw materials that are molded and shaped into final plastics products.27
The resin manufacturing industry is a sizable economic force, employing nearly 55,000 people around
the US. Resin manufacturing is not a major force in Northeast Wisconsin, or in the state more generally.
26
Ibid, p.7.
27
For background on the industry, see American Chemistry Council, Plastic Resins in the U.S., July 2013.
31
Mapping Value Chains in the Lakeshore Wisconsin region
According to the latest data, 25 facilities operate in Wisconsin and collectively employ slightly less than
600 workers. 28
Plastic resin production is a highly concentrated activity due to the high capital investments required for
new facilities. New facilities, such as a number of new cracker facilities being proposed or underway in
Louisiana, Ohio, and Pennsylvania, require billions in new investment and are typically located near
sources of oil or gas inputs. For this reason, the prospects for moving this supply base into the region are
fairly limited. Fortunately, company interviewees also noted that they faced few obstacles in sourcing
resin supplies in timely and cost-effective manner.
Market opportunities
Our value chain maps suggest that local plastics manufacturers may be able to capture a number of new
market opportunities in sectors that traditionally serve as strong customers for their products. Three
strong and growing clusters do presently serve as leading local customer targets: sign manufacturing,
coffee and tea manufacturing, and household cooking appliance manufacturing.
All of these industries have both very strong employment concentrations in the region and have
experienced strong growth since 2010. Household cooking appliance manufacturing had no presence in
the region in 2010, but now has enough workers that employment in the industry is seven times more
concentrated regionally than nationally. Sign manufacturing and coffee and tea manufacturing grew
more modestly, but have relatively high employment concentrations and their employment in the
region is projected to grow by 2020. None of the other leading market opportunity sectors have a
presence in the five county region.
These industry patterns also suggest that local plastics manufacturers must continue to place heavy
emphasis on succeeding in new national and global markets. Fortunately, Wisconsin’s plastics
manufacturers have been enjoying recent success in export markets. Between 2010 and 2011, plastics
and rubber product exports from Wisconsin grew by 6.6 percent, and more recent growth appears to be
even more rapid. 29
28
Ibid, p. 26
29
MPI Group, Wisconsin Economic Future Study, June 2013, p. 5-38. Accessible at:
http://inwisconsin.com/economicfuturestudy/
32
Mapping Value Chains in the Lakeshore Wisconsin region
Cutlery, utensil, pot, and pan manufacturing
Source: Jonti Bolles
Cutlery, utensil, pot and pan manufacturing is one of Lakeshore Wisconsin region’s most resilient
manufacturing industries. Industry employment is more concentrated within the region when compared
nationally. While experiencing a slight decline in regional industry employment from 2010, regional
industry employment is projected to hold steady heading into 2020. In particular, regional industry
representation is focused to Sheboygan County and dominated by one large manufacturer, Vollrath LLC,
and a number of mid-size and small manufacturers such as Millennium Technologies Inc., Diverse
Tooling Inc., and Genesis Tool and Machine Inc. Figure 14 diagrams the industry’s key forward and
backward linkages.
33
Mapping Value Chains in the Lakeshore Wisconsin region
Figure 14: Cutlery, utensil, pot, and pan manufacturing value chain
Supplier opportunities
Supplier opportunities for the cutlery, utensil, pot, and pan manufacturing industry are dominated by a
few industry groups within the Lakeshore Wisconsin region. Among the most impactful supplier
industries are Aluminum sheet, plate, and foil manufacturing and Other plastics product Manufacturing.
Together, both industries provide the necessary skill and raw inputs to support machinery
manufacturing in the region. The region’s largest Aluminum, sheet, plate, and foil [metal cookware]
manufacturing enterprise is Vollrath LLC. The largest enterprises in plastics production manufacturing in
the region are Kohler Inc., Plastics Engineering Co., and Bemis Manufacturing Co.
Vollrath Inc. is a private Sheboygan-based company which produces stainless steel and aluminum
cookware for primarily commercial food-service operations. The company has a long history in the
region, starting its local operations back in 1874. Recently, Vollrath has acquired several smaller
cookware manufacturing suppliers, including Stoetling Food Service and Polar Ware Company; both
originally Lakeshore-based companies. 30 The metal cookware manufacturing industry relies upon
proximity to market and a skilled labor force. In recent years, Vollrath has benefited by its location,
30
“The Vollrath® Company Acquires Polar Ware®/Stoelting®,” The Vollrath Company. Accessed at:
http://vollrath.com/Vollrath/Press-Room/Press-Releases/Stoelting-Acquisition.htm.
34
Mapping Value Chains in the Lakeshore Wisconsin region
which aids its ability to compete with its many competitors based in China. Vollrath’s recent acquisitions
have also helped on this front as its increasing vertical integration provides it with more capacity for
large scale production and for innovations in both production and product design. Vollrath depends on a
sophisticated supplier base. Many local firms can provide needed quality and expertise, but some local
suppliers may lack the capacity to effectively supply a large global player like Vollrath.
Vollrath and other firms in this sector rely on a steady supply of materials from the plastics product
manufacturing sector, discussed in the previous section.
Another important group of supplier industries for machinery manufacturing is Turned product and
screw, nut, and bolt [metal fabrication tools] manufacturing. Metal fabrication tools manufacturing is
one of Wisconsin’s most recognizable industries. Within the Lakeshore Wisconsin region, metal
fabrication tools is represented by Formrite Co. and EVM Inc. The industry is known for its employment
of a highly-skilled workforce and capital intensiveness. Industry employment projections predict an
increase in regional and national employment over the next five years with a growing regional presence.
Market opportunities
Consumers of the specialized tool design indicative of cutlery, utensil, pot and pan manufacturing are
disproportionately represented by the food service industry. Demand within the food service industry is
driven by restaurants, civic, education, recreational institutions to replace culinary supplies. Customer
orders tend to be wholesale, less specific and more easily replicable. Demand within this field is driven
by new purchases and replenishing supplies for food service and restaurants. Although Food service and
drinking places represent a relatively low portion of Wisconsin employment, as compared to
neighboring states, there remains a large industry presence within the Lakeshore Wisconsin region with
indications that regional employment will grow by 2020. However, many opportunities for market
growth will come in the broader national and international marketplace.
Besides the ties to demand in the food service industry, the potential to diversify into the broader
machine fabrication industry is also a source of market opportunity. Customer orders within the
machine fabrication field are typically labor intensive, feature custom design specifications, and require
wide access to capital. Meeting design specification is arguably the most important factor for the
industry as a whole. 31
31
The Wisconsin Economic Future Study Statewide and Regional Analysis. The MPI Group Inc. June 2013. Accessed at:
http://inwisconsin.com/economicfuturestudy.
35
Mapping Value Chains in the Lakeshore Wisconsin region
Company Survey Results
Progress Lakeshore/KCEDC Supply Chain Survey
The value chain analyses presented in the previous section provide a deep dive into current market
trends in key manufacturing sectors. However, the data only tells a partial story and should be
supplemented with additional qualitative information. In an effort to better understand critical supply
chain issues and opportunities facing local companies, the project team also developed and deployed a
survey of local companies. It sought to gain input and feedback from Lakeshore Wisconsin companies on
key supply chain opportunities and challenge areas.32
Survey Respondents
Of the area companies who responded to the survey, 89% were located within the 5-county Lakeshore
Wisconsin region, while 11% were located in other Wisconsin counties. The largest share of respondents
(68%) hailed from either Kewaunee or Manitowoc Counties, with local response rates from Calumet,
Door, and Sheboygan counties. Manufacturers comprised the bulk of respondents (77%), while the
remaining respondents represented a host of other related industries. Among manufacturers a diverse
set of industries is represented, including metal fabricators and machine shops (29%), machinery and
equipment manufacturers (24%), food and beverage manufacturers (20%), plastic product
manufacturers (15%), and wood and textile product manufacturers (12%). Small businesses comprised
94% of all respondents.
More than half (53%) of respondents reported annual gross sales of less than $10 million, and a small
portion of firms (15%) reported sales exceeding $50 million.
Supply Chain Involvement
Survey responses clearly reflect the diversity and global market reach of the Lakeshore region’s
manufacturers. Over half (55%) of respondents represented companies that are currently involved in a
supply chain. For those involved in a supply chain, most were involved in several different supply chains,
ranging from 3 to 500. Many respondents can claim large OEMs as key customers. A third of
respondents are suppliers to Manitowoc Company, and another large share (25%) also serve as suppliers
to the defense industry.
32
The digital survey (included at Appendix B) included eighteen questions. Between April and June 2015, the survey was sent
out via e-mail to area companies within their organizational networks and through their partner networks. At the close of the
survey period Progress Lakeshore and KCEDC had received responses from 58 area companies.
36
Mapping Value Chains in the Lakeshore Wisconsin region
Figure 15: Percentage of Goods & Services Purchased within 150 miles of Location
11%
None (no purchasing)
26%
Less than 33% of
purchasing
40%
24%
Between 33 and 66%
of purchasing
Between 67 and 100%
of purchasing
Local firms have always enjoyed success in national and global markets, and they typically serve larger
markets than manufacturers located elsewhere in the US. This pattern is reflected in their supply chain
dynamics as well. The majority of the companies in the survey operate in geographically dispersed
supply chains. Over a third (35%) had international suppliers and/or customers, while a third (33%) had
nationally dispersed supply chain. Most respondents sold extensively out of state; over a third of them
sell between 67-100% of goods outside of Wisconsin.
Very few respondents remain solely focused on local or regional markets. Only 18% of respondents had
only local or regional suppliers and customers. Similarly, only 10% of firms rely solely on sales within the
state of Wisconsin.
While local firms seek to succeed in global markets, they are also happy to do business closer to home.
As Figure 15 shows, 26% of firms buy the lion’s share (over 67%) of their supplies in the immediate
region. However, the figures also show a sizable cohort of firms that do limited local purchasing. In fact,
half of local firms do little or no local purchasing. Fortunately, respondents also expressed a strong
interest in using more local suppliers. 95% expressed interest in sourcing local goods and services. This
suggests that the shares of goods and services purchased locally may become higher if companies were
more aware of suppliers in their region, or had the ability to switch to local suppliers.
37
Mapping Value Chains in the Lakeshore Wisconsin region
Supply Chain Strategies
Respondents were also asked to discuss their current supply chain strategy. i.e., what UPS has called “an
iterative process that evaluates the cost-benefit trade-offs of operational components”.33 Supply chain
strategies focus on driving down operational costs, maximizing efficiencies, and establishing how
companies work with their supply chain partners, including suppliers, distributors, and customers. A
little less than half of respondents (46%) currently had a supply chain strategy in place.
Similar to the number of respondents with supply chain strategies, about 44% of respondents currently
had a waste stream management strategy. Waste stream management strategies apply to the
collection, transport, processing, monitoring, recycling and disposal of waste materials produced by
industry. This can include recovering resources during the manufacturing process through capturing
reusable materials and introducing them back into the product stream. Having a waste stream
management strategy in place can help manufacturers understand the interrelationships between their
waste and supply streams, which could help identify ways to reduce supply costs, increase production
efficiency, and develop new products and services.
Extensive industry data suggests that success in the 21st century economy requires that manufacturers
have coherent, cohesive, and effective supply chain strategies that are built on close linkages with
suppliers, customers, and other types of partners. These types of linkages appear to be quite prevalent
among surveyed firms. The majority of respondents (63%) stated that their firm closely partners with
other firms in its supply chain network.
Though not all companies had a supply chain or waste stream management strategy in place, most of
the respondents had strong relationships with other firms in their network, which could be similarly
helpful in addressing supply chain management challenges. However, less than half of respondents
(40%) stated they had a strong commitment to working with local suppliers and partners. This suggests
that many respondent companies had strong relationships with firms outside of the Lakeshore
Wisconsin region.
33
UPS Supply Chain Solutions. Supply Chain Strategy: The Importance of Aligning Your Strategies. Accessed at : www.upsscs.com/solutions/white_papers/wp_supply_chain.pdf
38
Mapping Value Chains in the Lakeshore Wisconsin region
Close supply chain partnerships improve the bottom line, and our respondents pointed to many benefits
from these networks. Top noted items included (in ranked order) improved productivity, financial gain,
access to customers, and agility. Less frequently, companies sought to gain greater access to finance,
faster lead times, access to more advanced production equipment, and greater access to raw materials.
The lower emphasis placed on access to raw materials reflects the fact that 70% of respondents felt that
their firm had adequate access to raw materials. (See Figure 16).
Firms recognized the benefit of strong supply chain partnerships, but does the proximity of these
partners matter? To assess this question, we asked firms to rank the local assets that were most
important to their company success. Proximity to customers and suppliers was chosen by almost 60% of
respondents – more frequently than any other factor. The other factors that were of major strategic
Figure 16: Why Develop Supply Chain Partners?
What are the key challenges facing your supply chain? What are benefits from partnering with other firms in
your supply chain network?
Accessing new
markets/customers
73% Improved productivity
62%
Managing supply chain costs
57%
49%
Regulation/compliance
35%
Distribution
47%
Product damage or spillage
16%
Product security
16%
60%
40%
Access to customers
53%
22%
80%
Financial gain
20%
Agility
Access to raw materials
27%
7%
0% 0%
Access to finance
20%
40%
60%
80%
importance to respondents were (in ranked order) a skilled labor pool, good roads and other
What are the key challenges facing your supply chain? What are benefits from partnering with other firms in
transportation options, utilities and internet, commercial your
and supply
population
centers, and agricultural and
chain network?
rural areas. About 15% of respondents felt there were no locational assets affecting their location
Accessing new
73% Improved productivity
decisions,markets/customers
so they “could go62%
anywhere”.
Managing supply chain costs
49%
Supply
Chain Challenges and Opportunities
57%
Financial gain
Regulation/compliance
Access
to customers
35%region face an array of supply chain management
53%
Companies
in the Lakeshore Wisconsin
challenges.
The most frequently
cited challenges concern
access to new markets and customers.
Other
prominent
Distribution
22%
47%
Agility
challenges include (in ranked order): managing supply chain costs, dealing with regulation and
Product damage
or spillage
16% or spillage, and product
Access to 16).
raw materials
27%
compliance
issues,
distribution, product damage
security. (See Figure
Product security
16%
80%
60%
40%
20%
7%
0% 0%
Access to finance
20%
40%
60%
80%
39
Mapping Value Chains in the Lakeshore Wisconsin region
The research team also identified other challenge areas via an open-ended survey question and by
interviews with a number of local manufacturers. Some respondents also had challenges with accessing
goods and services due to the lack of adequate infrastructure in the area. For example, plastic product
manufacturers mentioned the need for more rail lines and offloading facilities in order to access resin
produced in the Gulf region. Other respondents mentioned the more administrative challenges of
supply chain management, such as managing business guarantees, primary supplier contracts, and
supplier quality issues, like nonconforming products.
Many of the respondents’ supply chain challenges arose due to having a geographically dispersed
supplier and customer networks. For example, long distance shipping increases wholesaling and
distribution costs. It also increases the likelihood of product damage and spillage, and lessens product
security. Shipping products across state and national borders increases the regulatory and compliance
burdens for companies, and complicates distribution networks. The challenges that arise with disbursed
supply networks may be the reason why almost all those surveyed stated that they would consider
purchasing more goods and services from firms within the Lakeshore Wisconsin region.
Survey respondents indicated a number of opportunities for improving their supply chain management
practices. Some were looking to learn more about market trends of existing regional industries, while
others were interested in knowing more about the industries expected to grow in the Lakeshore
Wisconsin region. In terms of logistics, some respondents wanted to know more about shipping
alternatives and strategies that could help them reduce their supply chain costs, especially more
environmentally sustainable shipping alternatives. Respondents also indicated interest in ways to save
on packaging costs through packaging alternatives, like “green” packaging, and how to work with
suppliers directly to find more customer-friendly packaging solutions, and ways they could “bypass the
middle man” to buy goods directly from producers.
In addition to the stated interest in purchasing more goods and services locally, multiple responses to
the survey suggest an opportunity for strengthening the supplier relationship between companies in the
Lakeshore Wisconsin region. First, accessing new markets and customers was the most frequently
identified supply chain challenge, followed by several challenges exacerbated by geographically
dispersed supply chains. Proximity to customers and suppliers also emerged as the most important
factor for companies when choosing a location.
Almost 90% of respondents currently purchase a percentage of goods and services from firms within
150 miles of their location, and 43% of respondents sell over two thirds of their goods and services
within Wisconsin. However, less than half had a strong commitment to working with local suppliers and
customers, though these partnerships seem to be highly valued for supply chain management, given the
strong partnerships respondents reported having with firms in their supply chain network. Although not
all goods and services can be bought or sold locally, these responses suggest that these companies could
benefit from stronger relationships with their existing suppliers and customers in the region, as well as
increasing their percentage of locally purchased products and in-state sales.
40
Mapping Value Chains in the Lakeshore Wisconsin region
Overlapping Linked Industries
When it comes to manufacturing, the Lakeshore Wisconsin region should be the envy of most areas. It
has an unparalleled long history as a place where people make things and make things well. Iconic local
companies like Kohler, Manitowoc Crane, and Vollrath trace their local histories back more than a
century. These companies, and their more recent local neighbors, have weathered many past business
cycles and remain resilient and thriving today.
In addition to this strong heritage, local manufacturers benefit from an excellent location. While
Lakeshore Wisconsin is not a major population center, it is well positioned from a manufacturing
standpoint. As Figure 17 indicates, the region is extremely close to thousands of other manufacturers
who can serve as customers, partners, and suppliers to local companies. This location in the center of
the industrial heartland is another essential competitive advantage.
But a strong heritage and a good location are not enough. After all, other U.S. regions, such as
Michigan’s auto sector or Pennsylvania’s steel industry, enjoyed similar advantages. The region’s
manufacturing future is not guaranteed and it will require that local firms continue to innovate and
succeed in new local, regional, national, and global markets.
Our analysis was designed
to assist in this work by
identifying potential new
market opportunities in
four of Lakeshore
Wisconsin’s leading
manufacturing clusters.
All four sectors can benefit
from each other. As our
value chain maps indicate,
these four industries are
closely inter-related. In
most cases, they buy and
sell from one another.
This is particularly true for
metal fabricators and
machine shops, which
often serve as both
important suppliers and
customers to other
manufacturing sectors in
Figure 17: Manufacturers within 150 miles of Lakeshore Wisconsin
• Kewaunee
• Manitowoc
41
Mapping Value Chains in the Lakeshore Wisconsin region
Lakeshore Wisconsin.
For specific manufacturing clusters, several important opportunities merit greater attention. In the
cheese manufacturing sector, new growth opportunities can emerge from a focus enhancing local milk
supplies and identifying new uses and markets for various byproducts related to milk and cheese
production. For machine shops and metal fabricators, firm managers should give consideration to more
aggressive market diversification strategies along with a focus on how to bundle new services, such as
complete customer care initiatives, to their core product offerings. For utensil and cutlery
manufacturing, local firms should continue to develop new innovations and consider new initiatives to
identify local suppliers. Finally, the plastics manufacturing sector should aggressively capitalize on its
emerging market moment. Thanks to local shale energy inputs, the plastics industry appears to be on
the verge of market boom that could lead to explosive growth prospects in coming years.
Next Steps
What can be done to ensure that the Lakeshore Wisconsin region remains a global center of
manufacturing innovation? A number of steps make sense. These include:
Enhance Understanding of Regional Supply Chains
Extensive industry data suggests that effective supply chain strategies are a core ingredient to success in
today’s global economy. Yet, not all local companies have heard this message. As our business surveys
indicated, only 46% of surveyed companies have a supply chain strategy in place. Local service providers,
such as the Wisconsin Manufacturing Extension Partnership, New North, Inc., and local partners, should
develop new technical assistance offerings that help small and medium sized manufacturers develop
their own supply chain strategies.
Some of work is already underway. For example, in August, New North, Inc. sponsored a well-attended
supply chain innovation workshop led by the University of Wisconsin-Milwaukee’s Supply Chain
Management Institute. Additional training and technical assistance programs focused on these issues
should be considered.
Build Stronger Local Supply Chain Connections
Our research yields some important insights when it comes to developing stronger regional supply chain
connections. Local companies recognize the importance of proximity to suppliers and customers. Our
value chain maps also suggest that more local supply chain connections are possible. In most of our
target sectors, fairly strong local supplier and customer bases are already in place. Local suppliers do
exist—the challenge is finding them and building new connections.
Building on these potential connections is a challenging proposition. As our surveys indicate, most local
manufacturers do not have a heavy bias toward local suppliers—only 40% of surveyed firms indicated a
42
Mapping Value Chains in the Lakeshore Wisconsin region
strong commitment to local purchasing. Some firms have limited flexibility on this front, especially if
they must use suppliers designated in advance by OEMs or other customers. But, in many cases, they
are not aware of potential suppliers closer to home. When asked how they identified new suppliers,
interviewed company leaders noted that they used traditional sales channels, national or industry
directories or even basic Google searches. They lacked an easy means to reach out to local suppliers,
partners or customers. This project, and the accompanying Lakeshore Wisconsin Manufacturing
Directory, is designed to help local firms build these local connections. By logging onto the LICI directory
at www.progresslakeshore.org/manufacturingdirectory, businesses can identify potential customers,
suppliers, and partners by location, industry, and other key search terms.
Develop New Markets
Lakeshore Wisconsin’s manufacturers are in an aggressive growth mode. As the 2015 Manufacturing
Vitality Index shows, 66% of local manufacturers enjoyed increased sales in 2014, and 68% expected
even higher growth in 2015.34 Identifying new markets and managing subsequent business growth is
thus the major challenge—and the great opportunity---facing local manufacturers.
Local economic development agencies and business service providers can support the growth of local
manufacturers by providing easy access to sophisticated consulting and business support tools. This
work may entail using consulting services from organizations like WMEP or the state’s Small Business
Development Center network. Given the global nature of manufacturing, many firms will require
assistance in identifying and capturing new export markets. Local firms should tap into excellent export
promotion resources such as those provided by the WEDC’s Global network program.
For smaller firms, new markets may be closer to home---within the supply chains of OEMs or other large
manufacturers. Entering these supply chains is often easier said than done, as most OEMs have stringent
requirement for quality, safety, and other factors. This often requires that small firms obtain new
licenses and certifications that can be quite costly and time-consuming. Where possible, local economic
development agencies should help small manufacturers obtain these certifications in areas via training
or funding support.
Develop Talent
While workforce issues were not a primary focus of this research, they remain one of the most
important keys to the industry’s past and future success. Like many parts of the U.S., Lakeshore
Wisconsin suffers from shortages of skilled technical workers. The latest Northeast Wisconsin
34Northeast
Wisconsin Manufacturing Alliance, “2015 Northeast Wisconsin Manufacturing Vitality Index,” Accessible at:
http://www.newmfgalliance.org/pdfs/2015-vitality-study.pdf
43
Mapping Value Chains in the Lakeshore Wisconsin region
Manufacturing Vitality Index finds that ¾ of local firms have difficulty finding technical talent.35 The
toughest positions to fill are machinists, general laborers, and engineers.
In addition to finding technical talent, manufacturers also want workers who are “ready to work.” When
asked to identify the most important skills they seek, employers identified soft skills, such as
communications and work ethic, as their top priorities.36
This current shortage is further exacerbated by the aging of the current manufacturing workforce.
Thanks to this age wave, some firms are losing as much as ten percent of their workforce each year.37 As
the Baby Boom generation retires, a new cohort of skilled workers must replace them.
Addressing this pressing workforce challenge will require new initiatives at all levels. At the local level,
regional agencies are focused on this challenge. In Manitowoc, Progress Lakeshore Inc. and Lakeshore
Technical College have sponsored a Manufacturing Boot Camp to train local high schoolers for indemand jobs. At the state level, the Advance Wisconsin initiative is a massive new program focused on
training nearly 3,000 students for high demand manufacturing occupations. These kinds of high profile
initiatives will be essential for fueling the continued growth of Lakeshore Wisconsin’s manufacturing
sectors.
35
Ibid, p. 3.
36
Ibid
37
Northeast Wisconsin Manufacturing Alliance, “2014 Northeast Wisconsin Manufacturing Vitality Index,” p. 5.
44
Mapping Value Chains in the Lakeshore Wisconsin region
Conclusion
When it comes to economic prosperity in Lakeshore Wisconsin, it all comes back to manufacturing.
Manufacturing has long served as the primary engine for the region’s economy, and its future success
will similarly hinge on local manufacturing prowess. Fortunately, the region already enjoys many
distinctive competitive advantages: a great location, a diverse base of companies, world-class
companies, a talented workforce, and other assets.
The Lakeshore Wisconsin Manufacturing Initiative is designed to build on this important legacy. Via
projects, such as this value chain analysis, Progress Lakeshore, KCEDC and other partners, intend to
bring new resources and new support services to the region. By enhancing their supply chain
strategies, local manufacturers, especially small and medium-sized firms, will best prepare themselves
to compete and win in global markets.
45
Mapping Value Chains in the Lakeshore Wisconsin region
Appendix A: Maps of targeted value chains
The following maps show the total number of companies from each value chain located in the Lakeshore
Wisconsin region. The maps show patterns where the core and linked industries are located within the
region. Along with the companies, the maps also depict the region’s various economic development
infrastructure assets.
The value chain maps included in this appendix are:




Cheese manufacturing (NAICS 311513)
Machine shops/ All other miscellaneous fabricated metal product manufacturing (NAICS 332710
and NAICS 332999)
All other plastics product manufacturing (NAICS 326199)
Metal kitchen cookware, utensil, cutlery, and flatware (except precious) manufacturing (NAICS
332215)
The various maps portray the companies that are part of any industry that appears as a supplier or
customer in the relevant value chain. Companies are identified as to where they appear in the value
chain, according to the categories of supplier, customer, or both supplier and customer. Companies with
multiple locations within the region will appear at each location.
46
Mapping Value Chains in the Lakeshore Wisconsin region
47
Mapping Value Chains in the Lakeshore Wisconsin region
48
Mapping Value Chains in the Lakeshore Wisconsin region
49
Mapping Value Chains in the Lakeshore Wisconsin region
50
Mapping Value Chains in the Lakeshore Wisconsin region
Appendix B: Progress Lakeshore/KCEDC Supply Chain Survey
51
Mapping Value Chains in the Lakeshore Wisconsin region
52
Mapping Value Chains in the Lakeshore Wisconsin region
53
Mapping Value Chains in the Lakeshore Wisconsin region
54
Mapping Value Chains in the Lakeshore Wisconsin region
55
Mapping Value Chains in the Lakeshore Wisconsin region
56