Small Manufacturers, Small Towns, Big Success

“One promising factor in the struggle to transition from the Old Economy to the New Economy lies in the fact that Wisconsin’s manufacturing firms are small when compared to those in the eight competing states: 82.4% of the Wisconsin manufacturers’ corporate parents have annual revenues of less than $100 million, while all of the other states have percentages less than 65%,” was the key finding that I took from John Brandt’s presentation at the 2006 Governor’s Conference on Economic Development in Madison, WI last week. John is the CEO of MPI (Manufacturing Performance Inc.), which recently completed a detailed study of Wisconsin’s seven economic regions’ manufacturing potential.

WI ranked very high in our research on the top agurbs® in the USA and I’m convinced that part of the reason for their success, is the number of entrepreneurial manufacturers in the state. Brandt pointed out that “every $1 of demand for manufactured goods translates into 55 cents of GDP in manufacturing and 45 cents in non-manufacturing services, the greatest amount for any industry.”
I love manufacturing and continue to see that the continuing high gains in productivity have translated into ever higher wages in the sector. But, it is getting tougher in the sector because of the speed of change and increased competition from places like China. Brandt said it best, “The workforce is exhausted with all of this change. But change is occurring more rapidly than ever before and will only get worse.”

As Brandt was talking about the roll of smaller manufacturers in the WI economy I was reminded of the very wrong prediction of John Kenneth Galbraith, the economic guru of the 1970s. In his famous “New Industrial State” book which he wrote in 1967, he predicated that the future of America lay in “Big Government, Big Business and Big Labor.” He was wrong in a BIG way. Small towns and small manufacturers throughout WI are showing him why.