FEATURE: Help for hard-hit industries

Posted on Feb 3, 2014 :: Features
Posted by , Insight on Business Staff Writer
USS FREEDOM: The first Littoral Combat Ship built for the U.S. Navy at Marinette Marine, pictured above, has interceded in numerous drug smuggling operations. Photo courtesy Lockheed Martin.

USS FREEDOM: The first Littoral Combat Ship built for the U.S. Navy at Marinette Marine, pictured above, has interceded in numerous drug smuggling operations. Photo courtesy Lockheed Martin.

It’s no secret Oshkosh Corp. was hit hard in the past year as the U.S. Department of Defense curtailed its spending after a decade of supporting two wars. Last spring, the manufacturer laid off about 900 people in Oshkosh. Area companies that help Oshkosh fill all those orders also are feeling the pain.

But help is on the way for the dozens of Fox Valley companies that make up Oshkosh Corp.’s massive supply chain.

The region recently received a grant of $837,316 from the Department of Defense’s Office of Economic Adjustment to help businesses affected by the decline in military spending. The grant, which is being administered by the East Central Regional Planning Commission, will help companies in Calumet, Fond du Lac, Outagamie, Waupaca and Winnebago counties that work with the Department of Defense to diversify and find new business opportunities, says Eric Fowle, executive director of the East Central Wisconsin Regional Planning Commission. The commission wrote the grant with assistance and support from the Wisconsin Economic Development Corp.

Defense spending cuts cost an estimated 1,437 jobs in the Oshkosh-Neenah Metropolitan Statistical Area, according to the grant proposal. That equates to $91 million in lost earnings.

“This is about helping companies affected by defense spending cuts to look at other opportunities and industries that are available,” Fowle says. “We have an opportunity here to put this part of Wisconsin on the map in regards to advance manufacturing, thanks to our skilled workforce. There’s a lot of planning and work that’s going to happen in the next 16 months.”

In fiscal 2013, state companies, led by Oshkosh Corp. and Marinette Marine, did $3.4 billion in federal business, down from $3.98 billion in fiscal 2012, according to the Wisconsin Procurement Institute. Both those numbers are down considerably from 2011, when Wisconsin companies did $7.2 billion worth of business with the U.S. government. Those higher numbers were tied to Oshkosh Corp.’s incredible growth in the late 2000s as it filled orders for the U.S. Department of Defense, which was supporting wars in Iraq and Afghanistan. As the war ended in Iraq and troops began to come home from Afghanistan, the need for the equipment produced by Oshkosh Corp. decreased.

The East Central Regional Planning Commission is working with a host of partners and mapped out four key goals they want to achieve in the next 16 months:

» Align current economic development plans and update them with diversification strategies.

» Promote growth of new and existing businesses in targeted industries through workforce and supply chain initiatives.

» Map defense industry supply chains and provide technical assistance to suppliers.

» Identify emerging aerospace industry opportunities for the region.

Identifying businesses that are part of the defense industry supply chain is crucial, says Jerry Murphy, executive director of New North Inc.

“We don’t even know who all the players are,” he says. “Once we have that information, we’ll be able to do a lot more. We can communicate with them about job options in other industries. Our goal is to make the companies who are part of the supply chain stronger.”

The City of Oshkosh and the University of Wisconsin-Oshkosh are tasked with implementing a cluster of businesses to serve the aero-industry sector. Fowle says work started on a new aviation business park in Oshkosh and UW-Oshkosh is launching a Northeast Wisconsin Business Accelerator Program. Both efforts will help expose manufacturers to new opportunities to serve the aero industry as well as other growing economic sectors, Fowle says.

“As we look at the supply chain, we’ll try to identify some businesses that may benefit from some additional training to help them transition into new markets,” he says.


Spending bill unleashes funds

Companies in the New North doing business with the U.S. Department of Defense are breathing a collective sigh of relief after a flurry of Congressional action.

As 2013 came to a close, a new budget deal was struck and President Barack Obama signed the $632 billion National Defense Authorization Act into law. The spending plan guarantees $552.1 billion for military spending this year and $80.7 billion for overseas operations, such as the war in Afghanistan. It also rolls back the $63 billion in arbitrary spending cuts that were scheduled to go into effect beginning in January.

“Between sequestration and the budget CRs (Continuing Resolutions), the last year was brutal for businesses working with the government,” says John Rogers, president of Capstone National Partners, a Milwaukee-based boutique public relations and lobbying firm.

The recently passed legislation allows federal employees – and the companies that work with the government – to look to the future and do some planning, says Rogers, a former Defense Department official.

“Projects will now move ahead and hopefully business will be better” for companies that work with the government, he says.

“Everything was on hold before. Now government employees can plan ahead and companies can come forward with ideas they have” for new equipment, including the Joint Light Tactical Vehicles (JLTV) contract, which Oshkosh Corp. is in the running for.