Foreign attraction

Posted on May 9, 2015 :: Global
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Posted by , Insight on Manufacturing Staff Writer

Irish dairy cooperative Ornua-The Home of Irish Dairy was looking ahead when it purchased the former Thiel Cheese & Ingredients in Hilbert and then mapped out an expansion plan.

Ornua, which until April was known as the Irish Dairy Board, was seeking outlets to expand and solidify its position in the global market now that European Union milk production quotas have come to an end.

In place since 1984, the quotas were meant to curb overproduction. However, they also hampered European producers from exploiting growth opportunities in overseas markets that have emerged in the past decade.

By investing $12 million in a state-of-the-art facility, now known as Ornua Ingredient North America,  Ornua was giving “Irish farmers and the Irish industry a chance to truly develop its great products into a much bigger marketplace of a much higher production,” says Kevin Lane, Ornua’s chief executive officer.

Ornua is just one of several foreign entities that have invested in manufacturing companies across the New North. The list is long and includes notable businesses such as Marinette Marine and Bay Shipbuilding (owned by Fincantieri of Italy) and Waupaca Foundry (owned by Hitachi Metals of Japan).

David Ward, the chief executive officer of NorthStar Consulting, who recently studied international investment in the New North, estimates that more than 100 companies in the region are owned by foreign entities.

“They are attracted to this area because of the strong companies we have here and the strong manufacturing history,” Ward says.

The region’s manufacturing sector also has some undervalued assets, which makes it ripe for investors, Ward says. “There’s a lot of good growth potential with the businesses and industries here and investors are looking for that,” he says. “We also have deep supply chains, which is something too that investors are looking for.”

As for local communities and companies, they also gain when foreign companies take an interest, which is why the New North is looking to boost global investment through its Global New North initiative, Ward says. For example, the region gains capital investment along with expertise not only in technology, but processes as well, he says.

“Look at what Fincantieri has done with the boat yards in Green Bay, Marinette and Sturgeon Bay. They have invested millions and build ships differently than how it was done before,” Ward says. “The companies that come in also have exporting experience and access to global markets so they can help companies here grow in those new markets overseas. They bring a lot of expertise to the market and these businesses.”

Another benefit is that foreign investors tend to take a long-term picture, says Ward, citing Alliance Laundry Systems in Ripon as an example. Alliance is the world’s leading manufacturer of commercial laundry equipment and was purchased by the Ontario Teachers’ Pension Plan in the mid-2000s. The new owners have invested in Alliance since then, including a $69 million expansion of the Ripon manufacturing facilities in the past two years.

“Foreign companies are in it for the long-term. They want to stay and grow in a community,” he says.

When it comes to foreign investment, Wisconsin is in the middle of the pack in the Midwest and there is potential for more growth, Ward says. “There’s a lot more that can be done and New North is looking at ways to do just that,” he says, adding that after southeast Wisconsin, the New North is second in the state when it comes to businesses with foreign investment.

To help companies grow their global footprint, New North Inc. launched its Global New North initiative, which includes a global New North directory, as well as a website and information to help businesses learn more about exporting and growing abroad. The website provides a clearinghouse for data and internal market opportunity analysis for state companies.

“As part of my research into foreign investment in area companies, I also took a look at how it can be grown and how what’s in place can be leveraged for more growth,” Ward says.

The area’s strong dairy industry footprint — think farms, dairies and cheese manufacturers — is a definite plus, Ward says.

“You have to remember it’s a global economy and as the middle class grows globally, the demand for protein goes up and milk and cheese is a good and healthy source of protein so smart companies know that those areas are good investment options,” he says.

When Ornua bought Thiel Cheese, a well-known company, in 2011, it was able to capitalize on the company’s name and space in the U.S. market, Lane says. Beyond the physical expansion, the company has also invested in research and development since that will be key to future growth, he adds.

“With the Thiel expansion, we were able to increase our U.S. ingredient capacity by 40 percent,” Lane says.

Ward says Thiel is another example how foreign investment helps the local community — the project injected construction dollars and jobs into the market. “These investments help companies that do business here as well as expose these products to new markets,” he says.