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Federal Reserve Bank of Chicago

Sixth Annual Summit on Regional Competitiveness

Understanding Competitiveness and a Call to Action

Morning -- October 29, 2018

KELLY O’BRIEN: Good morning everybody. My name is

Kelly O’Brien, and I’m the Executive Director of the

Alliance for Regional Development. I have received many

messages from attendees, trying to get here. If you saw

the news this morning, the Dan Ryan was closed down

northbound. So, while we wait, we are going to kick off

the program in just a minute.

But what I am going to ask is, if you would please

move into the middle and kind of fill the middle of the

room, instead of being out on the outskirts. And, then as

people are able to get into the city, it won’t be as

disruptive. So, again, I do apologize; but if you could

please get up and move more towards the middle that would

really be appreciated, and we will start the program in

just a minute.

So, everybody over here, come on in. Everybody over

there, come on in. I promise the tables in the middle of

the room are just as comfortable.

Good morning again, if everybody could please take

their seats. Thank you for being here for the Sixth Summit

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on Regional Competitiveness. If you attended the summits

in the past, you will have heard me say, when we started

the Alliance there were a lot of skeptics. People didn’t

think that we would get to a year one. So, I am extremely

proud to be at year six, and it’s really because of

everyone in the room. So, if you could give yourself a

round of applause.

When we started the Alliance, as I mentioned there was

a lot of skepticism. People did not really understand

Regional Economic Development and thought that it was

something that could never really be embraced. And,

although we still have our challenges, it’s more important

than ever to work together.

And, obviously by virtue of you being here today, you

realize how important this is. There are so many people

that we have to thank, and you’ll see our sponsors, and I

hope if your logo is not on this page, that after today’s

event that you’ll say, we need to get more involved.

You’ll have the opportunity to hear why Regional

Economic Development is important throughout the course of

the day. And, one of the things that I hope that you’re

able to take away from today is really a better

understanding of what is happening in our own backyards.

You don’t even understand the assets and the

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investments that are happening, and how connecting the dots

can make such a difference for each individual state and

the mega region as a whole.

Now in terms of today, with technology, again, if

you’ve been here in the past, you will recognize that we

use what they call the Sea Vent App, and this is a very

powerful tool. Not only will it give you the listing of

the people that are registered, but if there’s somebody

that has registered to attend, let’s say it’s a name that

you’ve seen on different speaking materials, or just in

your own sector and you thought I’ve always wanted to meet

this person, but you may not know what that person looks

like; through this App today, while you’re sitting here in

the room, you’re able to send that person a message, and

you can agree to meet outside, you know, by the orange

juice or the coffee and become introduced.

One of the real values of today is that networking

component. So, please take advantage of that. And, what

we’re going to do really quickly is play a video, so that

you better understand how to download and use the App.

You’ll also find that today’s program and all of the

speaker’s bios are on the App, so be sure to download that.

So, without further adieu, -- is there a question?

Q What’s the name of the App?

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MS. OBRIEN: Sea Vent. You should have received an

email when you confirmed your registration from the Bank,

and there will be a link.

I want to also to say just a quick thank you to the

team at the Federal Reserve Bank of Chicago that we have

the privilege of working with and to the leadership of the

Alliance for Regional Development. Again, together we

worked very hard all year to make today hopefully a

memorial experience and something where you will take away

a lot of lessons learned, information to share, and

opportunities to work together.

So, what I’d like to do next is to introduce our host,

Jerry Boyle, who will kick off the program. Jerry?

JERRY BOYLE: Well, good morning, I’m Jerry Boyle, and

I’m an Assistant Vice-President here, and I’m the Managing

Director of Community and Economic Development for the

Federal Reserve Bank of Chicago, and it’s my pleasure to

welcome you here again for the Sixth Annual Summit. I do

want to call your attention to a table back in the back

room there. I’m going to ask Alicia Williams, my boss, the

Community Affairs Officer, to wave her hand, and then if

the rest of you would stand up at the Fed table back there

so that everybody can see you. Two things, number one, I

want to thank them because they’re the ones who actually do

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all the work to put this together. So, I appreciate all of

the work that the team has done.

But secondly, I want you all to see who they are,

because if there are any questions or anything, any help

that you need, any, anybody there, or I can help you with

that throughout the day.

Two other minor housekeeping items, if you want to log

onto our guest WiFi for today, there are forms like this on

the back credenzas which give you all the instructions,

including the password if you need it. And, secondly and

as always, the most important thing, the restrooms are

across the atrium, and if you go to the second exit sign

and turn left, that’s where you’ll find the restrooms.

And, that’s it. That’s my job which for today is

done, other than to introduce our opening speaker today.

If I could bring Charlie Evans, who is the President and

Chief Executive Officer of the Federal Reserve Bank of

Chicago; Charlie?

CHARLIE EVANS: Good morning. I’m Charlie Evans,

President and CEO of the Federal Reserve Bank of Chicago,

and let me welcome you here to Chicago and our Fed

Conference Center. I’m pleased to welcome you to the Sixth

Annual Summit on Regional Competitiveness. It’s a pleasure

for us to work with Kelly O’Brien and the leadership team

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at the Alliance Regional Development to host these

convenings each fall.

In 2012, the creation of the Alliance was spurred by

the release of a territorial review of the Chicago Tri-

State Metropolitan area by the Organization for Economic

Cooperation and Development, otherwise known as the OECD.

Since then, the Alliance has focused on strengthening

the economic competitiveness of the 21 county tri-state

area covered by that report. And, in many ways the

Alliance’s interests aligned with some important work the

Chicago Fed does across our five-state region. Today, my

remarks will highlight some of these common interests and

underscore their importance in the current economy. And,

I’ll close my remarks with some food for thought for the

discussions that will follow.

And, let me begin by noting that any opinions I will

express this morning are my own and not those of my

colleagues on the Federal Open Market Committee or anywhere

else in the Federal Reserve System. That’s just our

standard disclaimer. I’m not here to talk about monetary

policy anyway.

A major part of the Federal Reserve’s mission is to

foster the stability, integrity, and efficiency of the

nation’s monetary, financial and payment systems in order

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to promote optimal macroeconomic performance. Fulfilling

this mission includes our work addressing the economic

challenges faced by workers, families, businesses, and

communities at both the regional and local levels.

We know that competitive metropolitan areas contribute

to a strong and stable national economy; however, to keep

ours competitive, we have to address several ongoing

challenges. Some of these challenges include encouraging

the efficient movement of people and goods within our metro

areas, matching employers and workers in an increasingly

specialized labor market, and promoting innovation and

entrepreneurship.

Additionally, there’s a growing realization that

equity and inclusion across the social economic spectrum

are essential to the sustained economic success of a

region.

The 2012 review of the Chicago Metro area was the

first of its kind conducted by the OECD in the United

States. It assessed the region’s capacity to contribute

effectively to the midwest and national economic

performance and quality of life.

Although its seven years old, the OECD report and

others like it are motivated by a key principal that is

explained in the forward to the report. The need to pursue

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regional competitiveness and governance is particularly

acute in metropolitan regions. Although they produce the

bulk of national wealth, metropolitan economies are often

held back, not only by unemployment in distressed areas,

but because opportunities for growth are not fully

exploited. Effective metropolitan governance is called for

if a functional region as a whole is going to reach its

full potential; and I think Kelly’s earlier comments got at

that that it requires everyone to come together.

According to the OECD’s territorial review that call

for effective metropolitan governance in the Chicago area

rests mainly on four thematic policy issues; the

effectiveness and coordination of workforce development

programs, the metro areas capacity for innovation, its role

as a major center for logistics in North America, and its

capacity to encourage green growth over the long term.

I’d like to highlight some key Chicago Fed initiatives

that closely parallel the work of the Alliance, and that

address some of the OECD’s policy themes. First, it’s

worth recalling that the twelve Federal Reserve banks are

by definition regional entities charged with responding to

the specific credit access challenges and economic

characteristics of their respective parts of the country.

The 21 county tri-state area covered in the OECD report is

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the core of our five-state region, which, you know, I think

leads off Michigan and Iowa in your three-state alliance.

We have a research group dedicated to studying our

regional economy, including its industries, strengths, and

growth opportunities. Our community development and policy

studies or CDPS team has both research and outreach staff.

CDPS focuses on our districts economically marginalized

communities, and populations, and works to inform sensible

and inclusive policy development. I want to take a few

minutes to delve further into some specific components of

our work in CDPS that I think is particularly relevant to

today’s discussion.

A key component of the Chicago Fed’s Community

Development mission is to understand how economic

opportunity extends to communities and households. So, in

addition to analyzing macroeconomic and broad financial

developments, CDPS promotes the identification and study of

trends at the local level especially in those communities

and households facing the greatest barriers to labor and

housing markets. Not surprisingly, these communities and

households also face tremendous obstacles to new skills

attainment and investment capital. Over the past several

years, CDPS has developed a body of work that explores

regional trends in older industrial cities. This work has

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explored how leadership in these places connects their

residents to regional labor markets so that they may take

advantage of the opportunities and benefits of economic

growth and mobility.

Beginning with the industrial cities initiative, we

looked at 10 industrial cities around our district,

including Racine. This initiative coincided in many ways

with our early engagement with the regional alliance.

Although the ten cities all shared a common manufacturing

legacy, some of them were experiencing higher income,

population, and job growth. We wanted to understand why

and whether there were lessons or strategies that could be

shared or scaled. Through more than 200 interviews with

city and regional leaders, we identified three key

principals they said would be critical to the success of

their city’s economic development.

The first one is investing in human capital. Many

places are making efforts to attract a more educated work

force, often through downtown revitalization efforts. But

the places that out-perform their peers are those that are

working to expand opportunities for existing residents.

Most industrial cities lag national averages for post-

secondary educational attainment. Closing this gap is

likely to be essential to meeting employer demands for

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skilled workforce.

The second is addressing diversity. Some of the

cities profiled were destinations which during the early

20th century had great migration of blacks from the south.

Other places profiled saw increasing diversity through

recent waves of immigration. As I mentioned before,

insuring that all residents can benefit from economic

growth is an important component of the success of a city

and its region.

The final principal is that cities that are more

connected to their regions tend to thrive. Cities that

provide their residents with more links to regional labor

market opportunities, perhaps through education and

infrastructure, strengthen the potential for business

attraction and retention. During those interviews with

local leaders, we also heard that they wanted to better

understand how they are faring, relative to other cities

that share common traits. They also wanted to learn from

others who may be facing similar challenges, for example,

around housing affordability or demographic shifts that

affect their labor force. We developed the pure city

identification tool to help leaders identify potential

peers in terms of economic resilience, equity, housing

affordability, and demographic outlook. The PCIT, as we

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refer to it, is accessible through the Chicago Fed.org

website and is one of our most visited pages. I encourage

you to explore this tool when you have a chance.

Our current work is around efforts to understand what

older often smaller cities are doing to ensure positive

labor market outcomes for all of their residents who are

affected by regional, national, and global economic trends.

The next generation of our industrial cities work will

explore how economic growth and inclusion can be achieved.

Let me offer a preview of some of the findings from a

forthcoming paper that summarizes extensive qualitative

research. I encourage you to think about how these

findings to connect to today’s discussions. First, labor

markets matter. Whether a labor market is tight or loose

will shape how opportunities are extended to individuals.

A tight labor market provides an opportunity to bring some

individuals who have dropped out of the labor force back

into the labor force. In places where there is little or

no economic growth, the practice of labor market inclusion

becomes much more challenging.

Second, cities can become more inclusive by addressing

barriers to employment. These often include substandard

public transportation, limited childcare options, scarce

workforce training resources, and underfunded education and

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training. Affordable housing shortages near employment

centers represent a long standing issue in many regions.

City leaders can expect more demand for affordable

workforce housing if labor market inclusion is made a top

priority. And, I have to say we have a number of advisory

councils. I go out and speak to people in the region, and

I hear many of these issues raised as, you know, business

leaders and community leaders are trying to forge a better

working environment for everyone, and increase business

opportunities for everyone.

Substandard public transportation -- we had an

advisory council just last week, and they were talking

about this current, very nice, low unemployment rate

environment. Everyone is struggling in order to get

workers, find them, and get them to the places where they

can be productive. And, we heard about the innovative

plans about putting buses together to go around and, you

know, get the workers who are in more rural, remote

locations and to bring them onsite. These are great

strategies when the unemployment rate is at 2 percent, as

it is in some of the regions. What you need presumably is

a more robust transportation system so that throughout the

cycle as the unemployment rate is more elevated, there are

still opportunities for people to get to the workforce.

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Affordable housing; I was in Fort Wayne and Flint not

too long ago, and I think around the region that sweet spot

of affordable housing for workers and homeownership

continues to be a challenge in most places.

And, third, coordination among several actors of

different backgrounds is needed to account for the

diversity among current and potential workers. Some people

are more attached to the labor market than others. It

takes careful coordination across a diverse set of actors

to ensure that economic growth provides real opportunities

to all, or at least a much broader set of prospective labor

market participants than in earlier times. Our CDPS group

will continue to leverage the benefits of connecting

diverse places. Facilitating such connections allowed

cities to keep on learning about effective strategies for

inclusive growth from each other.

Over the past couple of months I’ve met personally

with leaders in, as I just mentioned, Fort Wayne, Indiana

and Flint, Michigan. I’ve also spoken to a national

convening of community development financial institutions.

Today we will hear from leaders in Spartanburg, South

Carolina and Racine, Wisconsin; areas that may share some

common demographic and economic straits that might not be

readily apparent. Employers in Spartanburg and Racine draw

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workers from broad geographic footprints, which cross

county and state lines. Both Spartanburg and Racine

counties have seen increasingly tight labor market

conditions with unemployment at or below four percent, and

have significant concentrations of manufacturing jobs.

However, these two places also include communities with

persistent barriers to economic conclusion, as well as

poverty rates exceeding the national average.

You can use our peer city identification tool to see

that both Spartanburg and Racine exhibit high levels of

racial segregation which present challenges for the

economic and social inclusion of communities of color. In

our growing economy, tight labor market conditions in these

places currently allow for labor market opportunities to be

extended to more people, including those traditionally

marginalized. While monetary policy is too blunt a tool to

address labor force challenges at the regional and local

level, we continue to work with leaders and practitioners

like yourselves to find efficient and effective ways to

expand the opportunities that economic growth provides in

our region.

Over the next several hours, you’ll hear a variety of

perspectives around the themes to human capital, workforce,

and talent development. My job this morning is meant to

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offer some framing observations that have emerged from our

current research.

In closing, I want to recall some of the findings and

recommendations of that OECD report that was the genesis of

the Alliance and the Annual Summit. When the report was

released in 2012, our regions’ economic growth had slowed

in the wake of the Great Recession. In more recent years,

we’ve seen signs of a stronger recovery. Our workforce is

aging; which some of our research suggests will be a

headwind to economic growth. The overall unemployment rate

in our region is at a near all-time low, but black and

Hispanic workers are continuing to experience much higher

rates of unemployment than white workers. Concentrated

poverty and the spatial segregation of minority populations

compound this problem. Also making this problem worse is

the chronic educational attainment gap between whites and

blacks and Hispanics.

While regional economic conditions have changed

somewhat since the publication of the OECD report, it

nonetheless calls attention to challenges that persist.

Our work within the Federal Reserve has shown us that

extending economic opportunities to all individuals is a

complex task that must engage a broad range of

participants. Gatherings such as this one help us make

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progress.

So, I’m sorry that I can’t stay for today’s discussion

myself, but I look forward to my staff’s report on what we

learned from the rest of the proceedings and how they will

inform our work. I congratulate the Alliance on its

successes today, and I thank all of you for your

participation and engagement in this important work. I

hope you have a great day. Thank you.

MS. O’BRIEN: By a show of hands, how many people in

the room are active on social media, or are involved with

organizations that are active on social media; show of

hands, excellent. So, please note this important slide,

just quickly, you can maybe jot this down. Send it off to

your respective organization or log in to your own

accounts. Our Twitter handle is @alliance4RD. Our hash

tag for this event is #MegaRegionsummit and you can follow

us on Facebook. We are going to be posting on Facebook

throughout the day, so we do ask again that you maybe share

those postings, and really kind of get the word out about

what’s happening today.

And, speaking of today, when we decided again to

engage in the Sixth Summit, Jerry Boyle; I want to give

credit where credit was due, on wanting to set the bar very

high, said to me, “You know Kelly, this year, Foxconn,

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there’s a big buzz around Foxconn. There’s something

really exciting happening, and our stakeholders, all over

the region, they’ve heard of it, they may understand what

they’re doing or they may not, but we need to hear directly

from Foxconn, make it happen.” Oh, okay, Jerry. So, then

the phone calls to our stakeholders in southeast Wisconsin,

many of whom are in the audience today and a profound thank

you; and one in particular, Dr. Carmel Ruffolo. Carmel, if

you could stand for a moment.

DR. CARMEL RUFFOLO: Yes.

MS. O’BRIEN: Carmel is one of the founders of the

Alliance and has been struggling with some health issues,

and she’s really quite a champion to be here today. So, if

we could please have a round of applause for Dr. Carmel

Ruffolo.

So, with Carmel’s help and many others here in the

room, I was able to connect with Dr. Louis Woo, who I found

to be, you know, so approachable and charming and Dr. Woo,

thank you again, for agreeing to help kick off the Summit

today.

And, we are also very, very pleased to have Mike

Lovell, who back before taking the lead at Marquette was

again really at the table day one with the Alliance. So,

we’re very, very proud to have you here today, and I’d like

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to invite Mike Lovell and Louis Woo to the stage.

DR. LOUIS WOO: Hi, Mike, how are you doing?

MIKE LOVELL: Good, good.

DR. WOO: I must tell you this story first, I was

asked to speak but, I know that I am not a very good

speaker, so I need someone to help me out, you know, to jog

my memory or ask the right question, and things like that.

So, I could not think of a better person, except Mike, you

know, we have known each other at least almost a year now,

right, yeah. And, so, I’ve got a lot of respect for him,

but do not underestimate the bargaining power of a

President of a University.

And, he said, unless I give him half an hour, I want

my half an hour to talk about Marquette, and he would not

be able to do so. So, at the end, he bargained, I will

give him 15 minutes to talk about Marquette. So, Mike, why

don’t you tell us about Marquette University?

MICHAEL LOVELL: Well, thank you, Louis and thanks for

being here, and I will keep the remarks about Marquette

brief, because I know everyone here wants to hear more

about Foxconn. Marquette was founded in 1881. We’re a

Jesuit institution in Milwaukee with about 12,500 students,

and most people know about us because of basketball. As a

matter of fact, when Louis first got here, I gave him a

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gift. Do you want to tell them what gift I gave you?

DR. WOO: You probably framed it up and put it in my

office.

MR. LOVELL: Yeah.

DR. WOO: Right?

MR. LOVELL: Yeah.

DR. WOO: So, that would be a Marquette basketball

jersey. Yeah.

MR. LOVELL: I told Louis, the only way I would

interview him today was if he wore the jersey up here when

we talked, but he didn’t -- he wasn’t responsive to that.

So, Louis when we think about how exciting the past years

have been for us, it’s that that response was really within

the mega region, a lot of people have now heard the name

Foxconn. But, they may not really know exactly what

Foxconn is. And, maybe you could give us a little bit of

background about the company; how large it is, you know,

when it was founded and a little bit of information about

Terry.

DR. WOO: Sure. So, I think most of you might not

have heard of Foxconn. We founded about 45 years ago in

Taipei, Taiwan, and now we have become one of the, not one

of the, I think we are the largest consumer, electronic

manufacturers in the world.

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If you add up the revenue to the number two to all

number 11; their total revenue is less than ours. So, when

we said that we’re the number one consumer manufacturers,

we are not kidding you. And, last year, our revenue was

about $157 billion. So, we were ranked as number 24 in the

global 500 companies, and if you look at us as a nation,

and I would go to that a little bit here. Of course, we

are not a nation, but we would be number 36 of 37 in terms

of GDP when you look at assets of revenue.

The reason why I mention that as a nation is that we

employ about 1.3 to 1.4 million people. So, that’s quite a

lot of people, and also that the average age would be from

18 to 25. So, I was trying to be one of the outliers to

try to kind of add up the average a little bit more;

otherwise, they would be all very young.

And, what more could I tell you about Foxconn? We

certainly have a lot of ideas, new ideas, and to be the

high technology company, a high technology provider in the

world. So, we have been very successful in doing that for

the last 40 something years.

MR. LOVELL: Great, so, for those of us in southeast

Wisconsin, we are seeing actually the changes in terms of

the construction of the sites from I-94. Maybe tell us a

little bit about the cities you’re making up your mind

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about, and what do you expect to do in them?

DR. WOO: Okay. Well, first of all, I just want to

make it very clear that we are not really building a

factory in Wisconsin, and the reason is the following. If

we are building a factory, we should not be doing that in

Wisconsin. In fact, we should not be doing that anywhere

in the U.S. The reasons are very simple, the construction

cost of any facility in the U.S, is about 2.8 times that of

what it would cost if we built the same thing in Asia.

If we look at the average wage of assembly line

workers, in the U.S. it’s about five times more expensive.

So, unless we are manufacturing something very different,

that maybe there is no market for here today that you might

be able to afford that kind of cost structure, yes. So,

the thing that we are trying to build in Wisconsin is

really a high tech hub. So, that again when we talk about

that, I need to share with you the vision of my Chairman

and also with Governor Walker of Wisconsin. I think when

they met up about April 30th of 2017, I think they came upon

the idea that we should build something like a Wisconn

Valley in Wisconsin so that would one day become the rival

of the Silicon Valley in the west coast or the Boston

Corridor on the east coast.

The reason why they see that could be a reality, and

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what is it so exciting to build a high technology hub that

could one day rival the Silicon Valley or the Boston

Corridor? It’s the following, and, how many of you are

from Wisconsin? So, quite a few; so you would know how

beautiful Wisconsin is, but at the same time, the cost of

living is relatively inexpensive, especially compared to

the west coast. I was told that they fast graduate in

terms of entering the market. In Wisconsin, you might earn

about $60,000 a year, right when you first graduate.

On the west coast, if you’re lucky enough to be hired

by Apple or Goggle, you will start at $125,000 to $150,000,

right? But do not forget how much you have to pay for

housing. In the Silicon Valley, if you’re lucky, you can

buy a house under $2 million, where you might have to be

driving for at least one hour transit each way, every day.

In Wisconsin, I was told that you can buy a very

decent house for about $200,000 to $300,000, which is

probably a few minutes away from where you work.

So, I think it’s an alliance, Kelly. I think we

should continue to tell people that you need to be looking

at the total cost of living or the total cost of owning

your own career. So, not only just the pay per se, but

also the opportunity to work in Wisconsin, and also pass

the cost of living to make sure that the standard of living

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is not the same, but it would be certainly higher than the

west coast or the east coast.

So, for any kind of high technology industry, you

really need the components. The first thing, of course, is

the human being; the human tolerance is the people. If you

look at Wisconsin, we have probably one of the best

universities, which is Marquette. So, I remember that,

yes. And, if you’re looking at the mega region, including

Chicago, of course, you have been west of Chicago. So,

those would be the prime examples of private universities,

which would be similar to Stanford in the Silicon Valley.

If you look at the UW system, again it would be similar to

the UC System in California, right. So, every year alone

we know that in Wisconsin, we have close to 300,000

students, faculty, and staff that we can take advantage of.

And, plus, if we want to reach out to the mega region, then

you have Illinois, Indiana, and you have certainly Chicago

to tap on, right? So, all we need now is really a company,

somewhat that can become a catalyst to shore up a critical

mass of either scientists or research engineers, or putting

enough investment to make it happen.

So, I think that is one of the objectives of the

Silicon Valley in order to put together a Wisconn Valley,

science and technology apart. So, let me come back to one

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we are trying to build there, the first thing we are going

to build is a Generation 6-TFT5. Now, to you what is a

TFT? TFT is basically the thin film that would be made

into glass of what we call substrates. So, we look at

your; and, I think most of you own a smart phone. So, the

display, the monitor is made by a substrate.

So, when you look at a television and you look at the

television display, that’s made by the substrate, right?

So, what we are saying is that for any kind of high

technology devices, one of the critical components has to

be display. At Foxconn, we have the largest in immerses in

display. In 2016, we bought 66 percent of these shops.

So, we have the latest display technology that can rival

that of South Korea, or any company in Taiwan, or mainland

China.

So, we want to build a part of that in Wisconsin, but

somebody must ask me the question; why not Generation 8;

why not Generation 9; why not Generation 10 from 5? Why

Generation 6? So, please bear in mind the larger the

number doesn’t mean the better it is. In this case, the

larger the number simply means that the size of the display

that is going to be manufactured by that particular

factory. So, let’s take 10.5 for example. The size of the

substrate that is the glass that can be manufactured is

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about nine feet, seven inches long, and 11 feet, one inch

wide, as immersive Generation 6 that would be 4 feet, 11

inches, and also 6 feet and 1 inch.

Of course, I can just make up those numbers, because

you guys would not know anyway. But for a change, I can

share with you, size doesn’t matter. It’s the technology

that brings it in. So, what we are trying to sell up is

first, a unique one. Nobody has ever done that in the U.S.

We’re setting up the tier team fabrication in Wisconsin

that would be able to help us to continue to develop a new

generation of this space, and plus advanced semi-conductor

packaging technologies on glass. So, that’s what we are

trying to build.

With that we’ll be able to grow with a lot of

universities, academics, and research institutions to bring

along a lot more critical mass of development of new

products.

MR. LOVELL: Well, thanks. And, I would say you talk

about being a catalyst. If I can just tell you, in my

fifth year at Marquette in the past year, I’ve met more of

my colleagues at the other universities both from

technology systems and other systems which you’re going to

hear about in the next session. So, you’re definitely

filling the room.

27

One of the things you’ve already done is you’ve

recently announced a $100 million partnership with the

University of Wisconsin, Madison. You’re in cost

discussions right now.

DR. WOO: That’s part of your system.

MR. LOVELL: Yes, and you’ve actually since arriving,

you’ve been to all of our campuses almost on a daily basis.

When you think about what you’re trying to accomplish by

partnering with the universities in play, what do you hope

to get out of these partnerships?

DR. WOO: Well, first of all, we are serious about a

Wisconn Valley science technology partnership, or the

concept of Wisconn Valley to one day rival that of Silicon

Valley. We cannot do it alone, but even though we are

committed to hire and to create 13,000 jobs, but 13,000 is

nothing. So, we have to take advantage of the deep

learning, the deep knowledge in the university systems in

Wisconsin and also beyond. So, we see that partnering with

the university, partnering what the technical colleges, and

partnering with private universities is certainly the thing

that we have to do, otherwise, we would not be able to

create something like Wisconn Valley.

MR. LOVELL: So, one thing you look to is the jobs,

the 13,000 jobs. Obviously, Foxconn is going to create a

28

lot of jobs themselves, but we’ve also heard a lot about

the supply chain that will develop around you. Can you

talk a little bit about that and what you expect to happen

in the next few years?

DR. WOO: Sure. I think maybe I should talk about the

creation of 13,000 jobs. I think a lot of people might

have misunderstood that, you know, since we are, you know,

basically a manufacturer. So, would we be hiring mostly

assembly line workers out of the 13,000? And, the way we

are looking at it is that it’s probably about a 75 to 25

split. So, I would imagine 75 percent would be knowledge

workers and 25 percent would be assembly line workers to

start with. And, then some of you might be interested to

know why that is the case; because I believe that there is

a certain national division of labor. I think in China or

in Asia, we still see the benefit of labor, more on the

side that is relatively inexpensive. But in the U.S., the

benefit of labor is not on the purely economic side of

being cheap labor. But in the U.S., we have a huge

abundantly available pool of talent; so, that’s what we

want to take advantage of. So, that’s why the split of

what we want to hire, the jobs we want to create would be

at least 75 percent knowledge workers, and the other 25

percent would only be assembly line workers.

29

And, about supply chain in our past, at least in Asia,

for every one job we create, there will be another four

jobs that the supply chain would create. So, more likely

than not, the supply chain would follow us to come to

Wisconsin to invest. But that would be most likely a year

later than after our plaza is complete. So, I’m very

excited to see the supply chain coming over, yes.

MR. LOVELL: So, within that I would say at least

would be right on your campus. For those of us not from

southern Wisconsin, but maybe one of the mega regions, how

do you think Foxconn could impact say the Chicago area?

DR. WOO: Well, first of all, in terms of talent,

given the tight labor market today, and so, we are looking

for talent all over the place. And, certainly, I would see

that that should be people taking the commuter train from

Chicago all the way to Wisconn Valley Science and

Technology Park, and so, basically that would be, you know,

having the best talent in Chicago, who want to join us to

work in Wisconsin, but they seem more comfortable with the

city life in Chicago. And, they can have the best of both

worlds.

So, talent alone I would see that we would have to

reach out and go beyond Wisconsin per se and certainly we

have to reach out to go beyond just the southern part of

30

Wisconsin, but to Madison, to other parts of the state.

That’s why we are also building the Foxconn Place to

attract them. So, not only just the physical building, but

also so that it would attract more people to join us, even

not exactly in the Milwaukee area.

MR. LOVELL: So, we heard this morning that, you know,

how unemployment is near record lows. It seems to me that

what you’ve talked about earlier about how attractive it

may be for someone from the Silicon Valley or Boston, given

the cost of living and the kind of life to come. Do you

have any efforts underway that would actually bring people

from outside of this region into the Wisconn Valley?

DR. WOO: Yes, I think that we have a very concerted

effort especially that would attract veterans. So, we are

participating in the next six months or so, there are about

11 upcoming veterans hiring events in their own military

bases. Some would be in the south carrier called Kissel in

Korea and Japan, and also in Germany. And, there would be

also many military bases that would be participating in

that kind of event. And, at the same time; and we made

this announcement I think a month or two ago, we put

together a $100 million venture fund, together with

Northwestern Mutual and parts from Rolla Health Care, and

also Johnson Controls to make sure that we be would keen to

31

help start-up companies, not only in Wisconsin, but at

least in this region to be aware of the high technology

potential that Foxconn, and the Wisconn Valley can bring

about. So, we are seeing that there are many ways to reach

out to the start-up companies to the new generation of

entrepreneurs.

MR. LOVELL: So, you know, I noticed that you recently

announced a smart cities competition.

DR. WOO: That’s right.

MR. LOVELL: Can you talk a little about what that is

and what you hope to accomplishment with it?

DR. WOO: Well, there are a couple of things at least.

One is that we believe that high technology has made an

impact in a lot of industries. These are in trade, in

medical care, and even transportation, but we see that

there is very little movement in terms of the construction

industry. So, we see that there is a lot of new ways that

we can bring the internet technology that includes cloud

computing, mobile devices, the internet of things, and also

the spectator, artificial retail intelligence, and

automation and robots into the construction business.

That’s part of the smart construction, as part of the smart

living, and smart future.

And, we also see that in the future we should bring a

32

lot more technology into our homes so that would impact our

house, especially in preventative medicine. Just imagine

today, how many of you would do an annual medical check-up?

That’s still quite a few, but instead of a medical check-up

on the annual basis, why can’t we do it on the daily basis;

daily basis in terms of not necessarily having to go to see

the doctor, but everything you eat, every time we take a

leak, that could be documented, right? That could be

analyzed by the IOT and can be going up to the cloud

computing. They can put together that data to analyze how

one changes over time. That’s what preventative medicine

is all about, and mind you, preventive medicine would be a

lot more cost-effective than medical care because you would

only see a doctor when you are not feeling well. So,

that’s how I see it, the future living and the smart

future.

MR. LOVELL: Yes, so that’s one of the things we’ve

talked about since you’ve arrived in this part of the

country, part of the world --

DR. WOO: You do mean last night, right?

MR. LOVELL: No, no, no, you know, there have been a

number of things culturally here that are things that have

surprised you. Can you talk a little bit about some of the

challenges that Foxconn has had coming to the U.S. for the

33

first time?

DR. WOO: Is any media in the audience?

MR. LOVELL: There’s always media.

DR. WOO: Always the media. To put everything in a

context, please, just generalities. So, you have to put it

in context. I was asked the question by Mike, I really

didn’t want to answer it because it would put me in a bad

light. Yeah, I was a little bit taken aback by the health

devices, also scientific, right? I would imagine somebody

like Foxconn, who wants to create 13,000 high-paying

knowledge worker jobs in Wisconsin with $10 billion

investment in the next five to ten years; I would imagine

that people would go roll out the red carpet and to say

hey, Mr. Terry Gou or Louis Woo, you know, have our back

and say, what can we help you out with, how can we make

your life easier? How can we make you to be part of the

community? You guys did that. I really appreciated it. I

truly appreciate it, yes. But not everybody, right, and

I’m really surprised, and some even saying that, you know,

that we are here to steal the water from Lake Michigan, and

I don’t, I thought Lake Michigan is relatively big right?

So, we were accused of doing so, but fortunately, we have

this plan to set up a zero lake discharge in our factory

that means that we will only use the water once that would

34

make sure that it would continue to be recycled, to be

reused again and again.

And, and also, everywhere we go, we are living here,

we are part of that community. Look at how beautiful

Wisconsin is, and, I don’t want to make a place worse than

when I first walk in, right? So, it’s in our hearts, in

our guts to do the right thing. Look at even in China,

there are very few environmental protections. We are

building a huge solar farm in China, and also we will

either build it by ourselves or working with our partners.

By the end of 2019, we will have sufficiently set up the

solar farm to produce electricity, which would be close to

half a gigabyte would be 500 billion watts of electricity.

And, so if we do that in China, we certainly want to do

that in Wisconsin. And, so we are here to stay. We are

just not immersing; we are not trying to make the quick

buck. It’s very difficult to make a quick buck by

immersing $10 billion dollars. By employing 13,000 people

there’s no quick buck to be made. So, when you ask me this

question, I just can’t understand it.

MR. LOVELL: Sorry about that question. Right now,

we’re having some growing pains, you know, as you’re trying

to move in; how can people maybe help or, you know, what,

how can we work together on to best help you to be

35

successful?

DR. WOO: Wow. The number one priority for 2018 for

the remainder of 2018, we have about two months and ten

days or so. I want to hire as many people as possible.

So, we are running hiring fares, left and right in

Wisconsin almost like every weekend. We do that on a

Saturday to make sure that, you know, people who are

working will be able to come and see us to talk to us and

see what the opportunities are.

And, I think it’s too late for the reelections. And,

but if you guys haven’t voted, you should go out and vote,

you know, to vote for people who are good listeners, you

know, for people who are trying to make a difference in

Wisconsin, that would certainly be helpful, yeah, because

that would be helpful for the longer time. And, because I

believe that when there is economic development, I think

that’s what the Alliance is all about, and the people would

be better off. And, so we can do that altogether, yeah,

and normally, I would ask you guys to just go out and tell

the Foxconn story and tell them that, you know, we are not

an evil empire. We actually want to do good things here.

With that maybe I should tell you one more thing, you

know, people would imagine in saying that we are getting a

$4 billion dollar handout and some said $4.5 billion

36

handout, and let me tell you this, we have invested close

to $200 million now to level the ground and we have about

3,000 acres, just by leveling the first 1,000 acres, so we

spent about $100 million there, and we also build the first

building to house some of our workers there. And, also we

set up the 611 in Milwaukee as our northern workers

headquarters. So, with all that, we spent about $200

million. We have not had one dime from the State of

Wisconsin.

So, the agreement with the State of Wisconsin is that

we would invest first. We would hire the people first.

So, the end of every year, we would submit an auditory cost

list. Of course, the WEDB, the Wisconsin Economic

Development Board would ask a third party to go back and

check all the data and make sure we have the payroll and

things like that. Only after that we will have the subsidy

to us. So, it’s not a handout. It’s basically as a

performance-based subsidy. So, I hope that, you know, you

are very well aware of that so when somebody tells you

we’re getting a handout, please tell them, we are not.

MR. LOVELL: So, let’s kind of, there’s enough time

for maybe one more thing before we wrap up. What one thing

would you like to do here to know or say about Foxconn as

they walk out of the room?

37

DR. WOO: Well, I see the tremendous opportunity for

all of us to work together especially for the mega regions

to build what we call a Wisconn Valley. I think that this

is really the hope of the future for the mega regions led

by so many good private and public universities. We have

plenty of talent, we have beautiful scenery here. We have

the most pristine living conditions in Wisconsin and also

in the mega regions. I don’t see why we cannot provide a

better working and also better living opportunity than the

folks in the Silicon Valley or the folks on the east coast.

So, I wish that we can all work together to make this

happen. It’s not going to be 1 year, it’s not going to be

2 years; it could 5, 10, 20, 15, 30, too, and I think we

can make it happen. But, we need the leadership to make it

happen. Leadership is not only from the political world,

but also from leadership of the private sector. I think

the leadership from the universities, but if all of us work

together, I think we will make it happen.

MR. LOVELL: Well that’s a great segue to our next

panel discussion about how the universities are working

together.

DR. WOO: They pay me a lot of money to do this.

MR. LOVELL: So, why don’t we all thank Louis for your

wonderful comments.

38

DR. WOO: Thank you, Mike.

MS. O’BRIEN: We are going to now take a 15 minute

break, but there is an assignment. Look around your table,

if there’s anybody that you don’t know, please introduce

yourself. If you know everyone at your table, look at the

table next to you. So, your job is to meet one new person,

during this fifteen minute break and engage in social

media. We’ll be back at 9:45. Thank you.

Ladies, and gentlemen, can we have everyone please

take your seats. The conference will continue, very

shortly.

MS. O’BRIEN: If everyone could please take their

seats. We want to try to do our best to stay on time

today, and you know, the next panel is going to start at

9:45, and it is now 9:44. So, if everybody could please

take their seats.

So, earlier I alluded to the fact that there were many

people in southeast Wisconsin that I reached out to in

order to get in touch with the right people at Foxconn.

Pretty much everybody sitting on the panel right here

helped us get Dr. Woo here and be able to network with

Foxconn, and I really thought it was also very important,

not only to hear directly from Foxconn, but to hear from

the people that made it happen. Everyone up here was

39

involved in either recruiting Foxconn and/or responding to

the needs that are going to be transformed in southeast

Wisconsin. And, so we have an elected official, economic

development, and higher education. We got it all across

the board, so I think this is going to be a very valuable

panel. It’s going to be an opportunity for us to learn

exactly what is happening right in southeast Wisconsin and

it’s something that, we again, can maybe understand from a

best practices standpoint, as opportunities like this

continue to happen in the mega region.

Our board member and really one of the best champions

that the Alliance could possibly hope for, Chancellor

Debbie Ford, will serve as the moderator. And, Chancellor,

I’ll leave it to you to introduce us to the panels. Thank

you.

DEBORAH FORD: Thank you, Kelly. And, before we

begin, join me in recognizing Kelly and Shalora for their

work in organizing the Sixth Annual Summit.

While I’m honored to be serving as the moderator today

for this particular panel and wanted to let you know that I

have a few prepared questions for our panel members. And,

then we will open it up for questions from the audiences,

towards the end. So, think about your questions and think

about what additional things you’d like to learn from this

40

very prestigious group this morning.

So, this morning we have with us Dr. Mark Mone, the

Chancellor at the University of Wisconsin-Milwaukee, Dr.

Bryan Albrecht, President and CEO of Gateway Technical

College, Jenny Trick, Executive Director of Racine County

Economic Development Corporation, and Jonathan Delagrave,

who serves as the County Executive for Racine County.

I am fortunate to be able to work with all of these

folks and I am very happy and pleased that you’ve taken

time to join us for this morning’s panel. I would invite

you to take a look on the App for a little biographical

information for each panelist, so you can take the time to

do that. But we’re going to go ahead and get started, and

I have asked each of our panelists first to briefly

introduce themselves and describe their professional

relationship with the Foxconn. And, so we’re going to

start with Jenny.

JENNY TRICK: So, I’m the Executive Director with

Racine County Economic Development Corporation. I’ve been

with the organization about 26 years. I have, I think

literally done every job at the organization, but the

controller. So, it’s a good opportunity if somebody says

the job can’t be done, I’ve done it. Yes, it can. Let’s

move forward.

41

We’ve done a number of different recruitment projects

over the years and never one certainly of the scale of

Foxconn as you might imagine. I mean the words that

everybody uses, unprecedented, transformational, all of

those and more, and it has been an absolute delight working

with Dr. Louis Woo, as well as every other person that I’ve

met through Foxconn as one is nicer than the next. So, our

relationship with the company is really, we’re about feet

on the ground, so to speak. The role that we fulfill in

Racine County is to be the county wide economic development

organization and just like we serve every other prospect

and company that chooses to locate in Racine County or

expand there, we’re that point of contact between business

and government. And, so we can fulfill that role for

Foxconn.

DR. FORD: So, Jonathan.

JONATHAN DELAGRAVE: I’m Jonathan Delagrave, Racine

County Executive. I kind of grew up in the county ranks.

I’m extremely fortunate enough to be County Executive, and

I’ve worked for the county for a long time. And, I’ve

certainly gotten a lot more out of the county than the

county has gotten out of me for sure. And, I’m very

appreciative.

With Foxconn, you know, I look at it as we’ve engaged,

42

but it’s turned from engagement to partnership. That

partnership has grown obviously over the last year, year

and a half. I can just tell you everything that Foxconn

has said or has advocated for has come true and then some.

And, there are numerous examples of that, but probably it

would be touched upon throughout this panel. But, I would

say this and this is kind of the story that I like to tell.

When they first came to Racine County and looked at what is

now the location for the manufacturing site in Wisconn

Valley, we walked that site on an extremely hot day and as

we were walking, Trevor Dillon and Dr. Woo, you know, they

turned to me and said, you know, you don’t understand John,

when we locate in Wisconsin, we want this development to be

as pristine as possible because we plan on being here for

generations to come. And, that embodied to me partnership

and their partnership has exhibited just that throughout

the past year and a half.

DR. FORD: Thank you, Bryan.

BRYAN ALBRECHT: Thank you, and good morning,

everyone. I appreciate the opportunity to be with you. I

live in the same communities as Jenny and Debbie and

Jonathan, Racine County. I serve as the President for

Gateway Technical College. Gateway was founded in 1911, so

we have a deep history in our community working with

43

business and industry helping to build our count strategies

for continued support and growth.

So, related to Foxconn we serve three counties,

Racine, Kenosha, and Walworth County, so we have facilities

throughout all of southeast Wisconsin. Fortunately, we

have one facility that it is one mile from the new Foxconn

facility. So, we are deeply ingrained in helping to not

only provide the adequate training, but really help people

understand the types of opportunities that are available

within the southeast Wisconsin region.

When Foxconn first came to our area, the SC Johnson

iMET Center was one of our campuses that they visited.

And, fortunately, we had some space available, and we

actually housed 40 of their employees at Gateway, while

they were doing their initial strategy and build-out for

the new fabrication facility in what’s now called Wisconn

Valley.

But, since that time, we have continued to strengthen

our relationship and develop an internship pipeline of

students so that they can obtain great opportunities at

Foxconn. We have built out four new curriculum pathways

for Foxconn. We’re expanding our facility at the iMET

Center to help increase capacity for advanced

manufacturing. So, there are a lot of day-to-day

44

activities taking place, but I would say just exactly what

Jonathan and what Jenny said; everything and more has come

true to what they’ve been able to bring to our community

and specifically to our campus, while generating exciting

expansion of the programs and facilities, not just for

manufacturing, but for all sectors across the services

areas that we provide for.

DR. FORD: Okay, Mark.

MARK MONE: Thank you, Debbie, now, good morning,

everybody, happy to be here. Mark Mone, Chancellor, UW

Milwaukee. We provide a lot of talent for organizations in

the region, and Foxconn is very interested in that talent,

and they’ve helped kick off some career affairs a number of

times on our campus, as well as across the state. We have

with the research partnerships had a lot of companies

already in place, and partnerships with the other

organizations that you’ve heard about already; we see the

work with Foxconn as incredibly catalytic. We’ll talk on

the panel this morning about a number of those specific

areas. But, it’s really strengthened our work together in

ways that we probably wouldn’t have had and certainly

hadn’t even envisioned.

So, we just have as an example yesterday, our provost

came back from Taiwan, and he spent only a few days in

45

Taiwan and he was finalizing an agreement that we have with

Foxconn and what’s known as CYC University, which we’ve had

a partnership with for probably a decade for our

engineering students to intern. But, today Foxconn

initially agreed to have five or ten students to serve as

interns that would learn there, and then come back and work

in the facilities in Wisconsin. And, they’ve already

doubled their commitment to that work already. So, we’re

working on a lot of the details on that and there are many

other examples that we’ll talk about. But it’s the talent,

it’s the research partnerships with companies like Johnson

Controls, Rockwell and many, many other firms in the region

that have specific technology that will be part of the

larger Foxconn and Wisconn Valley ecosystem.

DR. FORD: And, Jenny?

MS. TRICK: Yes, ma'am?

DR. FORD: Your organization, Racine County Economic

Development Corporation, was one of the first really to

respond and initiate the engagement with Foxconn, and at

that time you didn’t even know you were working with

Foxconn. So, many of our partners here today in the

audience are economic development professionals or are from

municipal governments, and also from higher education and

business and industry. So, can you talk a little bit about

46

the journey of the relationship with between our RCEDC and

Foxconn; and what you and your team have learned from this

experience and talk about the beginning, because I think

that would be very helpful for the folks here.

MS. TRICK: So, the beginning with this project was

very much similar to every other project. We’ll often work

with a site selector, and that site selector will send us a

request for information document, and they generally range

anywhere from a couple of pages to 50 pages. This one

happened to be on the larger side, and it was provided to

us by Ernst & Young, who served as the lead site selector

with this company. And, much like every other project, the

turnaround was very quick. And, so they wanted a lot of

information in a very short order, which was often referred

to as the Foxconn speed, if you haven’t heard that already,

but everything is in the warp speed.

And, so we began that way and to be honest, when I

first read the request for information document, I thought

it was a bit of a pipe dream simply because I think any of

us that are in this room in economic development know, you

will often receive an RFP on some of the mega sites you

refer to where you need to assemble up to north of a 1,000

acres or so of property and you hope and dream for those

opportunities, but often they go to communities kind of in

47

the south and unfortunately, we were not as successful.

But, that’s where it began and we worked with a team.

And, I must say even before this opportunity came to us,

economic developers are very resourceful, and they need to

know who their team is and those teams are often elected

officials, but they’re often also ripe with technical

knowledge, so engineers, attorneys and so on.

And, really from the very beginning, when we received

that information document, we quickly engaged Jonathan, as

well as a couple of communities that were pitching for this

project. And, I can remember the day Jonathan, where we

assembled for the entire day around this document and where

we pooled all these resources together, including

engineers, and some of our community leaders. So, from the

very beginning it’s been a very collaborative activity, but

it is just again another exercise in collaboration, which

already existed in Racine County, so we didn’t have to do

something unique. We just needed to draw on things that

had worked already in the past.

And, what I have learned in this whole journey, is

really probably nothing unique to this, but really through

our entire effort of doing international recruitment, which

began in 2007 on a much smaller scale, it was really

honoring what is the culture of that company that you’re

48

trying to attract, and what do I need to know about them so

that I don’t make an error and I’m not offensive;

understanding that. But, then also understanding what’s

important to them, what really trips their trigger so to

speak. And, of course, those are the same issues that we

deal with on domestic companies, but it adds a little bit

of a different flavor when you’re working with

international companies. And, so just honoring the

culture, understanding what that win-win solution is that’s

really akin to that culture, and then again, working really

very closely with your partners, overall.

DR. FORD: Great. Well, since we’re talking about

understanding the culture and particularly with our

partners from around the world you recently hosted a

business etiquette program for members of the Racine County

Economic Development Corporation. So, can you talk a

little bit about what you’ve learned and how RCEDC is

helping our region prepare more for international partners?

MS. TRICK: So, as I mentioned, more than 10 years

ago, we started in this whole international recruitment

endeavor. And, one of the ways that we thought we would

become more informed about it was to actually reach into

the Chicagoland area, where you have a number of

international chambers of commerce. And, we started with a

49

number of different countries, but one of them fortunately

was with Siva Yam, who is the President of the U.S. China

Chamber of Commerce, and we’ve been friends for the last 10

or so years and in fact, Siva was one of the first people I

called when we were in our final straits of trying to

secure this company for Racine County to be informed. What

am I missing? What do I need to know? And, so we drew on

that same friendship when we knew that the same challenges

and opportunities that Jonathan and I learned on the

frontline of this; we wanted to inform our local of

community and our companies, so that they wouldn’t fall

into the trap of perhaps having some challenges with some

cultural issues.

And, so we hosted a half-day session in that respect

and if anything, although it was a lot of information

shared with folks, it just encouraged people to think

differently. Begin your research and then go to the

different websites like Executive Planet and so on to have

a better understanding of how to work with international

companies.

DR. FORD: Alright, thank you. So, Jonathan there’s a

lot of things happening in Racine County and for any of us

who are traveling I-94, we know things get a little

different when you hit the county line. So, tell us what

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it means to you and to the county for Foxconn to establish

their science and technology park in Racine County, and if

you could also talk a little bit about how the county is

also working with the city in terms of the Foxconn Place

Racine as a center to advance smart cities, ideas, and

technologies.

MR. DELGRAVE: Thanks, Dr. Ford. This is a great

question, and it’s truly transformative and you asked about

the catalyst of the economic development opportunity that

Foxconn brings to Racine County; and we want to have such

great things going on in our county, but it’s really

transformational through our school districts, through

Gateway, and our universities in the area. It’s really

going to advance healthcare bringing two new hospitals

systems, and potentially another one, and building new

medical facilities in Racine County.

I mentioned our school districts getting on board to

talk about curriculum related to Foxconn and advanced

manufacturing, and just talking about the opportunities for

students that can go to a four-year university or a two-

year community college, or just get that certification

right out of high school to be able to work with these

businesses.

It’s working with those existing businesses to make

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sure that they have the workforce they need and all of that

opportunity that comes with it. So, we’ve leveraged that

with our partners from the state workforce development

grants. We know in Racine County that we have to make our

existing businesses a priority; quality of amenities for

our citizens are important, so just those opportunities for

recreation and family opportunities are going to be

enhanced. So, really this is transformational throughout

our county in so many ways.

I-94, we were kind the hole in the donut; Kenosha

County and Milwaukee County had their freeway systems

already built. We did not, and we were not going to

probably see that for 10 or 11 years. We went out and got

a $160 million plus grant from the federal government to be

able to do that. So, you know, I apologize to all of you

going back to Racine and Milwaukee. But we are really

truly grateful for all the opportunities that this brings

to Racine County.

DR. FORD: And, so talk a little bit about the work

with the city, and I know that you and Mayor Mason work

closely together and we are happy to have the Foxconn Place

Racine in the city and it’s about what six to eight miles

from the Science and Technology Park, so talk about that.

MR. DELGRAVE: Sure, so we have 17 municipalities in

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Racine County and I want all of our municipalities to be

able to benefit, and obviously, the city of Racine is our

largest municipality and they have, you know, obviously

some demographics that I want to make sure are included for

this project to make sure that everybody benefits.

But the innovations center is going to focus on two

things; one is smart cities, which we are grateful for, we

can do the hub and be looked at hopefully as a smart city

and smart county, and then second, they’re going to be

focusing on autonomous vehicles and whatnot, so, being able

to have routes from the Innovation Center to the site out

of Mount Pleasant along I-94 would be great. But, I would

just say that again Foxconn was a catalyst in bringing our

municipalities together. So, the city of Racine and the

Village of Mount Pleasant and the county came together to

work to create a water development agreement that’s going

to enhance economic development opportunities quite a bit

in terms of water usage and the cost of that water.

We were able to do a partnership with the Village of

Caledonia and Mount Pleasant to lower water cost from the

Village of Caledonia, saving the taxpayers $25 million in

Caledonia. So, working with all our municipalities and

specifically the city of Racine and the Innovation Center,

again it’s going to be transformative. We’re going to be

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looked at as the leader throughout the midwest and

hopefully the United States on a lot of these smart

community things. I know the city of Racine and their

mayor is really engaging in that opportunity, so just a lot

of exciting things to come and those partnerships I think

are going on a day-to-day basis.

DR. FORD: I think the keywords that I keep hearing,

and I certainly heard it from Dr. Woo this morning is

collaboration and partnerships and so, Mark, let’s switch

gears a little bit and tell us about the emerging Higher

Education Regional Alliance and how higher education is

partnering with Foxconn. And, Dr. Woo talked about this as

being one of the key reasons why they selected the midwest

and the state of Wisconsin, which was the strength of

talent and the strength of the educational systems across

our regions. So, can you talk a little bit about that?

MR. MONE: Happy to do it. You know, you’ve heard the

words transformational, unprecedented, and things like

that, but the Higher Education Regional Alliance is a very

clear concrete step forward in a way that you don’t

typically see. We have created an entity called the HERA,

Higher Education Regional Alliance, and it has 176,000

secondary education students, 18 academic institutions,

representing 96 percent of the students in the southeastern

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seven Wisconsin counties. We also have partnered with

Higher Expectation of Racine and a partner in Milwaukee,

which is Milwaukee Succeeds. We’ve got the greater

Milwaukee Committee, Metro Milwaukee Association of

Commerce, and Milwaukee Urban League, and a couple of other

organizations involved. They’re really going to help bring

together the Alliance between higher education and

industry. We’ve got three key goals. One goal is

completion; no region in terms of strong economic

development works well without higher education performing

at the higher levels. But nationally, we don’t get enough

students through in four or six-year rates, at a two-year

institution in a two-year rate. We all need improvement

around what we call completion or better graduation rates.

So, we’ve received already nearly a $.5 million grant

for technical support. We competed very effectively

against 45 other regions in the country, and we’re one of

three to receive that type of assistance. So, over the

next several years, we’ll be getting,; that’s just an

initial example, an initial starting point.

We’ve just started working together in a collaborative

way on completion, and we think there will be a lot of

sharing of best practices and a lot of great things that

will happen, as a result of that concentrated effort. Dr.

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Ford and also Dr. Vicky Martin of Milwaukee are at a

technical college, and the president there is co-chairing

that group.

We have another group under which I’ll call the

portal, and the portal is when you think about if you’re in

industry and you want to hire across those 18 academic

institutions, it’s pretty difficult to do that at 18 or for

that matter, anything more than three, four or five,

considering also companies that are large, the A.O. Smiths

of the world and others that would recruit globally. So,

this portal concept is how powerful it will be. Think

think about this, for you as an employer to access

simultaneously all those students, I want to say 176,000,

let me give you an example. UW Milwaukee alone, we put

5,300 people into the workforce every year. Now, go to all

the different academic institutions and think about all

that talent and rather than having to recruit one place for

some of those, you can have one portal. Now, similarly

from a student’s prospective, the portal is very powerful,

because you might be at any one of those universities only

able to interview with and find employment at those

companies that your campus has a relationship with. But,

this portal works both ways, so that’s a really powerful

concept.

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The third area I should mention on that portal is Dr.

Mike Lovell, as well as Dr. Bryan Albrecht, are the co-

chairs of that group, so we’ve got the right people at the

table.

We also have a third goal group and that goal group is

about innovative programs. So, one of the challenges that

we have right now is that a lot of tech college students

can transfer very easily to the four-year degree programs

in the state if they want to go on and continue to be an

engineer. We happened to work something out earlier with

UW Parkside, Gateway Technical College, and UW Milwaukee,

where we have a technology pathway partnership. But, if we

can scale that concept and have stronger articulation

agreements and also accelerated programs for the talent

that’s needed, that’s going to be huge. So, there are a

lot of examples, whether it’s in healthcare, whether it’s

in engineering, computer science, business; a lot of other

areas where we can really accelerate that. So, the co-

chairs of that are also represented with the technical

college, with Waukesha County Technical College, and

Milwaukee School of Engineering.

So, this Higher Education Regional Alliance, HERA is a

two-year, four-year, public, private, and for us something

we’ve not ever done before. We’ve had the interest, but

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boy, we’ve got the definite enthusiasm for it now.

DR. FORD: So, Mark, what would you say would be the

secret ingredient to bringing everybody together, because

in higher education, sometimes we’re natural competitors

not natural collaborators.

MR. MONE: Yeah, you know, what’s interesting is we

have been and I think it’s fair to say, we have been

swirling around this and we’ve had some isolated

partnerships. I want to say isolated, they’re good,

they’re great partnerships in their value, but to take it

to scale, I think the tipping point for us has been, we

have no choice now with Foxconn. I mean that has really

been the convener, if you will, even if Foxconn isn’t at

the table, their presence is there. So, I’m sure you

experience this no matter where you are in the midwest.

We’ve got this incredible talent shortage, and we’ve been

trying to meet this and now, it’s really exacerbated and so

to create that talent, I find reaching back to K12, looking

at this in a powerful way, it really is that, and the neat

thing about it too is which I think everybody really

appreciates is how collaborative we’ve all become and what

great leadership we have across our institutions.

DR. FORD: Great, so, Byran, Gateway Technology

College and the Wisconsin technical system, you have been

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national leaders in partnering with industry to prepare the

workforce of the future. Can you share with our audience

today some of the workforce development initiatives that

you have developed with Foxconn and talk a little bit more

about your co-location at their facility in Racine and then

your build out at the iMET Center.

MR. ALBRECHT: I’d be happy to. This should take

probably the rest of our time here today.

DR. FORD: You don’t have that much.

MR. ALBRECHT: So, I might just start out by kind of

peeling back a little bit the fortunate relationship we

have with our local industries, which doesn’t happen

without other partnerships. So, the HERA group, working

with the universities is really critical for our long-term

success, reaching down into our K-12 programs. We served

over 7,000 high school students with dual credit programs.

That’s essential to build a pipeline, whether it’s for the

two-year or the four-year post-secondary opportunity. With

Jenny’s support and economic development; Jenny’s office is

located on our campus, that really helps to really drive

the decision-making around where do we spend our time and

make our investments in trying to help companies begin to

think about our region as a great place to do their work.

And, Jonathan’s leadership at the county has given us

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the opportunity, whether it’s the funding mechanisms or

just helping to work through some of the policies between

municipalities, because we serve so many different people.

Having said all of that, I did mention that we were

founded in 1911, so we have 160 corporate training

partnerships that we’re nurturing right now. And, I say

nurturing because it’s a continuous evolution; things

change, leadership changes, whether it’s at the schools or

at the business partnerships, you have to work at that

every day and some of them are fairly mature, so we’ve got

buildings named after some of our great corporate partners.

The SC Johnson Integrated Manufacturing Center, Snap-On

Tools, we trained not only locally, but nationally and

internationally for Snap-On Tools. You know, you could go

to the InSinkErator, Twin Disc, Modine, Amazon; they’re all

great partners with the college, and they all have unique

aspects of how that relationship was developed. Many times

it was because they were trying to identify where they can

attract talent and how they can make sure that we have

skill sets that are going to be assimilated quickly into

their manufacturing facility, which is kind of the core

mission of Gateway, so that’s an easy lift for us.

Foxconn was a little different; it was a little bit

more around how do can sustain the whole idea of creating

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an ecosystem of not only talent, but also innovation. Now,

we’re fortunate to be living in a community that has really

been built around innovation, so Case Tractors’ world

headquarters is there and I mentioned some of the others,

SC Johnson, Twin Disc, and InSinkErator. So, there are a

lot of innovative practices that are going on. Maybe they

weren’t necessarily always the driving force of what we

need to start thinking about. So, entrepreneurship, smart

cities, how do we take the best ideas from the brightest

students in the region and really make those into practical

applications for our communities?

And, I think the Foxconn initiative has really not

only elevated that level of discussion with this, but

changed the way that we think about the programming we

offer. Jonathan led a team, along with Jenny to visit

Osaka, Japan and I had the good fortune to go along. With

100 years of history in manufacturing, I thought we were

pretty good until I saw how manufacturing is done in Osaka,

Japan. We needed to ramp up very quickly, so what we did

was put together four new training partnership programs

with Foxconn, including IIOT, the Industrial Internet of

Things. We’ll be the first college in America to offer

ZDT, Zero Down-Time Technology and Robotics. I probably

wouldn’t have even known what that was six months ago, and

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now we’re building a new facility to support that. The

Industrial Dating and Analytics Program, very unique; it

integrates our IT program with our manufacturing program.

We may have gotten there at some point, but it might have

taken 10 more years, and now we’re going to do it in 10

months.

So, supply chain management; I don’t know if it was

mentioned earlier today about the massive infrastructure

for the supply chain for our region. We need new

specialized skills in those areas, both at the two-year and

at the four-year level. And, then cyber security, which

I’m sure everyone talks about, how we protect our IT

systems, but how do we protect it in a world that is now

globally competitive in our backyards. So, it’s IT, cyber

security in manufacturing, cyber security in healthcare

which changes the way we think about the types of programs

we offer. So, now instead of separate IT disciplines,

we’re going to get a degree in, you know, software

management, it’s integrated in the manufacturing centers so

students will be working hand and glove with our computer-

integrated manufacturing systems. So, that led to a

different prospective and maybe a different vantage point

of where we think we need to position our campus to get our

students ready.

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We still offer all of the terrific programs to support

all those 160 other partnerships. They’re essential to our

long-term stability within our community, but we’re trying

to project out at a much more rapid pace as to what we need

5 years from now or even 10 years from now on how we

position the college to do that. So, working with the

state of Wisconsin and the county and the municipality of

Mount Pleasant, we were able to generate support for

funding to expand our manufacturing centers as I mentioned

earlier to give us about 36,000 square feet of totally

automated manufacturing systems, which will not only I

think revolutionize the programs we offer, but serve as a

model for students that want to go on to four-year

engineering degrees, because we’ll have advanced technology

in their home community.

And, I think sometimes seeing is believing, and maybe

Jonathan and Jenny, if we saw it we believed it, didn’t we?

We walked away from our visit to Osaka, Japan with a

different vantage point of what Foxconn was intending to

do. And, as you mentioned earlier, they’re not only

maintaining that level of commitment, but expanding our

viewpoints at a much greater rate.

I would just conclude by saying that the development

of the downtown center is also one mile from our Racine

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campus, so we’re fortunate to have two campuses located

very close to Foxconn. So, our students and our faculty

are very actively involved in the Smart City Smart Future

competition. We want to be a demonstration campus both at

the iMet Center and at the downtown Racine campus center,

so we can become a smart campus environment, help our

students assimilate into that technology environment, so

that when they become citizens and working in our

community, they’re more accustomed to those types of rapid

changes. So, we’re real excited about what Foxconn has

brought to our business partnerships.

DR. FORD: That’s great, thank you and I can see parts

of Dr. Woo’s visions coming through, in terms of the

Wisconn Valley right here in the midwest. So, Jonathan,

one of the things that everybody’s talking about and we

know this from the OECD report and the presentations today

that talent and workforce development are key, and it’s

probably one of the things that keep many folks up at

night. So, Racine County recently received funding from

the state of Wisconsin to support workforce development.

So, can you talk a little bit about your priorities as

County Executive and the partnerships that you are forming

and sustaining in order to meet the increasing demands for

talent across all industries in Racine County?

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MR. DELEGRAVE: Sure, great question. We really

started I think in really three buckets. One is, you know,

we want to make sure as a county that our residents,

especially those where the barriers to employment in the

past, have those opportunities. So, whether it’s

transportation or childcare or a single female head of

household who has barriers to employment, we want to make

sure that those individuals have that opportunity. And,

we’ve shown some great success in the last year, the city

of Racine’s unemployment rate has dropped comparatively

speaking to other cities in the state of Wisconsin by quite

a margin. So, we are making inroads there. When I got

elected, we had an ambitious goal to have the city of

Racine’s unemployment rate match the state’s, and we

drilled down the data and it was at first 900 jobs, and now

we’re down to about 300 plus jobs or so. So, we want to

make sure that we hit that 300 and accomplish that goal.

Second, is we have to do a better job in Racine

County, but I guess really in detail what keeps me up at

night is we’re aligning services, but we’re not having a

duplication of workforce development initiatives. So,

we’re taking some of that fast forward money from the state

of Wisconsin, which is about a little bit over $2.5

million, or a little under $2.5 million to make sure we’re

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in alignment so our existing businesses have a workforce

and not worry that we’re creating that workforce demand

from businesses that demand our workforce, so individuals

will have opportunities as I stated.

And, then third is the talent recruitment aspect to

make sure that this is a success, we have to draw people to

southeastern Wisconsin, and UW Milwaukee, and Parkside, and

Gateway, and we need to draw people to southeastern

Wisconsin for employment purposes. And, and that’s not

just for individuals to work at Foxconn, but it’s also for

individuals who have a husband or a wife who’s going along

on the trek; what are available, what do each of our school

districts have to offer, what type of healthcare system is

available in Racine County. So, we need to make sure we’re

marketing Racine County for families that we want to

hopefully relocate to southeastern Wisconsin and Racine

County.

And, we’re going to partner hopefully with Manpower on

that, and we know what our county is good at and what we

help with, and obviously the county getting into the town,

and recruitment is something that’s new to us, and we want

to make sure our partners like Manpower can help us with

that, and we’ll have that expertise.

So, really to sum it up, it’s really three things.

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It’s one, making sure those who have barriers to employment

be given an opportunity, two, it’s making sure our existing

businesses have a Racine County ready workforce, and three,

is that talent recruitment that I mentioned and bringing

people to southeastern Wisconsin, but more importantly

bringing them to Racine County.

DR. FORD: So, Jonathan, one of the things you

mentioned also and I know that one of your priorities is to

work across the municipalities in Racine County and beyond.

It’s not just in Racine County. So, talk about really how

that’s going and what advice you would give to folks,

because again, sometimes it’s not as easy to work across

those geographic boundaries, because we like things the way

we like them in our area.

MR. DELGRAVE: We do, and so that’s for sure. As

County Executive, you’ll talk to, and other County

Executives will tell you, we have 17 municipalities in

Racine County and as County Executive, each of them are

like your kids, right? They all have their strengths and

they all have their weaknesses and you want to be able to

improve on the strengths and obviously make the weaknesses

into strengths. So, but Foxconn was a catalyst to bringing

everybody in alignment in Racine County, and as I’ve

mentioned, we’ve had so much success with our

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municipalities, whether it’s infrastructure and keeping the

cost of water down, or whether it’s creating an environment

where I think you’ve heard this term where business is

open; truly business opportunities are open in Racine

County. But, we also want to stress to our municipalities,

and to our existing businesses that, you know, if you want

opportunity, you also have to be proactive. You just can’t

sit there and say, well what is Foxconn going to bring me,

or what is the County going to do for my municipality. So,

what we want to do is encourage; look, if you have a

housing development, work with the Racine County or work

with Foxconn, develop partnerships. And, we got a number

of municipalities starting to do that and offer ideas and

facts and plans to partner with Foxconn. So, really

alignment of our municipalities is key, and I think we’re

there. I think everybody’s on the same page trying to make

this economic development opportunity work for the greater

good, which is taking a little bit of time, but like I

said, we’re there. And, then encouraging and fostering

innovation from our municipalities, two in particular,

Foxconn and Racine County, so they can have that diverse

community that they want in the future.

DR. FORD: Okay. So, one the things that Dr. Woo

talked about was supply chain, and we know that Foxconn is

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very interested in bringing that supply chain here. So,

could all of you talk a little bit about the impact of this

supply chain and our readiness? And, I believe it’s going

to take the mega region to meet their needs to be able to

supply what they need and their suppliers all the way down.

So, can you talk a little bit about that for everybody?

MR. ALBRECHT: I could maybe start. I think there are

so many moving components to it that it’s difficult to say

here is the list of suppliers that are going to be needed

since it changes every day. And, I think our challenge is

to prepare our organizations internally first. So, when

Foxconn first announced to everybody, at least at Gateway

we got advanced manufacturing looking through. It’s a lot

of time and attention going into robotics and automation,

and in reality, there’s so many other programs that have

already benefitted from Foxconn, from our HR departments to

our IT departments, and our healthcare departments. So, it

took a while to build the internal awareness of how an

ecosystem changes an organization. And, then to take that

outside of Gateway and start thinking about preparation

for, not only the partners that we have, but other new

partners coming to the area as well. What type of specific

training needs you might have, or access to resources and

grant programs for training; so, we’ve been spending an

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enormous amount of time just welcoming new people to our

communities, giving tours of the facilities, making sure

they understand all of the resources that are available. I

think they call it matchmaking events on campus, where

literally hundreds of people come out to these matchmaking

events to really see where they might fit within this

larger entity around supply chain, not only the

matchmaking, but then how do you build a relationship with

some of the people internally at Foxconn.

So, we’ve helped facilitate presentations to our

school teachers, whether it’s K-12 or postsecondary

awareness, tours of the facility, linking industry to how

they can meet the right people at Foxconn to get involved

in supply chain management, to identifying specific

training programs that could assist them in building out a

new capacity to support Foxconn and others.

And, so that’s been a really unique aspect I think

from our vantage point of helping develop a supply chain

infrastructure, not just a supply chain, you know, but also

a purchasing arrangement.

DR. FORD: Mark?

MR. MONE: I’d just add, you know, picking up on the

theme of kind of from the talent to the supply chain, you

know, the direct effect of Foxconn is anticipated to be

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anywhere from 10,000 to 13,000 jobs, initially. But the

supply chain and the suppliers for them in terms of the

larger context, it may be 25,000 to 35,000 jobs. We’ll

hear later today about some of the larger. So, if you

think about that as one of the major components and just an

example of the power of that’s happening in this region is

in a tech sector. And, virtually every company sees itself

as a tech sector in some way, whether in retail, so Kohl’s

with its headquarters there really sees itself as having a

lot of tech-related jobs. Some of the healthcare

organizations really see manufacturing, of course, and

others.

And, so, what we’ve helped create in the region and I

don’t know, I think it may well have happened without

Foxconn, but it certainly has created a greater appetite

for the tech sector is where 20 firms have come together,

most of them leading area firms, come together to create a

tech hub and one of the big anchors of that will be what we

call the Data Science Institute, which has as its partners,

Northwestern Mutual has really stepped up and put between,

at this point, a commitment of about $15 million, UW

Milwaukee and Marquette have put in another $12 to $12.5

million each. So, we’ve got about a $40 million initiative

that will be educating talent across the region for all the

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tech-related types of jobs. So, again if you think about

the region and supply chain that’s needed, the talent is

the necessity, as well as an enabler for future growth.

And, again if you come back to what we’ve got with a lot of

students in that region around areas Bryan and others have

mentioned, advanced manufacturing, cyber security,

artificial actionable intelligence, some are calling it; a

number of different areas in the ISIT world are very much

enabled in the supply team mode of talent.

DR. FORD: Jonathan?

MR. DELGRAVE: Well, let me just add that, you know,

and I think what Dr. Woo touched on is if this were a

basketball game, the national anthem would have just gotten

over with. We have a lot to do, but what we are going to

see the hugest ripple effect is through the supply chain,

and I think our partners from Spartanburg, South Carolina

are here and we’ve talked. What can we prepare for, and,

you know, the number one theme that we’ve taken away is

whatever you’re planning it’s not big enough. It’s going

to be much, much bigger and the supply chain issue has a

lot to do with that. I would just add that, you know, at

Oshkosh Corporation right now in the state of Wisconsin is

really taking advantage of this. They’ve significantly

grown over the last year, and so, with all that being said,

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you know, and roughly about 64 counties have already

directly been impacted in the state of Wisconsin because of

Foxconn; so, we know that the supply chain ripple effect is

just starting, and it may not cross for 5, or 10, or 15

years as Dr. Woo said, but we need to be ready for that.

MR. ALBRECHT: I might just add one last comment on

that. You know, I’ve been kind of watching cyclical

changes within the college as a result of the Foxconn

announcements, so you could take any occupation, but let me

give you two examples. Diesel technology; you want to make

$80,000 per year, become a diesel tech you could do it in

about 12 to 18 months. We had one really strong program,

but in the last six months now we have three. And, each

one of them is full. We’re running six days a week in

diesel tech.

So, as you watch the changes take place, it’s a

massive build out. There’s a lot of need for heavy

equipment operators and diesel technicians. That’s a key

element of our success. Welding; we’ve always talked about

a shortage of welders. Welding is up to seven days a week

at Gateway, three shifts a day. So, we’re seeing these

changes taking place, not only with new technologies like

artificial intelligence or an industrial internet of

things, but with existing core skills that are really not

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just for Foxconn, but for all of those supply chain

companies in order to be able to get the work to do that.

So, if Oshkosh Truck is going to need diesel techs, we’d

better start preparing. So, there’s a ripple effect

through the entire, you know, educational and training

arena.

DR. FORD: So, it’s key to keep an eye on all the

moving parts.

MR. ALBRECHT: Right.

DR. FORD: With the Foxconn selection of southeast

Wisconsin, but also the other industries that we’re working

with. So, I have another question for all of you. So,

what do you need from the mega region, that’s folks in

here, to be successful? What do you need from this mega

region to be successful?

MS. TRICK: I’ll go first. I’m always hungry for new

ideas. I mean that’s the thing. I really have appreciated

the relationship that has been formed between Spartanburg

and Racine County, as well as Reno and just people that

come into our space that understand the challenges and the

opportunities that we’re facing, but tell us, try this,

this worked for us. It worked or it didn’t. And, so I’m

really interested in new ideas so that we can rise to the

occasion and really have success, not only in Racine

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County, but the state and the region, so we all succeed.

But with everything in economic development and anybody

that’s in that space knows this, I can’t do this alone.

These guys can’t do it alone. We really need people to

rally around us to tell us what are the best practices that

have worked elsewhere so that we can follow that same

course.

DR. FORD: Great, so being open to new ideas and

because we don’t have all the answers and certainly at

times like this, we really do need to lead through

partnerships, okay. Mark?

MR. MONE: I’d offer two things that I think are going

to be important and it’s not just for what we need, but

basically wherever you are. One is the awareness and

engagement with the providers of talent and it’s got to be

a two-way street. We need to think differently. We need

openness. It’s got to come from leadership at the top and

so many of you represent so many important parts of your

organizations that can help both higher education and

business to create those stronger linkages that allow both

of us to thrive. And then of course, the second one and

this is my plea in any setting, send us students, send us

that talent that is going to be the talent of the future.

What we know is that higher education in the

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traditional model in terms of two-year, four-year, masters

degree; that’s going to continue to be relevant, but

increasingly relevant is the need for the badging or

stackable certificates, the types of things where we talk

about skills needed when and where really in a six-week

module, twelve-week module; things that are much more

portable. And, that type of linkage comes about from

closer working relationships and students that are needed,

not just the traditional 18 to 25-year-old, but really in

the workplace today. We have so many more programs in

organizations, and I know all of us do in terms of the

types of needs. So, you have to engage and be open to that

but also to be proactive. And, I can tell you that HERA is

a great mechanism for bringing a portal to you to be able

to bring those types of educational capabilities forward.

MR. ALBRECHT: I might just add we could use a little

more strength in our reciprocity agreements between

Illinois and Wisconsin as it relates to educational

pathways. We have great reciprocity with the College of

Lake County, but that’s really the strongest one we have,

and it’s not going to attract enough students to go back

and forth. If we should have some way to figure out, you

know, some sort of cost break even analysis, where students

aren’t paying out-of-state tuition to go to Wisconsin and

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Illinois, and then we could begin to think regionally and

not limit ourselves to what the current practices are

because once you cross the interstate border, it costs you

more to go to school. We want to try to help support

students as we can.

MR. DELAGRAVE: I have two things, one is for advocacy

for Foxconn and what Foxconn can bring to our region. I

think Dr. Woo touched on it a little bit when he was

talking about, you know, there is some adversity or some

negativity around that, so advocacy would be huge for our

partners around the region. And two, just generally, and I

mentioned it a little bit before is that there is not a

better time, whether it’s housing or development or

transportation or other quality of life issues to approach

Foxconn, or the colony, or our Chamber of Commerce, or

Racine County Development Economic Corporation for ideas

and development and just making our community better.

There’s no better time to do that, and I think I am

speaking for the county and I think I can speak for Foxconn

as we’re chomping at the bit for partnerships and ideas.

DR. FORD: That’s great. Well, I know you have ready

partners here at the Summit and certainly with the

Alliance. So, let’s talk a little bit about what keeps you

up at night in terms of how fast the economic development

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is changing across our region. So, what keeps you up at

night?

MR. ALBRECHT: I think for us right now, because it’s

such a high growth opportunity, it’s first of all, finding

faculty to become engaged in this dialog and to recruit the

right faculty to be able to deliver so that’s a key

element.

I think also taking a look at strategic investments

because we’re still balancing 65 degree programs, 23,000

students, and so we can’t put all our eggs in one basket.

You’ve got to balance that diversification of the

investments and then attract new investments so that we can

position our college and our community for potential

opportunities that we didn’t even know existed. But, at

this point mostly for me, it’s the understanding of the

cultural shift in our community. So, we’re teaching

Chinese classes at Gateway, which I probably would have

never guessed we were going to be doing. We’re really

advancing the way that our students think about their

global responsibilities. So, we have 16 international

partnerships right now and our newest one will be in China

as well. So, we think differently about the skill sets

that are necessary, but also about the social impact that

an organization the size of Foxconn will continue to have

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on the student population that we serve.

DR. FORD: Mark?

MR. MONE: I’d say, you know, in terms of, you know,

in higher education, so resources and I mean what keeps

most of us up at night, right? So, and I think that Bryan

spoke to it well. So, there is a mismatch in terms of how

much demand there is for a lot of programs within the

resources to really build those in the time that it takes.

And, so that’s one issue, and I think the second one is

around trust. To build these partnerships, you can’t just

put things together and have it work. There is a great

demand for that and that’s a real motivator for so many

people, but you still have some of the historic

impediments. You know, I’ve been at UWM for 30 years, and

there are a lot of partners, educationally and business-

wise, where there are a lot of established relationships;

to change those, it doesn’t happen overnight. We’re very

fortunate to have a lot of good things in place, but we can

only move at that speed.

And so, building that is something where I think

that’s the challenge because there is that, again, public,

private, two-year, four-year, a lot of history there and a

lot of perceived competition.

But, we have to look at the region much differently

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and I think that is what is so neat about the Alliance

here, where it’s not just Milwaukee versus Racine, versus

Kenosha, versus Waukesha. It’s not Milwaukee versus

Chicago; but, when you stand back and look at this

globally, we’re going to be so much stronger, bringing a

lot of forces to bear on this. We can really benefit, and

I think that’s what this panel has a great shout out to

say, there’s a lot of opportunity for Illinois, just like

when you look at this in a collaborative manner. But,

again it is history and overcoming, you know, some of the

trust issues that can be in place.

MS. TRICK: I think two things probably keep me up at

night, managing expectations is the first one. Not only

what we want to accomplish and what the demands are from an

external prospective, be it our municipalities of Foxconn,

or our other companies, because it’s again to the economic

development, people in the room; we don’t have the luxury

of one prospect or one company that we’re serving. But,

sometimes when there’s so much concentrated effort toward

one company, other companies and municipalities begin to

think that you’ve forgotten them, and that’s not true, but

it’s the perception versus reality situation. So, we

continue to balance that, and I’m very thankful we have a

very engaged staff that’s able to continue to do that work.

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The second thing I think and it’s probably somewhat

related that keeps me up at night, it’s just

communications. Again, we know communications for the

media is one, but the communications internally to our

municipalities to continue to keep our elected and our

chief operating officers apprised of the facts of what is

going on with Foxconn, versus they finishing the story

without factual information. I think that’s the most

challenging, and no matter how frequent the communications

are provided or in what mediums, it’s still never quite

enough, but it’s just constantly talking with people. And,

fortunately, with so many of them, we’ve had multiple year

relationships with them, so, there is that trust factor

that’s already developed, but it’s just trying to maintain

those communications so that people all remain informed at

the same time, and at the level and interest they want to

have.

DR. FORD: Okay. Well, those are great responses and

what I really --

MR. DELAGRAVE: Sure, well, if the question was what

allows me to sleep at night; I could give a lot short

answer. But, what I would say is what the number one most

affordable place to live in the world; it’s Wisconsin and

Racine County. We have rising property values, which are

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the good news; but, the bad news is we have rising property

values. We have transportation issues. We’re seeing great

new healthcare possibilities, but we want to make sure that

that’s managed right, and at the end of the day, after all

this is done, I hope that we are still the most affordable

place to live, or one of the most affordable places to live

in the world.

So, in the short term we’ve got to get a grasp on our

housing. We had a shortage of housing before, and now

that’s just been accelerated. So, just trying to be

proactive, we had a housing summit in Racine County just

recently, and we talked about ways to be able to manage

that issue, so housing worked for us, talent recruitment,

transportation, and all the other things probably that I

don’t have enough time to talk about, all that time to

answer, but those are the things.

DR. FORD: Those are great responses and what I really

appreciate is I can tell you’re really thinking about this

when you wake up, because you’re also processing on how you

might solve it. So, thanks for that.

So, now what we’d like to do is take just a few

minutes to open it up for your questions and Jeremiah and

others have the microphones. So, if you have a question,

please feel free to ask, and then I have one final question

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for them at the end, so questions? Let’s start right here.

Q So, I think what we’re all hearing, you know, on

the workforce training and so forth is scales are so much

more important than the job creation itself and what we’re

training for now is not going to be the job in five years.

So, how do you answer that question, scales versus jobs?

Are you looking at that more holistically, or is that

something that is really a focus, skills versus the jobs?

MR. ALBRECHT: That’s a really great question. It’s

kind of sort of the ying and yang, right? You need both,

you need both for sure. We’re certainly helping students

think about careers and career paths. We’re part of the

National Pathway initiative. We have career pathways,

credit for prior learning, due enrollment for every degree

program we have, but what I’ll suggest in this particular

case is that the short-term embedded credentials are

essential to long-term career success.

So, I’ve just introduced Roger Tadajewski from the

National Coalition of Certification Centers who is with us.

We’re really proud that we have 65 Associate Degrees, 100

one-year diploma programs; and we have 200 industry

certifications.

So, we try to align our industry expectations with the

academic experience the student is going to get, so even if

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you don’t stay with us for a year or two and get a

credential that says you’ve obtained a degree, you will at

least have a series of occupational certifications which

will get you a start in the workforce. And, then we will

give credit for that so that you can continue, whether your

company is going to support you, or whether you’re going to

come back later for a life change. We want to add value

through the entire journey, so short term embedded

certifications are a part of that focus that we have in

ensuring that whatever pathway an adult or young person

takes, they are at least going to have the skills that have

been measured against industry credentials.

DR. FORD: Mark, do you want to add to that?

MR. MONE: I would add that one important component I

think is that we have to also think about lifelong learners

and lifelong learning skills, so things such as social

skills, emotional intelligence, writing, communication,

negotiation, things that really instill with individuals

some of the critical aspects needed. I’m on a number of

different boards, National Presidents, Chancellors of

Universities, and what we’re seeing is that tech companies

in particular are really looking for that skill set. Go to

Silicon Valley, go to Boston, go to Route 128 Austin; and

they find that the shelf life of a lot of technology

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professionals is a year, two, or three, but the ability and

the appetite, if you will, and individuals that can think

broader and in addition, when a lot of companies and their

CEOs asked for a lot of tech talent, they say it’s not just

the tech talent, we need people who can play in the sandbox

together. Can you work on that? And, that really becomes

increasingly important.

So, those I think are critical, and I think that’s

where our partnership with Manpower has been great to look

at that and that’s what they see in terms of the world of

work as something that I think is important. And, tech

colleges I know in Wisconsin have been really good at

building that into their curriculum, as well what you get

with most of your four-year campuses. We need to elevate

that and make it more explicit as a brand, and strengthen

that more.

MS. FORD: Question right here?

Q Yeah, first of all I’m very grateful that you

talked about lifelong learning, because anybody who has

ever heard me talk, they know I talk about that all of the

time. And, what I often do though is I like to take a look

at lifelong learning beginning at a very young age. What

we’ve been focusing our attention on right now is post-

secondary education, right, and training. And, I love what

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you’re doing with the Gateway Technical University.

But you mentioned something before about the need for

diesel mechanics and the need welders. How many fourth

graders are being exposed to welding and diesel mechanics

because that’s where it starts, right?

We usually just ignore that. Back in the old days,

back when I was a kid, back in my day, right, we used to

have vocational education. We were exposed to all of these

things, and then we could make a decision as to which life

path we wanted to take. Well right now that’s kind of,

we’re not doing that anymore, as much as we probably

should, so what are your thoughts on actually exposing

young children in the pre-K through 12, you know, grades

for all the opportunities to go on into the future, because

I agree with you. We don’t know what the jobs are going to

be in 5 years, 10 years, and 15 years from now, what we’re

going to need. We don’t know what kind of skills they’re

going to need.

MR. ALBRECHT: Yeah, I think it’s a great question and

thank you for bringing it up. So, as a result of the

Foxconn initiative, we have as we mentioned had to go

through some really strategic thinking. We now invest in

eight elementary schools. We start our technology programs

in second grade. So, we have eight kid’s labs throughout

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our district. We’ll add more this next year. This year

we’re also adding eight new middle school robotics

programs. We already have 30 robotics programs at the

middle school. We align our high schools, like I mentioned

dual credit, 7,148 high school kids getting dual credit at

no cost, saving parents $2.5 million in tuition and fees.

So, we provide free teacher professional development, at

any grade level, preschool, first grade, third grade,

fourth grade; we do that all summer long. We have a mobile

training unit that we will take out to a school, bring the

equipment out so they don’t have to worry about making the

investments.

We co-run three high schools right now, including the

R.E.A.L School, R.E.A.L. High School in Racine, the

Lakeview Academy in Kenosha, and the Burlington Academy in

another community that we serve.

We support the alternative high school on our campus

for a direct dual enrollment. At the college, there’s a

list of things that we’re doing, but it’s still not enough,

right? And, it’s still parent awareness and parent

orientation that’s needed. We spent a lot of time giving

tours and open houses, and helping students and parents at

all grade levels understand that there is a resource in

their community, and it’s been there for a very long time,

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but it’s changed dramatically over the last 10 years or so,

and we welcome them to our campuses.

DR. FORD: Mark?

MR. MONE: I’d give an example, and I want to

reinforce what Bryan said. We can’t do enough of this. We

have a partnership in Milwaukee, called MQ. It’s MPSMATC,

Milwaukee at our technology college and UWM, the three Ms,

working in an exponential manner with 140,000 kids at the

K-12 level, and then at the two-year technical college at

UWM. And, we have a number of different things in place to

five different goals groups that have been working for the

last four years, involving parents getting kids to come to

highs schools, and, you know, from younger ages, get them

exposed to the types of things that they are going to be

learning later.

We have through these programs, students have come in

and they spent time at our school, Freshwater Science

Elementary School, and we’ve got this graduate school, and

we’ll be having undergraduate programs; but we want to have

coloring books, because when they spend time on a research

vessel, they don’t want to leave that boat. They want to

really, you know, get excited about the career

possibilities. But, having students from those schools

come on the college campuses and spend time with employers,

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it does a couple of things, it exposes them to life in

college, and, you know, earlier we had a keynote today that

talked about the equity lens, and that’s really what

undergirds a lot of the work that we’re doing

collaboratively to really try to keep opportunities

available and open. And, we because of the talent needs,

we really have to look at every possible student for the

future. So, those are the types of things that we want to

reinforce and get as much exposure as we can at early ages.

MR. DELAGRAVE: I would just add one thing. The

county is only as good as its non-profits, its faith-based

entities, and our school districts. We partner with Racine

County’s Higher Expectations. We take a focus as we’ve

piloted a program for 4-K kindergarten. We want to make

sure third grade reading and eighth grade out through

attainment, ninth graders have minimum credits, and

everybody has a plan when they graduate from high school

for a sustainable job, or for a higher educational

opportunity and it’s important for us to do that.

We’ve helped shape our high school academies in our

larger school district for the last few years, so we take a

great interest in making sure that exposure to technical

careers is a priority.

MS. TRICK: I’m going to have to add to this one too

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because of the importance of our reaching and developing

partnerships with K-12 is more important than ever, just as

we’re reaching out and having partnerships with business

and industry and so, thank you for your question.

And, in southeast Wisconsin, we are fortunate that

three of our communities, actually four have the strive

together relationships; Higher Expectations in Racine

County, Building our Future in Kenosha County, and

Milwaukee Succeeds in Milwaukee County. And, so those

efforts have really helped to align business and industry,

government, K-12, and higher education, so really great

work is happening in that space.

MS. FORD: So, we’re going to go to, we have one way

back here and then I’ll get yours and then we’ll close up.

I have one more question for them I hope.

Q So, this is a regional summit. I want to ask a

question about the Regional Education Alliance. Have you

reached out to educational partners in let’s say northeast,

Illinois and if you have, how has that been going? If you

have not, what’s the plan to do so?

MS. FORD: Mark?

MR. MONE: Yeah, I’ll start with that and I know Bryan

will have some thoughts as well. We’ve had our seventh

meeting together, so we’re getting our legs under us, and

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we want to figure out, first of all, our own goal groups,

figure out how we’re going to operationalize and deliver on

the expectations that we have internally. So, the thinking

in the first year is let’s get this figured out.

We do have linkages. Bryan gave an example of some

with Illinois. We have at least three other regional

groups in Wisconsin right now that are at different levels

of formation of their regional higher education groups with

business meeting those needs, and we’ve basically had

discussions with them, and said let’s figure this out first

ourselves and then bring that together. And, then the next

linkage that makes sense would be with northeastern

Illinois, and to look at both higher education and the

business opportunities that are there. So, we’re not quite

ready for prime time. Bryan, I don’t if you agree or

Jenny?

MR. ALBRECHT: I think you’re absolutely right. I

mean even in Wisconsin, we’re still trying to not take the

ball out of the end zone on the last play of the game, drop

a knee, and then let Aaron Rogers win the game for us. So,

first we got to get our act together, internally. So,

we’re working very closely with all the colleges and

universities, but independently, there are relationships

with many organizations outside of our regions. So, I

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mentioned that, you know, the College of Lake County, we

have great reciprocity and articulation, Harper College, we

have great reciprocity, City Schools of Chicago; we have

great partnerships there. So, we have individual elements

of that happening, but not collectable as a region yet, but

I’m sure that that will be part of our long-term growth

strategy.

MS. TRICK: And, I would just say that the Alliance is

the platform to help make that happen because higher

education is well represented from northwest Indiana, as

well as Illinois, and southwest Wisconsin, so, yes.

MS. FORD: One more question.

Q Yeah, just to Bryan’s point, and to your point on

reaching out to the vocational programs; and, one of the

things that the National Coalition of Certification Centers

is doing is that across the country this same issue resides

across the country. I was in Houston last week, and down

in North Carolina, and they’re having the same

conversations, but what they’re doing is reaching out and

engaging with middle school math teachers. I know last

week we had some teachers, Bryan, from Wisconsin that were

in industry certifications, just as Bryan talked about

getting those industry credentials to students, we’re also

delivering those to middle school math teachers and science

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teachers. So, we have a math teacher that’s going through

precision measurement with Starrett Corporation, sitting

right next to an instructor from diesel or mechatronics,

and getting those relationships, because, why that

important to us is that everybody and anybody that you’re

going to hire, we talked about the next 15 years, they’re

already in the pipeline. So, they are in elementary

school. They’re coming through, so, how do we engage them

and most importantly, how do we engage those math teachers,

science teachers about all the technology, as well on the

other side in working with the universities that are

producing those math teachers and those science teachers

that are coming into the system? So, how do we get that?

MR. ALBRECHT: So, we’re engaged with a little over

400 high school programs, already. We’ve got many more

coming. We run industry certifications about every six

weeks now across the country. So, we can’t get enough, as

the gentleman was saying. We’ve got to keep this going,

because the technology and the needs are there, so that’s

one of the things that we’re working on to help drive that

process. Thank you.

DR. FORD: Okay. So, I’m going to ask a closing

question for you all, and so you’ve talked a lot about the

importance of transformation, about perseverance,

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partnership, collaborations, how institutions of higher

learning are serving as conveners and catalysts and the

importance of life-long learning. And, so what advice

would you give to the folks in our audience today about how

really to either start or sustain these collaborations in

these changing economic development times? So, what’s your

best advice for our partners and colleagues here? Mark,

you go first.

MR. MONE: Minds have changed, one word, two words.

Minds have changed. What I mean by that is I talked about

this a little bit earlier, but let me just develop it a

little bit more. First, it’s about leadership, setting a

direction that we’ve got to look at this very differently

than we have historically. What’s worked in the past is

not going to solve the 100,000 plus talent shortage that

we’re going to see in southeastern Wisconsin. It’s also

not going to address the larger, mega region types of

issues from a leadership prospective. So, that’s one

thing, but then we have to drill down and just talk about

both higher education and business.

How does business hire? What do we look for in terms

of job descriptions, you know, the skill sets that are

required and there needs to be a lot more flexibility. We

need to look at things very creatively, quite a bit

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differently, as we work with employers, and we see some

that are very innovative, moving much quicker.

On the other hand, how colleges, how universities, and

the accrediting bodies in higher education; we’re held

hostage a lot of times. I hope nobody from, certainly some

of the accrediting bodies are here, but this couldn’t be

the headline; but that is something that really does

regulate us to very restrictive ways.

And, so as we work closer with industry and how

industry leaders help accrediting bodies, that’s exactly I

think what’s really needed to move us quicker, so that we

can get the talent to industry where it’s needed. So, it’s

a different way of thinking about this. So, it’s that

mindset change of looking at this very differently and

getting exposure to different ways of approaching issues.

DR. FORD: Great.

MR. ALBRECHT: I’d probably say internal capacity,

make sure that your organization is ready for a rapid pace

change like this. I mentioned we serve 160 corporate

partnerships. That division has done that work for a long

time. To add this size of expectation on them is a lot to

lift, so making sure the entire organization is prepared

and engaged and strengthening those internal

communications.

95

MS. TRICK: I guess I would say build your team, you

know, it’s the folks around us on the stage that are my

team, you know. I need to do a lot more than I did a year

and a half or so ago; and yet, my capacity as an

individual, as an organization has not changed. So, we

have to find those efficiencies, and sometimes those

efficiencies can be realized by expanding your own network

without expanding your immediate team on staff.

So, I would say build your team and it really begins

with relationship building, because I can make a call to

Mark, but if I hadn’t have had this working relationship

with him, he might screen me out. So, it’s having that

relationship --

MR. MONE: Never, never.

MS. TRICK: -- to build your team and beyond your

immediate circle, Mark’s team is just, it’s bigger; his

network is bigger, so my team grows by having that

connection to Mark.

MR. DELAGRAVE: I would just say when Foxconn came

into my vernacular in February of 2017, and one thing that

I am really, really proud of is that, and you can’t often

say this, is the public sector and Racine County Economical

Development Corporation has been ahead of the private

sector throughout this process, and when can you really

96

ever say that. And, the reason why that is because we’ve

developed the partnerships, whether it’s with other

municipalities, the state government has been a great

partner in this, and then obviously our business community;

ahead of the private sector.

So, what I would say is first of all, participatory

leadership, allowing for thought processes, allowing for

entities and individuals to offer solutions, and make them

feel part of the solution and feel part of how the

transformation is working. And, then just continue to

build on that on a day-to-day basis. It’s something we’re

proud of in Racine County and, like I said, we’re lucky for

this transformational opportunity.

MS. O’BRIEN: That’s great, well please join in giving

a big round of applause to my partners and the panelists.

David if you could wave your hand; David leads a group

called the Urban Campus, and all of the Chicago-based

higher education entities are a part of Urban Campus. They

recently completed a study and there is a breakout meeting

following the last panel today.

The Summit concludes at 2:30, and then about 2:45

there will be this meeting, where David can share some of

the information from this report that is just being

released to talk about how we may want to scale the

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information that was obtained in the Chicago area to the

mega region, and then of course, building off of what we’re

hearing in Wisconsin, coming back.

I appreciate that Chancellor Ford did know that the

Alliance is the right platform to bring these groups and

decision makers together, and we are very proud of the very

strong support that we have from Indiana University, and

from Purdue, and the University of Illinois, both Chicago

and Urbana, and the University of Wisconsin, and just so

many, so many schools. In fact, I think we have some of

the Chancellors that are a part of the Alliance Board. If

you could please stand, here in the room, Chancellor Lowe,

Chancellor Keon, Chancellor Ford, yes. So, again if you

have questions in regard to the work that the Alliance is

doing in that space, please be sure to see our board

members, and if your schedule allows please attend this

breakout session with David Baker.

So, next, I’m actually going to be introducing the

Chairman of the Alliance, who will introduce the next

keynote speaker. This is an important conversation because

we’re all aware that our area is a major hub of

manufacturing in the United States. I wanted to briefly

though, again, give my profound thanks to Paul Jones, and

again, for those of you that are aware of the history of

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the Alliance, you’ll know that when the Alliance was first

formed we searched for leadership from the private sector

and immediately Paul Jones stepped up to the plate, as one

of the real influencers in the Milwaukee area with

relationships in the business community, and strong ties

with the public sector.

Paul has been devoted to this effort. We wouldn’t be

here today really without Paul and what he has brought to

the table. So, just in the matter of last few weeks, he’s

been in China, he’s been in Mexico City; he’s literally

still as a retired person as busy as any retired business

person can possibly be, and I am so grateful Paul for all

that you do for this effort. And, I know it’s your real

understanding of how important the mission of the Alliance

is and, you know, your continued support and the time that

you give to this. So, can I ask everyone a round of

applause for Paul Jones?

PAUL JONES: I appreciate that Kelly, but for everyone

here I think she knows I call her my boss for a good

reason. So, and I see Greg, nodding his head.

We are going to change gears just a little bit;

although, maybe not as much as I originally thought because

there’s a lot going on in global trade, trade policies; you

hear the word tarriff a lot more lately, and there’s just a

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lot going on there around the world, and we’re very, very

lucky to have the CEO of Rexnord Corporation. That’s a

company that does business around the world, has

manufacturing, pretty much around the world, they’re

involved in a lot of different things, and I think it will

be interesting to hear what our next speaker has to say.

The reason I said we’re not maybe changing gears quite

as much, because one of the things that Rexnord does is one

of their divisions is Zurn, and if you know Zurn, they make

flush valves for porcelain devices. And, Dr. Woo mentioned

the phrase, taking a leak this morning, so maybe we’re a

little bit more connected there than we had been before.

So, Todd, we’re going to have to figure out how to put some

sort of a medical recording device into our porcelain

devices as we go forward.

With that being said, and hopefully forgotten, it’s

now my pleasure to introduce Todd Adams, the Chief

Executive Officer of Rexnord. He’s been in that role now

for nine years and is just doing a terrific job, running a

global enterprise. Todd?

TODD ADAMS: Good morning. There are a couple of

phrases that I wasn’t expecting to hear this morning, and I

must have missed an interesting session. You know, Paul

and Kelly asked me to come and talk at this thing, and I

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said, well, I’m not sure I can add any value. I mean I

looked at the agenda, and I saw just the terrific panel,

and obviously Foxconn being sort of the name brand and then

sort of the hottest thing in town or in the region. And,

Kelly said, well, just think about it. And, I said, well,

you know, the thing that I can do is offer a perspective

for a company who’s been in the region for a long period of

time, and facing many of the same things that Foxconn is

facing here we face all over the world every day and have

for a very long time. And, so, you know, this is sort of

an alternate prospective of I think some of the things

where Foxconn is sort of bringing to the table and

challenging the region to do, but in reverse. And so,

we’re not unique, but I thought I’d take you through just

some of the realities of what it means to operate a global

business and some of the complexities that we see and how

we work through them.

You know, just to give you a two second Rexnord

commercial. Rexnord today is about, we’ll be over $2

billion this year, 67,000 employees globally, 1,800 people

in the region, so just about 25 percent, or a little bit

more than 25 percent of our employees in the world are in

the region. We do business in over 75 countries, and we’ve

been around for 127 years. We operate what you call a

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diversified industrial. So, we have a bunch of different

businesses that do different things; but there are a lot of

common threads to them. We solve customer’s problems. We

have a business that’s a process in motion control, which

is how the business was founded, and basically making

mechanical components that go into complex systems that

help customers move and produce goods.

As Paul mentioned, we thought we needed to diversify

our business a little bit because of where the world’s

water needs work, and now water conservation is becoming

increasingly important. And, 10 years ago we diversified

into a water management business called Zurn; so

professionally made home products.

The thing that we do really well is we figure how to

create a sustainable competitive advantage and exploit it.

So, you don’t stay in business for 127 years without doing

something right and being the best in the world at it. We

think we do that. And, we do that through something we

call a Rexnord business system, which is sort of a

disciplined operating system. It’s not a computer system.

It’s the language we use internally. It’s how we talk.

It’s everything from how we do strategic planning, to how

we develop people, to ultimately how do we make money for

our shareholders?

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So, a small business based in Milwaukee its entire

life, but it’s taken on many forms. The company has been

bought and sold in public and private and most recently we

went public in 2012, and so this is a little bit of a case

study/story around a regional business that’s been able to

thrive for a long period of time by adapting. And, that’s

really the emphasis I think that I want to sort of give you

some perspective on.

If you read this and let it soak in for a minute, it

doesn’t sound like it’s possible, right? But, it is. And,

I think rather than take you through a strange example that

you wouldn’t be able to recognize, I think it is something

that everyone knows. In 1985, if you wanted to rent a

movie, where did you go; Blockbuster, Blockbuster. So,

Blockbuster went public in 1997, had a terrific run, put

stores everywhere, and they dominated the market. Along

came a little company called Netflix doing very similar

things at the same time. If you remember, they were the

rental guys, right? They saved you a trip, it’s actually

two trips; and, you didn’t get hit with the invariable late

fee, because I was always late, which was a great business

model, but tough. What were they both doing? They were

delivering entertainment to consumers, right, but in very

different ways. Before you had to go to Blockbuster, pick

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out a movie, rent it, bring it home, watch it, bring it

back, hopefully, on time. With Netflix, you just pick out

what you wanted, they sent it to you, and you sent it back

when you were done. That was it.

What happened over the next ten years is an incredible

story, right? Consumers wanted convenience, and Netflix

figured out the easiest way to ship media to people was the

United States Postal Service, right? It saved two trips,

it was lower cost for the consumer, greater convenience,

and it started to build a business, and in 2006, Netflix

started to get into digital media, right? At the time,

2006, Blockbuster was number 366 on the Fortune 500. By

2011, they were out of business. Netflix shipped $13

billion of revenue last year, a recorded $13 billion of

revenue last year, and they shipped to and they have 136

million subscribers. So, in a span of 20 years, what you

saw is a market of consumer technology all coming together

to create a massive change and change what was before an

iconic American company.

So, I only bring that up because this happens every

day across every sector. It’s more obvious when it’s a

consumer-oriented sort of business. You see it, it’s more

visible, but this is the kind of change that’s happening

and only accelerating, not just in the region, but for

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companies like ours that many of you support and help.

Here’s, you know, sort of the way I think; a

perspective of the world. If you look at the last 100 plus

years, on the left, these are all the external things that

have happened to companies, right? You’ve dealt with the

industrial revolution, the great depression, globalization,

the great recession; all these things, political market

reforms, party changes, political views change, right?

And, here we are today, with all those same things, but

faced with a greater degree of globalization. Automation

is becoming increasingly important to survive. As Paul

mentioned trade policy and tariff, right, a brand new thing

that’s back on the radar creating huge disruption right

now. I understand why it’s being done, but I think what

you’re faced with is corporate America having generally

forgotten how to deal with inflation, and what’s happening

is there are massive amounts of inflation flowing through

the various supply chains because of that, and obviously

the fight for talent.

What you have here is you have to have a real

sustainable competitive advantage to compete, survive and

thrive, or else you’re going to go away. Like every day,

every week, every year, there’s going to be things like

this rippling through the world. And, if you’re a company

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that isn’t nimble, isn’t willing to adapt, isn’t flexible;

you’re going to get tripped up by all this. You’re seeing

it now, I mean you’re seeing these tariffs have massive

adverse impact on a lot of people. And, in part it’s

because they haven’t taken the time to step back, think

through what their real competitive advantage is, invest in

it, and also develop a supply chain.

I walked in on the last panel, and I think the first

18 words I heard were supply chain, which is incredibly

important. But, it’s also important to think about it how

to export basis. At Rexnord, there was no way for us to

solely survive serving the United States and the North

American market, and I think that’s true for almost every

company in the region. If you look at where the world has

grown over time, you have to be there, you have to figure

out how to tap into that. And, it’s also an area that’s

going to grow for a greater period of time. If you look at

Europe, if you look at the United States, those are fully

developed economies, the populations are not growing. You

have to be where the populations are growing. It is very

difficult to do it on your own. And, I think the Foxconn

example is perfect, right? They have an incredible amount

of resources, and they want to address the North American

market, but they need help. The same is true for many more

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companies with far fewer resources, who have frankly even a

greater need to continue to survive against global

competition.

So, it’s really an interesting way to think about it,

which is all these things are going to continue to happen,

they will happen at a greater pace, but helping businesses

in the region get out and expand while leveraging the base

they have here, I think is the biggest opportunity that I

see for the region. You know, this is a word problem,

right? If you Google supply chain you’ll see all these

different things, and in the middle of it what you’ll see

is flexibility. And, the reason Foxconn wants to be here

is to be close to their customers. They want to collapse

their lead times. They want to collaborate with people who

can bring the best products to market for the customers in

this market.

If you look at all the other words around it, things

like capacity, core competency, trade policy, low cost,

lead times, capital expenditures; these are all things that

go into the decision and it is a incredibly, complex view,

you know, we do business in 75 countries. In the last 10

years, we’ve consolidated down from probably 10,000

suppliers globally to only 5,000. Why; because the more

you manage a complex supply chain, the more difficult it

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is, the more costly it is, and, so, I think where I see the

biggest need in the region, and where I see the biggest gap

in terms of skill set and capability; we talked about

developing the supply chain in the region for Foxconn. I

think the biggest gap that I see is the talent and

capability to help businesses in the region go out and find

new markets and new customers.

The reality is it is customer and market driven,

right? If you think about some of these tariffs and trade

policies, it would be wonderful if you could rely on one

market and one supply chain to fulfill your customer’s

needs and have a great business. But I’m not sure that’s

the reality of the world today. There’s a great need to

find new markets and new customers, and in order to do that

and do it organically, as I said earlier, is just a very

difficult thing. So, you know, we rely heavily on a supply

chain. We’ve chosen to be outstanding in a few things and

work with partners and many, many others, and find just a

few partners, not too many, and help them to develop and

grow so that they can be part of our business and enjoy the

growth too.

That being said, you know, we also feel like the

region is just a terrific place to run a manufacturing

business. We started in 1891 making leather timing belts;

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yes, leather timing belts, and over time, the company has

grown and diversified into a lot of different industries.

We’ve pared back and really started to focus on processing

motion control. So, this is the movement of goods, through

revenue-earning process and water management. And, if you

look on I guess my left, you’d see we have an aerospace

business in Downers Grove. We just commissioned a $40

million new facility, state of the art manufacturing

facility, digital advanced manufacturing to sort of support

what we see as terrific growth. That being said, we can’t

support Airbus from Downers Grove, right? We’ve got a

sister facility in the UK because lead times, access to

people, engineers communicating real time back and forth.

So, it’s a combination, right? If we want to grow with

Airbus, we can’t solely do it based on the region. We have

to have partners. We have to have people out of the region

to be successful to help the companies in the region grow.

The same is true with Zurn. We acquired Zurn 10 years

ago and it was based in Erie, Pennsylvania, which at one

point was also a terrific place to manufacture. But, over

time the lack of investment, the lack of innovation, the

talent receded, and it became very difficult. So, we chose

to relocate the business to Milwaukee. We’ve got a 150

people that are in Milwaukee now that weren’t 10 years ago

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because of a lack of investment that was done in the region

and the lack of talent. And, right now as I said earlier,

over a quarter of our work force is in the region. We

don’t see that declining any, we see it growing modestly.

But, what we do see is growth of the business being

supported by leveraging external supply chains, both in the

United States, and all over the world.

You know, in the earlier panel they questioned like

what would you do differently, or what do you need help

with? And, you know, I’ll take all the help we can get,

but I’m not sure that the intent of the question was for

me. Supply chain management; everything from understanding

what it is to how to leverage it better, how to develop it,

how to develop people that understand it so that you can

focus on your core competencies. I mean if you think about

our business, some of the mechanical devices we were making

are made out of steel and forgings. Are we really best

suited to be vertically integrated, and run a foundry and

do all of that, or are we better off leveraging a supply

chain that does that? Somebody can be the best in the

world, and who does have better lead times, better quality,

and lower cost.

A quick story; it was 2004 and I had just been to

India, and my dad works with a small civil engineering firm

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in northern Illinois here, and he’s been there for 55

years. And, he was grousing about how difficult it was to

get new business; alright, he works with an eight-man shop,

pretty small. So, I went to India, and I had the fortunate

opportunity to tour the University of Mumbai. And, I

called him, I said, dad, have you ever thought about, you

know, hiring some engineers or at least interns from the

University of Mumbai so that you could work around the

clock? And, this little eight-man shop forged a

relationship with a university in India, and is now able to

do engineering around the clock. They’ve got lead times

inside of anybody else, and they’ve grown three-fold since

2004, and it was only because he’s leveraging a supply

chain, right? He’s leveraging outside resources that he

didn’t have before to do something as good or better than

he can, and as a result of that the business has grown

three-fold in the region.

So, that’s just a small, small example. Those

examples are multiplied by the thousands if you look at all

the companies that are represented in the region. The

second thing that I think as a region we need to do in this

sort of hotbed of manufacturing for the world, right? I

don’t know what the percentage is, but I was surprised when

you told me the amount of manufacturers in business that

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are in the region relative to anywhere else in the world,

and I think that the reality is the world is changing. If

you think about that Netflix example of how you buy

groceries today, it’s going to be different 5 years and 10

years than it is today.

Much is true with our products, right? Our products

we were usually selling to an engineer or a maintenance

technician. If you put this particular Rexnord product in,

it’s going to run forever. You’re going to eliminate

maintenance intervals, and it’s going to be fine. And, in

order to buy it, here’s a book six inches thick covered in

grease and it’s on page 475 in like two font. Try doing

that today. So, what we did was five years ago, we

launched what we call a digital productivity initiative

which was really two-fold, which was to take all the

information that we have, whether it’s drawings, whether

it’s lead times, whether it’s application engineering, and

converted it to digital form, right? Before you had to

pick up the phone, talk to somebody, we converted that to a

digital platform that anyone can access, 24-hours a day,

anywhere in the world.

The second thing we did is we took all of our products

and we’re making them smart. You might have heard the IOT,

internet of things discussion. I heard that a couple of

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times. And, so our products as an example and I think many

products are, typically, the failure mode in an

application, right? If a conveyor breaks that is bottling

beer, right, or moving grain, the cost of downtime is

enormous. But, over 127 years we figured out that these

are the types of conditions, whether it’s vibration,

whether its heat, that causes a failure. So, as the cost

of technology and the cost of sensors have come down, we’ve

embedded sensors into all of our products. So, our

customers can avoid that. The reason we’re doing it is

because you have to, right? In the next 5 or 10 years, and

I’m sure in the Foxconn factory, they’re not going to have

a guy walking around the conveyors that are moving product

all over and touching it to see if it’s warm, right? They

want to be told it’s warm, they want to be told when it’s

going to fail, and they also want to have a maintenance

tech before it happens, because the reliability and uptime

is so important in these continuous operating environments.

And, so the reality is this is going to happen more

and more, right? Everything you need to do in your life or

know happens on the net, and I think increasingly that’s

what’s going to happen in the industrial world. The

consumer world is ahead of the manufacturing world by 10

years, easily, but the curve is coming quick. And, so we

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made the decision to do that, and we’re seeing just

incredible growth because it’s saving our customers money.

And, at the end of the day that’s sort of what, you know,

these private manufacturers are here to do. It’s how to

make your customers more money.

And, then finally I think the prior panel there did a

terrific job of articulating the need for talent, and the

need for talent at all ages. You know, the region has got

so much to offer in Wisconsin in particular, you know,

sometimes is a tough place to attract people. Once they’re

there they never want to leave, because of the Packers and

the Brewers and all that kind of stuff. Is that a sore --

is that a sore subject? It’s a regional crowd, I’m sorry.

But continuing to grow in the region for us, it’s going to

be limited to a degree by the supply of new talent, right?

If you think about the Foxconn discussion this morning,

they’re going to absorb 300 percent of the available

workforce. Every other company in the region is going to

have to figure out how to get the same level of talent at

the same time. And, so I think early career programs are

incredibly important, get to the high schools, get to the

universities. We have 60 to 65 interns, every summer

hiring 10 to 12 full-time, and, you know, it’s incredible

what they can do. The amount of information that they are

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able to absorb and use quickly relative to someone my age

is just incredible. So, you give them real problems and

they start solving them right away.

So, hopefully, this has been a little bit helpful.

I’m far from an expert on regional economic development,

but I think just a little bit of a case study on a business

that’s been in the region for a long period of time, and

what we are doing and what we see as the big opportunities,

gives you a little bit of insight. I have one ask, you

know, what this region could do, could be very similar to

what other countries and regions do. If you go to Taixing,

China it’s loaded with German flags, and the reason is a

regional economic development group in southern Germany

decided to help these German manufacturers get to China.

And, what happened is they all got there, and they’re all

thriving and growing as a result of it because Germany is a

relatively small market, whereas China is a huge market.

And, so if the region could figure out how to create some

resources to help companies in the region get to other

places in the world, it just makes the companies in the

regions stronger and more sustainable over time. Thanks a

lot.

MR. JONES: I was struck by your interesting point

that in your view the number one priority for our region in

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economic development is to go more global, that’s what I’m

hearing.

MR. ADAMS: It’s an opinion.

MR. JONES: Sorry?

MR. ADAMS: It’s an opinion.

MR. JONES: It’s an opinion, of course.

MR. ADAMS: Yes, yes.

MR. JONES: One with which I agree, in fact, but I

wanted to see what specific advice you would have or

recommendations to this audience which is higher education,

economic development, public sector in the region, how

could they better help companies in their region go global?

What specific recommendations do you have for them to do a

better job there?

MR. ADAMS: You know, it’s a tough question, you know,

and I think it starts with one finding companies that have

a desire to do that. There are many companies in the

region that are thriving and doing perfectly well. So, I

think you’ve got to find companies that have a desire to

grow their business and perhaps expand their markets.

Secondly, I think it starts with probably the universities,

to be honest. I mean I think when you look at the resource

capability we have from a university’s perspective in the

region, it’s powerful. And, so companies are typically

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busy serving their current markets and their current

customers. They have an idea that they need to be

someplace, but they’re not quite sure.

I think leveraging the universities to help them

understand where the market opportunities could be, it’s a

great opportunity for students to get engaged, understand a

business and the market and how a supply chain could help

this particular customer, and also how to teach them to be

a little bit more competitive in that region, right? Price

points are different, lead times are different, competitors

are different. So, leveraging the resources at the

universities, working with the companies to find where

opportunities could be would be terrific. And, that would

be the place that I think would be a logical start.

Q Mr. Adams, this is Cindy Tomei from the Illinois

Manufacturers Association and if I remember correctly you

just, and I think you mentioned an expansion in the Downers

Grove area.

MR. ADAMS: That’s right.

Q What are some of the reasons that swayed the

investment to stay in Illinois?

MR. ADAMS: Well, you know, first of all we’ve been

there for 60 plus years. Aerospace Manufacturing requires

a degree of skill that’s not easily moved, and so, you

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know, there was competition but, you know, what weighed the

decision for us was the ability to retain the existing

workforce and build on it in a location where we’ve been,

you know, very successful. You know, we didn’t ask for any

money from the state. We got a little bit of help from

Downers Grove. We felt it was the right thing to do to

stay competitive, right? As part of this factory we’ve

completely automated most of the processes. We’ve kept all

of the same level of employment because we’ve reserved it

for growth. And so, for us it was really about retaining

this terrific workforce that we’ve cultivated and been able

to attract over time.

MR. JONES: Could you coach us a bit on getting smart

about tariffs? I recently had a breakfast with a CEO who

said in his 40 years he had never encountered a tariff cost

in his supply chain, and it manifested itself. Larry

Cudlow is coming to Chicago on Friday to talk about the

President’s trade policy that China is going to be

discussing, I hope, with the U.S. in the G20 meeting at the

end of November, and there’s 144 actions that they’re

supposed to take, they’re going to do 80 of them,

apparently. They may think about the second traunch, they

won’t touch the final 20.

So, how does an American business cope with that

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changing nature? You did say it’s necessary I think in

earlier remarks that, you know, tariffs are going to be

something we have to live with.

MR. ADAMS: Well, I don’t know, I don’t see these

being long term. I think the basis of it was to sort of

create a dynamic where there was a dialog on potential

trade reform. I think that’s probably a good thing. But,

the manner in which we’re doing it, you know, is sort of

open to interpretation. Well, first of all, it’s

incredibly complex, and I would tell you that, you know,

whether it’s Section 232 Tariffs or Section 201 Tariffs,

list one, two and three; it’s changing every day. The

codes that are subject to tariffs are changing every day.

The ability to go lobby exemptions has been frankly more

accommodating that I would have guessed meaning that if

there is a lack of capacity in the U.S. for a given

component or a given commodity, you know, there are some

exemptions.

But, the more interesting thing is the inflation of

the cost increase has started coming from the domestic

supply base faster. The things that are being most

impacted by tariffs, the capacity for most of that, whether

it be a semi-conductor, or steel, or capacity, left the

United States a long time ago. And, so the amount of

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capacity that is left couldn’t possibly serve the domestic

market, couldn’t possibly serve it. So, you had this

instance where the demand went through the roof in the

United States because of trying to modify your supply chain

to source domestically, but the capacity just couldn’t

respond, and so what happened was prices went up

dramatically. And, now what you’re seeing are companies

that are working to find alternate suppliers, not just in

the United States, but elsewhere, route materials

differently in the United States and ask for exemptions.

But, you know, to say it’s a full-time job is probably an

understatement. I mean, you know, we’ve treated it a bit

like a crisis because it is. I mean, you know, as a public

company to simply sit there and say, okay, our costs are

going up 25 percent tomorrow, sorry shareholders, it

doesn’t work. And, I think what you’re seeing is the

reaction to that because as you said, you know, this is a

sort of unprecedented territory, right, both with the

tariffs, the level of the tariffs, and the amount of

inflation that’s coming along with it.

So, be nimble, adapt, it will probably change, so

don’t over think it. I mean I think that’s part of the

reason why you’re not seeing capacity flowing into the

United States, right, because if this changes over time,

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the result of the negotiation with China, you know, then

there will be too much capacity in the United States for

some of these things, so, it’s really a wait and see, but

it’s a very difficult period for the United States

manufacturing companies having to deal with this sort of,

you know, uncertainty, and that’s really what I would call

it.

Q One last question? Thank you.

MR. JONES: Thank you.

MS. O’BRIEN: I had the pleasure to introduce our

Chairman, Paul Jones and next, I’m going to introduce our

Vice-Chairman, Greg Hummel. And like Paul, Greg has been

involved really from the very, very beginning. In fact,

when the OECD report was published, we sat in the

conference room of what was then Bryan Cave and talked

about the need to create the Alliance for Regional

Development. So, Greg is one of the founders of the

Alliance and Shelaura and I are very fortunate to office

out of what is now Bryan Cave Leighton Paisner. They

recently merged with a London firm and have offices all

over the world.

But, I can say for the six years that I have had the

good fortune to office with Greg and there’s a great team,

it’s a wonderful place, and we have so much support. And,

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Greg, again, we really appreciate the opportunity to go

work every day at Bryan Cave Leighton Paisner and to work

so closely with you. So, thank you for all of your support

and if we could get a round of applause please for Greg

Hummel.

GREG HUMMEL: Thank you, Kelly. We’ve been focused on

the midwest and certainly Wisconsin and the rest of the

region. This organization started with a territorial

review, actually the first one that was conducted by the

OECD in the United States, and we’re privileged to have

Karen Maguire from the OECD who flew in yesterday to

address us on the subject of global trends, local actions,

maintaining a competitive mega region.

Karen is no stranger to Chicago. She took her degree

from the University of Chicago, went on to Harvard’s

Kennedy School, then had a stint as an investment banker at

UBS, also spent time with the Urban Institute in

Washington. And, then she pivoted into really important

work at the OECD. As an author she’s written books and

articles on regions and innovation policy, collaborating

across borders, competitive regional clusters, and national

policy approaches.

Today she’s a senior counselor in OECD’s Center for

Entrepreneurship. And, so without further adieu Karen

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welcome to our podium.

KAREN MAGUIRE: Thank you very much for welcoming me

here today and thanks again to the Alliance for Regional

Development and the Federal Reserve Bank of Chicago for

putting together such a great event and for allowing us to

participate with you here today. I just wanted to share a

couple of reflections on some global trends, particularly

for large regions that have a strong metropolitan poll

within them, and a little bit about some considerations

regarding its global positioning, in terms of rankings in

other OECD metro regions and some ideas about the future

work to feed into some of the next discussions we’ll be

having on skills.

You know, the other thing is that being here today is

an opportunity to take back some very exciting examples

that we can share in our OECD work on what’s happening here

in this mega region to help others. So, what is the OECD?

So, the Organization for Economic Cooperation and

Development works with its 36 member countries that are in

green up here, and also engages with 120 overall. And, its

origins were in the Marshall Fund in the reconstruction of

Europe, and today it’s really a global hub for thinking

about different policies for internationally comparable

statistics; if you’ve ever heard somebody say, oh, well we,

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you know, the U.S. X percent of its GDP on healthcare

versus France. It’s probably coming from the OECD. We

provide a lot of evidence-based analysis and we promote

international standards. And, this goes into a wide range

of topics, and so if you’re interested in global trade, you

know, last month’s interim economic outlook, you can look

up and get some of the latest there on education policies

and all sorts of policies.

So, the things that we do with this Center for

Entrepreneurship in regions and cities is really to try and

help provide data internationally comparable data, at the

scale of regions. We also do certain types of reviews.

Now, we’ve done dozens and dozens of what we call these

territorial reviews at different scales national, regional,

some smaller metropolitan scales, and, we also have

networks of practice that we try to use as ways of sharing

knowledge. But the study that was mentioned and I would

not presume to resume it all, it’s 314 pages, but the idea

being that, you know, we heard about these four areas that

were a topic on the study on managing skills, innovation,

partnership, transport logistics and green growth, you

know, we heard about that this morning from the President.

Maybe just to highlight that a lot of what the study

was trying to do was say that there’s already so much here

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that the issue is really building, connecting, and

marketing what is there. And, that you really have a

chance because you’re lucky, I should say, I should say

lucky, and I’m thinking of French, that’s chanceux in

French. But, you’re lucky because there is so much here

and so many other regions don’t have that chance. And, so

it’s really exciting to see all the people that are here

today that are really dedicated to making this happen day

in and day out.

You know, one thing that Kelly was asking about was on

some of the other examples internationally and, you know,

we have a lot of these business and civic leadership

organizations internationally. Here’s, you know, just as a

reminder that there are potentially lots of things that the

Alliance and other actors can do and here’s some of the

actions here. We heard about housing as being an issue

earlier on in a couple of different presentations. Well,

you know, London first is also first in housing there, you

know, because it’s very expensive.

So, you know, these organizations that are thinking

about what is important for its business development, and

how to link in the higher education institutions and I

think, you know, the activities here really fit into this.

And, they bring something that a lot of other actors can

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help with which is really this vision and these catalytic

initiatives and the private sector know-how and the

convening power. And, I think with people here today this

is a testament to the convening power that these kinds of

organizations can have and how they can help overcome in a

sense sometimes the challenges that our public sector

divides create when we’re trying to promote this

development.

You know, one of the other issues that we’ve been

studying since the Chicago study has been how to support

activities across borders. Now, this was an example of a

study that was done around international borders, but I

think here sometimes it can be pretty hard to work just

across state lines. And, you know, one of the things that

is really a quick win, and I think we’ll hear a little bit

more about some of the analyses like in South Carolina, are

trying to understand what are the cluster-related support

for these common competencies across the mega region, how

to prioritize a bit this joint research. And, you know,

these are things that tend in other international examples

to be very effective and very, I would say, relatively easy

to implement.

Where it becomes a little bit harder is on the more

broad-based university collaborations where you have

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sometimes certain very formalized bodies that don’t always

last after certain public sector funding, and so really

these bottom-up private sector initiatives that we’re

seeing here are really an example, because in a lot of

other OECD countries often the private sectors aren’t

stepping up to the degree that they are here. Some of the

challenges and I highlight a little bit about branding

issues on this sort of broader regional scale. How many

people have heard of the Oresund? Okay, how many people

have heard of Copenhagen? Okay. So, this is one of the

things that have come up in a lot of the work that we’ve

been doing on these mega regions and that is that it’s

always sort of a political challenge between the tensions

about how everyone is represented and then how do you get

visibility internationally. And, so I think that is an

important issue that’s something that the adaptors here

today can work on, but it’s true that it’s this common

branding on an international scale, and showing really the

weight of the assets here that is something that

increasingly I think will help with the region’s

development.

Just a few trends, you know, big metropolitan areas

have been really gaining in prominence within the OECD, and

these are countries that are already developed. I’m not

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talking about, you know, developing countries, and what

we’re seeing here is that actually they’re gaining

population in general and they’re gaining in economic

significance, in terms of the share of the national

economies. They have higher rates, increasingly higher

rates of firm creation and innovation. We’re also seeing a

lot of re-urbanization in terms of business locations in

some cases. And, also in addition to these sorts of

suburban science parks, we’re also seeing a bit of a

movement towards more innovation districts. So, this is

sort of a city angle which is very hot right now. And, the

data shows it across the OECD.

You know, we heard Dr. Woo this morning say that size

doesn’t matter, well for some things it does, and one of

them is in terms of productivity statistics, and this is

where you have opportunities without necessarily growing

bigger, but being better connected. And, this is what the

economists like to call conglomeration benefits, but the

fact that you have these better connections within the mega

region are going to help boost those productivity figures.

Now, proximity to cities and exposure to international

competition are other drivers of these productivity

increases, and one of the things I want to highlight here

is the, you know, tradable sectors as we were just talking

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about global trade. And, in this case I’m saying anything

that is exposed to trade; it doesn’t mean you actually had

to go international, but what you’re producing is a good or

a service that is competitive on an international market if

it had to be. And, this is really where we’re seeing a lot

of the action in terms of the productivity growth.

And, in the cities it’s a lot of these knowledge

intensive services that fall into this category of tradable

sectors that are driving a lot of what we’re seeing in

cities today. However, one of the challenges, and we’ve

been doing some economic research about this since this

study is that actually when you have a lot of fragmentation

of local governments in a particular district, you have

some challenges and some penalties in terms of

productivity, and in terms of inclusion. And, the

statistics show that these create some sort of bigger

barriers to overcome, and that’s one that is particularly

challenging in the mega region which international

comparison with the three states, you know, at least 1,700

municipalities and even more with all the special purpose

districts. It’s a big challenge.

You know, one of the things in terms of the latest

statistics; now, I’m not going to presume to update the

study here. We just looked at a little bit of the data,

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but just to say that over time, you know, the mega region

remains, you know, big and it remains productive in terms

of its levels of productivity. However, its growth is a

little bit slower. Now, we don’t necessarily expect all

very large cities to grow at the fastest rates; economic

theory might predict that some of the smaller ones have

more potential for catching up; however, we do see that,

you know, that out of the 97 largest metropolitan areas,

you know, this mega region is a little bit slower on some

of those growth figures.

And, to be honest, one of the big issues that really

comes up as well is on issues related to the labor force

regarding how the labor force works, what share of sort of

the population that is eligible for working is working, and

what is sort of the growth there. And, so you could sum

this up a little bit to say that in recent years, you know,

some of this mega region’s increasing productivity might

not have come at the cost conclusion. I see there’s a

little error there on the screen when the computer reads

it, but Chicago is where the little arrow is. So, it’s

just so show that if you put all the dots on a map, whether

they’re more or less inclusive in terms of labor force, and

higher or lower in terms of productivity, you get to see a

little bit where Chicago fits in. And, it’s more in the

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category of becoming more productive, but not necessarily

as inclusive, and I think we’ve heard a few of the talks

this morning, talks about how this is going to be, you

know, an ongoing challenge for the mega region.

And, so that’s why I wanted to sort of make the

transition between this presentation and the next

discussion that’s going to focus mostly on skills and the

future work, because this is I think another big challenge

that the mega region will be looking forward to in the

future. And, you know, one of the big tendencies we see is

that with technological progress and digitalization, we do

have some skills polarization. So, basically in this chart

you have the orange is the middle skills. And, then you

have dark blue and light blue for the high and low skilled,

and the blue and green is where you got the United States,

but it’s just to show that we do have this challenge to

address in terms of where the jobs are on the skill

spectrum and what that’s going to mean for future workforce

development issues. Now the U.S. does a little bit better

than many other OECD countries, but it’s still an issue.

The next thing that I wanted to highlight was just

that we have been doing a lot of work at the OECD what’s

called the future of work, and a lot others have produced

estimates like McKenzie, etc., some academics. What the

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OECD has looked at and they looked at the occupations, and

they looked at the skills required, and they looked at

what’s the likelihood that these skills will be automated.

And, in overall in the U.S., it’s about a 10 percent,

they’re at very high risk of automation between, you know,

over 70 percent at high risk, 27 percent with significant

change. This is a little bit lower than the OECD overall,

but it just reinforces some of the messages that we’ve been

hearing today about the need to, you know, prepare for

quicker transitions.

So, of course this varies across regions. It varies

across all sorts of places. This one was done at sort of

the state level, and you can see, you know, where you got

the highest share and lowest share in a few countries,

you’ve got, you know, highest share is in Nevada and the

lowest share is in Delaware. But, we took a look and here

I guess the percents have trouble on the computer, but what

we did was we took a look at the U.S. metropolitan

statistical areas, and we see that actually Chicago has a

little bit of a higher share of its jobs at high risk, and

that might be related to its manufacturing base, which just

means that more work will need to be done to try and help

those firms upgrade. So, you have the region in the last

couple of years is going on the right track in the sense

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that it’s creating jobs that are less likely to be at risk

in the future. So, you kind of want to be in that dark

blue bar, and it just means that Chicago has maybe a little

bit more to work to do in the Chicagoland area, or the mega

region in a wider sense. But, you need to think about that

as the sort of cluster development, the supply chain

development, and all these other projects are going move

forward.

So, you know, the mega region will need to think about

a lot of different types of policies and, you know, I think

one of the things that the future of work will bring is

trying to think about the regional labor market with a

little bit of a new lens. You know, here we’re talking

about the list of automation. There are all sorts of other

information about the nature of work contracts that I won’t

get into here because that’s really into a lot of

regulatory differences, you know, across countries and what

gets qualified as non-standard work. But, the fact that we

have to think about how long the jobs that are being

created will last which is a question we had earlier is

going to be very important.

We’ve heard a lot today about the role that the mega

region can play in supporting this lifelong learning and

retraining in the programs to transition workers, and here

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in terms of the entrepreneurship and SME support I want to

just highlight the importance of the sort of

digitalization. And, we heard earlier in the presentation

about the automation in your firms, and how to support

maybe those SMEs that are not as up to the curve and

getting sensors into their conveyor belts, et cetera as

quickly, and what the region can do to help those SMEs,

because we need to think about both sides of the coin, both

the upgrading up the local firm base, and the skills that

they’re going to need.

So, I just wanted to raise a few of these issues as a

sort of follow-up in a sense to what we started in the

study, because I think there’s really a tremendous amount

more that can be done to address some of the challenges

that were raised in the study, and also to confront some of

the newer challenges that we’re all sort of focusing on

today with this future of work.

All right, so maybe what I’ll say, because I think we

have to close soon here, but what I might want to just

highlight is that if there are any areas where you think

OECD resources would be valuable; just feel free to come up

and ask me, and I’d be happy to direct you to different

parts of the OECD that have access.

Q Where do we get a copy? I’d like to get a copy

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of your presentation?

MS. MAGUIRE: I’m sure Kelly will be able to; she’ll

be able to make available presentations afterwards.

MS. O’BRIEN: The presentations will be available on

the App.

Q Great, thank you, very helpful information.

MS. MAGUIRE: Okay.

MS. O’BRIEN: We have time for maybe just maybe one or

two questions.

Q Yes, do you have any best practices in terms of

the leveraging of social innovation to help unrepresented

groups? And, the reason I ask that question is because in

the mega region that has to be something intentionally

done. It can’t be low on the priority list, and no region

is going to be prosperous with the underserved and minority

groups not being able to participate holistically. And,

that’s just a reality, so I’m looking for best practices,

because so far I don’t know if we’ve done an adequate job

in terms of articulating that in this particular region.

MS. MAGUIRE: Well, there are a couple of things then,

you know, and I can direct you to some work that our

colleagues are doing in this area. I mean there are some

examples that have worked with, you know, populations that

have particular physical handicaps, particular

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disadvantages in accessing the labor force. You know,

there has been work that they’ve done also on, for example,

with indigenous populations around the world.

You know, I think, you know, in the Chicago area, I

don’t know if you’re referring to just traditionally those

that are just having trouble accessing the labor market, or

if there are those that have, you know, even traditional --

yes, uh huh.

I mean I think, you know, I think in this case given

the, I mean, the ability to try some pilots and one of the

things that they have found is that if you make an effort

to involve yourself in the design of the projects, the

populations that you’re most trying to serve, that has a

huge impact. This whole creation of the programs has a

huge impact in making them more effective and being able to

scale up. But, I’d be happy to give you some more details

because I know we have several books on this topic for you.

MS. O’BRIEN: I also wanted to point out just because

we need to move on to another question, but Steve Freeman,

if you could just raise your hand? Sir, if you could just

try to meet with Steve. We’re actually in conversations

about watching some of that. And, then we just need to go

to a question back there.

Q You have a number of slides that showed jobs at

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risk. Was there a correlation to unionization, or how did

labor unions correlate with the percentage of jobs at risk

to automation?

MS. MAGUIRE: To be honest this is focused on skill

sets associated with particular occupations. So, I am not

aware that they have correlated that with human

participation. However, there has been some work on some

of the nonstandard work contracts where there is some

looking, it’s not union participation, but in terms of the

dynamism of the labor market and then in some of the labor

markets where there is a bit of less dynamism, there is in

some of those markets more active use of certain forms of

nonstandard work contracts. But, it’s a different issue

than the automation list itself which is related to the

actual skills associated with a particular job.

MS. O’BRIEN: One question.

Q I guess this will be the final question for this

session. But, you mentioned some of the cross border

issues. I would speculate that in some ways our cross

border issues are worse than some of the international

border issues. Do you have any thoughts on what the impact

of that has been to perhaps make people aware of how

serious a problem it is and ways to break it down?

MS. MAGUIRE: Well, I guess that’s sort of the big

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question, huh? That’s the purpose of having the Alliance

and others here. You know, I think the figures have shown

that there is this productivity penalty, and it’s

quantified as being 6 percent for a doubling of the number

of jurisdictions. So, if one wanted to, we could try to do

some back of the envelope calculations and try to say if,

you know, when you’re controlling for other factors and you

have this doubling in the number of jurisdictions that you

can see what that productivity penalty might be and that

could be one potential metric you could consider.

You know, the challenges that people were raising;

there were some discussions at dinner about what are the

kind of events that can get people mobilized and get people

to the table. We heard the example of Foxconn where

basically that just accelerated a huge number of

initiatives because there was a catalytic event. And, you

know, it’s hard to get everyone to coalesce, but I think

the kinds of projects that you try to create to make that

visibility is going to be the most important part because

it’s, you know, the report already came out and said, you

know, much more needs to be done to reduce the sort of

within mega region zero sum game kind of competition for

the region to grow, and you know, I think that maybe that

will be part of the work in the future program of the

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Alliance and others to try and identify what are those

catalytic projects that will inspire and give a sense of

urgency.

MS. O’BRIEN: Thank you, Karen. You know, Karen held

up that big book with over 300 pages. If you’re

interested, a link to the book is on the Alliance website

as is the synopsis which is about 23 pages. So, if you

want to make yourself familiar with the important messages

that the OECD brought to this region, please be sure to

check the Alliance website.

So, now we’re going to break for lunch and, of course,

we want to pack so much into today. So, as soon as you’re

able to get your plate, come back in. We’re going to kick

off with our lunch program in about 15 minutes or so. So,

please, the buffet is right out the doors, and we’ll see

you back here in about 15 minutes. Thank you.

Federal Reserve Bank of Chicago

Sixth Annual Summit on Regional Competitiveness

Understanding Competitiveness and a Call to Action

Afternoon -- October 29, 2018

Ladies and gentlemen, the next session will be

starting in 5 minutes, in 5 minutes the next session will

be starting.

139

KELLY O’BRIEN: I really appreciate everybody grabbing

your lunch and taking your seat so quickly. Again, we do

our best to try to pack so much important information into

one day.

And next for our lunchtime panel I have the great

honor of introducing Anne Edmunds and Rebekah Kowalski.

And I want to just to share with you quickly a little bit

about Anne Edmunds, because as I have talked about Paul

Jones and Greg Hummel, Anne too, has been at the table from

the beginning and the support that the Alliance received

and continues to receive every day from Manpower has really

been transformative in terms of our ability to work within

the workforce space.

Anne leads the workforce team and since the creation

of the team, Anne has brought together the leaders in

workforce in the three states as well as subject matter

experts from literally all over the world. And being

nothing but a great team player, Anne supports our

Transportation Team by really connecting the dots with a

very exciting workforce program that is designed for the

transportation sector.

There's more about that on the Alliance website.

There’s meetings that we host on a quarterly basis and

webinars that are conducted by request. So, if you are in

140

the transportation space and you’d like to learn more about

the work we’re doing, please make sure to email me or come

up to me today.

But for right now we want to get this important panel

started. So, Anne and Rebekah if I could ask you to come

up and share with the audience a little bit about your

backgrounds and then talk about the importance of

Tomorrow’s Talent and Seizing Opportunity in the Digital

Age.

A warm welcome please for Rebekah and Anne.

ANNE EDMUNDS: Well, thank you so much Kelly and your

kind words are very much appreciated.

It has been my honor actually to have been with the

Alliance for the past 5 years and chairing these large

committees. But we have a really tight program today so

I’d like to get started. Tell you a little bit about

Manpower. Manpower is a $22 billion company; it’s a global

company in 58 states. We understand employment; we employ

over 4 million people every year, year in and year out.

One of the largest employers in the world. Some of the

things that we have been observing is how technology is

changing the workplace. How productivity is changing in

the in workplace, as well as the demographics shifts that

we’re seeing across the world.

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We're also noticing that our customers are becoming

far more sophisticated in this space. One of the things

that I have observed is that I have been in the employment

business for 34 years and I have never experienced such a

tight labor market. At 3.7% unemployment everyone who is

employed or eligible to be employed is employed. It is

very very difficult - - just recently I was promoted to the

Director of the U.S. Western Division so I see operations

the size of Chicago, Seattle, San Bernardino, Phoenix but I

also see the Peru, Illinois, the Sauk Valley, Illinois,

some of the small markets and this is not just a U.S.

issue, obviously it’s a global issue. And I’m so fortunate

to have as my business partner Rebekah Kowalski, who

develops and designs strategic solutions for our client

base across the world.

So, Rebekah I’ll turn it over to you.

REBEKAH KOWALSKI: Thanks so much for that Anne. So,

just a quick road map for what we are going to cover.

We’re going to talk about what we call at ManpowerGroup the

double squeeze. So, what’s happening in terms of pervasive

shortage of brightly skilled talent on the one hand and on

the other hand a rapid evolution in the kinds of roles and

skills that are required.

142

Then we are going to dive into how employers are

looking at that and what those roles and skills are. For

those of you who were with me a couple of years ago right

here in this room, we talked a little bit about what was

happening in the world of digital manufacturing. We

touched on the evolution to workforce. If you saw Becky

Frankowitz last year, she talked a little bit more about

that. We are going to go a little bit deeper today and

Anne is going to be doing some story telling. So, not just

the scary stuff but also some of the amazing things that

we’re seeing, because we are capable of closing this gap

but it’s going to require more creativity and flexibility

then we have ever seen before.

So, I want to start with this, so this is the first

half of the squeeze, it’s what Anne was talking about:

we’re not alone in terms of how we’re experiencing a

challenge to employment, right? Since 2006, ManpowerGroup

has been tracking talent shortages around the globe. We

ask 40,000 employers every year some very simple questions

one of which is, “Are you have difficulty finding the

talent you need?”

We have never seen numbers this high. A global

average of 45% of employers report difficulty in hiring.

That is due to two reasons, one is in most developed

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countries demographics aren’t doing us a favor. So, we

have an aging out problem in manufacturing, on top of that

we have an opting in problem. So, people not selecting to

not go into that field and those occupations and we have a

rapid aging out. Very few countries are experiencing the

demographic dividends and when they do, it’s demographic

dividends of people that don’t necessarily have the right

skills for the jobs that are required.

On the other hand, we have a rapid evolution in terms

of roles and skills. So how many of you have seen the

McKenzie Report that talks about how roles and skills are

evolving? Scattering - - a couple of hands. Okay, so the

bottom line is that report talks about the fact that, yes

there will be some jobs that go away but it’s not as many

as people think, they estimated about 5%. What’s really

interesting is that 45% of the tasks that can be automated,

will be automated. So, if you just do the quick math that

means the work is going to look different, very very

different. And the question that we have facing us then is

not just the typical shortage, it’s a shortage and a need

to upskill like never before. That means that what was

important is not necessarily as important. So, in an

abundant world, a talent abundancy world what is really

really important is an exact match and we tuned and trained

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our applicant tracking systems and our HR teams to look for

that exact match. With all these wonderful key word

searches and filtration processes because we thought what

mattered was the discrete skill. But we lost sight of is

that what really matters is something that’s always

mattered, which is people’s ability to adapt and evolve and

to learn and grow with you. This becomes even more evident

in a scarcity environment because - - oh and a scarcity

environment at a time when we’ve got a lot of evolution.

Because we don’t even know some of the jobs that will be

required going forward, that’s that 65%of GenZ or jobs that

GenZ will perform that don’t exist yet, we’ve heard that

talked about a lot.

So, what matters then? It’s can’t be like it is

today. Hey python is a hot skill, well in two years is

python going to be a hot skill, Anne? Not really, - -

MS. EDMUNDS: No.

MS. KOWALSKI: - - no. What matters was that you

could actually learn the language to begin with, right?

So, things like creativity, emotional intelligence and

cognitive flexibility are what matter most. Anne, has that

ever not been true?

MS. EDMUNDS: No. You know being creative, being

adaptable in the workplace has always been part of the DNA

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of every corporation. I think we haven’t placed as much

importance on it recently because we’ve gotten so bogged

down in the fact that we need absolutely the right skill at

the right time and it’s just not there today.

MS. KOWALSKI: Yeah, yep. So, we have to go back to

getting good at something we used to be good at. At a time

where we have really cut down a lot of the learning and

development programs and corporations. We haven’t maybe

looked at workforce development in the most modernized way

that we could. We’ve got a lot of partners in the audience

in 4-year and 2-year institutions and workforce investment

boards that can be part of that solution. But we all have

to understand that it’s not just about landing on a

specific skill in a short period of time. It’s about the

journey and that journey is ever onward and upward.

So, I want to introduce the research component of

this. How many of you are familiar with UI Labs which is

just in the backyard here? Okay. So, UI Labs has City

Digital under it and DMDII which is the Digital

Manufacturing & Design Innovation Institute. This is part

of the manufacturing USA Network of institutes and their

remit has been to look at how to make manufacturing

globally competitive in the U.S. So, even though they are

all geo located they all have a national wingspan, if you

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will. And the Digital Manufacturing & Design Innovation

Institute has the broadest wingspan of all of them because

all manufacturing sub-sectors are looking at some degree of

digitalization. Some of them are just moving faster than

others. You see some of the partners that were involved in

this work. The goal was to outline what’s the degree of

change we’re looking at and over what period of time. So,

as digital comes in and remakes manufacturing processes

what happens to roles and skills, how will they change and

what is it that we need to plan for? And together we

identified a 165 roles that were either new or evolving

very very rapidly. And that’s really important for all of

us to understand, we’re all talking about a skills gap and

a crisis and trying to find the talent we need but we have

to remember that when we get people on the ladder, we’re

going to have to move them up very very quickly and for

those who are already occupying a place on the ladder they

can’t get comfortable, that’s not where you build a cot and

take a nap. It’s a continual progression.

From the prospective of a client, I just - - I present

this as a view that may be helpful. We talk to a lot of

clients around the world, we have 400,000 clients around

the world and a huge chunk of them are in manufacturing.

And I have spent the last couple of years sharing this

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research with our clients and one thing that I have found

is, they usually have a digital strategy, right. You see

it in their literature, you see it in the annual report.

So, they’ve got a direction and that direction is typically

how are we going to remake our solutions? How are we going

to remake our services and our products? And from a

process perspective, how are going to do it a more

efficient way than we have done it before?

The piece that is usually not as present, is do we

have the workforce to do what we are saying we need to do?

And if not, what are we going to need to do to get there

over a pretty rapid period of time? So, they recognize

that there is a pain but they haven’t necessarily

quantified it. That’s the challenge that companies are

running into, do we have the talent here, can we upscale

that talent? What’s the right mix of strategies from, you

know, trying to pull in exact match and trying to develop

the talent that we need. And so, it’s in this context that

the research was put together.

So, this is a map of all of the technical domains of

manufacturing and what we did is we looked at those 165

roles and said, “How are they distributed?” In other

words, what’s the degree of change? If I’m looking at my

production and processing which is the gray box, how much

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of a degree of change am I going to experience? Is it 2%,

is it 5%, is it 50%? And we identified it’s a pretty high

degree of change in most of these boxes. Although in

production and processing it’s pretty dominant. And some

of these are not a surprise, right? You’re already seeing

some of these evolution of skills and roles but depending

on where you’re at on the journey as an employer you may be

experiencing more pain and tension in certain areas than

others.

And there is this one called Omni here which is

basically those talents that actually have to span all of

those technical domains and understand a vast array of

information. And I’m curious as you go around and you’re

talking to clients in this area, how they’re fueling this.

I mean my experience is if I’ve got a company that has a

quarter of the roles inside of the organization changing,

that’s a lot, that’s very disruptive potentially.

MS. EDMUNDS: It’s a lot and from our observation we

are inadequately prepared. Some companies are doing it

better than others with great training programs and

investing at a very early age but we are seeing is a big

gap in not having the right skills to fill these new

opportunities in digital manufacturing.

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It’s a very tough situation for the U.S., I believe

going forward.

MS. KOWALSKI: Yeah, most definitely. And I just want

to give you guys a view of how pervasive the change is.

You are not expected to be able to read this, by the way.

But it’s just plotting those 165 roles in a diagram so that

you can see how wide this is. And we’ll give you access to

the full report, it’s free, you can just download it.

For those of you who touch workforce planning and

workforce development this is actually a really helpful

piece of information because what it’s doing is it’s

breaking down those roles by technical demand and it’s also

breaking down the timeframe in which they are likely to

come online for an organization.

So, based on the technology the organization has

adopted, which of these roles will they need when? Which

was a very important question to be able to answer because

it also gives you the timeline of how much time do I

actually have to develop that talent that is required?

Here is a more “eye friendly” chart of the kinds of

roles. So, this is just a representative sample. Two

years ago, I had never heard of a Digital Twin Architect,

ever. Any of you in this room that have heard of it? Know

what digital twinning is? I got a few hands going up. So,

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it’s really - - it’s like the most sophisticated version of

modeling that you can imagine in simulation, right? So, we

are creating Digital Twins of products and lines and

processes so we can, for instance, test out what it would

be to refit a line and work out the kinks before we

actually put something through. So, it’s an efficiency

play and the technology now exists to do that in a cheap

and accessible way.

What about digital ethicist? What happens when you’re

dealing with masses of consumer information, supply chain

information, how do you make the right kinds of decisions

and so now quality risks, ethics, legal all converge? So,

some of this is formation of new kinds of roles based on

new types of work and a lot of them are and roles, if you

will, these are very high-end positions. So, two years ago

(inaudible 0:17:33.2) Twin Architecture accepting GE’s

annual report. Now these are posted positions that you can

see and they’re growing in terms of their mass. What

happens on the shop floor, right? Because this is where

everyone feels that delicacy we talk about where jobs may

go away. Or how jobs may be reformulated, remember that

that represents a significant chunk of the workforce, that

28% if the 165 roles.

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We think about this as transition opportunity. So

those roles don’t all go away at once and some of them

don’t go away at all but new technologies come online which

means they may not touch as much equipment as they used to

touch. They may touch no equipment, right? But surely they

need to have a knowledge of manufacturing processes, they

need to have knowledge of the equipment and the tooling but

the way they interact may be in a purely digital way,

right? That swipe of the phone, right or left, right? The

tenderification of the manufacturing workforce as

horrifying as that may sound.

So, we pulled out 60 roles that we think are really

ripe to be upskilled over the next 1 to 2 years so that

they’re ready to enter workforce and mass and enable these

great manufacturing processes. Anne, I think it would be

great to hear some of your perspective on how you’re seeing

some of these transformations work out right now in terms

of what you’re seeing companies do. How you are seeing

individuals adjust?

MS. EDMUNDS: Yes, I will use an example of a northern

Wisconsin company who were just strapped for finding, you

know people even at entry level positions. And their

philosophy was go out and find more, let’s find more

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people. Let’s partner with every agency we can find to

draw in more people.

Well, there were not more people. So, one of the

things that we did with them was to create a training

center where we trained on product development as well as

soft skills for them to be able to grow in their

profession. This area has a very large Hmong population

and we brought in instructors to teach English to the Hmong

population. Train them in a progression for the

pharmaceutical industry and we were able to supply the

workforce. It was not something that happened overnight.

It’s been a 2 year span of putting this together. But I

think it’s important that you know it’s not going out to

find the people you want, it’s working with the people you

have and getting them upskilled.

I think Manpower does a very good job of that with our

associates. We have a whole group of university classes as

well as something called My Path. And what we are trying

to do is provide a college education free of charge to

anyone who is a Manpower employee. And that is to raise

the associated experience and it’s selfish on our part

because we want to retain this workforce. So, that’s what

I see Rebekah as the 2-year progression.

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MS. KOWALSKI: And I think the mindset shift you are

referring to is the most critical and it really starts with

leaders understanding we are moving from abundance to

scarcity. Because if you don’t understand that shift you’ll

do exactly what you are talking about, which is we’ll go

out, we’ll find more, we’ll go out we’ll find more. No,

you’ve got to work with what you have and be responsible to

the talent that you have inside of your doors to be

upskilling them and looking at your community and getting

creative. I will tell you, we’re in a space right now

where we have got to be just as creative and adaptable as

the individual. So, asking questions like, why not? Why

wouldn’t you work with limited eligibility pool? Why

wouldn’t you think about the kind of program that Anne

taught. Usually people’s response is it’s a cost, but it’s

really an investment which is what that employer is finding

is that return on investment has been tremendous because

they have people who are loyal. People who have put in the

effort to build up their skills and they’re being offered

the next step on the ladder continually. But it is a big

mindset shift and it starts with understanding the numbers

and the degree and the pace of the change. There just

aren’t any corners you can go to extract perfectly matching

talent anymore. And if digital means anything because it

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is the biggest business model change we have seen in

decades. But in a couple years it will just be how we do

business, right? There will be - - that will be our new

platform. It means that all of us have to be able to adapt

and evolve and change in a pretty rapid way.

So, we talk about four strategies to win with this

double squeeze work. The build, you’ve heard us talk

about. The buy, it’s not that the buy is not part of the

strategy anymore, it’s not that you don’t still do

recruitment campaigns and try to acquire talent. It means

- - just like your investment portfolio needs to shift for

the market conditions, your investment portfolio in these

four strategies needs to invest. What would you say before

- - let’s say in the last couple of years, before employers

were really feeling the pinch, was the percentage they

would put on buy vs. build?

MS. EDMUNDS: Seventy percent on buy, let’s go out and

buy. Let’s go out and find another agency, find somebody

else who can bring in this talent. So, it was all on buy.

It is not easy to change the mindset of the American

business world right now. There’s still a little bit in

that buy mode. It’s a constant education process about

building your workforce. And bridging the gap between what

you have and what you don’t have and really training and

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re-training. We’ve gotten to a point as well where we’ve

made it so difficult to go to work. We have so many

requirements, you know background checks and drug screens

and you can’t have a felony and you know it’s so difficult.

We have to start taking some of these requirements down

because there is a good solid workforce out there that can

be built instead of bought.

MS. KOWALSKI: And a lot of time what we - - what our

experience has been is that we really push on those

eligibility requirements that some companies have. Some of

them have them for very very very good reasons, right? But

they’re in some cases they’re a legacy carryover of an

abundance mindset, right? So, everyone has to have a high

school degree or GED because in the land of abundance, I

had to have some way of sorting through 3,000 resumes. Is

that really still what’s required or are there other ways

to get to, does this person have the right skills and

aptitude to be successful in my organization and will my

organization be more successful for having that person?

So, it’s really challenging some of that on the buy

side and buying is expensive.

MS. EDMUNDS: Very expensive.

MS. KOWALSKI: And you have to really think about the

fact that even when you buy, you’re still going to have to

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build. Particularly with our Millennials but really every

generation. The number one way to drive retention is to

continue to invest in their careers. That’s what the

research - - our research shows over and over and over

again. So, there is no get out of jail free card on

builds.

Borrow, just thinking more creatively about the kinds

of talent platforms that are out there to accomplish the

work. There is a piece that we can make available to you

called “Gig Responsibly” and it’s about next gen work and

how to tap into some of those platforms for some of those

niche requirements that you have. And then this last one

is bridging and bridging is really important because there

are some jobs that are going to fade away. What happened

to the people that were working the counter in the video

store, that gave you recommendations on their favorite

movies. It’s all sitting in an app or it's sitting in your

Netflix preferences, right?

So, where were their adjacent skills? What could they

be trained to do that they hadn’t really thought of doing

before and we’ve seen some amazing leaps. One example that

we have in this stack which we’ll also make available to

you is something we did in Italy which is just a fun

example, because it’s in motor sports, right? Fast cars,

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they were - - a real restructuring of workforce around the

textile industry which meant the falling away of

traditional textile workers. And we saw an opportunity to

re-train those textile workers as carbon fiber cutters for

the motor sports industry. So, we took those people and

through our academy we re-trained them into very well-

paying carbon fiber cutters but that was a bridge strategy.

They hadn’t gone to school for that, they were working in a

garment factory. So, this is the kind of creativity you

may need. We are seeing people say, “Hey I’ve got this

really smart person on the floor, perhaps they belong in

finance.” I mean I can’t remember a time when that was a

conversation but it does require that kind of “why not”

mentality to retain and build a terrific workforce.

Do you want to talk a little bit about some of the

other strategies, Anne, that you’re seeing?

MS. EDMUNDS: Yes, we’re seeing - - you know a lot of

I think, creativity from employers today. Definitely, you

know, providing more training, providing opportunities if

they can, to work from home. We’re finding incentives that

are being offered for further education. It’s just a

multitude of things and I think that when companies are

putting together their talent acquisition strategy, all of

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these things are extremely important as part of that - -

that strategy going forward.

MS. KOWALSKI: Yeah, most definitely. I would like to

point out that wage is still on here. So, when you do a

look at the kind of talent that is going to be in most

demand, one of the things that we end up finding is a lot

of times employers just like they haven’t re-tooled their

talent acquisition strategies haven’t really reset the

market expectations around wage. Just like they haven’t

reset the expectations around what people will expect from

a career trajectory. So, this is a checklist of things to

really think through and it’s the basic hygiene of

attracting, retaining and growing your workforce.

Notice that number 36% of employers are adjusting

education and experience, right? So, really questioning

what is eligibility really? Do we have anything arbitrary

that is standing in the way of getting the talent we need

in the door?

Couple of examples we wanted to leave you with, the

motor sports one is here. Land Rover, we partnered to set

up an apprenticeship program so we’ve got 18,000 people

we’ve placed into work, 8,000 apprenticeships over 5 years.

So, again it was something that we needed to look at.

Well, what are those skills that are required going

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forward, really how are they different? And can we

collectively invest in the upskilling of that talent and

make them career ready and ready to continue to attain

ongoing skills? We have a partnership in the UK we call

CTP. These last two are really addressing parts of the

workforce that have not really been tapped fully. So, the

untapped parts of the workforce. In this case the veteran

community. Again, how do you make it easier for people to

transition out and move in? I’ll tell you with the Academy

of Advanced Manufacturing our partnership with Rockwell, it

is incredible to see people that have commanded a unit,

been to 30 countries and they’re working as a picker packer

for $13.00 an hour. How is that acceptable? They have

been trained on state-of-the-art technology to deal with

complex processes without clear answers and they’re - -

they’re doing that?

So, how do we make it easier, how do we help them

bridge into really good opportunities? And a lot of that

is doing the hard work to figure out how what they did in

the military prepares them for these careers and advance in

digital manufacturing, because I promise you there is

excellent - - excellent correlation. That has been our

experience and you know we need more of these. There is a

lot room under the tent, right? You know this is not

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something that ManpowerGroup can fix on its own or one

economic development region can fix on its own. It takes a

lot of hands at the oars to change this narrative to where

we’ve brought in everybody that we can and gotten them

ready to fuel our, you know incredible surge in

manufacturing.

You heard what Foxconn shared today, the jobs that

they are talking about they may have these plain sounding

names like, Operator underneath them is this. So, when you

think about what manufacturing looks like for the future

and what’s really required, it’s the tip of the iceberg.

We have - - we don’t have a body problem, we have a skills

problem and the last I checked that’s fundamentally

solvable.

So, that’s all we have. So, we have about 7 or 8

minutes for questions, that we’d be happy to answer.

AUDIENCE MEMBER: I just would say, I come from a site

selection background, so I help companies find locations -

- and you’re seeing site selectors now look at how do I - -

because of the tight labor market how do I look at a

position and translate it into skills, instead of looking

at the job specifically? What are the skills that I can

now quantify in a region and I don’t know if you use the

program O*Net, if anybody is familiar with O*Net it’s a way

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to take a job and dissect it based on skill sets. So,

you’re starting to see that become more of a quantifiable

way of looking at - - at a location is the skills versus

the jobs.

MS. KOWALSKI: Yes so the only - - I’ll start then

I’ll let you comment. O*Net is great, right? We have - -

our jobs are all laid against the O*Net taxonomy so the

thing that I would just tell people to be thinking about is

that O*Net is telling what you have, right? And what we

need to get really good at from a workforce and economic

development perspective is then projecting, so here’s what

we’re able to do with that workforce over the next one,

two, three, four years. That’s where the excitement

happens because that’s giving you a baseline then you can

say, we’re really strong here and we know that with this

certification program, this badging program we can convert

those workers into what you need. I think that’s when the

magic happens. Anne?

MS. EDMUNDS: I don’t have very much more to add to

that, other than I think again part of that strategy of

where do you put your company, what location? The key to

that is what is the workforce that is available? What is

the workforce that can be trained or upskilled? If you

look at our - - I55, 57 corridor we’ve got distribution

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center after distribution center, after distribution

center, after distribution center. Do we have talent?

Absolutely not. It’s a fight and a war to find people.

So, every time we locate a company that critical

factor is how do we develop that talent?

AUDIENCE MEMBER: They’re not lowkey enough where they

can’t - - they can’t find the talent so they don’t locate.

MS. EDMUNDS: Right.

AUDIENCE MEMBER: And so, if that continues to be the

bigger nut to crack, they are going to be going further and

further where they can find. Regardless of where the other

cost variables are high or not.

MS. EDMUNDS: That’s right.

AUDIENCE MEMBER: The talent variable is the critical

location.

MS. EDMUNDS: The example I used in northern

Wisconsin, again, companies coming in building these large

pharmaceutical plants, no talent. So, now they're

constricted they can’t grow and I either have to think of -

- I have to move this company somewhere else and shut down

or I’ve got to figure out a different way to get the work

done.

So, it starts at the very beginning.

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AUDIENCE MEMBER: Hi, thank you. Coming from a local

economic development perspective there's plenty of

communities here I’m sure that would be interested in

knowing this. When a business is in town or coming to

town, we often thought the fact that we’ve got a very

strong community college system and we actually have a

campus in our community. Has there been a willingness or

reluctance on the - - for the most part from some of these

companies to actually use the community college to help

them with some of these issues that you’ve talked about

today. I never quite know whether it’s the community

college that’s, you know being successful at reaching out

to local businesses and finding out what their needs are

and putting together a program that helps to train their

workers. Or is there any sort of sentiment that you have

learned over time that can help us economic developers best

communicate and bridge those gaps? Basically, are the

community colleges delivering what the businesses want?

MS. KOWALSKI: So, I can start and hand over. So,

it’s interesting, I come from Wisconsin, we have what I

believe is a world class university and technical college

system. When I pressed that particular issue with

employers, I get a span of answers. So, and they're

timebound. So, a few years ago you would see that a lot of

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technical colleges have put their eggs in the basket of we

will actually become the low-cost alternative to the first

two years of university. So, the impact that that had on

employers is that they felt like, well you just shifted your

focus from me to that particular economic model to which my

response was but how much were you really aligned with them

from a regional growth perspective to begin with? So, there

always has to be two people on both sides of the table for

the conversation to really flow. And so, what I have seen

in the last couple of years is an adjustment to really

thinking about how do we actually get all of the right

people under the roof and get all of the wood behind the

arrow. And I know that’s a generality but it’s what Mark

Monee was talking about before. Which is getting all of

those educators together in the room with all of the

employers and with economic development and actually saying

this is how much we need to move the needle by and by when

and getting everyone aligned. Then you have a very powerful

story to tell when you’re trying to attract organizations

because they know that they really do have a one stop shop

and everybody is headed in the same direction because

everyone is clear on the vision. The vision isn’t guess at

what your economic model will be in the future or guess at

which employers want to partner with you. It’s we have

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these numbers, we have to hit them in this period of time

and this is how we need to move together. So, they took the

guesswork out of it and I think that that is a really good

pattern book to look at.

MS. EDMUNDS: Yeah, I also think in some cases in the

work that I’ve done in Chicago with City Colleges and with

some of the junior colleges is that they cannot change the

curriculum fast enough to adapt to what is coming next and

what employers need. And it really is a setback because

they’re training on things that are no longer relevant. You

know, I think we started off with a very good process with

City Colleges in Chicago and somehow we got a little lost

and I think we need to go back and revisit it and look at

the jobs of the future and what’s coming next. So, that

they can be out in front of that curriculum instead of

behind it.

MS. KOWALSKI: We are getting the one-minute sign.

MS. EDMUNDS: Okay.

MS. KOWALSKI: Does anyone want to sneak in a quick 30

seconder? Yeah, in the back.

AUDIENCE MEMBER: Have you worked with businesses and

employers to discuss concept of place and investment in

community for retaining talent? It’s great if you can get a

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person to a community but if they don’t like the community

they may be looking elsewhere within a few years.

MS. KOWALSKI: Do you want to take that one or do you

want me to take it?

MS. EDMUNDS: You can take it.

MS. KOWALSKI: Okay, so, yes. I have seen some really

good best practices around this. In Milwaukee in the M7

region there has been a group of people working on something

called the Tech Hub, that you know there are many different

desired outcomes for Tech Hub but one of the key ones is

creating a community in which when we attract people, they

don’t want to leave, right? So really thinking about the

kinds of workers we are trying to draw in, what are their

demographics, what are the kinds of things that appeal to

them. And that cut across transportation, arts, culture,

entertainment, ongoing education. And really, they did a

great job of getting the employers and educators in the same

huddle and civil leaders and trying to think about

intentionally how do we design a community that people will

not only be attracted to a job but they’ll be attracted to

the community. Which also means it’s not going to be for

everyone. If you haven’t seen a snowflake, you may not be a

good fit for the Midwest, or if you really hate the cold,

weather is a reality and a barrier. But for - - if you set

167

that aside, do you have the kind of engagement and activies

that the people that you’re looking at will want to be

involved in and that has to become part of the economic

development roadmap too, because economic development is

workforce development which requires attraction and then

retention. So - - and we just got the red sign.

MS. EDMUNDS: Oh, all right.

MS. KOWALSKI: Thank you all so much for your time.

We really appreciate it.

MS. O’BRIEN: We are going to take a five-minute break

so if anybody needs to use the restroom, facilities

management is going to take the plates away and we will

start the 1:00 p.m. session at about 1:05 p.m. So, please

be back in your seats in about five minutes or so. Thank

you.

If everyone could please take their seats.

If everyone could please take their seats. We are

going to get the program started.

I don’t know if there are people out in the buffet

area, Jerry. I don’t know if you want to ask them to come

in.

Okay.

So, our two - - our next speakers, we have - -

actually I’m going to ask Dr. Joseph Von Nessen and Carter

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Smith to please enter the stage. I’m actually going to be

moderating this panel. So, we are going to have a little

fireside chat in regard to Spartanburg and the BMW

Experience.

So back when Jerry suggested that we contact Foxconn

to be a part of the program today. After we secured

Foxconn the next question was - - the next question was

where else in the country has a company been very

transformative? And if Jenny Trick is still here, I want

to give credit to Jenny Trick because she was the one who

provided some options for me to look into and it didn’t

take long at all to really zero in on BMW. And as luck

would have it, Dr. Von Nessen was already contacted by

stakeholders in Wisconsin and was going to Wisconsin to

make a presentation and we agreed to meet before his flight

left for South Carolina and I think it was really instant

that we discussed that a lot of his work is very applicable

to this mega region. And it was through Dr. Von Nessen

that I met Carter Smith and when I heard about Carter what

was really interesting is - - you know I said, I need

somebody who understands this BMW experience, somebody who

understand that, you know like way back when they went in

the 90s and then somebody who can speak to it today. And

they are like yeah, it’s Carter Smith and I said, “No, no,

169

no but somebody that knew it back then too.” They said,

“Carter Smith was there back then.” So, talk about

institutional knowledge that we have.

So, I’d really like to begin the discussion - - Carter

if you could just share for the audience just a little

understanding of Spartanburg, South Carolina. For those

that may not have ever visited South Carolina, just give a

people a little bit of the lay of the land.

MR. SMITH: Okay Spartanburg located really at the

crossroads of Interstate 85 and I26, traditional southern

community. Background in textiles significantly through

the turn of the century and pretty much up until the late

80s. It’s a - - it’s somewhat of a college town. I think

we have about 7 institutions in town of a variety of size.

So, it’s in the neighborhood of 400,000 population

countywide. So, when - - I always put that perspective

when you think about South Carolina, alone is somewhat

rural particularly when I’m visiting an area like this

without a doubt and then you incorporate the counties

within South Carolina which are 46 and Spartanburg one.

And we are a small rural county so it’s exciting to see the

growth and the change from what one project has done at

least and where I’m responsible for. I’ve been there since

’91 so as they said it’s really - - when I started, I was

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very fortunate, this is one of the first projects that I

picked up there from Spartanburg’s perspective.

MS. O’BRIEN: Thank you. And Joey maybe you can talk

a little bit about the economic realities back in the 80s

and 90s when BMW did select Spartanburg.

DR. VON NESSEN: Sure, well the history of South

Carolina can be broken down, if you look at the 3 general

stages of economic development. So, sort of low-cost

economy is followed by intensive capital investment or

capital or an investment driven economy and an innovation

driven economy, so, those are your 3 real stages. And

South Carolina transitioned from low cost agriculture to

capital or investment driven manufacturing with the textile

industry during the mid-20th century as Carter mentioned.

Then to an innovation driven economy beginning in the 80s

and essentially what happened was that in response to

globalization in the 80s we began, as everyone knows, to

see a huge drop off in manufacturing at the U.S. level.

That affected South Carolina very much and so South

Carolina ultimately had to decide what to do - - what to do

next. And so, the automotive sector was not picked out of

thin air, there were trends that we saw as early as the

1980s.

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Number one was the a - - so, in the 1980s we so we

began to see specific trends in terms of an increase in

sales activity and an increase in demand for vehicles in

the United States and if you look at small vehicle sales in

the U.S., they went up significantly and other companies

had already taken notice of this and begun investing in the

United States. So, we began to see significant foreign

direct investment in the southeast.

So, South Carolina recognized that and then the other

piece is South Carolina looked to other regions of the

world. Who else looks like South Carolina and is having

similar problems and it turns out if you look at

Regensburg, Germany I could give you a 5- or 10-minute

description of Regensburg and if I didn’t tell you it was

Regensburg you would think it was South Carolina. Same

story, history of agriculture, textile, manufacturing that

declined in the 80s, and of course they have Munich right

down the road where BMW is headquartered. They recruited a

plant so very similar stories there. So, again, the

automotive sector didn’t just arise out of thin ; there

were market realities that made it a natural fit for the

state.

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MS. O’BRIEN: And so, Carter, what was it like when

you kind of got that call or how did it happen that you

became aware of BMW’s interest?

MR. SMITH: Well, at that time there and again this is

in late ’91 and going into ’92, South Carolina had been in

pursuit of BMW for a number of years. At that point it did

not include Spartanburg though they were concentrating on

another area along the I85 corridor and you know some of

the topics that have been here and one of them that was

really rang well with me was the relationships. And so

Governor Campbell, at that time had established a very good

working relationship with Mr. von Kuenheim who was the head

of BMW at that point. And so anytime Mr. von Keunheim

would come in and particularly as they were concentrating

more on site he would say, “You know the site that you have

planned for me is nice but it would look better as a golf

course.” He says if what you have up by the airport where

he flew into each time which was our regional airport,

Greenville/Spartanburg Air District. And so, then the call

kind of came to Spartanburg what do you have that we might

can put in the mix. Because the requirements initially

were for about a 300-acre site and they were contemplating

around a $300M to $400M investment and about 2,000 jobs.

And so, when the call kind of came in to me from Commerce,

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I said, “Well I’ve got a 300-acre site, off of the north

end of the runway that I think would work very well.” And

then obviously then they said, “Well, we’ll take a look.”

But then they came back and said it doesn’t have interstate

frontage. So, even through we are about a ½ mile apart and

so in short that’s how Spartanburg became involved in the

BMW project.

I think the interesting thing and that obviously

required a lot of my time when you look at this site the

original requirement was 300 acres and because of - - I

would say state leadership and private leadership within

the Spartanburg community kept saying 300 acres would not

be enough. And so, we went on a land acquisition, keep in

mind this was not even a site at this point. And so, what

we assembled at the end of the day and a very short period

of time was roughly 1200 acres and those were basically 115

different tax parcels with 100 different land owners. So,

that’ll give you an ideal of the challenge that we had to

pull this together. And not only that there the - - we

basically started really identifying the actual kind of

overall boundaries of the site and identified land and then

with partners we started moving forward to assemble that

land and we basically assembled all of that in about 120

days. And we went through - - we bought - - just to give

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you an idea, we bought a couple manufacturing operations.

We bought numerous residential subdivisions and these were

very nice homes and some were under construction. I had a

couple of - - one the ladies said, “Well, I’m almost

through, I want to finish the house and I want to spend one

night in it.” So, we did it. I don’t think she ever hung

any curtains or anything. The lights may have been on and

gone. Then we had other ones that when we just drew up and

pulled together an option, our options were very simple

because of how we were having to acquire all of this the

carpenters went home. And these were significant

subdivisions and very nice subdivisions and then the other

interesting aspect if you will look where the horseshoe

type building is, what they called their Automotive Museum.

That was actually an active dairy farm. So, not only did

we have to figure out how to acquire that but we also had

to figure out what we were going to do with a herd of cows.

Which we did and we moved them down the road but it was a

lot - - a lot of cooperation from the - - not only the

community as a whole but from the landowners when you think

about it, we really asked a lot of them because we are

basically saying we were putting a jigsaw puzzle together.

We had a few large tracks but most of them were not large

tracks and then to ask some of them with a dairy farm about

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that and those of you who might be familiar with history

that was actually, if I remember right Kings Grant Land

that was presented to that family and been in this same

family since colonial days.

Once, you know we - – everybody overall was basically

on board with it because I think they recognized the

significance that it would be for the community. They - -

we were timing is everything coming off the end of the 80s

was not necessarily best. That was kind of one of the down

turns in the economy, so jobs were on everyone’s mind. So,

we did that then and we basically pulled that together and

then obviously the next few years, because they were

actually, they announced in June of ‘92 we basically

started the land assembly, right around January or February

of ‘92. We had targeted, set up a game plan. We basically

had three individuals that went across these 1200 acres

because we couldn’t have too many real estate people out

there simply because if we did prices were going to

escalate and they did a little bit thank goodness we didn’t

have the internet back then and so, a lot of that there may

have escalated purely between the family members trying to

buy their families out so they could sell it to us. So,

it’s little things like that there but the property got

assembled and then we had to obviously through all of that

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process was basically do due diligence from engineering and

that’s where we relied on very heavily from our private

side partners. Engineering companies, you name it, but the

three guys out there we had one that kind of concentrated

in manufacturing. One that concentrated in agricultural

type land and one that was basically residential and so

they went through and basically just took a lot of it out.

And when you look at all of that that’s there today and

this slide here, the blue was what we - - our original

plant was. And so, when you think about the supply chain

and everything else that’s been a lot of discussion today.

It is significant and my first impression was, okay when

we’re doing this this was big, without a doubt and so we

are thinking about the supply chain, how are we going to

capitalize on that? How are we going get? So, we had

everything out from a parts manual from the BMW sales

place, you know down the road. To everything else trying

to figure out a game plan on it. But basically, at the end

of the day, one of the liaisons with BMW and the state of

South Carolina was a honorary German consulate who had

started a major chemical company for a German company in

Spartanburg. He said, “You just need to sit back, they’re

going to be coming to you as you needed.” Particularly,

there is a pecking order without a doubt in the supplier

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system. So, he gave us some very good advice and we did

that there and we were thinking well with this 1200 acres

that you see here we would have a supplier part and I think

that’s where our private side was thinking we want to do.

Well the suppliers aren’t in this and none of that that was

all BMW there. And what I found out real quickly was that,

I think that because of the sheer number of units and the

investment at that time suppliers felt that they did not

want to viewed as a capital supplier to BMW. So, they were

looking at Spartanburg as a beach head then they could

start looking at basically the big 3 at that time. And

some of them were successful with that but as the years

have gone by, we’ve seen that now we’re kind of in the mode

were the suppliers are and I think driven a lot by the

mothership there is really kind of bring them back into a

much closer radius, in particular the Tier 1s.

And so every so many years we would see what I would

call the wannabes come around and any time there is a

platform change on the car or a different model, it makes a

big difference in terms of activity and trying to be sure

that we’ve got product that fits their needs and

continually demonstrating that we’ve got the work force

that fits their needs and that’s much more of a challenge

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these days as all of this have been in discussion here

today.

So, that’s kind of a real quick involvement on that,

not to mention the engineering and infrastructure to

accommodate it.

MS. O’BRIEN: And you mention that when they first

really started to set up shop, they started about 2,000

jobs, is that what you said?

MR. SMITH: That was the goal - - they would get to

2,000 jobs and about a $300 to $400M investment.

MS. O’BRIEN: And where are they now?

MR. SMITH: Right now, we’re probably close to $9B and

about 7,800 direct employees with probably 10,000 to 12,000

on site at any given day. That sound kind of familiar?

DR. VON NESSEN: Yes, so - - roughly between 9,000 and

10,000 total direct jobs and then we’ve estimated that the

multiplier effect is about 4 to 1. So, 4.1 so for every 10

jobs sustains about another 31 in South Carolina. Which to

put that in perspective, the average multiplier effect in

South Carolina is 1.7. So, just compare 4.1 to that 1.7

and it’s far and away the highest multiplier in the state

for the automotive cluster but that didn’t rise overnight,

it wasn’t 4.1, you know in 1996/1997. But that’s a very

easy metric to use to capture the strength of the supply

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chain and how it’s been built up over time. It’s been very

successful.

MS. O’BRIEN: And that was really one of the reasons

that - - you know we zeroed in on BMW because as we heard

earlier with Foxconn, they’re talking about starting at

about 3,000 and ramping up to 13,000 was the number we

heard. So, there was, you know some synergy in that. I

wonder too, if you both can talk about just how the

experience of BMW has impacted the - - the state - - the

surrounding states as well as South Carolina.

MR. SMITH: I would say from a surrounding state they

have suppliers obviously in North Carolina since we are

border county but also into Tennessee and Georgia and

probably a little bit in Alabama. One of the things that I

saw was when Mercedes went to Alabama that kind of

triggered another little bit and a little bit of growth

because one of the things that I was pleased about was that

us being ahead with BMW a number of those same suppliers

they continued to produce in Spartanburg and then would

provide logistics with a Just In Time Warehouse in Alabama

for a long time but now we kind of see that shifting a

little bit back and forth and with the Chattanooga

operation as well too.

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MS. O’BRIEN: Another one of the reasons that I wanted

to make sure that the audience was able to hear from these

two great gentlemen today is when Joey and I first met he

shared with me, this is just a little bit of a teaser in

terms of what is going to be coming in just another minute

or so, after some questions, is that because of the work

that was done really when BMW first announced that they

were going to locate in Spartanburg and the right

investments that were made, correct me if I’m wrong, but

isn’t South Carolina now the number 1 exporter of tires in

the United States?

DR. VON NESSEN: Yes, exactly. And so, the - - one of

the key aspects of looking at industry cluster development

is looking at spin off clusters or related clusters or

tangential clusters, whatever term you want to use. But

once you have a good grasp of what the supply chain looks

like for particular sector. So, in our case BMW and the

supplier surrounding it, you can begin to look at those

specifically and say, well what other industries could the

supplier support, in part or in full and what additional

suppliers do you recruit or additional companies?

And so, in the cause of South Carolina, the tire

cluster and also the aerospace cluster. So, Boeing came to

South Carolina in 2007 and both of those are due in part to

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the follow up work to BMW with the supply chain and

actively, pro-actively looking at that cluster,

understanding who’s in South Carolina, who’s in

relationship with whom and how you can continue to grow

that over time.

MS. O’BRIEN: Carter can you comment on anything that

has surprised you or thing - - or something that you may

have learned during the process of the multiple expansions?

MR. SMITH: Well, there is actually, they can - -

they're somewhat consistent. It seems like that about

every 3 years we’re in discussions regarding some type of

capital investment - - additional capital investment and

growth a lot of times and employment as well and that kind

of sinks in between what is the platform of the car. They

seem to run about the same thing without major changes for

about 7 years. So, it’s like you’ve got one that’s

carrying it through then they are going to make it change

and then it goes again.

And then the other thing is that when they came here,

they were not looking for automotive expertise. They were

looking for manufacturing expertise and obviously with the

textile situation in the late 80s and going into the 90s we

were very well positioned to provide a workforce that

understands the manufacturing climate. That understands

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shift work and is willing to do a good day’s work for a

good day's pay.

So, all of those there - - I guess it shouldn’t be a

surprise but some of that is supply - - was a surprise too

me as far as consistency and the operation continuing to

grow.

MS. O’BRIEN: We are going to open it up to questions

before the second part of this segment but before we do, I

would like for each of you to just share with the audience,

because there are so many economic development

professionals, a piece of advice.

If you were in their seats in terms of knowing that

Foxconn is coming to town and other businesses potentially.

What do you wish someone would have shared with you when

BMW first announced that they were going to Spartanburg?

MR. SMITH: It’s a lot of fun, to say the least. I

think that there but I - - I think that cooperation,

collaboration and always a “can do” attitude when dealing

with - - with the 800-power gorilla in the room moving

forward and continuing to develop those relationships with

that company. And so that – we’ve seen probably with me,

I’ve probably got more time than any of the other people at

BMW to be honest with you when you think about it because

leadership has changed and rotated out. So, you’ll always

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get what were we supposed to do or what were y’all going to

do for us. You know it’s 10 years down the road from that

previous agreement. So, anyone, whatever it may be, I

think you want to be thinking about that from the local

developer’s side.

MS. O’BRIEN: Joe?

DR. VON NESSEN: And I’d say just be proactive and

recognize that the market environment is dynamic,

constantly changing. So, in South Carolina for example

right now if we’re looking at other ways to add value to

the automotive cluster. One of the things that we don’t

manufacture in South Carolina is engines and so we’re

looking for ways to bring that part of the supply chain to

the state as well, that’s down the road. And then also if

we look at changes in energy with respect to the fact that

in the automotive sector cars are becoming more electronic,

more electric and we are not just talking about electric

vehicles in the sense of having batteries but think about

all of the electronics that go into a car even if it’s a

traditional engine, right? So, the automotive supply chain

is quickly becoming more of an electronic components

cluster. The supply chain is evolving in that direction.

So, just two examples of what’s happening in South

Carolina but always being aware of the fact that things

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change very quickly and you have to stay on top of market

trends to be successful and be looking ahead.

MS. O’BRIEN: So, again we are just going to - - if

you have any questions for Carter, questions for Carter,

because what’s going to happen next is once - - we want to

give your opportunity to chat with Carter and then Dr. Von

Nessen is going to give a presentation very targeted

towards the supply chain and what we might consider here in

this mega region.

So, Carter and I are going to exit the stage but

wanted to give everyone an opportunity to ask a question.

AUDIENCE MEMBER: So, my question is, this morning Dr.

Woo talked about some of the and I’m not going to quote him

properly but maybe some of the resistance that Foxconn is

noticed to the initiative in southeastern Wisconsin. Was

there similar resistance of any kind in South Carolina as

the BMW project was coming online?

MR. SMITH: Initially there was and it was surprising

some of it came from the declining textiles in terms of

their - - the potential impact on the workforce and the

wage potential. It was probably more that, I don’t think

we ever really were concerned about from a union activity

or anything like that but I would say the impact from them

and occasionally some of the other companies felt that they

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were going to be losing their best workers to this

operation because it’s new and shiny and it’s a highly

recognized consumer name.

And so, a lot - - some of them we were very fortunate

when you mentioned tires, we have a Michelin truck tire

plant which is their largest truck tire plant at that time

in the world. So, sometimes we would get the comment that

BMW stand for “Best Michelin Workers.” So, that fear of

walking across the street but they were - - we were all

very targeted from the workforce people to the company and

all that they made sure that they were not depleting any

existing company within a significant radius in South

Carolina for workers. They kind of tracked them because I

think the first week, they probably took in like 65,000

applications after the announcement. So, the workforce was

obviously swamped to say the least.

MS. O’BRIEN: Any other questions?

AUDIENCE MEMBER: (Inaudible 1:15:04.4).

MS. O’BRIEN: Okay.

AUDIENCE MEMBER: Quickly on the Port of Charleston

was it affected significantly by either imports or exports

based on the siting of the plant or was that, is this

mostly a domestic operation?

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MR. SMITH: No, it’s - - they are highly affected by

exports. In fact, they - - the Port of South Carolina was

very involved in recruitment of BMW. BMW is the highest -

- greatest exporter of value automobiles in the country is

right there in Spartanburg and that’s because they export

about 70% of what they make. Also, they - - the port has

invested in the last 5 years of a inland part which

provides directly train traffic from the port to this plant

and back which is basically daily. Now two trains a day

and maybe might actually be 4, 2 trains both ways now. And

so, the export, this is where the port was just talking

about their five-year growth at Inland last week or so.

And so, they are about 62% of projected cargo movements of

what they were anticipating in 5 years.

So, very much a part of it.

AUDIENCE MEMBER: Couple of our subjects here are

being transportation, you suddenly, over several years but

not all that many having a huge increase in the number of

workers who are going to this location. What has been done

in terms of innovation or whatever to get - - to make this

happen?

MR. SMITH: Well primarily we have looked at the

traditional thought on how do you take care of

infrastructure when you put more on it? Build it bigger.

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And so, I think where we are at now is, we are having to

seriously consider not only the company's work but on terms

of shift times and shift releases and things like that for

the worker going out. But we are also looking to see how

do we disburse traffic off of the plant site and how they

may need to move more traffic within the plant site as

opposed to going out going around to the back gate for

instance. But basically, its been the traditional thing,

just make it bigger.

AUDIENCE QUESTION: Kudos to Kelly for this panel

session right here. I’m a former Political Scientist at

Auburn University and one of my former colleagues was the

City Manager of Auburn the City of Auburn, Alabama wrote a

book entitled “The New Civil War.” And that book was

basically looking at the south basically stealing a lot of

investment capital away from rust belt states. What’s

really amazing about this is that you’ve been invited up

here to the Midwest to share your expertise. So, from a

political competitiveness scenario, what are you going to

go back and tell the folk in South Carolina and Alabama

about please beware because I think Foxconn kind of tilted

the teeter totter towards the Midwest in terms of capital

investment?

188

DR. VON NESSEN: I can speak a little to that. Each

region is different and has its own competitive advantages

and from the perspective of the auto cluster, I would say

if you look at a map and look at the U.S. headquartered

firms and the foreign headquartered firms that there is a

very specific division and if you look - - and so the

domestic firms are anchored in the Great Lakes region,

foreign direct investment has come more to the south. So,

there has been somewhat of a division there for a number of

reasons but the bottom line is that each region has its own

specific competitive assets and that’s one of the reasons

that we are here today is to talk about that.

MR. SMITH: And we realize that and we also recognize

that our competition is globally. It’s not whether it’s in

this part of the United States or where - - more and more

small projects, all kinds but they are looking elsewhere as

much as just the southeast.

MS. O’BRIEN: Well, I could listen to that southern

drawl all day but we are going to transition now. Dr. Von

Nessen will do a keynote and Carter and I will exit the

state. So, thank you

DR. VON NESSEN: Thanks Carter. All right, well good

afternoon everyone once again and thank you for inviting us

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to participate today it’s great to be with you in Chicago

today.

And we’ve talked over the last 20 minutes or so about

really the logistics of the boots on the ground approach.

The interactions between BMW and South Carolina but I want

to pivot a little bit and talk more about the why and the

how of BMW. So, specifically why is it so important for

South Carolina to devote all of these resources towards

bringing BMW to the state and then how, how did we get the

link, what is that link between the announcement of BMW

itself and then this high rate of economic growth. How do

we basically maximize the benefits of a company like BMW?

What does that look like?

So, let’s talk about both of those questions. So,

first of all why? Why was BMW so important? There are

two main reasons, again some of these we have already

addressed briefly. But the first reason of course is the -

- perhaps the most obvious one and that’s the jobs and

incomes and overall economic activity that’s associated

with a large company like BMW coming to South Carolina.

So, the state is clearly going to benefit from that but the

less obvious benefits come down to this concept of traded

cluster development and the fact that BMW like any major

economic player or economic buffalo that we like to use

190

that term. Any major buffalo that’s going to service the

foundations for traded cluster development. And traded

clusters really are the key to linking a company like BMW.

A major announcement or Foxconn to maximizing its rate of

growth over time and maximizing the rate of economic growth

and a region over time. So, I think it’s important to talk

a little bit about what traded clusters are and why they

are so important and how they work. So, in economics any

time you want to talk about a concept it’s always best to

go back to the basics. So, let’s start by defining what a

traded cluster is. As you can see here it’s simply a

regional concentration of related industries in a

particular location. So, this is obviously a concept that

we are all familiar with, if not in name at least in

concept. And a traded cluster you can think of some of the

most famous ones that we’ve - - some of which we’ve talked

about today. Silicon Valley of course, the Biotech cluster

in Boston and the automotive cluster in the Great Lakes

region, just to name a few.

And why are clusters important? Why do companies - -

why are they willing to locate and congregate near one

another? And the answer is quite simply they have shared

resources that they can take advantage of or agglomeration

economies is the term that economists like to use for this.

191

So, anything from a shared workforce, a shared labor pool

to shared infrastructure, to a shared supply chain and

we’ve talked about the Port of Charleston being a - -

certainly a shared resource that automotive companies

coming to South Carolina can utilize.

So, in 2018 we have multiple major automotive

manufacturers in South Carolina that are export oriented

and therefore can take advantage of the Port of Charleston.

So, these common resources provide a significant value

there.

Now another concept about clusters that’s important is

this adjective that we use to describe them, traded

clusters. And those can be distinguished from local

clusters in the sense that traded clusters rely on demand

from outside of the local region. Whichever region that we

are talking about. Local clusters rely on demand from the

local region. So, just think about the difference between

a major automotive firm like a BMW that is selling cars all

over the world to a service cluster that is primarily

serving local residents. Services like restaurants and

barber shops and all different manner of local services.

So, very obvious difference there and the reason

traded clusters are so important is that when you're

integrated into a global economy that makes you less

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susceptible to local economic fluctuations. So, if we

think about traded clusters as a way to maximize economic

growth and to minimize disruptions over time, we want

consistent growth. Traded clusters is a way to do that.

It’s just like a retirement portfolio, diversity is good

you want to be integrated into more markets across the

world because if you’re wedded less to a particular market

particularly to your own market, that’s going to limit your

risks to a certain extent.

And then finally traded clusters also typically see

high rates of growth particularly in the early years once

they hit a critical mass. Once you get that supply chain

built up to a certain level. And they typically follow

what we call an “s” shaped growth path. That is fairly low

growth for awhile and then it shoots straight up like an

“s” once you hit that - - once you hit that critical mass.

So, why do traded clusters matter? What are some of

the major reasons? These are three of the big ones, number

one traded clusters scale up employment in ways that few

other industries can do and we’ve talked about that. One

of the specific factors there is the supply chain. When

you have a large supply chain and a new company comes in

that‘s in that cluster, that’s in that industry and they

can use that local supply chain that means that all of

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those dollars are staying local. All those dollars are

staying within the region and that’s going to generate

additional demand through the economic multiplier effect or

the economic ripple effect. So, scaling up employment for

a local region. Also, traded clusters tend to be more

anchored to a specific region. They don’t pick up and

leave and move from region to another very easily like an

induvial firm might. And then they also lead to higher

more consistent rates of economic growth as we’ve talked

about. This is a key feature of the traded part of the

traded cluster environment. Again, when you’re integrated

into a global market or at least into a national market

that is outside of your local region, you are looking at

demand from other areas and that helps to maintain

consistent growth over time. It allows you to maximize

your growth and, in many cases, minimize fluctuations

during economic downturns. Of course, every downturn is

different but in general traded clusters tend to fare

better in many cases during those downturns.

All right, so let’s talk about BMW as a story in South

Carolina and how they manifest these - - this potential to

develop traded clusters. Are they a good match for this

fit? And so, you can think about BMW and then think about

the similar patterns that you see here in the mega region

194

with respect to Foxconn. So, does BMW serve as a good

anchor for a automotive cluster in South Carolina? Well

let me give you five reasons why we would say the answer is

definitely yes. Number one BMW is export oriented. As

Carter mentioned BMW exports about 70% of all the vehicles

manufactured in South Carolina outside of the United States

through the Port of Charleston. So, this shows us very

clearly that BMW is integrated into global markets. Which

again provides that advantage of being anchored to the

global economy and providing more - - more diversity and

again such that South Carolina is not necessarily going to

be limited or is going to be influenced as much by local

economic downturns, that’s not going to end influence

growth rates quite as much.

Secondly, BMW does not displace local business

activity. Once again because it forms the foundation of a

traded cluster in its access to international demand. So,

one of the common criticisms of large companies like BMW or

like Foxconn or like others is that they do come in and

they shut down a lot of local mom and pops. So, think

about a lot of the big box retailers, they are sort of the

typical example of this. But that has not happened with

BMW, again because they are selling to markets all over the

world and in the United States as well and so that makes

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the benefits of BMW far more clear. And so, these gains

that we see in terms of jobs for South Carolinians is

really a net gain. And again, it’s more obvious because

they are not displacing local demand and can actually do

the opposite and fuel local demand. So, when you have a

established supply chain, you have a lot of workers in high

wage, high skilled positions those are wages that are then

spent locally in South Carolina’s economy and fuel

additional demand for the local service sectors. So, the

local clusters often follow traded clusters in terms of

their overall growth partners. So, that’s an important

advantage for BMW.

Number three, BMW is very much forward looking so we

have to look at companies in terms of the buffalos that

were trying to attract and retain. Are they going to be

around? In BMW the case is definitely yes. They just

recently celebrated their 100th anniversary in 2016; they

are doing all sorts of work with respect to research and

development and innovation. And one of the really

interesting things that they are doing now in terms of

recognizing these changing market demands I mentioned

before that’s really a key factor here.

I was in Germany earlier this year and they’re very

very sensitive to changes in consumer buying patterns

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particularly among Millennials who are much more likely to

use services like Uber and Lyft and are far less likely to

get a driver’s license at a normal age. And are less

likely to own a car, particularly in major cities. So, if

you are a major automotive manufacturer that’s a real

trend, a market reality that you’re beginning to have to

deal with now. So, BMW is taking that very seriously and

looking ahead. And of course, any company in the

innovation or R&D space is going to generate more value-add

which leads to higher wages in general. And that leads to

another more obvious benefit of BMW -- that they generate

high wage, high skilled employment. I’m not going to spend

too much time here we have already talked about some of the

major benefits of BMW in South Carolina. They were

definitely a company that under-promised and over-

delivered. As you can see, 2,000 employees at the time,

2,000 jobs rather. Which has expanded to about 10,000

direct jobs as of 2017.

And then finally, BMW also provides what we call a

halo affect for South Carolina which is just another term

for the power of branding. Any time you land a major

marquee name in a region, that’s going to provide

significant branding power around the world because other

companies are going to stop and take notice of regions like

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South Carolina and ask, what is South Carolina doing

differently? Why would a company like BMW be attracted

there? So, all these advantages that we see, again, arise

out of this concept of traded clusters and that’s very

important. And we can see the evidence of this so I

mentioned the supply chain before this is a picture of what

the BMW supply chain looks like in South Carolina. That

actually shows you some of the names there which obviously

you can’t read very well so I can change the picture this

makes it a little more obvious, a little easier to see.

But one key point that I want to emphasize here is, notice

that the supply chain is statewide. BMW is in the

northwest part of South Carolina in the

Greenville/Spartanburg region. So, you can see that

cluster firms in the northwest part of the state. Columbia

the state capital is in the center part of the state and

then Charleston on the coastal region. So, three obvious

clusters, but what do notice there, again you notice that

the benefits of BMW are very clearly statewide so it’s not

as if an individual region would have any reason to be

upset that BMW located in one region versus another.

Because the benefit extends to multiple regions across the

state and even some outside of the state as Carter

mentioned before. So, the benefits are very clear and

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we’ve seen, again, a sizeable supply chain develop in the

last 25 years.

This is the employment multiplier effect that I

mentioned before in the conversation: a 4.1 in South

Carolina. So, for every 10 jobs that are created in the

automotive sector in South Carolina, another 31 are created

elsewhere in the state on average. So, this means that any

new automotive player, any new company that comes to South

Carolina is going to be able to take advantage or rather

South Carolina is going to be able to take advantage of

that multiplier effect and that’s been building up over

time. Again, you don’t just jump to 4.1 overnight but as

you expand the supply chain over time this is the type of

effect that you can potentially get. And just compare that

to what the other major sectors in the state look like.

These are just a handful of the larger sectors in South

Carolina that you could look at, but as I mentioned before

the average employment multiplier is right at about 1.7.

And here we can actually see the growth that the

automotive sector and the advanced manufacturing sector

more generally has contributed to South Carolina throughout

the current economic expansion that goes back to 2009 it’s

now in its 10th year. So, the redline there represents

South Carolina’s employment growth rate and the green line

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represents advanced manufacturing or transportation

equipment manufacturing the official definition there. So,

you can very clearly see that it’s been driving our growth

and in fact by many metrics South Carolina has been leading

the nation in terms of economic growth going all the way

back to 2010 due in large part to the - - the automotive

sector and the advanced manufacturing sector. And that

sets the state up for future expansions as well. So,

Volvo, one of the most - - one of the more recent

announcements in the state announced they were going to set

up shop in Charleston, that was back in 2015. A number of

reasons why they’re coming to South Carolina as you can see

that they have been quoted that it’s not all about the

supply chain of course.

We’ve talked about the labor force, we’ve talked about

the different regional assets that a particular area has.

All of those matter but the bottom line is that South

Carolina is setting itself up for future success as well.

All right, so, that tells us the story of what’s being

going on with BMW. But here’s the real question that you

all are interested in, we’ve landed a buffalo, so what.

What’s next? Where do we go from here, right? That’s –

that’s one of the reasons that we are here today. So, when

we think about where we are going next and what the process

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is going to look like in terms of traded cluster

development, I would invite you to think about this

question using the following flowchart. Because when we

think about an economic ecosystem and that term is being

used a little bit this morning, we can consider three major

steps, at least as a major part of the process.

So, the first step, of course is to land a major

economic player or a buffalo which, that part we can kind

of check off our list, right? And then we can move on to

the second two phases which are supply chain development

and then what I alluded to before - the creation of spin

off clusters or related clusters, and both of these

elements are important and this is a way, again to begin

conceptualizing where we move from here. So, how do we

begin to advance the ball on items number 2 and 3 there,

especially with respect to supply chain development, and

the answer is market research. Because what you all

effectively have and what economic developers in general

have is as much of a marketing problem as it is an economic

problem. Or a marketing opportunity as much as an economic

opportunity. And economic development in many respects is

taking the philosophies and the principles of both fields,

marketing and economics, and merging them and using

economic research to understand the landscape of the local

201

region and from there building a strategy, a competitive

strategy, a market strategy to identify target markets and

then to go out and recruit them. Because effectively

marketing looks externally, that’s the philosophy of

marketing is always looking to the customer and saying, how

do we figure out what their needs are and how do we

identify way to fulfill those needs? And in this case in

the mega region, the needs are those of Foxconn and of

course the suppliers that we're hoping to recruit to the

region. So, all of that is very important, again market

research is a fundamental.

And so, it begins with environmental scanning so a

couple of different ways that we can - -a couple of

different first steps when you are looking at market

research and the principles behind it. What are the

existing businesses? Number one, in the region that can

potentially supply a principal player, such as a Foxconn.

So, going out and actually mapping - - mapping the firms in

the region, identifying which ones could potentially fit

the bill versus which ones are less likely to, and then

secondly to go and identify what Foxconn’s needs are or

what the major economic players needs are, and then thirdly

going out and identifying related clusters that may exist

elsewhere in the United States.

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So, what are other regions doing that might be

comparable to the mega region that would be helpful and

again I go back to what South Carolina did in the late

1980s and identifying Regensburg, Germany as having a

similar economic history, having a similar sized economy as

a template essentially for - - to learn from. So, what

other regions of the country are doing similar things to

what the mega region is doing?

So, three specifics in terms of environmental scanning

to look to. And so, once you engage in these three actions

you can do a SWOT analysis and a identify those gaps.

Identify your strengths and weaknesses and begin to create

an actionable plan, strategic plan to move the ball

forward.

So, let’s talk about an example of how this works and

work that’s been done in South Carolina that illustrates

this process. So, as I mentioned before Boeing in 2007 came

to South Carolina and since then we’ve been proactively

working in the aerospace cluster, the University has to

help the Department of Commerce and other economic

development officials identify the firms that are in the

supply chain. Identify others that could be potentially in

the supply chain and again comparing ourselves to other

regions. So, specially we started out by first mapping the

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supply chain, looking for Tier 1 and Tier 2 suppliers. And

then we actually went out and did interviews so- - - sort

of phase 1 of this research is to identify the firms in the

region, the potential players. And then phase 2 is to

actually go out and talk to them because fortunately or

unfortunately one of the only ways to get good data in this

case is to actually interview and talk to the firms. There

is really no good secondary data here. And so, the

Department of Commerce took these firm lists and actually

went door-to-door for over a year and basically interviewed

companies asking them very simple questions, why are you in

South Carolina? Where do you see demand going in your

industry over the next 10 years? What would you like to

see in South Carolina if the Department of Commerce or the

state could do anything to help you? Who are you hoping to

work with, right? Very basic questions but you get a lot

of good information from this process and so you can

develop the strategies over time.

So, two quick examples of some conclusions that came

out of the research that we’ve been doing in South Carolina

with respect to the aerospace cluster. Number one is

looking at the military aviation component and the

Department of Defense contractors. So, one of the things

in South Carolina that is true is that the aerospace

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cluster is largely about half of it as actually a military

base. We have a large military presence in South Carolina

and so we have a lot of military contractors that serve as

suppliers. And given the constant changes in DOD funding,

DOD priorities, these contractors are at risk of either

having to scale back or potentially in a positive sense of

scaling up. And so, if that happens, one of the important

things to be able to do, is to be able to mitigate

particularly in a negative direction some of those

potential losses to prevent a change in DOD priorities from

negatively affecting areas of South Carolina’s economy and

economic growth. And so, by going out and looking at those

contractors, talking to them, identifying their supply

chain, identifying their - - who they are working with, we

can identify which ones most easily transition into the

private sector and which ones can’t. Which ones are going

got need more help and which ones will need less.

So, that had become a very important part of this

research effort. A second research effort is that the - -

a second outcome here has been the - - the identification

of a potential new supplier - - or I’m sorry of a new

potential industry cluster, in terms of medical equipment

manufacturing and the supply chain looks like it might be

in place to start that development and which is a really

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cool concept because if you think about it, when you’re

creating equipment, advanced equipment to work on a

particular - - to work on anything. Whether you’re working

on a heart, a biological heart or whether you’re working

on, you know an airplane engine you can still see some

overlap there. So, that’s really exciting, so we are

looking into that right now.

And so, there’s some evidence here, I’ll go through

this fairly quickly in terms of the success that we’ve

seen. You can see the scale up in aerospace employment

also in the firm growth as well. And firm growths have

been anchoring the South Carolina as well so we have seen

evidence very high employment and revenue growth, fairly

lower firm growth. And we’ve seen this in interview work

that we’ve do too, that smaller and midsized companies are

coming to South Carolina, they’re anchoring there and then

they’re flourishing. So, that’s been some very positive

results that we, that we’ve seen.

So, just quickly wrapping up, a few key takeaways as

we look to the future, recognizing that initial investments

can generate exponential benefits over time. So, BMW was

very controversial at the time but it’s not in 2018. Not -

- Carter may disagree with me, he may be - - you may be

able to find somebody in South Carolina that thinks BMW was

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a bad decision but I don’t think you’re going to find that.

But you have to be proactive in order to ensure cluster

development. There are likely hidden clusters that may

emerge but once again being proactive to - - to explore

what those are and again aerospace and the tire clusters

are those that have manifested themselves in South

Carolina. A strong R&D sector is critical as we mentioned

we’re continuing to work on this in South Carolina and

hopefully, eventually attract engine - - engine production

to the state.

And then finally workforce concerns of course, are

important too. So, four major takeaways to be thinking

about, but market research is an important next step and it

really will enable you to take economic development to the

next level. So, I am very excited to be - - to be

observing and participating in this exciting announcement

with Foxconn and look forward to watching your successes in

the coming years.

Thank you all very much.

MS. O’BRIEN: Because we are trying to get back on

schedule here, we’re going to go into the next segment but

I know that Dr. Von Nessen will be here at the conclusion

of the program. So, if you have questions, he’ll take

questions from folks after the program. Great, thank you.

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So, last but not least, we started the day looking the

Milwaukee/Racine area and we’re ending the day at the other

side of the mega region in northwest Indiana. And we’re

going to be asking three of the fantastic supporters of our

work to enter the stage. And I’d like to share, Violet

Sistovaris who is the CEO of the utility NIPSCO/NiSource.

NIPSCO/NiSource has been - - really again we talk about

Paul Jones being at the table from day one, this utility

has been supportive of our work. Prior to Violet taking

the role of President, Jim Stanly was the first Indiana

chairman of the Alliance and Violet you have really stepped

up and you have hosted business advisory meetings for the

Alliance in northwest Indiana. You continue to understand

the important role that the northwest Indiana has within

the mega region and with your support and visibility of the

company it does tremendous help for the Alliance, so thank

you for that.

And Mayor Karen Freeman-Wilson, the Mayor has also

been very supportive of the Alliance, she brings so much

expertise in terms of the renaissance that is happening in

Gary and there is really a lot of best practices from

around the mega region that can be shared and you know

connect the dots in terms of what’s happening where. We

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have been involved with the Gary airport and with looking

at some redevelopment areas and some social programs there.

And then we’re very excited and truly the reason that

this segment came together is that I was reading the

newspaper when we saw that US Steel announced its $750M

investment in its plant and I said, “We have to have him.”

So, the phone calls started and Paul Vercher, we really

appreciate you being here today.

So, a round of applause for our next three speakers.

MS. SISTOVARIS: Thank you for that introduction

Kelly, it’s great to be here. I want to make sure that I

don’t clash with both my mics. It really is a pleasure to

be able to join you. It sounds like throughout the day

you’ve talked about a lot of exciting things that are going

on in the three-state area. And it’s really no different

in northwest Indiana as Kelly just talked about.

Continuing to attract new businesses and continuing to

reinvest in businesses that exist, including significant

announcement from U.S. Steel recently about their plans is

what you’re going to hear about today. The work that the

Alliance does under Kelly’s leadership is important and it

provides a platform for connectivity that really leads to

greater opportunities for all of us and certainly want to

thank Kelly and the organization for their continued great

209

work. I am honored to introduce the two major players in

some of our recent success stories. So, a little bit of a

background, Mayor Karen Freeman-Wilson, while I appreciate

our personal relationship, professionally what I would say

about Mayor Karen is that she’s the leader that I think all

of us strive to become. For nearly 7 years now, the Mayor

has been the Major in her hometown of Gary, Indiana

becoming the first female to lead the city and the first

African American female Mayor in the state of Indiana.

She’s a graduate of Harvard College and Harvard Law School

and has served as the Indiana Attorney General, the

Director of the Indiana Civil Rights Commission, and the

presiding Judge of the Gary City Court. She’s also a

leader in the National Drug Court movement, having served

as the CEO of the National Association of Drug Court

Professionals and Executive Director of the National Drug

Court Institute.

As part of her success in rebuilding of the city of

Gary she is very focused and I know this firsthand because

of the work that we do with her on new job creation, the

completion of the $100M airport runway relocation. The

creation of Art House, a social kitchen, it’s a work of

public art and culinary incubator supported through funding

from Bloomberg Philanthropics and the Night Foundation.

210

And certainly, she’s very focused on the development of key

areas of the city including Miller Beach, University Park

and the downtown neighborhoods.

Let me talk a little bit about Paul Vercher. He is a

native of Montgomery, Alabama and welcome to the Midwest.

Having joined U.S. Steel in 2007 and currently serves as

the Director of State Government Affairs. Paul oversees

all government and political activities in Alabama,

Arkansas, Illinois, Indiana as well as Texas. Prior to

U.S. Steel, Paul held government affairs positions in the

Business Counsel of Alabama, the Alabama Rural Electric

Association, the Birmingham Regional Chamber of Commerce,

Alabama Governor Rob James and also worked with one of the

state senators. He’s a graduate of the University of

Alabama and a Juris Doctor from the Birmingham School of

Law. He’s serves on numerous Boards of Directors,

including the Indiana Manufacturers Association, the

Birmingham Business Alliance and Alabama Baseball Coaches

Association just to name a few. His current role enables

him to build the healthy relationships needed between a

city like Gary, Indiana and a corporation like U.S. Steel.

And the impact that such a collaborative relationship can

have on the entire community. We look forward to their

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discussion on how their renewed partnership has led to

investment and revitalization.

So, I’m going to join them and facilitate a brief

discussion. As I am getting settled, what I thought I

would do is maybe ask both of you to make a few brief

comments and then we will get into a couple of questions

and hopefully also allow some time for audience questions

and then we will definitely, I’m looking at Kelly, we will

work really hard to stay on track.

So, Mayor why don’t we start with you and any opening

comments you might make.

MAYOR FEEMAN-WILSON: Well first and foremost, I want

to thank Kelly and her team for allowing me to be a part

what we all know to be an extremely important conversation.

I think that as Mayors, and as business people and as non-

profits who want to drive our communities and promote our

communities there is a bit of tension in saying that we

want to also promote regional competitiveness so that this

region can be competitive with other regions. What I would

counsel us as we look at the whole notion of regional

competitiveness is that there are regions who have this

down to a science.

I had an opportunity recently, as recent as yesterday,

to participate with other Mayors and Bloomberg Philanthropy

212

in a Mayors Innovation Workshop, day long. And what I

noticed immediately was the comaraderie but not just the

comaraderie but the cooperation that is occurring in the

Austin area, that’s occurring in the Denver area among

Mayors and not just among Mayors but among Chief Innovation

Officers, among businesses in those regions and as a result

of that there was a city’s challenge that was announced

this morning where Georgetown was able - - Georgetown,

Texas which is the Austin region won a challenge and the

folks from Austin were just as happy. So, I think that’s

really instructive to us as a - - as a tri-state region to

think about how important it is for us to work together.

How important it is for us to support each other and really

how important it is not just because playing nicely

together is the thing to do but really because it benefits

the citizens that we have been entrusted in serving. It

benefits the business climate in our respective communities

and ultimately when we work together, we all win.

MS. SISTOVARIS: Thank you. Paul?

MR. VERCHER: Yeah, that’s a great point, Mayor. And

by the way I lived in downstate Illinois, to at Scott

Airforce Base, my dad was military.

MS. SISTOVARIS: So, welcome back.

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MR. VERCHER: So, I’m back in Illinois and I’ve also

lived in Kansas City, so I have a little Midwest

upbringing. But I wasn’t really going to bring this up,

but it’s a good point because our company U.S. Steel has

factories all over the country. So, we have a pretty big

footprint here in North America. We have a footprint in

Europe and then other places.

So, one of our mills in Alabama was shut down there

was a project which most of the economic developers here

are probably aware of the Tissen Corrupt Project at the

port down in Mobile, Alabama. And they went into direct

competition with United States Steel and I think they got a

$1B from the State of Alabama. Once of the first projects

I worked on out of school was a Mercedes Project in Alabama

and that I think was right before BMW but a lot of people

thought that was a bad investment, too but it turned out to

be one of the best things the state ever did. But getting

back to that point Mayor is when Tissen Crept came in and

competed with us in getting $1B from the state I told the

current Governor at the time, I said, “Governor, I

understand why you’re going to take this but you’re going

to put workers out of a job in Birmingham.” I said, “So,

you’re adding these new jobs at Port of Mobile but you’re

just taking away from Birmingham.” And we made an

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announcement last year that regrettably we closed our

Flatwell Operation down because of that. So, I think it’s

- - I think it’s good when communities can come in and work

together collaboratively, I think that’s the key word,

collaboration and I just want to say that our investment

that we’ve decided to make at Gary, you know it’s announced

that $750M, I think there’s a chance that it could be even

more than that, Mayor. But - -

MAYOR FREEMAN-WILSON: I’m counting on it.

MR. VERCHER: - - but it wouldn’t have happened

without the collaboration with the city. I mean one of the

things I get, I'm blessed to do is I go around and I talk

to different cities and communities and states and we have

a lot of projects. I’m going to talk about one in a second

and I get to go meet with a lot of people but the Mayor of

Gary is the best - - my favorite Mayor in the whole

country. And I really have a unique and really good

relationship with her and when it comes time to you know

look at a project and make an investment, a lot of that is

how you feel about the community and obviously Gary is our

flagship plant. So, we have a great relationship there but

you have to have great leadership and leadership starts at

the top. So, Mayor thank you for all of the things that

you do for the community and you’re a big reason why we are

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- - we’re coming here to your town and so just want to

thank you.

MAYOR FREEMAN-WILSON: Well, that’s very humbling and

I certainly appreciate it Paul. You know when we think

about the significance of U.S. Streel to the city of Gary,

obviously U.S. Steel created the City of Gary as its

flagship and you know gave birth to the city. But I think

we also had to really rethink what our relationship was and

for so long it was a - - a taking, what can we get U.S.

Steel to do? But I think when we thought about how we

might add value to the partnership, I think it made us a

better partner and ultimately gave more value to you from a

corporate standpoint and it’s not that there won't be times

when it has (inaudible 1:57:05.2) that we won't go to our

corporate sector and say, we need or we’d like to see or

we’d like to do to create that value-add in the city. But

I think that can’t always be the conversation.

MS. SISTOVARIS: Great conversations and Paul I agree

with you wholeheartedly, she’s one of our favorite Mayors

too. And Mayor to your point partnership has to be a two-

way street and you know you’re - - sometimes we can get off

track but collaboration, I think, only happens when there’s

a little bit of give and take at various points along the

way. Well as someone very much interested in economic

216

development certainly in northern Indiana and really the

entire state, I have to ask this question first. That

first initial meeting as an inquiring minds kind of

question - - that first initial meeting, how was it? Who

was there? What were your objectives? And what were you

able to leave coming out of that initial conversation?

MAYOR FREEMAN-WILSON: So, it was a very interesting

meeting. Because while we had had a meeting that Paul was

not in with a number of the leadership - - leadership team

in Pittsburgh when the National League of Cities met in

Pittsburgh, we just reached out to say we’d like to come

in, we’re going to be in town, we’d just like to sit down

and have a conversation. So, that was sort of the

precursor, I think to this - - the next meeting which

occurred late ‘17 early ‘18. And so, you know, my question

was where have you been? And it was in a very respectful

manner because we were glad to see them, but it still was a

way of us sort of saying you know there are ways that we

thought we could have been helpful and there are ways where

we thought you might’ve been helpful that did not involve

money. And so, we wanted to kind of reset that

relationship that if nothing else happened there would at

least be a rapport where I could pick up the phone and call

Paul or pick up the phone and the call the Plant

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Superintendent or pick up the phone and call someone else

in or out of northwest Indiana or Pittsburgh to develop a

rapport that would be lasting that would really transcend

any monetary investment. And what I will say in Paul’s

favor and really in the company's favor, I don’t think they

could have had a better Ambassador, could have sent a

better person to come and sort of reestablish that

relationship because he certainly acknowledges the prior

challenges but also said okay, that happened then, let’s

move forward and that was well received by our team.

MR. VERCHER: Thank you. And you know I think it’s

something that regrettably corporations can do sometimes we

can retreat into our silos and if you look at the cyclical

nature of the steel business you know we are up and we’re

down. When we were down from 2,000 - - and the cities know

it just like the company knows it. We were really down

2008 until really recently. So, we were in a lean six

sigma type environment. Our company we were - - we changed

from Gatorade to Squincher in our mills because it saved us

$3M a year. You know TV’s went out of the offices. I mean

we went down to, I mean where we didn’t have anything but

one of the things that we didn’t do a good job of was

establishing and maintaining relationships with cities and

municipalities and governments really at all levels during

218

that time. So, when you go into survival mode, I think one

of the things that companies can do sometimes they lose

focus of the relationships. So, when you come out of that

survival mode and you got nothing, you know you have

nothing and so we realized really quickly and the Mayor was

kind and we promise, “Hey we are going to do a better job

of that.” I think we have different leadership, you know

at our company right now. You know we are looking to

merely maintain our even keel focus in the try offs, you

know at the peaks and the valleys and that includes our

relationships with the cities and sometimes it’s not - - I

think what I found more than anything is that it’s not

always about monetary things. I mean those are things that

need to happen in cities but a lot of times it’s just being

present on a board on a - - you know coming to an airport

meeting or just doing whatever that city wants. Having a

representative there doesn’t look good if the largest

employer is not sitting at a meeting when you bring in a

prospective new prospect or whatever. I mean we need to be

involved and I think we realize that and we decided to

change. And so, you know our - - we’re making this

investment, it’s called AMP (Accelerated Manufacturing

Production) it’s an asset revitalization project and the

kind of things that’s really neat about it, that’s

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different than a lot of other investments is that we don’t

create new net jobs so everybody, all the economic

developers know the big metric, you know when you go out,

you get money and investments is - - you know it’s - - for

incentives it’s all about job creation where we don’t

create jobs. But what we do is we stabilize the 3,800

employees that are at Gary right now. And it’s interesting

our company has 29,800 people in our company. Gary in 1970

had 30,000 employees. So, automations come in and our

technology is changing and we’re still producing the same

amount of steel. U.S. Steel, you know to put it in kind of

perspective, you know we make about 22M net tons of steel a

year, that’s what U.S. Streel produces. The United States

produces 100M tons, China produces 1B tons. So, and

there’s a $2B overall steel capacity in the world so it

just kind of puts that into perspective of where we are at.

MS. SISTOVARIS: So, if not jobs, Mayor may I ask you

what are you seeing as some of the key benefits of U.S.

Steel’s AMP program as it pertains to the city?

MAYOR FREEMAN-WILSON: So, there are two aspects to

that. While there are no new net jobs, we know that their

workforce is ready to retire a number of them. And so, we

do see the job opportunities that exist maybe not today but

next year, five years, ten years from now. To have that

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stability for 38,000 jobs now we can train, we can work

with Ivy Tech and other local educators and educational

institutions so that our young people will be ready for

those jobs as the workforce retires. But in addition to

that, the investment that is going to occur will add to the

tax base for the city and the question for us became how

does that happen. And we spent a lot of time crafting what

that would look like so that there would be a benefit for

U.S. Steel obviously, but that there would be an immediate

benefit for the city and that has not always been the case

in economic development because of the way that incentives

have been structured in the past. So, I think that was the

win for us, particularly given our financial challenges in

the city. We had to look very carefully at that both how

that would impact our bottom line immediately but also how

our citizens would receive that type of idea.

MS. SISTOVARIS: Great, thank you so much. And Paul,

it’s hard for me to have a steel representative up here and

not ask probably a question many folks in the audience have

and that just the impact of tariffs. You know, not the

political aspect of it but maybe if you could speak to

impact that it’s having on your industry and maybe U.S.

Steel specifically and then I’m hoping to have a few

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minutes to go to some questions from the audience. So,

please be preparing for your questions.

MR. VERCHER: And let me just add one thing to what

the Mayor just said, so AMP is a $2B project over a 5-year

period. So, our company is going to invest $2B over 5

years to revitalize existing machinery. So, the thing when

we were talking to Mayor in Gary and the other places that

we went. We went to all of our business operation

locations as we have redundancy in most of our product

lines and so these investments could have gone anywhere.

But where they go is going to be the most stable part of

our company. So, it was really a big deal and for Gary to

continue to be the flagship, you know that was important

because Gary doesn’t shut down in lean times. Our other

plants shut down and idle and there’s nobody working so

Gary kind of gets the - - when that happens everything

comes to your flagship, so I think that’s important. The

Mayor realized that and we just appreciate her working with

us.

On tariffs, so, I’ve heard some of the comments about

tariffs obviously, you know steel companies benefit from

tariffs, so I sit up here today as a beneficiary and I make

that caveat at the beginning but I think what you have to

do on tariffs is you have to ask yourself a question: Is

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steel something that the United States needs to produce?

If you answer yes to that question for whatever reason,

then you have to have tariffs because over the last - - you

know we can go back to - - you know 4 or 5 or 6 Republican

and Democratic Administrations and China and Russia and

other countries to a certain extent have been violating ITC

trade rules. So, you know in a real low level, you know

there’s rules that everybody has to play with to make sure

steel can be globally competitive, not to give one person

the advantage over the other but just make sure that

there’s a level playing surface.

If ou believe that steel - - the United States has an

interest in creating and having a strong domestic steel

industry, then you have to have the tariffs because the

people are not going to stop cheating and they come up with

new and creative ways to do that. China stole a lot of our

trade secrets at U.S. Steel and then they put that - -

those secrets in the marketplace working against us and

they manipulate their currency and they do transshipping

and just a number of other things. I have compared it to a

whack-a-mole game so as soon as you do one thing you know;

the other head pops up and you hit that one and another

head pops up. And at a certain point the number that I put

out there America produces 100M net tons a year. It’s a

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$2B capacity, China in 2016 was exporting more than the

whole United States domestic steel industry produces. So,

you have something that’s not going to change there and if

you lose your steel making ability, you know you have a

national security issue. So, 232 is an instrument that the

President has at his disposal but it’s a 9-month process

from the U.S. Department of Commerce and they studied the

issue and they came back with the recommendation and they

recommended that the president take some action. He took

the 232 action. We are glad he did, our business went up.

We are aware that there is, you know other businesses that

were harmed in that but you know President Trump said steel

was the backbone of the country, I agree. I work in the

industry but you know everybody uses steel every day of

their life, so you have to have it. And if you have to

have it, you’ve got to - - it’s like the bully, you’ve got

to stand up to the bully and there is some pain involved in

that but eventually you know you have to do something about

that. And that’s kind of what happened, on very simplistic

terms. So, I know we are at 5 minutes so I’ll be quiet.

MS. SISTOVARIS: I for one appreciate the clear and

direct response because I think many industries are still

kind of in the “wait and see” mode so it is interesting to

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hear you’re pretty emphatic that it was needed and a good

thing, so thank you for that.

MR. VERCHER: If you run a robust steel industry.

MS. SISTOVARIS: We have 5 minutes. What - - we’ll go

right here. Yes, go ahead.

AUDIENCE MEMBER: This is a question for Paul and it’s

a kind of a follow up. You’re talking about the tariffs

but what are some of the other economic drivers that led to

this investment as well as firing up the Granite City?

MR. VERCHER: Yeah, that’s a good point. So, Granite

City is our downstate Illinois plant outside of Bellville.

And that’s - - it produces, I think 2.7M tons of steel, has

two blast furnaces, about 800 jobs. So, tariffs played a

role in all of these things, our CEO is on record as

talking about that. The economy you know turning like a

lot of industries, we’ve kind of been sitting on our

capital for a while. When you’re a steel manufacturer

you’ve got a lot of heavy equipment and it bangs on it, day

in, day in, day in and if you don’t make adjustments to it

and if you don’t fix it or spend capital to fix it you’re

not going to have an operating steel mill. So we had sat

on it for a long time and so I think the economy turning,

the tariffs being implemented, certainly had an impact to

Granite City and reopening those mills, but it also played

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a role in our AMP process and our investment here and in

Indiana.

MS. SISTOVARIS: Great, thank you.

AUDIENCE MEMBER: Thank you.

MS. SISTOVARIS: We probably have time for one more,

we’ll go to you.

AUDIENCE MEMBER: Mini mills used to have a big factor

against fully integrated mills like Gary Works and Granite

City. How big of a factor is it as far as your competition

now?

MR. VERCHER: Yeah, I mean mini mills are - - they

have the biggest thing - - the biggest advantage they have

over an integrated - - we have an integrative process

which is basically you take minerals (inaudible 2:10:47.3)

makes steel mini mills you can flick them on and off. So,

in the cyclical nature of our business when you start to

hit a downturn a mini mill can just turn off that electric

art furnace. You can never totally idle a blast furnace

because you have to spend $7M or $8M to restart it when you

do that. So, you can’t totally turn it off so you low idle

them. It’s very inefficient and so the biggest advantage

that a mini mill has is just the flexibility. You know

that’s a big driver there but we do have a mini mill plan,

our first one that will come online.

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AUDIENCE MEMBER: Cost per ton?

MR. VERCHER: Yeah, you know it depends on - - that’s

a bigger question but it’s significant, you know.

MS. SISTOVARIS: All right, well we are going to go

ahead and wrap up. Please join me in thanking Mayor Karen

and Paul. And I’ll turn it back over to Kelly.

MS. O’BRIEN: All right, well we did it. We got

through the day and we’re ending at 2:30. So, just - - I

know people want to get to their train, just a few quick

things. We started the day by saying what a phenomenal

team exists here at the Federal Reserve Bank. So, I really

want to do a shout out to Jerry Boyle and Alicia Williams,

Mary Joe Kenistra, Brit Oliver, Rhonda Brawnham, Jenny

Shrader, Greg Fitzpatrick, Graham Justice, Amy Bickers.

For all of the names that I mentioned I cannot tell you the

amount of time that goes in to putting today together. So,

a round of applause to the team at the Federal Reserve

Bank.

By virtue of being in this room it means that you’re

on the distribution list for the Alliance Newsletter. I

know we are inundated with so many emails but please do try

to read the newsletter, follow what’s going on and

participate in where you think you can bring value. You

can see that there is a robust dynamic mega region but as

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the data showed that Karen Maguire told us about earlier,

we are not growing at the rate that we should and there are

things we can do about that.

And in our newsletter, we always have economic data so

I want to especially thank the economists at Indiana

University and our own resident economist. Morton, if you

want to just take a quick wave to the audience, he supplies

- - spends countless hours and sends me all kinds of excel

sheets and we always want to make sure that we translate

that back to our shareholders. So, Morton thank you for

everything that you do with that.

And the day cannot end without really a heartfelt

thank you to Shalora Jasper, our Director of Operations.

Shalora has become such a trusted confidante, such an

incredibly hard worker, she’s so talented, keeps the trains

on track and if every you ever really need or want

something, Shalora is the person to go to. Full

disclosure. So, round of applause for Shalora.

So, you can take your names tags off, leave them on

the table, we’ll collect them. For those that are

interested in the higher ed meeting it’s going to happen

right outside these doors in the Wisconsin Room starting at

2:45 and again thank you for being here today.

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Please don’t let this be a one time a year effort.

There are so many programs that we are doing and will do

and we need you involved.

I hope to talk to everyone really soon. Thank you and

have a great rest of your day.