Category Archives: Economy

Wisconsin Unemployment Drops to 2.8%

Seriously. With 2.8% unemployment and thousands of jobs that employers can’t fill, why is anyone on our welfare roles?

MADISON – The Department of Workforce Development (DWD) today released the U.S. Bureau of Labor Statistics (BLS) preliminary employment estimates for the month of April. The data showed that Wisconsin’s unemployment rate declined to a new record low of 2.8 percent. Wisconsin’s labor force participation rate remained at 67.5 percent in April.

The “Bar”

Interesting concept. I’m not sure it would ever work in Wisconsin.

A bar without booze sounds like an oxymoron, like an aquarium without fish or a bakery that doesn’t serve bread. But in cities like New York and London, where bars often function as second living rooms for apartment dwellers with little space, an alcohol-free nightlife option can appeal to people who, for whatever reason, would prefer not to drink.

Sam Thonis, who co-owns the bar with Regina Dellea, got the idea for Getaway three years ago, when he and his brother, who doesn’t drink, were trying to find a place to go out together at night. “There weren’t many nightlife options in New York that didn’t revolve around alcohol or weren’t trying to push that on you in some way,” Thonis says. “The more I talked to people, some of whom are sober and some of whom aren’t, the more I felt that people wanted that kind of space.”

In response, Thonis and Dellea made their bar a studiously 0% alcohol space, meaning that not even non-alcoholic beers that have a trace amount of alcohol are allowed on the menu. In the US, the term ‘non-alcoholic’ may be applied to beverageswith 0.5% alcohol by volume or less, which means many popular non-alcoholic beers aren’t actually alcohol-free.

“It’s 0% as much as humanly possible, so if you’re sober and it’s an issue for you, or you don’t even want the smell of alcohol around you, you’ll be safe,” Thonis says. But it still looks and feels like a bar – it only opens in the evenings, the lights are low and no one appears to be working on their screenplay.

Getaway, which opened in April, is part of a growing global wave of nightspots that specifically cater to people who are avoiding alcohol, but still want to go out and socialise in spaces that have traditionally been dominated by drinking. There’s Vena’s Fizz House in Portland, Maine and The Other Side in Crystal Lake, a suburb of Illinois. In London, alcohol-free Redemption bar now has three locations, as well as a menu of vegan, sugar-free, wheat-free food. In January, The Virgin Mary, an alcohol-free pub, opened in Dublin.

Unionizing Efforts

Heh.

Delta Airlines is facing significant criticism after posters discouraging its staff from joining a union were widely shared online.

“Union dues cost around $700 [£540] a year,” one of the posters states.

“A new video game system with the latest hits sounds like fun. Put your money towards that instead of paying dues to the union,” it continued.

The posters point to a website featuring Delta branding which encourages workers not to unionise.

Without confirming it produced the posters, a spokesperson for the airline said it had “shared many communications, which on the whole make clear that deciding whether or not to unionise should not be taken lightly.”

[…]

Politicians and union representatives were among those to condemn the posters online.

Democratic presidential candidate Bernie Sanders said the posters were “a disgrace”.

“I say to Delta: Stop trying to undercut workers’ right to form a union and negotiate for better wages,” he tweeted.

The pro-union people are permitted to say any outlandish thing they want about the company. They tell the workers how evil the company is… how greedy they are… how selfish they are… how badly they treat employees… and on and on and on. All of this in an effort to encourage people to unionize. But when a company makes the slightest effort to discourage the employees from unionizing, the socialist bullies immediately pounce on them.

No, Bernie, Delta wasn’t trying to “undercut workers’ right(s).” They were merely presenting a counter-argument. That is allowed in a free country, but not in Bernie’s socialist paradise.

Rideshare Driver Career Path

In response to my post yesterday about the rideshare driver strike, a helpful reader sent me this Career Map for a rideshare drier. Seems about right…

Rideshare Drivers Strike

Looks like unions are trying to kill Uber and Lyft at a critical time in their corporate development.

Rideshare drivers are striking and protesting in major cities across the United States, with many participating in a 24-hour strike of the Uber and Lyft apps that began at midnight on 8 May.

Cities affected by the stoppage – which varies in length from two-hour strikes to day-long boycotts – include Los Angeles, New York, San Francisco, San Diego, Philadelphia and others. Strikes are also expected overseas in Britain, Australia and elsewhere.

The protests come the day before Uber launches its shares in a public offering on the US stock exchange.

The 4,300-member Rideshare Drivers United in Los Angeles is picketing outside Los Angeles international airport throughout the day in addition to participating in a 24-hour strike.

“All of us had to guess when Uber’s [share launch] was, knowing this would be a key moment the public, investors and elected officials would be looking at Uber to see what kind of company it is, and we knew the voices of drivers had to be elevated in this. And that’s why we chose this time to organize,” said Nicole Moore, a part-time Lyft driver and organizer with RideShare Drivers United.

I have used both Uber and Lyft extensively. I used to be an Uber guy, but I switched to Lyft because I can get Delta Skymiles using Lyft. The friction of their growth is being driven by the new business model. Remember that Uber and Lyft are not cab companies with a labor force. They are simply apps that connect a transient labor force with consumers. The key to the financials is that they have to make the price low enough to be acceptable for consumers while also providing enough money to attract enough drivers to fill demand. The apps serve as real-time supply & demand measurement devices and seek to hit the sweet spot for maximum profitability.

Frankly, they aren’t working right yet as evidenced by the fact that neither Uber or Lyft are profitable. Meanwhile, as a customer, I can tell you that the pricing is OK, but not vastly better than a cab in most cities. And depending on the city, the customer experience is very uneven. Some Lyft and Uber cars and drivers are great. Some are pretty shabby. What keeps me as a customer is the convenience and transparency of the app and the easy receipts for business expenses. But I have been at an airport more than once and jumped in a cab when the app tells me that the driver is 10 minutes away. Again, it’s about convenience.

Back to the strike… remember that Uber and Lyft were never set up with the intention of having full-time drivers. The drivers are supposed to be people with other jobs who choose to drive from time to time to make some extra money. In order to attract these workers in the Gig economy, Uber and Lyft have to set the rates high enough to attract drivers. What SHOULD happen is that if enough drivers look at the rates and decide it isn’t worth the effort, they just don’t log on. If Uber and Lyft can’t attract enough drivers, then they will have to raise the rates. The problem is that they can only raise prices so much before customers balk. Meanwhile, Uber and Lyft are both struggling to be profitable taking a cut as the facilitator. Now that some of the Uber and Lyft drivers are unionized and treating their labor as a full-time gig instead of a side hustle, it increases the upward pressure on driver rates and aggravates the problem.

So at the root of it all, we have to question whether, after all of the hype, are rideshare businesses structured like Uber and Lyft a sustainable business model? Perhaps this opens up the market for new entrants who will find another model. The problem is that people who travel a lot don’t want 15 rideshare apps on their phones. The cab companies have come to the table (late) with a pretty decent app that provides the convenience of ridesharing with a dedicated labor force. Is that the answer? Maybe. The problem with cabs that Uber and Lyft sought to fix was the convenience and quality. The Curb app addresses the convenience and the competitive pressure has helped equalize the quality.

We are going to know a lot more in a couple of years. As public companies, Uber and Lyft won’t have the same ability to raise capital if they can’t get profitable. And one inevitable recession will shake out overly-optimistic investors.

New Hotel and Office in Downtown West Bend

Good news from the Washington County Insider.

May 6, 2019 – West Bend, WI  The City of West Bend has entered in to an agreement with RafRad LLC and Kinseth Hospitality with the intention of constructing a hotel and office building in the downtown on a portion of the 8-acre site formerly home to Gehl on the southwest corner of Water Street and Forest Avenue.
In partnership with the Washington County Site Redevelopment Committee (SRC), the City of West Bend completed a hotel study specifically dedicated to the former Gehl site. City staff approached SRC and identified the site as a high-priority redevelopment site.
Paul Stangl, of RafRad LLC, has been a driving force behind bringing a hotel to our downtown. Along with Kinseth Hospitality, Stangl has a history of successful hotel development. Many residents may be familiar with their developments and most specifically with their development of the Hampton Inn and Suites located in the City of West Bend.

Wisconsin’s Economy Had Strong Growth in 2018

So we fired our governor smh.

Wisconsin’s real gross domestic product grew 2.5% in 2018, the second largest increase in the Midwest and the state’s strongest year of economic growth since 2010.

The 2018 growth rate marks the first time Wisconsin’s real GDP has increased by more than 2% in a year since 2011. After two years of negative growth in 2008 and 2009, Wisconsin posted 3% growth in 2010 and 2.1% in 2011. From 2012 to 2017, the state averaged 1.3% annual growth.

Wisconsin now ranks 17th in the country last year for economic growth. The U.S. economy as a whole grew 2.9% last year while the Great Lakes region grew 2.2%, according to data from the U.S. Bureau of Economic Analysis.

The state of Washington had the strongest economic growth at 5.7%, followed by Utah, Idaho, Arizona and Florida.

Among nearby states, Michigan had the strongest growth at 2.7%. Wisconsin outpaced Minnesota, 2.2%, Iowa, 1.4%, Illinois, 2.1%, and Indiana, 1.9%.

And you’ll note that the overall growth would have been stronger and outpaced Michigan if we has not also been shrinking government, which is a good thing.

Government cut growth by 0.28 percentage points.

Wisconsin Won Amazon Facility Over Michigan and Ohio

Cool

Amazon.com picked Oak Creek for a nearly 2.2 million-square-foot fulfillment center over similar projects it considered doing in Michigan and Ohio, according to state documents and a source involved in the project.

The new facility, announced last year, is described as Amazon’s flagship Wisconsin facility and will ship around 1 million packages per day. The company’s Kiva branded robots will operate throughout the building, which will house around 25 million items, according to state documents.

The project is eligible for $7.5 million in state tax credits from the Wisconsin Economic Development Corp. Those credits are in addition to the $10.3 million previously awarded to Amazon for its facilities in Kenosha.

The company was deciding between Wisconsin and Michigan for the investment, according to a WEDC staff review for the new credits. A source involved with the project said Amazon was also considering Ohio for an investment, but noted the company is often simultaneously considering investments in multiple locations.

Teaching Office Life

Not a bad thought.

If you’ve spent much time working with recent graduates – people who have just finished university without much work experience – you’ve probably witnessed your share of odd office behaviour.

For instance, the new grad who shows up dressed for a night of clubbing, or the entry level worker who doesn’t realise the CEO in a Fortune 500 company doesn’t want his opinion about their new brand strategy, or the new grad who takes all her calls on speakerphone without noticing the colleagues glaring in her direction.

We’ve all heard the stereotypes about entry-level workers who think they should get a corner office or have their own assistant right off the bat – but in my experience, those are outliers.

Of course, we’ve all been there at the start of our own careers … because we don’t do a very good job of teaching students and recent graduates how to navigate office life. We teach them other things – how to write a research paper or analyse a poem or conduct a lab experiment – but we don’t have many formalised mechanisms for teaching the sort of skills that will have a huge impact on how to succeed in your first few years of work: skills most of us think of as just how to be in an office.

Part of the problem is that the people who could do the teaching work in academia and don’t have much, if any, recent experience of industry

Instead, we just throw young people in and expect them to figure it out … which of course leads to plenty of professional faux pas along the way, some of them only mildly embarrassing but some quite embarrassing indeed.

We’ve all heard the stereotypes about entry-level workers who think they should get a corner office or have their own assistant right off the bat – but in my experience, those are outliers. What’s much more common are young workers who haven’t fully processed that they’re adults now and don’t need to ask for permission to go to lunch, or to leave a meeting to use the bathroom, or who feel awkward calling their older colleagues by their first names, or are afraid of asking questions because they think they’re already supposed to have all the answers.

Wisconsin’s Age Problem

It’s a real problem.

The Wisconsin Counties Association’s nonpartisan research arm, Forward Analytics, recently released a study that raises concerns about the state’s migration patterns. The report claims that Wisconsin doesn’t have enough young people to take over jobs from baby boomers set to retire in the coming 10 to 15 years, Wisconsin Public Radio reported.

“We’ve got to figure out how to turn that around and we’ve got to do it fairly quickly because baby boomers are nearing retirement,” said Dale Knapp, Forward Analytics’ research director.

The state’s migration of children dropped below 10,000 from 2010 to 2015. Before 2010, Wisconsin added 40,000 children from outside the state over a five-year period.

Wisconsin’s birthrate has also declined to its lowest in four decades.

Former Gov. Scott Walker launched a marketing campaign last year to try to lure millennials, age 21 to 35, to the state. Wisconsin has struggled to retain younger millennials, who often prefer big cities and more entertainment options.

Knapp recommends that Wisconsin instead targets families that might want to settle in the state. He says Wisconsin can offer quality schools, safe neighborhoods and recreation.

Wisconsin was successfully able to lure people in their 30s to 50s around 1990 to make up for the exodus of younger residents, many of whom were college graduates leaving the state, he said.

Knapp said the issue is that states across the country are facing an aging population and declining birthrate.

“So we have to figure out what makes us different, what makes us more attractive than IowaIllinoisIndiana or Minnesota. So we can attract those workers,” Knapp said. “Our long-term economy really depends on it.”

As I am wont to say when people ask me why I moved to Wisconsin almost 20 years ago, people only move for one of two reasons… love or money. Young people are generally moving out of Wisconsin for money… higher paying jobs. And many retirees and people in the middle of their careers move out of the state for the same reason, but are more likely to factor in a lower cost of living (lower taxes, housing prices, etc.). That’s why we see the net migration to states like Arizona, Florida, etc. Some people stay in Wisconsin, or leave and come back, for love. Love of family, love of spouse, etc.

The State of Wisconsin can’t do anything about love, but they can focus on money. How can the state make Wisconsin a more attractive place for businesses with higher paying jobs to locate in Wisconsin? How can the state make Wisconsin lower the cost of living so that people don’t need a job that pays as much to have the same standard of living in other states? What are states that enjoy an interstate net inflow of people doing differently?

I’ll give you a clue… all of the marketing in the world won’t compensate for higher taxes, more regulation, and crappy winters, but the state government can only do something about the first two.

Evers Threatens to Renege on Foxconn Deal

Don’t screw up our state, governor.

Gov. Tony Evers said Wednesday that electronics maker Foxconn Technology Group is unlikely to employ 13,000 workers in Wisconsin as it has said it could and that the state’s deal with the company may need to be “downsized” as a result.

The structure of the deal already accounts for Foxconn missing their jobs obligation and protects the taxpayers. If Evers reopens the contract, he is dealing from a position of weakness. Foxconn doesn’t have to agree to anything else and could just walk away. While I’m sure that Evers and his lefty cohorts would be pleased with their self-fulfilling prophecy, it would be terrible for Wisconsin for a generation or more. It would mark Wisconsin as a state that won’t stick to their contracts for businesses around the world.

Gou Plans to Take a Step Back

Perhaps this explains why we have been getting a few mixed messages from Foxconn lately.

TAIPEI (Reuters) – The chairman of Taiwan’s Foxconn, an assembler of Apple Inc’s iPhones, said on Monday he plans to step down in the coming months to pave the way for younger talent to move up the company’s ranks.

[…]

Terry Gou, speaking on the sidelines of an event in Taipei, said that while he planned to resign as Foxconn chairman, he hoped to remain involved in strategic decisions regarding the company’s business.

When asked by Reuters if he would quit as chairman, Gou said he was moving in that direction, although any decision needed to be discussed with the company’s board.

“I don’t know where you got the information from. But I have to say, basically, I’m working toward that direction – to walk back to the second line, or retire,” Gou said.

“I will be involved in the major direction of the company, but not involved in daily operations.

“I’m already 69 years old. I can pass down my 45 years of experience. That’s the goal I set up – to let young people learn sooner and take over sooner and to replace my position sooner.”

Gou said his plans would be discussed with the board of Foxconn, formally known as Hon Hai Precision Industry Co Ltd, in the coming months and shareholders would be told at the AGM in June.

Foxconn Buys Building in Madison

Excellent!

Foxconn Technology Group confirmed plans to buy a building on the Capitol Square in Madison currently owned by BMO Harris Bank to establish another innovation center in Wisconsin.

The company announced the purchase of the property at 1 W. Main St. on Friday morning. The building will be renamed Foxconn Place Madison and Foxconn says it will connect the University of Wisconsin-Madison and regional suppliers with the company’s Wisconn Valley Science and Technology Park in Mount Pleasant.

BizTimes Media first reported on Foxconn’s plans to buy the property in March. 

Foxconn has previously announced a number of other innovation centers around the state, including in Green Bay, Eau Claire, Milwaukee and downtown Racine. An article from The Verge this week suggested many of the projects have not made significant progress.

Local Business Innovating and Doing Good

Here’s a fantastic write-up about a local West Bend business that is doing great things by innovating and disrupting.

Born between 1946 and 1964, the Baby Boomer generation came along right after WWII. They make up about 26% of the entire United States population, a number that is only matched by Millenials. They own the majority of the homes in the United States and, in fact, usually own more than one property. With such numbers, boomers are determined to change the way we age in America. They will not settle for the care and surroundings that their own parents received. The boomers want to remain independent and in their own homes.

In a world of Uber, GrubHub, and Amazon, at-home caregiving and independence-enabling services will be the “go to” for our aging neighborhoods. GrandCare Systems, located in the heart of downtown West Bend, has been on the cutting edge of the digital caregiving bubble since the late 2000s. We had a chance to sit down with co-founding members, Charlie and Gaytha Hillman to find out more.

[…]

Charlie knew there had to be others experiencing the worry and stress he was. He searched for existing products and came up with nothing. He put his engineering mind and MIT education to good use and decided to design a technology to provide remote monitoring capabilities and enhanced communications between the loved one and family members. GrandCare is available not only for use in the United States, but internationally in countries such as the United Kingdom, Australia, Canada, Aruba, Bermuda and New Zealand.

The system can be used in both single-family homes or in senior living communities. GrandCare is a large touchscreen that is placed into the loved one’s residence. It is a source of information and communication with pictures, videos, games, trivia, weather/news, simple video chatting and reminders. Caregivers can simply log in or check the GrandCare app to add communications or check on activity, medications or health readings.They can also get alerts if something seems amiss (e.g. didn’t take medications, blood pressure is too high, didn’t get out of bed, or isn’t moving around normally). GrandCare requires zero computer knowledge on the senior’s part.

Wisconsin Shipyard to Build New Bulk Carrier

Great!

Fincantieri Bay Shipbuilding of Sturgeon Bay has signed an agreement with The Interlake Steamship Co. of Ohio to construct a U.S.-flagged Great Lakes bulk carrier that will be the first of its kind to be built in 35 years.

The new River-Class, self-unloading bulk carrier is believed to be the first ship for U.S. Great Lakes service built on the Great Lakes since 1983, according to a press release from Interlake and Fincantieri Bay Shipbuilding, a unit of the Italian shipbuilder Fincantieri S.p.A. The ship, which will transport unpackaged raw materials to support manufacturing throughout the Great Lakes region, also represents hundreds of jobs for U.S. merchant mariners and Wisconsin shipyard workers, Fincantieri said.

The ship, measuring 639 feet long and 75 feet wide, will be constructed in Fincantieri’s Sturgeon Bay shipyard by its nearly 700 employees. The work will will generate business for partnering contractors, vendors and suppliers. Major partners include American Bureau of Shipping (ABS), Bay Engineering (BEI), EMD Engines, Caterpillar, EMS-Tech Inc., Lufkin (a GE company) and MacGregor. Construction is expected to be completed in mid-2022.

The Interlake Steamship Co., based in Middleburg Heights, Ohio, is the largest privately held U.S.-flagged fleet on the Great Lakes with nine vessels. Based on the length, the new bulk carrier will be the smallest ship in Interlake’s fleet, but the company hasn’t built a new ship in 40 years, according to Interlake president Mark Barker.

Zuckerberg Advocates for Enforcement of Digital Hierarchy

He’s no fool. In an essay for the Washington Post, Zuckerberg calls for more regulation.

In brief, Mr Zuckerberg calls for the following things:

  • Common rules that all social media sites need to adhere to, enforced by third-party bodies, to control the spread of harmful content

  • All major tech companies to release a transparency report every three months, to put it on a par with financial reporting

  • Stronger laws around the world to protect the integrity of elections, with common standards for all websites to identify political actors

  • Laws that not only apply to candidates and elections, but also other “divisive political issues”, and for laws to apply outside of official campaign periods

  • New industry-wide standards to control how political campaigns use data to target voters online

  • More countries to adopt privacy laws like the European Union’s General Data Protection Regulation (GDPR), which came into force last year

  • A “common global framework” that means these laws are all standardised globally, rather than being substantially different from country to country

  • Clear rules about who’s responsible for protecting people’s data when they move it from one service to another

This is a game that has been played for centuries. Now that Facebook sits atop the industry, Zuckerberg is advocating to freeze the structure and increase the barriers to entry. Complex legal structures with substantial financial liability for violations makes it impossible for all but the biggest and wealthiest of companies to comply.

Wisconsin Unemployment Rate Dips on Flat Job Growth

Good news!

Wisconsin’s unemployment rate dipped below 3 percent in February, even as net private sector employment was essentially unchanged during the month.

The seasonally adjusted unemployment rate in Wisconsin was 2.9 percent during the month, the first time it has been below 3 percent since February 2018.

Private sector employment was down by 300, according to data released by the state Department of Workforce Development. Total nonfarm payrolls were down 3,400, led by a 3,100-job drop at the local government level.

Foxconn Plant To Be Operational By 2020

Great!

Electronics maker Foxconn Technology Group said Monday it will begin construction this summer on a display-screen manufacturing hub near Racine, with plans for production to start by the end of 2020.

A company statement said the construction marks the next phase of Foxconn’s overall blueprint for its campus in Mount Pleasant.

It underscores the company’s manufacturing plans at the site, weeks after reports and statements by Foxconn officials suggested the company was scaling back or changing its plans to build display screens in Wisconsin.

If the plant is operational by fall 2020, it also could give political fodder to one of its top cheerleaders, President Donald Trump, who has touted Foxconn’s plans as heralding a renaissance in U.S. manufacturing.
This will be hard for Wisconsin’s Democrats. Will they celebrate this great economic boon to Wisconsin or will they continue to carp and moan because Trump celebrates it? In other words, will Democrats prioritize partisan politics over celebrating Wisconsin’s success? I think we know the answer to that.

Foxconn Complies With Wisconsin’s Environmental Regulations

There you go.

A top aide to Gov. Tony Evers said Thursday he believes all of the state permits issued to tech giant Foxconn have been reviewed by the state Department of Natural Resources and deemed appropriate.

But the damage to the relationship with Foxconn is done. Despite having gone through the process and received the appropriate permits, they were forced deal with regulators again and wait to see if they would pass the new administration’s test. Inconsistent treatment, uncertainty, and the arbitrary application of regulations kills businesses.

U.S. Becomes World’s Largest Petroleum Exporter

Huzzah, huzzah.

New York (CNN Business)Move over, Saudi Arabia. America is about to steal the kingdom’s energy exporting crown.

The United States will surpass Saudi Arabia later this year in exports of oil, natural gas liquids and petroleum products, like gasoline, according to energy research firm Rystad Energy.
That milestone, driven by the transformative shale boom, would make the United States the world’s leading exporter of oil and liquids. That has never happened since Saudi Arabia began selling oil overseas in the 1950s, Rystad said in a report Thursday.
“It’s nothing short of remarkable,” said Ryan Fitzmaurice, energy strategist at Rabobank. “Ten years ago, no one thought it could happen.”