Milwaukee 7 Council Meeting

February 19, 2015

DRIVING

ECONOMIC

GROWTH

Chairman, President and CEO

Wisconsin Energy Corporation

Gale Klappa – M7 Co-Chair

Jim KreuserCounty Executive

Kenosha County

Frank UnickCFO

Uline

M7 Agenda

BusinessPlan

Driving Prosperity

Global Trends

M7 Mission

Help companies in our driver industries –

companies that EXPORT

goods and services from the region –

to create jobs and invest capital here.

M7

Privately-held former Fortune 1000 manufacturer of industrial compressors, blowers, pumps and loading arms

$2.5 billion annual sales; global employment of 7,000

Moving global HQ to Milwaukee’s Third Ward (competed against Houston and Quincy, IL)

200 highly-paid executives & professionals

Team effort: WEDC, City of MKE, M-7

Win: Gardner Denver

M7

Lake County (IL) CNC machining

company

Consolidating two facilities to

50,000 sf complex in Kenosha

77 skilled manufacturing jobs;

$1.5 million capex

Announcement February 2015

Team effort: WEDC and KABA

Among first meetings sourced via M-7

calls on Illinois manufacturers (2013)

Win: Toolamation

M7 Kenosha “Wins”

Jobs Payroll CapEx

Konecranes 50 2,346,000 250,000

Kenall 621 34,487,856 32,000,000Niagara Bottling 70 3,088,750 75,000,000

Quest 56 2,805,880 3,600,000

Toolamation 77 2,788,324 1,445,000

874 45,516,810 112,295,000

M7

Healthcare technology company

that provides IT systems and

services to manage the ordering

and tracking of patient injections

Locating office in downtown

Milwaukee

50 highly-compensated engineers

and software developers

Recipient of WEDC angel investor

tax credits

Emerged from MassChallenge

accelerator

Win: ConsortiEX

M7

Milwaukee-based screen

printer that specializes in eco-

friendly production methods

Milwaukee- and Wisconsin-

centric products and designs;

sold in Milwaukee, Madison

and Door County

Expect to add 15 employees

MEDC loan candidate

Win: Orchard Street Press

M7

Scorecard of Wins for the Region

* Results based on company projections at time of M7 engagement** Jobs accounted for at 5 year audit using public records*** Average regional wage $45,000

STRATEGY: GROW JOBS

Performance Measures 2010-To-Date 2005-2009

Project Wins 46 12

Pledged Jobs* 7,390 3,220

Audited Jobs** TBD 2,449 (76%)

Average Wage*** $49,998 $58,800

Payroll $369M (est.) $144M

Capital Investment Pledged $657M $156M

M7

50 Active Projects

16International

Pipeline of Prospects

M7

5,292Potential Jobs

Pipeline of Prospects

M7

Campaign Leaders

Campaign 3.0

$3,969,000

M7

Next Generation Manufacturing Council

ACCOMPLISHMENTS:

One of 12 federally designated

“Manufacturing Communities”

The Region receives preferential

consideration for up to $1.3 billion

in federal grant money

WHAT’S NEXT:

Create and integrate regional

manufacturing initiatives

Lead collaborative applications

for federal dollars

STRATEGY: BUILD REGIONAL CAPACITY

M7M7 NGM Council

National Manufacturing Institute Competition

Competition will award $70M in federal funding to the consortium best suited to execute the vision for a national Smart Manufacturing hub

$70M federal investment must be leveraged by at least $70M in matching private investments

The award is for five years with the goal of the institute being self-sustaining after that period

M7M7 Talent Initiative

Mission: Align workforce with growth opportunities in high potential industry clusters

Supporting → M7 Attraction & Expansion efforts

→ Employers in M7 driver industries

KEY STRATEGIES:

1. Provide a coordinated “Rapid-Response” to address immediate industry talent needs Link employers to 250 quality job placements per year.

2. Address the skills gap by improving the quality of the regional labor pool

Increase the # of apprenticeships in M7 region.

Expand the # of students in cluster-specific pathway programs (e.g., Welding and Machining 101)

Increase the number of students on a clearly articulated pathway (2+2+2) from basic credentials to Bachelor’s degrees in engineering.

3. Gather and disseminate real-time data of available talent for industry; and align

talent systems to meet current and future industry needs

M7

Export InitiativeRegional strategy to grow the number of exporting companies

RESULTS:

Selected as one of eight regions across the

nation to share export strategy best practices

Strategies

1. Catalyze export engagement by small and mid-

sized enterprises (SMEs)

2. Help companies navigate the exporting process

3. Use the region’s commercial strengths to

expand and intensify export engagement

4. Create a strong local export culture

In the past 10 years, exports have grown

45%offsetting a 6% loss in domestic sales.

STRATEGY: BUILD REGIONAL CAPACITY

Kenosha County

Jim Kreuser, County Executive

Kenosha Area Business Alliance

Todd Battle, President

Water Council Members

Carthage College

University of Wisconsin-Parkside

Gateway Technical College

Centrisys Corporation

FaB Wisconsin Members

Ocean Spray, Gina Balke, FaB Careers

Chair

Kenall Lighting

Gateway Technical College

M7 NGM Steering Committee

Carmel Ruffolo, UW-Parkside

Gordy Kacala, Gateway Technical College

M7 Talent Subcommittee

Gordy Kacala, Gateway Technical College

Doug Bartz, Kenosha County

Michelle Blanchard, SE WI WIB

M-WERC Members

UW Parkside

Gateway Tech College

Engendren

BizStarts Members

Procubed

Dossett

Centrifill

M7 Todd Battle

Chair Emeritus Chair

Quarles & Brady Greater Milwaukee Committee

John Daniels – M7 Co-Chair

February 19, 2015

Paul A. Laudicina

Critical Global Business Trends

Milwaukee 7 Economic Development Partnership Council

Opportunities for the Milwaukee 7 Region

23

Discussion agenda

■ What’s on the minds of business leaders?

■ Global trends

■ Technology and creative disruption

■ Worldwide economy

■ FDI flows

■ Opportunities for Wisconsin

24

Discussion agenda

■ What’s on the minds of business leaders?

■ Global trends

■ Technology and creative disruption

■ Worldwide economy

■ FDI flows

■ Opportunities for Wisconsin

25

Business leaders are optimistic for 2015, but they have concerns

■U.S. economic recovery

■Hard landing in China?

■Rising cost pressure

■Technology and innovation

■Climate change and resource scarcity

■Potential changes in taxes

■International trade agreements

26

Discussion agenda

■ What’s on the minds of business leaders?

■ Global trends

■ Technology and creative disruption

■ Worldwide economy

■ FDI flows

■ Opportunities for Wisconsin

27

Adaptation is the key to survival

We live in a world of continuous, disruptive change

“Strategy is a sense of direction around which to improvise.” – Peter Drucker

28

Trends will influence global change over the next 10 years

Globalization/geopolitics

Turbocharged by technology

Natural resources and environment

Social/politicaltensions

DemographicsConsumer behavior

& economics

29

Discussion agenda

■ What’s on the minds of business leaders?

■ Global trends

■ Technology and creative disruption

■ Worldwide economy

■ FDI flows

■ Opportunities for Wisconsin

30

As the pace of change accelerates, we are flooded with information

■ 90% of the world’s data ever created was generated in the last two years

■ It takes only 15 minutes to produce as much information as is in the Library of Congress

■ The Internet of Things could link some 50 billion smart objects by the year 2020

31

Technology is leading to creative disruption in business

Source: A.T. Kearney; IBM

3D Printing Biotech advances

Robotics

Internet of things

Big data

32

Augmented reality, augmented confusion

Information

Wisdom

Data

Knowledge

Knowledge Pyramid

33

Droning on: The global robotics revolution will accelerate

1.61.21.0

17.0

2007

6.5

2011

18.2

5.5

2015

32.6

34.2

+23%

Industrial Robots

Service Robots

Source: International Federation of Robotics

World robot population, millions of robots

If robots formed a nation, in 2015 it would be the 36th largest country, larger than Canada

Hen-na Hotel, to open July 2015

34

The Internet of Things could link some 50 billion smart objects by the year 2020

0

10

20

30

40

50

2000 2005 2010 2015 2020

Number of things connected to the internet, global population, bn

Source: IDC, Cisco

Connected things

People

0

10

20

30

40

50

2004 2006 2008 2010 2012 2014 2016 2018 2020

Machine generated data, % of digital universe

35

3D printing could transform the manufacturing landscape

Source: Stratasys

176

420-58%

Additive Manufacturing

Traditional Machining

1.5

18.0-92%

Traditional Machining

Additive Manufacturing

Current advantages, hand-tools example

Production cost, US$ Production time, days

Past

Present

Tool based manufacturing (Forging)

Un

it c

os

t

1 10 100 1k 10k 100k 1M

Future?

Units

Additive Manufacturing

Unit cost comparison

36

Biotech advances will mean the end of some diseases and the advent of personalized medicine

Source: Human Genome Research Institute

100,000

1,000

1,000,000

10,000

10,000,000

100,000,000

2014

4,008

2001

95,263,072

Cost of sequencing human-sized genome, US$ per genome, logarithmic scale

37

Discussion agenda

■ What’s on the minds of business leaders?

■ Global trends

■ Technology and creative disruption

■ Worldwide economy

■ FDI flows

■ Opportunities for Wisconsin

38

Policy choices impact competitiveness and growth

■ 3.3% base-case average annual real growth between 2015 and 2020

■ Lower global commodity prices

■ >4% growth for emerging economies

■ > 2% growth for advanced economies

■ Diverging economic performance based on policy choices

■ Significant risks

■ Positive wildcards

39

Discussion agenda

■ What’s on the minds of business leaders?

■ Global trends

■ Technology and creative disruption

■ Worldwide economy

■ FDI flows

■ Opportunities for Wisconsin

40

FDI inflows: 1998-2013 ($B)

Globally, FDI inflows are once again trending upwards

Source: UNCTAD, A.T. Kearney analysis

1,800

1,600

1,400

1,200

200

800

600

400

1,000

0

2,000

2,200

Developingcountries

Developedcountries

World

20132011200620011998

Shaded area indicates recession

Global FDI Inflows

41

Five developed countries account for >40% of FDI inflow to the U.S.

(1) Does not include Caribbean countries often used as tax shelters for global corporationsSource: UNCTAD, A.T. Kearney analysis

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

2006 2009 2013

231136 170230198144306216

2371051.2%1.1%

-0.1%

1.7%

0.2%0.1%

1.0%

0.0%-0.5%

1.4%

-0.4%

1.6%1.4%

-1.1%

0.1%0.2%

-0.2%

0.9%0.5%

0.0%

0.4%0.5%0.7%

0.3%0.4%

0.3%0.2%0.8%

0.2%

0.0%

Mexico

Brazil

India

FDI by Source Country ($B, % of US) FDI from Select Developing Countries (% of Total U.S. FDI)

1.0%

2013

2.1%

0.5%0.5%

2009

0.3%0.2%0.0%

2006

0.1%0.1%0.1%

China

Rest of World

JapanUnited Kingdom

CanadaFrance

Germany

2013 U.S. FDI: $231B

$B

42

Investor confidence in the U.S. has been the highest for the last two years

FDICI 2014 rankings

Source: A.T. Kearney FDI Confidence Index 2014

About the FDI Confidence Index

• Index is based on a

proprietary survey of

senior executives of 300

of the world’s leading

corporations

• 1 year after survey, 10

top ranked countries

have consistently

received 50% or more of

global FDI inflows

2.162.091.52

+3%+38%

201420132012

1.601.601.611.611.61

1.611.62

1.631.64

1.641.651.681.701.72

1.741.74

1.751.761.811.841.91

1.911.93

1.952.16

Denmark

Italy

Netherlands

Belgium

Indonesia

Spain

Japan

Chile

Sweden

Malaysia

Switzerland

South Africa

Mexico

UAE

France

Singapore

Australia

India

Germany

Brazil

United Kingdom

Turkey

Canada

China

United States2014

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

2013

1

2

4

8

3

7

5

6

10

12

14

9

15

18

25

--

22

16

13

--

--

--

--

--

24

2012

4

1

20

8

3

5

2

6

7

17

15

--

11

22

10

--

--

24

21

--

--

25

--

13

9

43

The largest FDI flows are directed towards Manufacturing, Wholesale Trade, and Information industries

FDI by Industry into the U.S. ($B)

(1) ‘Others’ includes agriculture, mining, utilities, construction, waste management, food service, and health care(2) ‘Information’ includes publishing, telecom, media, data processing, and softwareNote: Petroleum industry investment is included in the appropriate phase in the value chain, e.g. manufacturing through retail trade (Petroleum contributed ~20% of total FDI in 2010-2011)Source: Bureau of Economic Analysis, US Chamber of Commerce website, WEDC Website, A.T. Kearney analysis

Retail Trade

Information

Others

Professional, Scientific and Technology

Wholesale Trade

Depository Banking

-$5

$22

$84

Real Estate & Leasing

Finance & Insurance

Manufacturing

$6

$32

20132012

$231$230

2011

$26

$27

$94

$95$170

44

A number of factors will likely increase FDI in U.S. manufacturing

Source: BLS, ILO, EIU, Fraser Institute Economic Freedom Ratings, IEA Quarterly Energy Price Statistics, A.T. Kearney Analysis

Competitive labor costs

Attractive business and regulatory environment

Strong market potential

Abundant energy supply

45

Discussion agenda

■ What’s on the minds of business leaders?

■ Global trends

■ Technology and creative disruption

■ Worldwide economy

■ FDI flows

■ Opportunities for Wisconsin

46

Wisconsin has proven capabilities in manufacturing with a strong industry base and leading academic institutions

47

Wisconsin needs to define its investment personality

“Raise a glass with Scotland”“Ireland at the heart of things”

“We favour green lights over red tape”

“Our people and your business, a winning combination”

48

Americas Atlanta

Bogotá

Calgary

Chicago

Dallas

Detroit

Houston

Mexico City

New York

Palo Alto

San Francisco

São Paulo

Toronto

Washington, D.C.

Asia Pacific Bangkok

Beijing

Hong Kong

Jakarta

Kuala Lumpur

Melbourne

Mumbai

New Delhi

Seoul

Shanghai

Singapore

Sydney

Tokyo

Europe Amsterdam

Berlin

Brussels

Bucharest

Budapest

Copenhagen

Düsseldorf

Frankfurt

Helsinki

Istanbul

Kiev

Lisbon

Ljubljana

London

Madrid

Milan

Moscow

Munich

Oslo

Paris

Prague

Rome

Stockholm

Stuttgart

Vienna

Warsaw

Zurich

Middle East

and Africa

Abu Dhabi

Doha

Dubai

JohannesburgManama

Riyadh

A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since

1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned

firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-

critical issues. For more information, visit www.atkearney.com.

49

StateColor & #1 Comments

CA (1) Stated focus on China

TX n/a Trade missions

NY (4) Trade missions

IL (9) FDI & export alignment

PA (11) Integrate local universities

NC (4) Integrate local universities

GA (10) Trade events

FL (13) Local events

SC (4) Country specific websites

MS (5) Country specific websites

LA (4) International trips to attend industry shows

WI n/a Trade Missions and Events

States are adopting different strategies to attract investors and are focusing on a handful of regions

Foreign Economic Development Office Presence – Sample States

Montreal, Toronto Czech

France

Germany

UK & IrelandSpain

S. East Africa

Beijing

Japan

Mexico

Brazil

Chile

Munich

Israel

Korea

Preliminary - based on public data1

(1) Analysis based on scan of Economic Development websites of each stateSource: State websites, Site Selector Magazine, A.T. Kearney analysis

Bangalore

Sydney

Netherlands

Poland

ShanghaiBelgium

New Delhi

Significant concentration of foreign offices

Only few in selected sample states have foreign offices

Hong KongTaiwan

M7

Question

& Answer

Milwaukee 7 Council Meeting

November 5, 2013

Driving

Economic GrowthNEXT MEETING:

JUNE 2