Job creation across the country and state is moderate, but several of Greater Madison’s largest employers are bucking the trend.
When 160,000 new jobs were created in July, barely enough to keep up with changes in the labor force, the nation breathed a sigh of relief. Most of the economic data leading up to that point – particularly modest GDP growth, sluggish manufacturing activity, and declining consumer confidence – was distressing to say the least. A better-than-expected jobs report was the only thing that suggested a recession, a technical recession, could still be averted.
Against this backdrop, IB presents its annual look at the largest employers in Dane County. Given the strength of the health care industry and health providers’ growing reliance on electronic medical records, it’s no surprise to anyone that organizations like UW Hospitals & Clinics and Epic Systems sit atop the list. What is a pleasant surprise is the extent to which various Top 100 employers have grown their workforces since April of 2011, the last time we presented this listing.
We contacted several of these businesses and found they have bucked the workforce odds because of a combination of strong industries, commitment, a surge in commodity prices, and Madison’s devotion to environmental and cost consciousness.
Across the country, health care is one of the few industries that’s actually growing employees, and occupying the top spot in IB’s “Largest Employers” list is University of Wisconsin Hospitals and Clinics. A lot of that has to do with demographic trends as the American population is aging and more frequently using the health care system.
In the case of UW Hospitals and Clinics, workforce growth has less to do with ramping up for full implementation of the Affordable Care Act than with practices already in place, according to President and CEO Donna Katen-Bahensky. “It also has to do with more people being covered by Medicaid or some form of insurance,” she explained. “States like Wisconsin have worked hard to have as many people as possible covered under either Medicaid, or through some other form of insurance, so that has made a difference.”
So have the economizing moves that pre-dated, but are reinforced, by the new health care law. As Katen-Bahensky notes, a lot of health care is moving to the clinic and out of hospital settings, where it’s more expensive. UW sees about 600,000 clinic visits each year, so that requires a lot of employees, and we put our resources into places that are close to where people live. We have a large clinic on the east side, a large clinic on the west side. As those grow, you need to have more staff.”
With regard to in-patient care, UW has added nurses during the past year to staff three new operating rooms. While it’s also opening a new digestive health center and while new staff is budgeted for, recruiting has not yet begun. In addition, newly recruited faculty members are coming on board, including a new head of pediatric surgery who began in August.
Some believed the impacts of the Affordable Care Act would cause hospital workforces to shrink because of lower Medicare reimbursement and the move to pay for quality outcomes rather than volume of services, but the latter is already underway. “It [full implementation of the ACA] hasn’t happened yet, but once that happens, we know we’ll have to keep the number of FTEs down,” she acknowledged.
Over the last five years, Katen-Bahensky said UW’s costs have grown approximately 1% per year, even though it has added staff and is paying salaries and wages above that. The organization has been able to keep the rest of its costs down because of the aforementioned economizing, but also in response to federal law not related to the ACA. Nurse practitioners now are working in a team with other primary care doctors and nurses because of federal laws related to the number of hours a resident can work. Since UW is “the employer of the resident,” it hired other people to fill in for residents.
“We anticipate that we’re probably going to need more ambulatory workers as the ACA comes about and we get more toward population health rather than having people in the hospital,” she acknowledged. UW’s new east side campus, for example, will focus on fitness, wellness, and keeping people healthy, “so there is more ambulatory space there than there will be hospital beds.”
Katen-Bahensky said UW is evaluating the impact of its contractual situation with Physicians Plus Insurance Corp., which is limiting access to UW Hospital, UW Health’s American Family Children’s Hospital, and doctors at UW Hospital-owned clinics. There are different schools of thought on this pending divorce, which will force some Madisonians to switch doctors and seek specialized care outside of Madison. Some want the two sides to patch things up; others see it as a necessary decoupling of organizations with different missions.
“We don’t know what the impact is going to be, so we’re trying to hold back on recruiting a lot of new people,” she said. “Even though we might have put some of these in our budget, we’re telling people to hold off until we see what the impact might be. Most of our patients come from outside Madison because they come here for specialty care, so it’s really less dependent upon that relationship, although we still have to watch it.”
In the meantime, UW is forming an accountable care organization, as specified under the ACA, and like other Madison health providers, the transition to a modified health care system is made easier by the integrative steps already taken. “Between the locally owned insurance plans, the physicians and the hospitals being closely linked together, if you already have those things in place, you are light years ahead of where other places are as far as getting ready for the Affordable Care Act,” she said. “We’ve also had this quality emphasis. With the Wisconsin Collaborative for Health Care Quality, we’ve been looking at our quality data across the state for a very long time. Most places have not even done that.”
The whole Spectrum
Spectrum Brands’ workforce growth is due, in part, to a commitment to Wisconsin and vice versa. The Wisconsin Economic Development Corp. and Spectrum reached an agreement to help fund expansion and the company’s planned move from Madison to Middleton, where it is building a new headquarters in Discovery Springs that will open in the fall of 2013.
Some of the local job growth is attributable to jobs moving here from Spectrum’s facility in Miramar, Fla., and some are occurring at its Fennimore and Portage battery plants. In all, the company employs 1,000 people at its Wisconsin locations, with an annual Wisconsin payroll of $80 million (with the new hires).
“Some of those were people in Florida who chose to relocate to Madison, and for those that did not, we hired locally,” said David Pritchard, vice president of investor relations and corporate communications.
The company will continue to have a presence in Miramar, but Pritchard makes no bones about the fact that the state’s commitment was a key driver in Spectrum’s decision to remain headquartered in Greater Madison. Other states dangled incentives, too, but as part of the bargain with the WEDC, Spectrum will receive $4 million from the state in exchange for maintaining its Madison-area workforce at 470 full-time workers, while spending $40 million over a five-year period to modernize its Wisconsin facilities. The bulk of that would be spent at the Fennimore and Portage battery plants.
“The $4 million from WEDC was a very important, critical factor to remain here in the Greater Madison area,” he noted, “as far as the total package and making the economics work for us to remain here, versus going to another state where there were also incentives offered, or to an existing building, the one we have in Miramar, which is already down there, has people in it, and has some additional space. The WEDC award was very, very important to the entire decision.”
As part of the WEDC commitment, Spectrum Brands said it planned to immediately hire up to 60 persons to fill positions primarily at its Madison headquarters in sales, marketing, and operations, as well as other general and administrative functions such as finance and accounting. The company still is looking to fill positions. “I’d say we have about 30 active searches going on for professional and technical positions,” said Stacey Neu, Spectrum Brands’ vice president of global human resources.
Pritchard said the decision to build a modern, more energy-efficient building in Middleton was part of a comprehensive, multi-month study of development sites, including a number of sites in Madison. “We decided on building a new facility based on the economics of it in Middleton,” he said. “It was a matter of staying here versus going somewhere else. It wasn’t Madison versus Middleton.”
In fiscal 2011, the corporation generated $3.2 billion in net sales, and more than doubled its quarterly earnings in the most recent fiscal quarter on sales of $824.8 million. Despite global economic conditions, declining consumer confidence, tight retail inventories, fallout from the European debt crisis, cost increases in the Asian supply chain, and inflationary pressures impacting food and fuel, it has an ace in the hole in terms of its product mix. With brands like Rayovac batteries and Remington shavers, the nature of its products help revenues grow right along with GDP and population growth.
“We have always had non-discretionary, everyday products, replacement products for consumers, so even in tougher economic situations, our products are still needed,” Pritchard explained. “Whether they are batteries, coffee makers, or an iron or a hair dryer goes out, most people are going to replace those at some point, no matter if the economy is doing well or not doing so well.”
In late August, Spectrum Brands announced plans for a multimillion-dollar investment at its hearing aid battery plants, including Portage.
Mike Schoen, president of Weir Minerals in Madison, serves mining equipment companies and therefore the mining industry by manufacturing slurry pumps and valves. His company’s workforce growth is attributable to the strength of the mining industry and rising commodity prices.
“It’s a very good time to be in the mining industry, and a lot of that is driven by commodity prices,” Schoen explained. “If the price of gold or copper or silver goes up, the mining activity from our customers goes up. They can afford to open new mines or expand capital projects in their existing mines. When they do that, they buy more equipment, which is where we come into the picture.”
Mining is truly a global enterprise, as different geographic areas often are known for the type of mining that takes place there. Whether it’s diamond mining in Africa, or coal mining in West Virginia, or iron ore in Minnesota, mining has been a source of employment for decades. In Wisconsin, the state emblem recognizes the Badger State’s own history of copper and iron ore mining, and the discovery of iron ore and gold deposits in Northern Wisconsin, and the realization that Wisconsin sand is ideal for fracking used in extracting oil and gas, has reignited the debate over mining.
“Normally when somebody mines a mineral, whether it’s sand or iron ore, it’s going to be something mixed in with aggregate, with rock and sand and everything else,” he explained. “So they will dig it out of the ground, put it in some kind of container, mix it with water, and then pump it from one stage to the next as they try to extract the mineral from the rock and aggregate.
“Our slurry pump is used in getting and transporting it from one stage to the next. It’s an extremely abrasive and extremely difficult environment, which is really where we excel.”
The so-called skills gap applies to Weir Minerals, part of the Weir Group of companies, even though it’s finally to the point where its workforce needs have been addressed. While expanding in recent years, Weir struggled to find welders and skilled machinists, including CNC operators.
Future expansion will test the availability of foundry skills. “Ultimately, we need to put a foundry in North America somewhere,” he stated, “and so we are going through that analysis now for the proper location. Wisconsin is one of the potential sites for it, so if it’s here, we’ll be looking for the types of skills that are required to run a foundry.”
If Wisconsin were selected, and the appropriate permits were granted, Schoen said the foundry would be built “around Madison,” where Schoen is not a casual observer of the legislative debate over mining. Noting that opportunity exists in iron ore, gold, and sand, he said Wisconsin is one of the best mining states. “Those three types of mining are huge for us, as they would be for any mining equipment business,” he said, “and so we watch the political environment on that pretty closely.”
At a place where a $20,885 Prius C hybrid drives off the lot almost daily, Allen Foster marvels at how a new innovation has elevated Smart Motors. Foster, vice president and general manager of the dealership, said the company is on pace to exceed its record sales pace of 2008, when it sold more than 3,000 new vehicles and 5,000 total (new and used).
Much of the credit belongs to the increasing popularity of hybrid cars, which combine traditional internal combustion engines and a fuel tank with one or more electric motors and a battery pack, to boost fuel efficiency. The top-performing hybrids get 50 miles per gallon of gasoline, and more models have joined the Prius C as hybrids gain in popularity.
Given the combination of environmental and cost consciousness that courses though the blood of most Madisonians, the hybrid is a huge hit in this market, propelling Smart Motors into a spot on the Largest 100 employers. Smart Motors, in fact, reports that hybrid sales represent 41.6% of its annual car sales, and the dealership has been trading places atop Toyota’s list of most prolific dealerships for hybrid sales. The other dealership is located in San Francisco and serves a much larger market.
In 2008, hybrids represented about 20% of Smart Motors’ annual car sales.
Some people come in considering a hybrid and leaving with a Corolla, which gets 40 miles per gallon, an indication that auto manufacturers are gaining fuel efficiency traction beyond the hybrid.
Foster said that when purchasing a hybrid car, consumers pay a $3,000 premium on the hybrid engine versus what they pay for a gas combustion engine of a similar vehicle, but he contends they recoup that in fuel savings over the life of the car. “Our customers have been very open to this type of technology from the beginning,” Foster said. “Early on, it was those concerned with technology itself, and then we sold a lot of vehicles to people concerned about their own environmental footprint. Now it’s more mainstream. Hybrids are on most people’s consideration list when it’s time to buy a new car.”
Throw in historically high gasoline prices and the difficulty that automobile companies have had in developing purely electronic battery-powered vehicles, and the future looks pretty bright for the hybrid. As a result, the future is solid for Smart Motors’ sales force and service department, which have added staff to accommodate the surge in sales. In the case of the service department, facility locations have been added as well.
“With continued growth sales over the last 10-plus years, that means a lot of service-maintenance customers as well,” Foster noted. “So we continue to add in those departments.”
When things got dicey for the auto industry in 2009, about the time when Toyota was dealing with the public relations nightmare of product recalls and a worsening economy, Foster said he never doubted the industry would make a strong comeback. Smart Motors was coming off a record year, and the recession did nothing to dull the luster of hybrid vehicles.
The same is true overall. In June of 2012, the industry posted 14.1 million new-vehicle sales, the highest since 2007. “We’ve been in business 104 years now, and we have a large stable of loyal customers,” he stated “I knew once the financial crisis was over that we’d still be here.”
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