Volume 21 | Issue 1 | Year 2018

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With over $1.4 trillion in annual private-sector revenues, the global advanced energy market is a can’tmiss opportunity, and dozens of U.S. states are well positioned to reap the benefits.

A case in point: Wisconsin. The latest report from the American Jobs Project details the state’s competitive advantage in sensors and controls for advanced energy, an industry that could support tens of thousands of Wisconsin jobs. The report, created in partnership with the Wisconsin Energy Institute and the Midwest Energy Research Consortium, counts the state’s robust industrial base, technical training programs, engaged university research community, and local market potential as key assets for strategic cluster development. With targeted investments and forward-looking policies, the sensors and controls sector could support an annual average of over 44,000 Wisconsin jobs through 2030.

The Growing Sensors & Controls Market

The sensors and controls industry is projected to grow by 6.9 percent annually through 2022 due to increased interest in active, agile, and efficient energy systems. Advanced energy systems require extensive monitoring and operational controls to optimize production, minimize energy use, and leverage storage. Sensors and controls are hardware solutions that enable these systems to be nimble and responsive to changing conditions, such as weather patterns, available resources, and energy demand.

Wisconsin could tap into the growing market for sensors and controls, especially in the biogas, efficiency, grid, and solar industries. For example, the market for smart grid sensors is expected to grow 15.3 percent annually between 2017 and 2021, while sensors for energy management systems will see a 13.2 percent increase yearly from 2016 to 2024. Wisconsin manufacturing companies are well prepared to serve this growing regional, national, and global demand.

Opportunities Abound for Wisconsin Manufacturing

Manufacturing is a key pillar of Wisconsin’s economy, providing workers with good wages and causing a multiplier effect in terms of local revenue and employment. Wisconsin’s manufacturing industry supports the second-largest employment concentration in the nation. It employs over 16 percent of the state workforce and is responsible for 19 percent of the state’s total output. Manufacturing workers are paid well, with an average annual compensation of nearly $69,000. However, Wisconsin suffered a blow to its legacy manufacturing industry during the recession, and has yet to recover fully.

The sensors and controls industry presents an opportunity to bolster manufacturing in Wisconsin. At least 209 companies already manufacture sensors and controls for advanced energy systems, anchored by corporate leaders such as Johnson Controls, Rockwell Automation, Regal Beloit, A. O. Smith, and Eaton’s Cooper Power Systems. An additional 700 businesses engaged in energy generation, transmission, distribution, and storage as well as the energy-water nexus can support supplier networks and local market activities for these manufacturers. The emerging information and communications technology sector for software development complements the state’s manufacturing expertise in sensing and control hardware.

The American Jobs Project’s research indicates that Wisconsin’s sensors and controls industry could support an average of 44,000 jobs each year through 2030. That includes direct jobs in manufacturing and software development, and a wide array of good-paying jobs that cater to different education and experience levels, including operators of computer numerical control machinery, electrical engineering technicians, and industrial production managers. Our jobs calculation also includes indirect jobs supplying equipment, materials, and services to manufacturers and developers, as well as induced jobs resulting from increased spending in the local economy. Additionally, Wisconsin could cultivate a local market for sensor- and control-embedded advanced energy systems to amplify job impacts in installation, operation, and maintenance businesses across the state.

Building Blocks for Cluster Development

So exactly how can Wisconsin capitalize on this exciting opportunity?

At the American Jobs Project, we specialize in matching states’ unique assets with advanced energy technologies that are poised for growth, then working with local leaders to expand these sectors, developing state economies and creating good-paying jobs.

In our experience, in today’s competitive, globalized economy, businesses are more likely to thrive in cities and states that support a comprehensive value chain, boast a highly skilled workforce, offer a rich innovation ecosystem, provide fertile grounds for capital investment, and foster a local market for homegrown goods. These building blocks — coupled with networking, coordination, and cooperation within the industry — form the foundation for robust clusters that can increase local job creation and revenues. By identifying the state’s assets and gaps within each building block, state and local leaders can strategically plan for growth.

Cluster development is nothing new to Wisconsin. The state’s existing networks fortify the sensors and controls value chain. Wisconsin is home to robust energy, power, and control and water technology clusters backed by the Midwest Energy Research Consortium, The Water Council, and the Wisconsin Economic Development Corporation. These organizations foster entrepreneurship and innovation, business recruitment, market development, and stakeholder education.

Wisconsin excels at hands-on technical training, and is committed to career readiness via its youth learning programs and higher education network. For example, in one year of the Youth Apprenticeship Program, over 3,000 Wisconsinites worked at 2,150 businesses, and nearly 67 percent earned skill certificates. Regional training labs that build skills in energy conservation, grid infrastructure, and smart manufacturing also support workforce development. Targeted training, recruitment, and retention are critical to improving conditions for Wisconsin communities facing employment barriers and addressing a potential labor shortage as the state’s working-age population decreases.

Wisconsin’s existing infrastructure helps entrepreneurs and researchers bring ideas to market. Its universities already host numerous research partnerships dedicated to sensing and control technologies and their end-use applications, from power conversion at the Wisconsin Electric Machines and Power Electronics Consortium, to biogas testing at UW-Oshkosh’s Environmental Research and Innovation Center. Additionally, groups like Kinnektor and gener8tor are cultivating a new generation of entrepreneurs and innovators.

Seed funding is increasing due to a strong angel network and momentum from the Badger Fund of Funds. But Wisconsin companies face critical funding gaps between the early/growth phase and late stages, and venture capital has only partially addressed this “valley of death.” Wisconsin received less than 0.2 percent of national venture capital investments in 2015, roughly the same as in previous years.

Wisconsin has local resources for financing advanced energy projects that could integrate locally manufactured sensors and controls. For example, Wisconsin has the potential to add over 1,300 new biogas systems, which could embed Wisconsin-made gas contaminant monitors to ensure viable output. The state is also projected to add 249 megawatts of installed solar capacity over the next five years, and these systems could use Wisconsin-made solar trackers to maximize generation. In-state deployment of sensors and controls could bolster Wisconsin’s energy economy while returning some of the estimated $14 billion currently spent on energy imports to Wisconsin communities.

Strategies for Growth

The American Jobs Project’s report provides 13 tailored recommendations for Wisconsin leaders to grow the sensors and controls industry. These strategies draw on best practices to target gaps in workforce development, the innovation ecosystem, access to capital, and local market growth.

For example, Wisconsin could take a page from the successful Opportunity Maine program and offer tax credits for student loan payments, reducing brain drain and helping attract out-of-state talent. Also recommended: facilitating greater knowledge sharing for entrepreneurship and innovation via mentorship networks, open-access test beds for large-scale energy systems, and incentives for university-based consulting on local biogas projects. Wisconsin could increase corporate investment, following in the footsteps of successful programs such as American Family Ventures and the Cincinnati-based Cintrifuse Syndicate Fund.

Other recommended strategies focus on cultivating local markets for sensor- and control-embedded biogas, efficiency, grid, and solar technologies. For example, Wisconsin could expand the Focus on Energy program to enable contributions from water utilities and expand eligibility to energy-water nexus projects.

Wisconsin’s emerging sensors and controls cluster is a solid foundation upon which the state can grow its economy, support 44,000 jobs, and become a leader in the production and deployment of advanced energy technology. Maximizing the opportunity that increasing global demand presents would require a concentrated effort from leaders in state and local government, industry, and academia.

When a state succeeds in building a vibrant economic cluster, benefits echo throughout its economy. Rewards include a more resilient statewide economy, a skilled 21st century workforce trained for the jobs of tomorrow, a growing base of young people optimistic about job opportunities close to home, and a rich hub for innovation and collaboration. Wisconsin is well positioned for just such a success story.

Read the full report here: americanjobsproject.us/ajp-state/wisconsin/.

The American Jobs Project is a nonprofit, nonpartisan, think-and-do tank focused on creating good-paying jobs in advanced energy and manufacturing through bottom-up, data-driven, 360° economic development. Our experts tailor best practice strategies for bolstering advanced energy and manufacturing, identify assets across the value chain, estimate an industry’s job-supporting potential, and support stakeholder-led initiatives by communicating ideas and analyses. Through engagement with a broad cross-section of stakeholders, we develop a shared vision of effective strategies to leverage the unique competitive advantages offered by each state and generate positive economic impacts.

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