Wisconsin Sizes Up Recent, Potential Future Changes in Manufacturing

When Greg Piefer founded Phoenix Nuclear Labs, in 2005, he was not expecting that it would one day lead to the construction of a large medical isotope manufacturing facility.

In the dozen years it’s been operating, Monona, WI-based Phoenix has developed particle accelerator technology with applications in areas such as weapons inspection, solar cell production, and healthcare. However, about a year after Phoenix was incorporated, Piefer says he saw an opportunity to develop separate technology that could be used downstream from Phoenix’s, to produce radioisotopes used for medical imaging.

Due in part to a potential future shortage in molybdenum-99—a crucial medical isotope that decays into technetium-99m, the most widely used radioisotope in medical diagnostic imaging—Piefer eventually decided to form a second company, Shine Medical Technologies.

Since launching in 2010, Shine has raised tens of millions of dollars in grant funding and outside investment. Last year, the pre-revenue company moved its headquarters to Janesville, WI, where it plans to break ground on an 11,500-square-foot prototype production facility later this summer. If all goes as planned, Shine will begin building a larger plant about a year from now, and go into full production in 2020, says Katrina Pitas, the company’s vice president of business development.

Shine has been checking off many of the requirements to start manufacturing molybdenum-99, which helps healthcare workers perform things like stress tests and bone scans, and diagnose other medical conditions. The global market for the isotope is about $600 million each year, Piefer says.

While the fact that the company has been able to progress to this point doesn’t come as a surprise to Piefer and other executives, its current preparations to build production facilities and manufacture isotopes there represent new ground for Shine.

“We had an idea, we developed a technology, and we proved it,” Piefer says. “All of a sudden, we needed to build this manufacturing facility.”

Shine’s anticipated foray into manufacturing highlights some broader currents in the sector, such as efforts to train or retrain future workers with the skills they’ll need on the job.

Manufacturing has long been a staple of Wisconsin’s economy, but a number of factors, including automation, have ushered in major changes. The state, along with a handful of others, is attracting national attention as Foxconn, a prominent Taiwanese electronics assembler, considers expanding its U.S. operations. But it’s not clear whether Wisconsin has the number and type of workers needed to support such a project, or whether young people today possess the same enthusiasm for manufacturing jobs as in past generations.

Pitas says Shine expects to triple its current employee count, to 150, by the time its larger plant is operating fully. The company anticipates hiring up to 60 people over the next two years to staff its manufacturing facilities. Radiation protection technicians, hot cell operators, and logistics specialists are among the positions Shine expects it will need to fill. For the majority of them, Shine will be looking for people with a two-year associate degree or the equivalent, she says.

Shine has partnered with two Wisconsin community colleges with the goal of helping students learn skills that will likely continue to be in demand in the technology and healthcare industries, Pitas says. Both Blackhawk Technical College (in Janesville) and Lakeshore Technical College (in Cleveland, WI) are getting set to offer programs in nuclear technology and health physics, starting this fall.

“Blackhawk has been extremely supportive of Shine’s needs for skilled technical workers,” Pitas says.

A similar partnership exists between Cellara, a Madison, WI-based startup that’s developing documentation software for researchers who work in stem cell culture laboratories, and Madison College. The school offers a variety of associate degree programs and certificates, including one in stem cell technologies. Madison College will train students who aspire to work in the field using a version of Cellara’s software, says Alex Vodenlich, the company’s vice president of business development.

Training students with an interest in manufacturing careers sometimes starts even earlier, says Lisa Johnson, who leads the life sciences trade group BioForward. She points to the $1.1 million in grant funding for digital fabrication laboratories the Wisconsin Economic Development Corp. has awarded to 34 school districts since 2015. These facilities, called fab labs for short, are workshops outfitted with tools like 3D printers, laser engravers, and plasma cutters that students learn to use. WEDC says its funding supports establishing fab labs in elementary schools, middle schools, and high schools.

During a visit to Wisconsin last month that included a tour of a Milwaukee-area community college, President Donald Trump promoted registered apprenticeships. These are programs that teach people a trade—welding or metal fabrication, to name two examples—and sometimes offer paid, on-the-job training while participants attend school.

There are also apprenticeships in high-tech fields. For example, the Apprenti program in Washington has led to registered apprentice placements at companies like Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN).

Ivanka Trump, the president’s daughter and a member of his administration, has said that attending a four-year college “is not the right path for everyone,” according to Politico. She has touted apprenticeships as something that could help fill 2 million manufacturing jobs over time.

Michael Hicks, a professor and the director of the Center for Business and Economic Research at Ball State University, says Trump’s comments set the bar too high.

“I haven’t seen any evidence suggesting we’re going to generate 2 million new manufacturing jobs because of a single program,” Hicks says. “There are not that many people sitting around, waiting to be manufacturers.”

Wisconsin passed the country’s first apprenticeship law in 1911, and it was later used as a blueprint by other states and the federal government, according to the state’s Department of Workforce Development. The program had 11,353 participants in 2016, an increase of more than 7 percent compared with the previous year. However, Robert Lerman, a fellow at the Urban Institute, last month told the Chicago Tribune that only about half of those who enroll in a multi-year apprenticeship program ultimately finish it.

Members of the Trump administration have reportedly expressed their desire for more collaboration between community colleges and the private sector, possibly by having companies fund apprenticeships that lead to jobs.

One existing model could be computing giant IBM’s (NYSE: IBM) Pathways in Technology Early College High Schools (P-TECH) program. The program lasts six years (though some participants finish early) and enrolls high school-age students. They graduate with both a high school diploma and associate degree in an area of study related to science, technology, engineering, or math. Graduates also receive preferred consideration for jobs at the 300 businesses that help fund the program. P-TECH, which launched in 2011, will be offered at 80 schools by the end of this year, IBM says.

Wisconsin residents probably won’t remember President Trump’s June visit by the comments he and other officials made about apprenticeships and workforce development. Instead, they’ll likely recall it as the occasion that set off speculation about Foxconn, the world’s largest contract manufacturer, building a plant in Wisconsin and manufacturing electronic displays there.

Taiwan-based Foxconn is best known for assembling iPhones and other gadgets at factories in China. Late last month, founder and chairman Terry Gou said at a shareholder meeting that his company plans to invest more than $10 billion in a display-making plant in the U.S. Foxconn said its potential investment could create up to 50,000 jobs.

The company is said to be considering other states besides Wisconsin, including Illinois, Indiana, and Michigan.

Last week, an airplane used by Gou was spotted at the Milwaukee and Madison airports, as state legislators consider passing a bill aimed at persuading Foxconn to build in Wisconsin.

A recent Milwaukee Journal Sentinel report raised a key question: what happens if Foxconn does pick the Badger State? According to academic and business leaders interviewed in the report, technical colleges would need to change their course offerings to equip students with skills that meet Foxconn’s staffing needs; information technology professionals could be poached away, leaving voids at their former employers; and wage inflation would likely occur.

Foxconn has indicated that any manufacturing facility it builds in the U.S. would use advanced technologies, such as artificial intelligence. Hicks, the Ball State economics professor, says that as engineers have designed more sophisticated factory-floor machines over the years, many companies have been able to maintain or increase their levels of production while employing far fewer workers.

“The inflation-adjusted value of things that are made in Wisconsin is still at or near the [historical] peak of production, but the state has lost vast numbers of manufacturing employees,” Hicks says. “This is a profound paradox.”

While automation has reduced the number of workers needed at factories across the country, in some cases manufacturing employees’ jobs aren’t going away, but are instead changing significantly. For instance, maintenance engineers at facilities with Internet-connected machines don’t need to spend nearly as much time collecting and analyzing data as they did in the past, says Anurag Garg. He’s the co-founder and CEO of Dattus, an Indianapolis-based startup that develops software for sensors designed to be placed on industrial machinery. These sensors allow the machines to share data with Internet-connected servers, and with each other. The company is part of the Internet of Things (IoT) sector, which involves updating formerly offline devices with Internet capabilities.

“What IoT is doing is augmenting, not displacing, the existing workforce,” Garg says. “Dattus helps to automate data collection and analysis. The same team of maintenance engineers can now focus their efforts on fixing and repairing things, and making sure machines stay up and running, as opposed to collecting data and doing data analysis.”

Maintenance engineers are paid relatively well, Garg says, but there continues to be a shortage of people who can fill openings at manufacturing companies.

Hicks says today, teenagers and people in their 20s are more likely to view working in manufacturing as an “employment option of last resort” than those in their parents’ or grandparents’ generations.

“Some people would rather be a legal assistant making $30,000 less a year than being a manufacturer, just because of the cultural lack of enthusiasm for it,” he says.

Shine Medical Technologies will of course need to hire enough qualified workers to staff the production facility it plans to open in three years. Fortunately for the company, it would likely be a fraction of the size of the electronic display plants to which Foxconn has alluded. Pitas, of Shine, says she’s confident her company will be able to attract a sufficient quantity and quality of prospective employees.

“We don’t anticipate finding workers for the manufacturing facility will be a significant challenge,” Pitas says.

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