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Testimony of Missy Hughes, Secretary and CEO, Wisconsin Economic Development Corporation; Senate Committee on Economic Development and Technical Colleges

March 3, 2023
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Missy Hughes, Secretary and CEO, WEDC

Missy Hughes, Secretary and CEO, Wisconsin Economic Development Corporation

Good morning, Chairman Feyen and members of the Committee. Thank you for holding this hearing today regarding my confirmation to continue as Secretary and CEO of the Wisconsin Economic Development Corporation.

As you are aware, I have served in this position for 3½ years since October 2019. My appointment received a unanimous vote from this committee in February 2020, and I was unanimously confirmed by the Senate in September 2021.

I would again like to thank Secretary Hogan for the work he did during his term, putting comprehensive financial policies and procedures in place, giving WEDC a strong foundation. This fundamental work has resulted in WEDC being recognized every year for outstanding achievement in financial reporting. Last week, we were also notified that the Government Finance Officers Association gave their Distinguished Budget Award to our FY23 Operations Plan, the first time we have received this honor.

In addition, I would like to thank Hank Newell, the chair of the WEDC Board, and the entire board of directors, including you, Senator Feyen, for the thoughtful and engaged support you have provided during my tenure.

The state created WEDC in 2011 to replace the Department of Commerce. WEDC was established as a public-private hybrid so it would have the flexibility to respond to businesses’ changing needs more quickly than other state agencies, while still remaining accountable to Wisconsin taxpayers.

WEDC’s principal responsibilities include attracting businesses and helping them expand, promoting Wisconsin exports and drawing foreign investment into our state, encouraging entrepreneurship and innovation, and building thriving communities. WEDC achieves these objectives primarily by awarding grants and tax credits to businesses, communities, and organizations.

During my time at WEDC, our agency has fulfilled all those duties while taking on new responsibilities. I would like to work through each of these responsibilities to bring you up to speed on what we have achieved since I last appeared before this committee.

First, over the past 3½ years, WEDC’s business attraction and retention programs have leveraged more than $1.7 billion in private capital investments in Wisconsin. Through our investments in more than 110 companies, our state has retained more than 8,000 jobs and created 10,000 new ones. Every one of these projects has been vitally important to our state’s economy – whether it’s keeping iconic businesses like Molson Coors, Fiserv, Generac and Milwaukee Tool growing in southeast Wisconsin, or helping Hewlett Packard Enterprises to create a Global Center of Excellence in western Wisconsin, or making sure that the Weinbrenner Shoe Company in Merrill remains the number one manufacturer of work shoes in the U.S. and Salm Partners in Denmark retains its lead as the nation’s largest co-manufacturer of sausages and hot dogs.

A growing number of new businesses – many of them with international roots – are also finding Wisconsin an ideal place to set up shop. Last year, for example, Ghana-based Niche Cocoa selected Franklin, Wisconsin, for its first and only North American production facility. Now, you may not have heard of Niche Cocoa before, but chances are you have tasted their products, because Ghana is the second-largest producer of cocoa in the world, and Niche Cocoa produces about 8 percent of all the cocoa in Ghana.

Niche Cocoa chose Wisconsin over New Jersey because our WEDC team and local partners worked relentlessly to build a relationship with them and demonstrate why Wisconsin was the perfect fit for their business. The result is that Wisconsin landed the largest food and beverage investment by an Africa-based company in U.S. history, and they picked Wisconsin because of our central location, great infrastructure and workforce and extraordinarily strong food and beverage sector.

Meanwhile, Canada-based Agropur – which is North America’s largest dairy production cooperative —  chose Wisconsin to invest $168 million for a state-of-the-art cheesemaking facility in Little Chute.  Our team worked closely with Agropur, making the case that an expansion which increases supply chain demand for Wisconsin dairy producers is a win for everyone here.

Given Wisconsin’s heavy manufacturing and agricultural base, exports are critical to our state’s economy. Here we are also seeing continued growth. Last year, Wisconsin exported a record $27.3 billion worth of goods to more than 200 countries. Even in the face of global economic uncertainty and ongoing supply chain issues, Wisconsin’s exports still grew by more than 10 percent last year, and they are up by more than a third since 2020.

WEDC is teaming up with DATCP’s International Agribusiness Center to implement the Wisconsin Initiative for Agricultural Exports plan. This plan provides flexibility to respond to exporting challenges and facilitates unique opportunities that connect exporters with international markets and buyers. Just today it was announced that Wisconsin’s agricultural exports reached record highs in 2022, shipping our products to 142 countries, totaling nearly $4.2 billion.

I just returned from a visit last week to strengthen our trade ties with Korea, and I can tell you Wisconsin products are recognized worldwide for their quality, durability, and advanced innovation. In short, our state’s global brand remains strong and is getting stronger.

The strength of that global brand depends in part on Wisconsin businesses’ continued innovation and our support for entrepreneurs. We continue to make gains in these fields. Last year, Fetch Rewards, a Madison-based start-up, became the first Wisconsin business to achieve “unicorn” status of more than $1 billion in market capitalization. WEDC was an early partner of Fetch Rewards, providing a Technology Development Loan to help them get off the ground. As they grew, we also authorized them for Qualified New Business Venture tax credits so Wisconsin investors could support their company.

But Fetch Rewards is only one of our state’s success stories. Through the QNBV program, 135 new businesses have been able to raise up to $335 million in capital from Wisconsin investors since 2019. WEDC is also supporting rural entrepreneurs through projects like the Idea HUB at UW-Platteville and the city’s business accelerator – because we know that great ideas come from every corner of our state.

Our state’s ability to keep those businesses in Wisconsin as they grow received a major boost last week when the U.S. Treasury awarded Wisconsin more than $79 million in State Small Business Credit Initiative funds. WEDC will use $50 million of that federal money to establish the Wisconsin Investment Fund, a revolving venture capital fund.

I know creating a venture capital fund like this has been a priority for you, Mr. Chairman, and I look forward to working with you and other members of the WEDC board as we move forward on this important initiative. To make Wisconsin even more of a powerhouse in supporting our start-ups, Governor Evers has included an additional $75 million in his budget to supercharge the investment fund.

WEDC’s investments in our communities are essential to our state’s success as our investments in businesses. After all, businesses choose to locate and grow where their executives, managers, and workers want to live and raise their families – which means we must have thriving communities.

WEDC assists downtowns through the Main Street and Connect Communities programs, which encompass more than 110 communities across the state. Through the Community Development Investment, Idle Sites Redevelopment, and Brownfields grant programs, communities have been able to find new uses for long-dormant properties. In Prairie du Chien, for example, the city is using an Idle Sites grant to turn a blighted mall into 96 units of affordable housing and retail space, while in Green Bay, they are using another idle sites grant to relocate coal piles away from downtown and expand the economic activity of the Port of Green Bay.

WEDC has also taken the lead in making sure one-time federal recovery dollars are invested in ways that will pay long-term dividends for our state. A recent national study ranked Wisconsin first among states for the share of federal ARPA funds allocated to businesses, and second for the share dedicated to economic development.

Many of these investments have resulted in the formation of new businesses and nonprofits that have opened their doors since mid-2021. Under the Main Street Bounceback Grant program, more than 9,500 businesses and nonprofits in all 72 counties have received $10,000 grants to move or expand into empty downtown storefronts. Over half of the grants have gone to women-owned businesses, and many have gone to businesses in rural communities.

These grants are breathing new life into Main Streets across our state. Visiting these businesses, you get to see how their owners are giving their all – and how, in many cases, the deployment of a small amount of capital was all that was needed to help them get started.

To build on this momentum, Governor Evers is budgeting $50 million in the next biennium to continue the Main Street Bounceback grants for another 5,000 businesses. To help both Main Street grant recipients and businesses of every size scale up, WEDC this year began offering the SizeUpWI web-based online business tool, which allows owners to compare their costs and profits with similar sized businesses locally, regionally and nationwide, find new suppliers and potential customers, and engage in the kind of long-range planning typically available only to larger firms.

While WEDC’s programming has resulted in the great successes I just highlighted, we must also recognize and address the challenges facing our businesses and communities.  First and foremost among these are our current and future workforce demands, which require both a statewide response as well as a deep understanding of the specific needs of each industry and each community.

Wisconsin has been blessed with record low unemployment and one of the highest rates of workforce participation in the country. But full employment, combined with long-term demographic trends, means we must team up with our businesses to provide thoughtful, practical, and lasting solutions.

Our businesses have raised wages and benefits, yet they are still struggling to find and keep workers.  Our businesses are recognizing that Wisconsinites, no matter how hard-working they are, cannot fully show up for work, day in and day out if they lack access to affordable child care, health care, housing, transportation, and education and training. In short, Wisconsin businesses are at the table asking for our help to solve the workforce shortage.

In response to their call, through the Workforce Innovation Grant program, WEDC and the Department of Workforce Development are partnering to invest up to $128 million in regional workforce projects serving the entire state.

These are locally driven projects – developed by business, community, and education leaders – to meet their local workforce challenges, such as making sure rural workers can get state-of-the-art training from mobile labs operated by Northwoods Technical College, or ensuring that people with developmental disabilities can join the workforce, whether they are in Milwaukee or Menomonie, or that third-shift workers can count on affordable and reliable transportation to their jobs.

The public-private nature of these solutions is critical to their long-term success. It also recognizes that businesses cannot solve this on their own, and neither can government, universities or tech colleges, or local organizations.  It must be a team effort.  The Wisconsin Idea, bringing together our schools, our industry and our government, is alive and well in the 27 projects now operating around the state.

Governor Evers has budgeted an additional $100 million over the next two years to enable more communities to find their own solutions to their workforce needs.

Working with our existing workforce and training the next generation is the first prong of our strategy for talent attraction and retention. WEDC is also actively marketing Wisconsin to regional and national audiences as a great place to live, work, and raise a family.

We are basing our marketing on the issues people think about when they want to move.  Our efforts begin with telling Wisconsin’s story – the quality of life we have here, the opportunities for growth and, most of all, the amazing communities where we all live.

The current state budget directs WEDC to spend $3 million on talent attraction and retention efforts. To maximize the impact of those dollars, WEDC is taking a multi-pronged approach. First, we recognize the vast majority people do not choose to move to a state – they look at moving to a town or a region because of a job, family, or some other connection. So to build on those personal ties, we are providing more than $700,000 in matching grants to 16 local and regional development organizations and other entities to promote their communities as ideal places for new residents.

These cooperative agreements are leveraging efforts these organizations are already making to promote their areas.  In addition, WEDC is working with the Department of Military Affairs to target transitioning service members. We are also collaborating with the Department of Children and Families to support refugee relocations to our state.

The Governor’s budget allocates $10 million more over the next two years to continue and expand these efforts.  With these funds, WEDC will intensify its focus on transitioning service members and step up our efforts to keep our graduates from high schools, colleges, and universities at home in Wisconsin.

We are also working on innovative new ways to identify and connect with potential new residents through online tools like Redfin and Zillow, job-search sites, and laser-targeting our message to people we know already have an affinity for or connection to our state. Once we identify these potential Wisconsinites and they are ready to explore our state further, we will share those “hot leads” with local talent champions around the state.

But let me be clear in setting our expectations: attracting and keeping new residents is a long-term investment that pays off over years and sometimes decades, not in two-year budget cycles. And movement toward our goal is not measured in how many people we attract right away, but first how we get people to think about Wisconsin.

We began this process by surveying residents of Wisconsin, the Midwest, and the nation. People outside our state mostly identified Wisconsin with beer, cheese, and cold –but they also had some very positive attitudes about our quality of life, wealth of outdoor recreational activities, and communities. Over time, we’ll follow up with more surveys to see if our messages are getting through and how we can improve them. And if the governor’s proposed expansion of talent attraction and retention funding is approved, we will measure lead volume, continue to partner with local and regional efforts and track individual relocations to demonstrate our impact and fine-tune our efforts.

We are already seeing some encouraging trends. Last year, among our five neighboring states, only Wisconsin increased its population. While the number we gained was relatively small, the fact that we added 7,700 residents is strong compared to Illinois – which lost more than 141,000. And last week, Redfin identified Milwaukee as the city Chicago residents were most likely to consider for a move – reinforcing what we are seeing among Illinois businesses that are also choosing to move to our state.

In my role at WEDC, one of the things that impresses me every day is how we Wisconsinites meet every challenge: we look around to see what needs to be done, we roll up our sleeves, and we keep working until we finally succeed. I see this can-do spirit coursing through our businesses, our communities, and our people. We are relentlessly looking forward and moving forward.

I want to thank the committee for inviting me here today, and I welcome your questions.

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