Zyng Noodlery coming to area

By Elizabeth Geldermann, of SBT

The former operations manager of the Tony Roma’s restaurant in Brookfield will open seven Zyng Noodlery restaurants in Milwaukee, Waukesha and Dane counties within five years.
Steve Smirl, of Ichiban Inc. in Milwaukee, signed a franchise development contract with Zyng International to own and operate the new pan-Asian restaurants along with a silent partner.
The first of Ichiban-owned Zyng Noodleries will open by Jan. 1 near the lake in downtown Milwaukee, in a facility Smirl declined to identify, as the lease remains unsigned.
Smirl left his six-year employment as operations manager at Tony Roma’s in Brookfield within a month after learning of Zyng.
"I definitely think this is the cuisine and restaurant type of the future," said Smirl. "Zyng has an exciting atmosphere, the food is outstanding and healthful – no oil is used. I am really looking forward to this."
Zyng fuses traditional recipes from Japan, China, Thailand, Singapore and Vietnam into noodle and rice bowls, salads and appetizers. The full-service restaurant will seat 80 to 100 people for lunch or dinner at fast food prices — $10 will buy an entrée and a drink.
The restaurants also will offer a full bar with Zyngria — Zyng’s own twist on Sangria, and an assortment of Sake and tea.
Zyng’s signature is "Teppanyaki Teamwork," where customers create their own dishes by choosing from seven variations of noodles or rice, meat or tofu, and one of 10 different sauces.
Zyng first opened in Montreal in 1998 after businessman Arnold Shostak had the idea while taking a culinary tour of Asia. Fransmart, a franchise corporation based in Alexandria, Va., joined Shostak in 2002 to create Zyng International and to extend the Zyng franchise into the United States.
Fransmart only sells franchises in multi-unit territories. According to Fransmart spokeswoman Molly Brown, each 3,000-square-foot restaurant costs $300,000 to open, plus a $25,000 down payment to Fransmart. Each Zyng rstaurant is expected to average $1.2 million in revenue within the first year, said Brown.
The first Zyng Noodlery in the United States opened in Wichita, Kan., in April. According to Brown, the restaurant will most likely exceed the first-year revenue estimate. The Wichita location is still the only Zyng currently open in the nation, but with 160 units sold, Brown said soon at least one will be opening every month.
The make-your-own noodle dish is not a new concept, and has spawned chains in the Chicago area with the likes of Stir Crazy and Flat Top Grill. Smirl is excited to bring the trend to Milwaukee, along with the new ideas that Zyng carries.
"The food and the atmosphere, coupled with service excellence and the right location, will make it a winner," said Smirl. "I think Milwaukee is ready, and they will embrace it."

Oct. 17, 2003 Small Business Times, Milwaukee

Water Works taps into marketing
City sees abundance of clean water as economic development tool

By David Niles, of SBT

Milwaukee’s abundant supply of clean water is being marketed in a new economic development effort of the city’s Water Works.
The recent hiring of Rosalind Rouse as marketing director for the utility is a turning point for a city that is now boldly proclaiming the quality and abundance of Lake Michigan-supplied Milwaukee water.
"We’re ready," said Carrie Lewis, superintendent of the Milwaukee Water Works, a self-financing business enterprise and division of the Department of Public Works.
Rouse’s hiring comes at the culmination of five years of repositioning of the utility as a business model.
"We spent the last five years engaging as many efficiencies as we could," Lewis said. "Now that we have realized those efficiencies, it’s time to take advantage of the opportunities."
And the hiring comes 10 years after water-borne cryptosporidium sickened thousands and led to the deaths of between 50 and 100 people in the community.
On the heels of that outbreak, the city spent $89 million in plant and process improvements over the last 10 years, Rouse notes.
"We’re now producing what is probably the best-quality water you can get in the US," said Skip Schifalacqua. commissioner of the Department of Public Works.
"On the quality side, we have a lot going for us," Lewis said. "We’re very fortunate to have such a clean source of water." And that water, brought in from pipes extending two miles into the lake, is then further purified. "We look hard to find any contaminants in the water, but we don’t find them very often. We’re required to test for 90 contaminants, but we test for 450."
It’s time to tell the world about that quality, Lewis said.
"We have a new-found confidence to let business and industry know that we have a resource here that is under-recognized and under-rated."
Not only high-quality water, but lots of it. And lots of treatment capacity.
In the late 1970s, Milwaukee was treating and supplying 53 billion gallons of water per year. With the loss of breweries and tanneries, and with the gains in usage efficiencies, the city now treats and supplies 40 billion gallons per year.
Which means there is room for more business within its distribution zone, which extends into eastern Waukesha County.
"My aim is to provide an outreach to business retention and economic development," Rouse said. "So that when there are local, regional or even national economic development initiatives – that our drinking water and the supply of it is considered one of the assets on the list of why Milwaukee is a great place to do business."
She’s already had successes in getting the water supply listed by Forward Wisconsin as part of that organization’s business development initiatives.
Locally, she is visiting business users. And she is working "to resolve a case of mistaken identity. "We need to build awareness that we are the people on the supply end of the water cycle," Rouse said, adding that there is frequent confusion between the water-supplying Water Works and the wastewater-treating Metropolitan Milwaukee Sewerage District.
Regionally, the utility is providing water to 14 communities and, starting next summer, will add New Berlin to that list.
But Lake Michigan water can only be supplied to areas east of the subcontinental divide, which in the New Berlin and Brookfield areas is at Sunnyslope Road.
Declining water tables in rapidly growing areas west of the divide mean limited development opportunities there, with current developments taxing that situation even more, says Milwaukee Alderman Michael Murphy, who proposed the Water Works marketing effort. Murphy, who holds a degree in geological sciences, notes that the massive Pabst Farms land in Oconomowoc now serves as an aquifer recharger and that the ongoing development of that land will further reduce water availability in western Waukesha County.
There have been predictions by public officials and geologists that western Waukesha County will face severe water shortages in 15 to 20 years.
"Even with treatment upgrades, there is a limited supply there," Schifalacqua said of western Waukesha County.
And then there are the water supply challenges in western states.
That all gives the Milwaukee Water Works an opportunity to present the community as a place to locate water-dependent businesses, Schifalacqua says, noting water prices here are as good or better than cities of comparable size or bigger.
But while prices here are favorable, a recent study by MMSD found that reliability of service is more important to many businesses than lower rates. And that leads back to the supply abundance that the Water Works has to offer, Rouse says.
"We need to retain water-using business that are here and try to attract businesses that use water," Murphy said. "We want to make sure they know we have an abundant supply. Water availability will again become an important consideration for business location."
While it would be good to attract more water-dependent industry, Rouse is also looking at the little things. "I hear people say we should be bottling Milwaukee water," she says, noting that Oak Creek already does that with its Lake Michigan water.
Or providing empty bottles. That’s what she’s seen in Denver, where participants in marathons and other runs get sealed, empty bottles which runners then fill themselves. Rouse speculates about providing such bottles with Milwaukee water labels.
"With Milwaukee sitting next to this massive supply of clean water, it’s hard to see commercially-bottled water being passed out at running events," Rouse says.
But some of that bottled water is Milwaukee water. As it does in other markets, Coca Cola’s bottling plant on the city’s northwest side bottles Milwaukee water sold under the Dasani label, Rouse and Lewis note. The company further filters the water and adds minerals. And other commercially bottled waters are filled with municipally supplied water elsewhere.

Oct. 17, 2003 Small Business Times, Milwaukee

We have some advantages – Let’s use them!

Commentary, by Larry Floyd, for SBT
At Plastic Molded Concepts Inc., our motto has always been, "We do crazy jobs no one else will do." This has caused us to become a knowledge-based company.
We pride ourselves in having strong education programs for on-the-job training, as well as professional and skill trade continuous education. We are ISO-9001-2000 certified.
A lot of us are complaining about competition from places around the globe, such as Mexico and China. Three years ago, we started to see our business decline, like many others. We realized the need to cut back our workforce to accommodate the obvious.
There were times that we couldn’t cut cost fast enough to stay profitable. We came up with a plan to alternate the layoff of our people, hoping to reduce any chance of losing valuable teammates.
We also had to do our scheduling and labor planning more meticulously. We developed a computerized financial model of the entire business and shared it with a manufacturing management team every week.
We made it through the first year of revenue decline of over 20% without losing more than a couple of people. The second year, our revenue declined less than 5%, and the last year we gained back 3.5%.
We began the year 2003 with 92 people and began hiring again in April and are now on our way up, with more than 113 employees.
During 2002, we decided that we needed more sales people. When the business did turn around, we were not going to get caught without having had face time with potential customers.
If you don’t keep your name out there in bad times as well as good times, you will soon be forgotten. Marketing 101.
Well, there’s no use in complaining about China or Mexico. You don’t really expect them to play fair, do you? Those countries are now getting a taste of what we found from the 1930s through the 1970s.
The quality of some of the products coming from those countries is no laughing matter.
We have a whole generation of young people that wouldn’t even think about buying an American automobile.
We are simply going to have to become more creative and develop a new manufacturing structure that grows through innovation, automation and thorough knowledge of our businesses.
Our plan at PMC is to specialize in doing things for our customer that these countries will never be able to do effectively.
I don’t like to shop. When I must shop, I like to find what I’m looking for and take it home. I don’t like to have to order something and wait for it to either appear at my front door or worse yet, go back and pick it up later.
I believe that many a sale has been lost, perhaps forever, to another store that carries the product in stock. We carry inventory for our customers, and this gives us our own internal scheduling advantage.
We are prepared to deliver product on a moment’s notice and schedule the replacement of those products in an orderly and timely manner. We will continue to write our own software and use real time, activity-based cost accounting methods that tell us of our cost on a shift-by-shift time line. Knowing our cost is paramount.
I suggest to you that today, even in our own country, the playing field is not level. In the sole interest of corporate stock values, many US corporations are looking for any excuse to send work to cheap labor countries and then bring it back to America to sell to the buying public.
Does that make the root cause for our manufacturing problem the buying public? Or is it unfair foreign competition? Or just the corporate drive for stock value? Have we really squeezed all we can out of ourselves for our customers? Perhaps we can find new ways of serving our customers that a 10,000-mile journey will never match.
Finally, and toughest of all – we must never, never give up!

Larry Floyd is president, chief executive officer and founder of Plastic Molded Concepts Inc., in Eagle.

Oct. 3, 2003 Small Business Times, Milwaukee

Cumberbatch says Milwaukee needs new leadership

Lobbyist Frank Cumberbatch is one of the 10 people officially in the race for mayor of Milwaukee. A native of Trinidad in the West Indies, Cumberbatch came to the United States to attend UW-Oshkosh. He obtained a bachelor’s degree in business administration from that university in 1984. He has held technology positions with Waukesha County, with the former Industar wireless telephone company, and with Kedestra, a real estate e-commerce company.

For the last few years, he has worked as a local affairs consultant for Broydrick and Associates in Milwaukee.
Cumberbatch, 45, responded to questions posed by SBT editor David Niles.
The primary election will take place in February, while the general election will be in April. Previous installments in this series of mayoral interviews can be found on the SBT Web site at www.biztimes.com.

SBT: Describe what went into your decision to run for mayor.
Cumberbatch: Milwaukee is a very different city than it was 15 years ago. Therefore, the city needs to move forward with strong new leadership. It is time to stop recycling the same old politicians from position to position. Milwaukee is ready for some new blood – someone who sees our economic and social distress as opportunities to make Milwaukee a great place to live, work and play; someone who could pull the community together; someone willing to give every city resident an opportunity to achieve the American dream.
My commitment to this city and the people who live here; the fact that I am not a politician; together with my broad background in the public and private sectors make me a very viable candidate. Milwaukee has had three mayors in 56 years, so it is now or never.

SBT: Where do you see Milwaukee’s current stature among American cities?
Cumberbatch: Milwaukee has fallen from 34th to 43rd in the top metro markets in the last decade and from 24th to 43rd over the last three decades. If this trend continues, Milwaukee will fall to the bottom of every category used to measure the viability of American cities. We jumped from 19th to 12th in the ranking of America’s poorest cities. Unemployment among minorities is among the highest in the country and rising. We jail more African-Americans than anywhere else, and our graduation rates for public school students, mainly minority, are close to the bottom. We are ranked at the top of the list in teen pregnancy. We rank near the top in manufacturing jobs lost in the past two decades. It cannot get much worse. However, I have high hopes for this city.
The new leader needs to see these inadequacies as opportunities for change, but he must have the confidence to pull all sectors of the community together to turn this trend around. I have that confidence.
We have a large, young workforce in the inner city that, contrary to what you may hear, wants to work. We have 200 acres of prime land in the Menomonee Valley that need to be developed. We are located on a beautiful lake that should be turned into a destination spot for visitors. We have a lot of potential and all the tools to make Milwaukee one of the premier cities in the country, if not the world. We need to focus on change with new leadership.

SBT: Milwaukee has lost population over the last several decades. There has been some return to the city due to downtown residential development, but that development is not family-oriented. Tell me your thoughts on why Milwaukee continued to lose population for so many years, and what you would do to restore a higher census count.
Cumberbatch: For many years, Milwaukee was a manufacturing city. In the late 1970s and early 1980s when we moved from a manufacturing-based economy to an information- and service-based economy, many Milwaukee citizens who were not retrained to take advantage of new opportunities found themselves unemployed and unemployable.
Meanwhile, there were many people well positioned to take advantage of the best economy in US history in the 1990s who accumulated wealth and moved to the suburbs to build homes and start businesses.
High crime rates and high taxes make Milwaukee a very unattractive place to start or move a business, so a large portion of the middle class left the city to find jobs in the suburbs and elsewhere.
What was left behind was a school district with a student body of mainly poor students and some parents left because they wanted a better learning environment for their children.
To turn that phenomenon around, I will strongly support the GMC’s partnership with the Initiative for a Competitive Inner City to form the Initiative for a Competitive Milwaukee.
This initiative focuses on economic development and job growth in the inner city in health care, construction and development, business process services and manufacturing sectors.
This plan is not only beneficial to Milwaukee, but to the region also. I will not allow this initiative to be another great idea that just gets lip service but is never implemented.
A thriving prosperous inner city will see a reduction in crime and hopelessness, which will result in people considering Milwaukee as a place to live, raise a family, work and play.

SBT: As we discussed above, the downtown residential development is not family-oriented. A lot of Milwaukee’s population loss can be attributed to schools; Mayor Norquist has often said that Milwaukee will gain families when families decide they want to send their children to Milwaukee’s public schools. There are good Milwaukee public schools. But many children struggle in MPS schools for a variety of reasons. While the school district is a separate political entity, what would you do about the educational system in the city? And how does school choice fit into your picture?
Cumberbatch: I support an expansion of school choice and a restructuring of how our children are currently educated. I mentioned that I support the Initiative for a Competitive Milwaukee (ICM). MPS, charter and choice schools need to work very closely with ICM so that skill sets can be identified and developed to take the jobs that will be available in the future.
I will also fight for smaller class sizes and more resources for teachers so that the quality of the education the children receive is improved. Today’s children are raised in a technological world of Internet, instant messaging and video games.
Educators need to leverage those skills to get kids excited about learning. They need to retrofit the classroom into new learning environments that will make learning fun and exciting. If MPS fails to do that, they will continue to lose very bright children because of boredom, among other things.

SBT: There has been an incredible amount of investment in the city under the Norquist administration. Downtown has seen much of that, but other areas of the city have benefited, also. But the central city seems to be continually left out of the picture. Yes, there are pockets of reinvestment, but there is still tremendous blight. How would you describe the situation?
Cumberbatch: I have been asked this question a few times, and my usual response is, "The head, downtown, is beautiful, but the body, neighborhoods, is rotting." I think the situation is frightening. This is the main reason why I support the Initiative for a Competitive Milwaukee (ICM). ICM’s vision includes specific objectives for revitalizing our inner city. The plan includes improving the infrastructure so inner city workers can get to where the jobs are, investing in people by giving them the skills to start their own business or qualify for available jobs and encouraging the private sector to invest in neighborhoods. It is through economic development, wealth creation and job growth that we will rid our central city of blight. Under my leadership, this initiative will be realized.

SBT: While Milwaukee has a strong and ingrained Socialist culture, Mayor Norquist describes himself as a supporter of market forces in business development. What do you see as the role of government in business and economic development? How far should the city go in promoting and financing business development? Aside from financial support, what can the city do to make it easier for market forces to effectively foster development in Milwaukee?
Cumberbatch: As mayor I will do three things. I will create a vision to make Milwaukee competitive in the region, the country and the world. I will then make that vision very visible by marketing it to the Milwaukee community, the region, the country and the world.
Finally, I will make myself accountable for the success of that vision. I will work with MPS to meet their goals for educating our children (higher SAT scores, higher graduation rates and lower truancy rates etc.) and with law enforcement to meet their goals for reducing crime (reduction in homicide etc.).
I will also work very closely with the private sector to set, and make visible, measurable goals for economic development and competitiveness in the city.

SBT: It looks as though Milwaukee’s budget will be severely impacted by the state’s budget crisis. What are your plans to deal with fewer dollars coming into the city? Would you be willing to forego a political future by making unpopular but necessary budget decisions for the city?
Cumberbatch: I do not see making tough budget decisions as foregoing a political future. If the mayor is open, honest and very clear about his decisions regarding the budget and a plan to turn things around, constituents will give the mayor time to execute his plan, but he must deliver. I intend to do just that.
The choices will be between city employees have to work a little harder, reduction in services or loss of jobs. I intend to be very clear to constituents about the city’s financial situation and the choices we make, and if that means foregoing my political future, I could live with that.

SBT: Tell me about the neighborhood you live in and why you live there.
Cumberbatch: I live on the east side. It represents all that Milwaukee should be. The east side is very diverse, economically, racially, religiously and socially. It offers a myriad of services, including art, music, exquisite dining, the best movie theatre anywhere, great coffee and an awesome view of Lake Michigan.

SBT: Earlier this year, Small Business Times polled the owners of businesses within the city of Milwaukee, regarding their perceptions of business conditions here as those perceptions relate to the mayoral race. The top three issues they cited for the new mayor to tackle were taxes, transportation and infrastructure, and crime. Your thoughts on those issues?
Cumberbatch: It is very understandable why business people would pick these three issues as their main concerns. Taxes affect the bottom line. More money a business keeps, more money can be reinvested in businesses and the faster the businesses will grow.
Many of the businesses that responded to the poll need the labor force from the inner city; if there aren’t options for the workers to get to the jobs, the businesses are inconvenienced, and sometimes those businesses have to fill the void by providing transportation. An immobile workforce is not good for business.
Crime is one of the main reasons that entrepreneurs do not locate their businesses in the inner city. But this is really a chicken-and-the-egg phenomenon. By providing living wage jobs in the inner city, crime will be reduced.
As mayor, I will work with community leaders, law enforcement, community-based organizations, religious organizations, educators and citizens in the city and the region to formulate a comprehensive plan to make severe reductions in crime, but the private sector must stop using crime as an excuse for not investing in our poorest neighborhoods.

SBT: That poll and a poll conducted by the Greater Milwaukee Association of Realtors raised the integrity issue. Will you stand up to the test of high integrity? And if human frailty does get the better of you, how would you respond to the people of Milwaukee?
Cumberbatch: There is nothing I take more seriously in life that my integrity. If I am guilty of allowing human frailty to get the better of me I will resign immediately.

SBT: Milwaukee has a long tradition of multi-term mayors. Do you see the mayor’s position as a long-time job for you?
Cumberbatch: I do, only because there is no magic bullet that will make this city a world-class 21st century city in a short period of time. I want to see my plans implemented and a reasonable amount of time allowed for results to be measured.

Oct. 3, 2003 Small Business Times, Milwaukee

What do you expect?
As businesses run leaner, leaders need to be very clear with employees on expectations

By Jo Hawkins Donovan, for SBT

Recently I was talking with about 100 savvy women executives on the topic, "Time and Technology." After my presentation, one participant — we’ll call her Margaret — talked with me a bit about a challenge she faced. She was in a position with a high level of responsibility. The organization was "trimming" costs, reducing staff, getting lean and mean, as they say. The message the owner conveyed to the "survivors" was: "Now more will be expected of you!"
Margaret appeared to be highly professional and sharp. She was anxious about her CEO’s expectations. How could she do more? She already was putting in 60+ hours a week, and delivering accurate and timely results. She had a conversation with her direct boss about this dilemma, and found that her boss was just as anxious as she was about the heightened set of expectations floating around.
In the presentation, I had talked a bit about the ways that the rapid-fire advances in technology have helped us all be more productive. We can get a product out the door much faster with all the high-tech help at our command. (Of course that doesn’t help us decide which product we want to get out the door, among other things.) We can respond instantly via e-mail, rather than spending an hour drafting a letter. We can even do all that e-mail work at home at 5 o’clock in the morning, or midnight, often unaware of the fact that we’re adding another hour or so to our workday.
With the increased productivity, though, have come huge increases in the pressure to perform. That’s what Margaret was experiencing – pressure to perform beyond a level she could even imagine unless she gave up sleeping altogether.
She was afraid that if she didn’t meet those expectations, she would be in line at the unemployment office. We chatted a few minutes about steps she might take to reduce her anxiety and get more clarity on what the CEO meant by "expecting more".
Driving back to my office, I thought about how prevalent this situation is in today’s business organizations. I’ve heard stories from executives who are doing their darndest at work, and trying to spend some of their time doing other things important to them, like attending kids’ soccer and football games.
That was the case with one man who felt like expectations about his productivity jumped a few notches when a young, single executive came into his department who came earlier and stayed later than anyone else – and put in some weekend time at the office to boot!
My client was afraid that the business owner’s expectations would change, afraid the owner would think, "Wow, wonder what we could accomplish if everyone were as committed to the job as this new hire."
I’ve heard many clients express confusion about their bosses’ expectations. Of course, we talk about asking for more clarity, but sometimes they just get more confusion from that conversation with the boss.
Perhaps it’s worthwhile for leaders to do some snooping around their organizations, to see whether their expectations are clearly understood.
It is always a good idea for those in leadership to be acutely aware of language they use; for example, "Now more will be expected of you!" This kind of statement can throw employees into a tailspin. If more is expected, it would help to have conversations about priorities. What can be eliminated from the list of responsibilities or projects? What can be delegated? What kind of support does each employee need in order to shift gears? How will they know if expectations are met?
Setting appropriate expectations is very tricky. Leaders want to set expectations that engage and stretch employees.
On the other hand, if employees feel the expectations are confusing, overwhelming or impossible to meet, the bar is too high or too unclear and they will be unmotivated. It’s a delicate balance. Guess that’s one reason that leadership is an art, an art that we can keep refining forever – and that’s an expectation that business owners must set for themselves.

Jo Hawkins Donovan has a coaching and psychotherapy firm in Whitefish Bay, and can be reached at 414-332-0300, or via e-mail at jo@hawkinsdonovan.com. The firm’s Web site is www.hawkinsdonovan.com. Hawkins Donovan will respond to your questions in this column. Her column appears in every other issue of SBT.

Oct. 3, 2003 Small Business Times, Milwaukee

United Way reaching out more to smaller companies

The chairmen of the annual campaigns of United Way of Greater Milwaukee have traditionally come from the ranks of the area’s big corporations.
But the campaign’s goals would never be met without the support of the community’s small and medium-size businesses – a point the local United Way has been focusing on for three years now.
It’s become a more important focal point as the larger corporations have changed their stature or become leaner in their operations in tight economic times.
"We’re finding more businesses with fewer people," said Bill Kitson, campaign vice president of United Way of Greater Milwaukee. "But we’re also finding that more of the small businesses here have added people, with many of those businesses started by people who formerly worked in big business. We’re certainly paying more attention to small and medium-size businesses."
Internally, the campaign has increased its staff from one person to four people working on the small and medium-size business segment, and hundreds of volunteers round out the effort.
They have a fair amount of work to do; the goal for the current campaign is just over $35 million – a 3% increase over last year’s successful campaign that raised $34 million.
"If we don’t get a handle on this small and medium-size market, we won’t be able to achieve our goal," Kitson said. "And ironically, small businesses benefit the most from United Way. If the campaign weren’t successful and United Way for some reason drifted away, it would be harder for small businesses to succeed," he added.
That’s because of the support that the many funded organizations provide to employees of those businesses – support that lets those employees lead more stable lives, says Robyn McGill. media and communications manager for United Way of Greater Milwaukee.
Last year, programs funded by United Way here served 300,000 people, with more than half of those people having household incomes of less than $15,000 per year.
The campaign leaders hope to engage an additional 100 businesses in fundraising this year, Kitson said.
To help make that happen, Cobalt Corp. has offered a Small and Medium Business Challenge. The corporation will match increased or new contributions from small and medium-size businesses. Other match and challenge programs have also been arranged by area corporations. More information is available at www.unitedwaymilwaukee.org.

Oct. 3, 2003 Small Business Times, Milwaukee

The anatomy of a successful salesforce initiative
Sales leaders must step to the challenge of driving fundamental change

By Jerry Stapleton and Nancy McKeon, for SBT

Most business owners and executives seem to acknowledge that we are in a new era of selling. The buyer/seller relationship has changed for good. Technology has provided customers with "infinite" knowledge that has made them more strategic purchasers with more information about suppliers than the suppliers have. On the selling side of the equation, commoditization has become the new enemy.
That change in the buyer/seller relationship has redefined what sales professionals must do to continue to contribute value to their own companies. Agreed! But what are you going to do about it? I think you know – you’re going to lead a change initiative in your sales force.
Sales leaders must step up to the challenge of driving fundamental change in their organizations. Here are some things we’ve learned along the way from our successful — and not so successful — efforts to work with leaders to drive change in sales organizations.

1. Recognize that traditional skills training or motivational seminars are counterproductive. That’s right. They’re worse than doing nothing at all because they trivialize selling and give the sales force the illusion that they can transform themselves by the equivalent of taking a pill.
For example, in this new era, salespeople will need to become much more proficient at accessing customer executives. One salesperson told us that some self-proclaimed sales guru told the audience she was in to tell the exec’s administrative assistant that, as a tactic for getting the exec on the phone, they were the executive’s sex therapist.

2. Set and communicate a clear, high-level direction. All change requires direction. The first thing a sales leader must do is articulate a direction for the sales team. It needs to be at a high enough level to serve as a "true north" for the team.
The direction should start with "why change at all?" by basing the need for change in the realities – often harsh – of the current business environment. The consequences to the company of not making the change (of doing nothing) must also be laid out.
The direction should address the "where" by painting a picture of the expected outcomes of making the change. The outcomes can include the expected effect on sales results, profitable revenue, customer relationships or even just the viability of the enterprise.
Communicating the direction is critical. Don’t limit your communication to a big, splashy launch, although such communication has a role.
Talk about the new direction at every opportunity. Start an organizational conversation that builds early momentum and carries the team through the change. The vocabulary of the new direction should become part of the sales team’s everyday language.

3. Show salespeople the personal value. You’ve been around enough to know that most employees are not going to change for the "sake of the kingdom." As one astute observer said, "Given the choice between changing and proving there’s no reason to do so, most people will get busy on the proof."
You have to communicate the value of the change into the salespeople’s personal lives. One client executive told his sales team that they’d have "valuable new skills that they could use anywhere" as motivation. And it worked.

4. Show them how. High-level directions often fall short on the "how." Be sure to be specific about the new behaviors, mindset and skills the direction will require.
One effective way to do that is to employ a "from-to" format, as it relates to how salespeople do things day in and day out, to dramatize the direction’s effect on their day to day activities.
5. Get in the game yourself. Leaders are often more keen to have their teams change than to change themselves. More than anything, this is why significant, sustainable change fails. You must be prepared to model the new behaviors even before the sales team does.
It is impossible to overestimate the credibility early leadership modeling brings to the change. A leader who can say that the new behaviors work because he or she has used them gives the team a real jump start.
Being in the game will enable you to be a real time coach.
Again, one of the reasons change fails to gain traction is that leaders fail to reinforce new behaviors in any meaningful way. They send the sales force off to training and then "wait and hope" something sticks. Typically, nothing does. Or leaders attempt a strange form of remote coaching, in which they try to coach their team without actually having tried the new approach themselves.

6. Require participation by all. How you do this is up to you. But if anyone gets a pass for any reason, the initiative will fail. It’s a good idea to tap one or two people who are viewed as informal leaders internally and enlist them, on the side of course, to step up to the challenge.
Set a direction, communicate the value, model behaviors and watch your team rise to the occasion-because you did.

Jerry Stapleton and Nancy McKeon are with Stapleton Resources LLC, a Waukesha-based sales force effectiveness practice. They can be reached at 262-524-8099 or on the Web at www.stapletonresources.com.

Oct. 3, 2003, Small Business Times, Milwaukee

Selective sourcing is the key
Here’s a working model for doing business in China

Commentary, by Ed Pope, for SBT

I have a unique background in that I have owned and operated a number of manufacturing and distribution companies. Some of those companies have been local and some have been global. About eight years ago, I purchased a local stamping company called Wire and Metal Specialties and brought it into our DexM Holding Co. That company has faced the challenges that all small manufacturers in the Midwest have faced — huge competition from China.
I saw this coming three or four years ago. I travel around the world constantly and saw that the Chinese had targeted US manufacturing. I decided to reinvent the business model of that company.
We turned DexM into a "supply chain management company" and also renamed it DexM WorldSource. The company sources stampings, fasteners, machined parts and plastic parts from all over the world and focuses on sourcing from China.
We use our engineering capabilities to both make parts for ourselves and now also to supervise Asian manufacturers. We use our technical expertise to quality-inspect the materials prior to shipment, and we actually take title to the inventory while it is on the container ship.
We then warehouse it in one of our warehouses around the country and deliver it on a just-in-time basis to the customer. In the course of the development of this business model, we have established exclusive agency relationships and/or direct operations in more than 20 countries around the world.
This enables us now to shop the world for the low-cost producer for stampings, fasteners and machine parts, as well as plastic components, fittings, etc.
We still maintain our manufacturing capabilities in Wisconsin and also have manufacturing in three other Midwestern States. We manufacture parts that are either hard to manufacture overseas because of quality reasons or regulatory reasons (such as aerospace) or cannot be manufactured overseas.
Under this model, the business has expanded on an average rate of 40 percent annually over the past few years and will continue that growth into the foreseeable future.
We think that manufacturers should look hard at their business model and consider using China as a possible asset to them in the future, rather than considering China as a threat. It took hard work, some capital and a whole mindset change in order to change our business model and culture.
In many ways, we are still working at it everyday. However, the alternative was a serious decline in the business and possibly not having a company when this was all over.
We found this business model change a necessary reaction to what we believe is a permanent change in the way manufacturing takes place in the United States.
The best value-added asset that US manufacturers can bring is the following: Customer acquisition, customer retention, customer service, quality engineering, logistics management and product innovation.
The Chinese are principally good at one thing — manufacturing. They really rely on US companies to provide the rest of the package to service customers.
If we can position ourselves as providers of the rest of that package and still provide manufacturing for short runs, prototypes, difficult-to-manufacture or protected industry parts (like medical or aerospace), then I believe that model will be the wave of the future of US manufacturing.

Ed Pope founded Corporate Financial Advisors of Milwaukee and DexM WorldSource of Waukesha. He has been to China more than 40 times.

Oct. 3, 2003 Small Business Times, Milwaukee

Darryl Johnson has been named the executive director of Northeast Milwaukee Industrial Development Corp. (NMIDC) and Riverworks Business Improvement District. Johnson brings more than 12 years of experience in community and economic development.
The Gral & Co. law firm has expanded its eastside Milwaukee presence by adding paralegal Jami Huisjen Scott to its staff. Scott, an Air Force veteran, brings more than a decade of multi-state legal and real estate experience to the firm, having obtained credentials from Armstrong Atlantic State University, Savannah, Ga., and Silver Lake College, Manitowoc.
Wisconsin Manufacturing Extension Partnership (WMEP) has hired two manufacturing specialists to provide technical expertise and business assistance to small manufacturers across the southeastern region of the state. William Bryant has more than 20 years of experience in manufacturing, and has served at Sharegate Inc., Siemens Power Corp., Alliant TechSystems, Packard Bell, Avnet Computer and Johnson Controls. David Hill has more than 25 years of experience in several Wisconsin and Illinois companies, with specialized knowledge in ISO implementation, lean manufacturing and strategic planning.
Joseph Douglas Homes, a Brookfield-based residential home builder and developer, has hired Vicki Kasun and Rudy Zwicklbauer as new-home construction sales specialists.
Kirk Ericson has joined the Louis Schmitt Plumbing Co., Milwaukee, as chief financial officer, a new position for the 108-year-old company. Ericson is a graduate of UW-Whitewater.
Jefferson Wells International, Brookfield, appointed Tom McBride to the newly created position of vice president of sales and marketing. Prior to Jefferson Wells International, McBride was senior vice president at Metavante Corp., Milwaukee, and held the general manager position at Metavante’s Strategic Accounts Division. McBride was director of worldwide marketing for Diebold Inc. before working at Metavante. He received his bachelor’s degree in marketing and economics from Marquette University.
James O. Sullivan Jr. has joined the von Briesen & Roper law firm, Milwaukee. Sullivan will work with the firm’s health practice group. His law practices will concentrate on health care contracting, federal compliance issues and Medicare reimbursement. Sullivan received his J.D. from Marquette University Law School in 2001 and his bachelor’s degree from the University of Wisconsin in 1991. John G. Goller has joined the firm as an associate in the litigation and risk management practice group. Goller received his law degree from Gonzaga University in 1998. Prior to joining the law firm, Goller was a United States Criminal Justice Act legal intern for the Eastern District of Washington and the District of Montana. He also served as deputy prosecuting attorney in Spokane County, Wash. Carrie C. Joshi has joined the law firm, practicing in its Health Practice Group. Joshi earned her law degree, cum laude, from Marquette University in 2003 and her B.S.N. from the University of Wisconsin in 1998.
Jake Slody has joined the LePoidevin Rickinger Group in Brookfield as a copywriter. He was most recently a copywriter at Boelter & Lincoln in Milwaukee. Slody graduated from San Jose State College in California with a degree in advertising, and did post-secondary work at The Creative Circus in Atlanta.
Claudia Abrams has joined Image Makes in Waukesha as a graphic designer. She has more than 20 years of graphic design experience.
Diane J. Nelson has joined Curative Care Network as vice president of human resources. Prior to joining Curative Care Network, she was director of human resources for Three Pillars Senior Living Communities in Dousman, and earlier worked in human resources for Covenant Healthcare. Nelson earned her master of science and bachelor of arts degrees from UW-Milwaukee.
David A. Weber has joined the Milwaukee law firm of Miller, McGlinn & Clark as a shareholder. Weber has practiced law for more than 25 years, with expertise in areas of closely held businesses, estate planning, probate and trust administration.
Mari Randa has joined Leum Roberts in Wauwatosa as an account supervisor for the public relations and marketing communications company. She had been an account supervisor at Cramer-Krasselt in Milwaukee. Randa is a Marquette University graduate with a degree in public relations and a minor in communications.
Mark Frohna and Katie Origer have joined Marcus Promotions in Milwaukee. Frohna is a 1995 graduate of UW-Madison, earning a bachelor’s degree in advertising. He had been the sole proprietor of Performance Photography, and continues to photograph events for area high schools. He will oversee production and printing of Footlights, the Marcus Promotions performing arts magazine in Milwaukee, Chicago and Madison. Origer joined the company as a production artis. She is a 2003 UW-Whitewater graduate and most recently was a graphic artist in the promotions department at UW-Whitewater’s Residence Life.
Gregory Enes has joined the Mequon insurance agency Fitzgerald, Clayton, James & Kasten. He will work as a benefits consultant in the employee benefit group. With 10 years of industry experience, he was most recently a producer with Frank F. Haack & Associates in Wauwatosa. He is a 1990 Marquette University graduate.
Tracy Marhal has joined CG Schmidt in Milwaukee as the construction company’s new marketing coordinator. She graduated from UW-Stevens Point with a bachelor’s degree in journalism and had been a reporter for the Waukesha Freeman.
Jennifer Dirks has joined Zeppos & Associates, Milwaukee, as an account executive. Dirks is a graduate of Illinois State University, where she earned a bachelor’s degree in mass communications. Prior to joining Zeppos & Associates, she was media relations director at another local public relations firm. She was also an executive producer at a Milwaukee television station.
Ralph Tatum has joined Schroeder Solutions, New Berlin, as a project team leader. He has more than 16 years of experience in the furniture installation industry and had owned his own business.
Heather Turner has been promoted to project director at MSI General in Oconomowoc. She joined MSI General in 1999 as an intern in the construction supervision area, becoming a permanent employee in 2001. She received a bachelor’s degree in architecture and engineering and another degree in construction management in 2001 from the Milwaukee School of Engineering.
Dawn Kiel-Nord has joined Strosahl & Co. CPAs in Menomonee Falls. She has several years of experience in accounting, tax preparation and business consultation. She holds a bachelor’s degree in accounting from Lakeland College.
David W. Kasun has joined The Wisconsin Heart Hospital, Wauwatosa, as director of diagnostic and interventional procedures. Kasun has more than 16 years of experience in cardiac services. Prior to joining The Wisconsin Heart Hospital, Kasun was coordinator of cardiac services of Aurora Sinai. Kasun received his bachelor of science in nursing degree from UW-Milwaukee and is currently enrolled in the master of business administration program at University of Wisconsin-Phoenix in Milwaukee.
Jeff Rasmussen has been named vice president, aviation practice leader – commercial account executive at Johnson Insurance, Racine. Prior to joining Johnson Insurance, he served as an account executive with Mortensen, Matzelle & Meldrum. Rasmussen holds his BBA and MS in risk management and insurance from UW-Madison.
Landmark Credit Union has promoted Robert Bruemmer, Sharon Mather and Jay Magulski to senior vice presidents. It also announced new responsibilities for David Powers and Robert Hall. Bruemmer began his career at Landmark in April 1987. He served in many areas of the credit union before becoming vice president of information systems in 1998. He will also assume management of consumer loans, mortgage loans, and the Member Service Department. Mather joined Landmark in February 1988 and served in many areas of the credit union before becoming vice president of branch operations in February 1998. In addition to her management of branch operations, Mather will assume management of the Marketing Department and Landmark Financial Services, a subsidiary of Landmark Credit Union. Magulski joined Landmark in February 2002 as vice resident of business development and Training. In addition to these management duties, he will assume the management of the Human Resources and Compliance departments. Powers joined Landmark in June 2002 as vice president of finance. He will assume the additional management of the Internal Audit and Purchasing departments. Hall joined Landmark in March 1998 as a branch manager and became vice president of the Member Service Department in February. He will assume the position of vice president of traditional branch operations, which includes management of Landmark’s seven traditional branches.
Sue Nelson has been named Midwest regional sales director of Associates for Health Care, a BCE Emergis company based in Brookfield. Nelson, based in Eau Claire, had been the corporate sales director for a major Wisconsin health insurer. Nelson holds bachelor’s and master’s degrees in business administration from the University of Wisconsin.
John Lange has joined North Shore Bank as a business banking officer, based at the bank’s Brookfield corporate headquarters and working throughout its Southeast Region. Lange had been with Associated Bank as a credit analyst. He earned a bachelor’s degree in business administration from Marquette University, with majors in finance and marketing.
Oct. 3, 2003 Small Business Times, Milwaukee

Cedarburg getting two developments
Construction has begun on the first of two separate mixed-use development projects in Cedarburg’s downtown historic district — the first new construction in the historic district in approximately 25 years. The buildings will house commercial space and residential lofts, developed by Cornerstone Buildings LLC, of Cedarburg.
The exteriors of both buildings were designed to complement the historic Cedarburg architecture.
The design of the building currently under construction on the corner of Washington Avenue and Western Road is based on the stone blacksmith building dating to the mid to late 1800s that originally stood on the site.
One block to the north, on the corner of Washington Avenue and Mill Street, plans have been approved for a larger building also designed to be historic in appearance.
Retail or office spaces ranging from 1,200 to 5,000 square feet will occupy the main floors. The larger space will have high ceilings and large windows, with room for sidewalk seating, that would lend itself to restaurant operation or a business with a cafe, the developers say.
The upper level of both buildings will house upscale loft living spaces with soaring ceilings, exposed beams and open floor plans. The residences will include attached parking and private entrances.
Completion of the first building is scheduled for late fall. Don Stauss of Mequon is the architect, while John Sauermilch Jr. of Sheboygan is the general contractor.

Oct. 3, 2003 Small Business Times, Milwaukee

Blackout casts light on power problem
Utility watchers say deregulation is at core of transmission troubles

By Erik Gunn, for SBT

The quest to find the cause of August’s blackout that plunged New York City and major portions of the Northeast into darkness for a day focuses on whether something went wrong in Ohio or in Canada.
But for some utility watchers, that misses the point.
The real culprit, they argue, is federal policy that seeks to hastily deregulate the wholesale distribution of electric power.
If that policy continues unchecked, critics warn, the cost is likely to be astronomical, and the blackout merely a harbinger of crises to come.
One who holds that opinion is Nino Amato – a former utility executive who now represents Wisconsin’s industrial energy users. Amato worries that in the aftermath of the August outage, business may learn the wrong lesson.
"Some people are using the blackout to drive energy policy saying more deregulation is needed," Amato said in a recent interview from his office in Madison, where he heads the Wisconsin Industrial Energy Users Group. "These are people who haven’t learned from California and people who haven’t learned from Enron. What’s needed now is for state governments to step in and for Congress to focus on reliability standards."

Time for reassessment
The controversy over the huge August blackout argues for a major reassessment of US and Wisconsin policy regarding electric power, some say.
It’s a reassessment that has been a long time coming. The state’s electric power industry is a far cry from the days when utilities were the dependable stocks that allowed widows to sleep peacefully at night because they held their value and paid a steady dividend. It’s also a long way from the days of cheap, consistently available electric power in Wisconsin.
"We’ve gone from a system that provided affordable electricity that was highly reliable to one that is more expensive and less reliable," said Steve Hiniker, executive director of the Wisconsin Citizens Utility Board, a lobbying group that advocates for consumers.
The culprit, Hiniker believes, is deregulation.
Deregulation was supposed to slash electric rates and reshape the power industry. Instead of huge, rigid monopolies lighting and heating our homes and powering our computers, washers, toasters and microwave ovens, we would see scores of small, nimble power suppliers, all competing with each other for our business and making electric power cheaper than ever.
It would be, we were told, not unlike what happened in the telephone and airline businesses, where competition really did bring down prices, albeit in the environment of a chaotic bazaar.
The bazaar never happened. Wisconsin only took baby steps toward deregulation, rather than embracing it outright – and then watched as the power revolution self-destructed in California’s market meltdown and Enron’s phoney energy trading.
Since 1997, Wisconsin’s electric rates have climbed dramatically, even though the Public Service Commission has imposed "freezes" on some major electric power providers.
How bad has it gotten? Wisconsin’s electricity rates – once a competitive selling point for the state – have increased at a higher pace than those of surrounding states and in the nation as a whole.
Nationally, residential electric rates have held steady from 1997 to 2002, while commercial rates have risen about 4% and industrial rates about 7%. Most Midwestern states show a similar pattern, with increases no higher than 6% over the five-year period.
In Wisconsin, though, residential, industrial and commercial rates have risen from 16% to 18% in the same five-year period. The only other double-digit increase in the Midwest was in Ohio. In Illinois, meanwhile, residential rates plunged nearly 19% over five years, and the state’s industrial and commercial rates rose about 6% and 5%, respectively — far less than Wisconsin’s.

Rates still favorable here
To be sure, Wisconsin’s rates today are comparable to and in some cases less than those of surrounding states; a PSC report expresses optimism that the state’s rates will remain favorable "barring unforeseen developments."
Others aren’t so sanguine. Utility projects on the horizon are projected to cost hundreds of millions of dollars. These include We Energies’ Power the Future plan to build new power plants in southeastern Wisconsin and the Arrowhead transmission line project, which has ballooned in projected cost to $445 million. "You’ve got all this tremendous upward pressure on rates," said Hiniker. "What are we going to do about it?"
Utility investors have had their share of shocks as well. While Madison Gas & Electric and Wisconsin Public Service have seen stock prices nearly double since 2000, Wisconsin Energy’s share price tumbled 20% in 1999 before rebounding. Madison-based Alliant Energy, after peaking at a little under $30 a share, fell to $15 last year and now trades at about $20 a share. And Xcel Energy, which provides power to the western third of the state, might have sent a few widows to an early grave: Peaking at more than $25 a share in early 2001, Xcel’s stock plunged to $6 a share a year ago and now trades at about $14 a share.
What went wrong?
The problems date to 1985, when Wisconsin allowed electric utilities to create holding companies that could invest in businesses not governed by the PSC. Although not deregulation itself, the law marked the first step in freeing utilities from state scrutiny.
The holding company law was proposed as Wisconsin struggled to emerge from the brutal recession of the early 1980s that devastated manufacturing in the southeastern part of the state. Holding companies were championed as an economic development tool.
"Utilities were flush with cash," said Amato, once an executive at Wisconsin Power & Light (Alliant’s predecessor). "They went to the Legislature and said, ‘If you give us holding company status, we will invest up to 25% of our assets and help build the Wisconsin economy.’"
The idea was that by creating holding companies, utilities – whose profit margins were dictated by the PSC – would have the chance to earn higher returns with some of their investments. In exchange, the state would get some much-needed economic development.
Wisconsin Power & Light became WPL Holdings, which invested in an environmental engineering firm (RT&E), a communications-transmission company (Norlight) and in affordable-housing construction. Milwaukee-based Wisconsin Electric Power Co. became Wisconsin Energy, which invested in industrial park property, mainly around its power plant in Kenosha.
The law allowing these new investments erected thick walls in the utilities’ balance sheets, so that investment losses in the non-utility lines of business would not be passed on to ratepayers. The system generally worked; both WPL and Wisconsin Energy’s outside investments were pointed to with pride.

Business culture change
Then things changed. Amato attributes it to a generational transfer of leadership. When the 1985 law first passed, WP&L was run by James Underkofler and Wisconsin Electric by Charles McNeer – men widely regarded not only as industrialists but as public-minded civic leaders. Both passed their companies on to more aggressive successors with grand dreams for the future.
Meanwhile, the country caught deregulation fever. Texas and California turned over the job of generating power to a group of unregulated power providers. Wisconsin never went that far, but the Badger State – worried by brownouts in the summer of 1997 — enacted legislation to open the way for new, independent power suppliers to build plants in Wisconsin without securing PSC approval.
"No one in the state had built new power plants at that point for 10 or 12 years," said Larry Salustro, general counsel for Wisconsin Energy and its We Energies natural gas and electric power subsidiary. "And the demand kept growing as the economy grew." Wisconsin had relied largely on imported electricity in the intervening years, buying from generators in Illinois and Minnesota.
The expectation was that the big utilities might leave the power generation business altogether. The new state law seemed aimed at encouraging that outcome, with a requirement that utilities needing power buy from the independent power producers, or IPPs.

Transmission separated
The next turning point came two years later. Under a 1999 state law known as Reliability 2000, utilities spun off their high-voltage transmission lines into a separate, statewide company.
Traditionally, there are three parts to the power business. At one end is generation: making electricity. At the other end is distribution: delivering it to customers. In between is transmission: conveying power over longer distances, often to other power companies. While electric utilities historically owned all three parts, federal energy policy has put pressure on states to create regional transmission systems that send power over longer distances.
The easiest way for Wisconsin to join such a system was to convert its utility-owned transmission networks into a single statewide company, which would then join the Midwestern transmission network, known as the Midwest Independent System Operator.
Creation of the new state network, American Transmission Co., didn’t really represent deregulation itself, cautioned Dale Landgren, American’s vice president and chief strategic officer. As a monopoly, "we are as regulated or more regulated today as the transmission assets were when they were part of the utilities."
Still, an independent transmission network in Wisconsin furthered the federal dream of wholesale competition in making and selling electric power – in essence, a national marketplace in which various power producers compete.
To make it easier for utilities to buy and sell power from each other, both within the state and across the upper Midwest, Landgren sees the need for "better interconnectedness." To this end, "We’re looking at investing over $2 billion in the transmission grid over the next 10 years."
But, to put it mildly, things haven’t turned out as planned.
Take the 1985 law permitting outside investments. In 1998, WPL merged with two Iowa utilities — Interstate Power Co. and IES Industries — to form Alliant Energy. With the merger came a sharp shift in Alliant’s investment strategy. No longer was it focusing on in-state, economic development; instead there were far-flung ventures: McLeod USA, an Iowa upstart phone service, power facilities in Brazil and China, and other global projects.
When the foreign investments turned sour and McLeod’s stock tanked (the phone company wound up reorganizing in a Chapter 11 bankruptcy), Alliant’s earnings took a huge hit and some shareholders sued the company. Alliant cut its $2 dividend to $1 in 2002 and started selling off assets, some of them profitable.
At Alliant’s annual shareholders meeting in Madison in May, chief executive Errol Davis found himself defending the $2.6 billion company’s run of bad luck, blaming the California energy crisis and the scandalous collapse of the energy trader Enron, which destroyed confidence in a free-market model of energy delivery. He also minimized the role of outside investments in the company’s losses. Staying strictly a utility, he told angry stockholders, wouldn’t have preserved Alliant’s annual $2 dividend.

MGE sticks with power
One utility, though, has prospered by not diversifying. Madison Gas & Electric took a very different tack. "To this day, we believe we are a utility and our niche is being a local utility," said Jeff Newman, MGE’s vice president and treasurer.
The company did form a holding company, but that was to provide greater flexibility to raise money for a co-generation plant on the UW-Madison campus, a project moving through the approval stage. The holding company structure allows MGE to create a separate company to own the plant and lease it back to the utility — an arrangement that creates a predictable cash stream for investors and a predictable electrical rate for customers.
MGE never looked at the far-ranging sorts of ventures in which other utilities invested. "We’ve always stuck to our knitting," said Newman. "We did not believe getting outside that core interest was in the best interest of our customers." The proof, he said with satisfaction, is in the company’s relative stability today – not to mention its double-A bond rating.
To be sure, MGE is much smaller than either Alliant or Wisconsin Energy. In opting out of outside investments, is it merely making a virtue of necessity? Newman insists not. "It’s corporate philosophy. Size is not the deciding factor. You can always use your assets to invest in other things. MGE’s corporate philosophy has just been not to go in that direction."
Amato and Hiniker both argue that the holding company law should be revised to limit utility holding companies to in-state investments, especially since building up the state was how utilities sold the idea in the first place. Said Amato, "They should have been made to put it in writing."
Other flaws in the law
Critics cite other flaws in state law. Opening the state up to independent power producers, for instance, required utilities to give them preference when buying power. "That’s kind of like directing by statute someone to buy a car from someone else," said Hiniker. "The IPPs knew that they had a buyer who was required to buy from them. So they’re going to represent their interest as well as they can to get the biggest dollar they can. The consumer was put at disadvantage by the statute."
The independent power producers dispute this. "No one is forced to buy our power," said John Flumerfelt, director of government and public affairs for Calpine Corp., which has built or drawn up plans for a half-dozen Wisconsin plants, including ones in Cambridge and Beloit. He said the utilities that contract with Calpine for power have "aggressively negotiated contracts."
Calpine has suggested a gas-fired generation plant in Fond du Lac would offer a sound alternative to the We Energies plan for a new coal-fired generation plant in Oak Creek, and environmental critics of the coal plant are warming to the idea.
Alliant’s Davis said ways in which both federal and state laws favor non-utilities helped contribute to current power shortages. Looking back on the late 1990s, he said, "We certainly were in a position to build [new generating capacity] and probably could have moved into the future with a little less risk than now."

Independents fell out of favor with Wall Street
Reality has sharply curtailed the independents’ role, added Salustro of Wisconsin Energy. "In 1998, it was anticipated that independent power producers would be essentially taking over the power plant business," he said. But when California’s deregulated energy market imploded, Wall Street lost interest in the sector. Too risky. Add in the Enron collapse and the rising price of natural gas (which IPPs use because the plants can be built faster for less money), and the nascent industry seemed dead on arrival.
"It’s important that they stay around," said Salustro. "But if the idea of the ’98 law is that they would build all the future power plants, that just did not work."
Hiniker sees other problems. The law provided no review of the new power plants’ impact on rates, and it eliminated a requirement that utilities formally report on how they will meet future energy demands. Such planning is important, he said, because it allows the public to offer alternative suggestions that may save money in the long run.
In short, Hiniker argued: "All of the provisions of the ’98 act made the problem of electrical reliability in Wisconsin worse, and not better."
For defenders of electricity deregulation, the problem isn’t that it has failed, but that it hasn’t been tried adequately. The first lesson of California’s failed deregulation effort, said David Weimer of the UW-Madison’s La Follette Institute, is to make sure there are an adequate number of power suppliers to create real competition.
"California went into its deregulation during a period when demand increased and supply didn’t," said Weimer. This tilted the market to the power producers, who jacked up their prices. Weimer also said consumers need to understand that power costs vary according to time of use. Business already pays differently based on whether they use power at peak times or off-peak times; under a truly deregulated environment, he said, consumers would too — just as they do for telephone calls.
This is already technically possible, said Weimer. What’s missing is the rate structure and, for now, the will to pay "the political costs of getting an agreement to move to such a system."
Indeed, the conventional wisdom now is to build up that grid as quickly as possible, and to push ahead with deregulation on a big scale in the meantime.
Both Hiniker and Amato, however, say that’s wrongheaded and will ultimately hurt business and consumers.
Wholesale trading may come, Amato said — but only after a better network is built to improve existing transmission. In the interim, though, deregulation now will merely lead to market manipulation that benefits only a few power suppliers.
Unlike other commodities, where suppliers can build up inventories, storing electrical power isn’t practical, said Amato. "You’ll end up having California over and over again. You’ll have a small handful of winners, and the ratepayers are going to lose."
American Transmission’s Sept. 10 announcement that it would seek to build $2.8 billion worth of new high voltage lines hints at what’s to come. Amato said that certainly some of those lines would be needed. But he noted that 30 years ago, the PSC reined in plans to build too many nuclear power plants — and likely avoided a disaster that would have sent rates skyrocketing again.
Now the agency again needs to independently gauge what the state’s real needs in generation and transmission are, Amato argued. "If not, we’re going to see rate shock that will absolutely hurt high energy users in the state."
Both Amato and Hiniker question federal policymakers pushing for national deregulation. "Transmission was originally set up as an emergency connection between investor-owned utilities," said Hiniker. Now the lines are more like interstate highways, transmitting power bought and sold in a national marketplace.
Yet the New York blackout suggests, Hiniker said, that the "interstate highways" are really still old well-worn streets that aren’t ready for the traffic they’re being forced to carry. "It’s kind of like driving a car at 70 miles an hour through the middle of the city. Our transmission grid was not designed for the bulk transmissions of power that we’re trying to shove across the system."

Eastern Wisconsin in isolated position
Wisconsin, especially the state’s eastern half, is a virtual island apart from the national grid. The state would "have to pay a very high price" to be able to play competitively in the centralized, national model that federal policy envisions, warns Hiniker.
He’d rather see the state opt out and revert back to the days when power remained a local commodity. "Utilities that keep their focus on that core mission have done better than those that have looked afar," he said. And for power companies, "there’s plenty of profit to be made in the old system."
A few years ago, Hiniker notes, an ice storm in Quebec required the city to rewire its system. Authorities there considered, and ultimately rejected, the option of more tightly integrating themselves with the larger regional grid, opting instead to stick with the model of operating as its own service territory only loosely connected with the rest of the world. Then came the August blackout. "While Montreal went out," Hiniker said, "in Quebec lights stayed on."

Oct. 3, 2003 Small Business Times, Milwaukee

Downtown Milwaukee jumps high for GE Med jobs
Bidding war pits city against suburbs

By Steve Jagler, of SBT

Downtown Milwaukee is now in the stretch run of a perfect trifecta that would place a crowning jewel on Mayor John Norquist’s final year in office.
Earlier this year, Roundy’s Inc. decided it will move its headquarters and 500 jobs from Pewaukee to downtown Milwaukee at the new 875 E. Wisconsin Ave. building.
That decision was quickly followed by Bank One’s announcement it will move 750 jobs from Menomonee Falls to its downtown Milwaukee building at the southwest corner of Wisconsin Avenue and Water Street.
And now for the third leg of the trifecta — 1,500 jobs in a $50 million, 300,000-square-foot office building sought by Waukesha-based GE Medical Systems Information Technologies.
GE Medical continues to shop around southeastern Wisconsin for the perfect home for that building and those jobs.
The firm’s ongoing shopping tour has pitted downtown Milwaukee against the suburbs in a familiar bidding war to be the company’s suitor.
The City of Milwaukee has made its best economic offer to the firm, said Bill Zaferos, special assistant to the commissioner of city development.
"We’ve had questions come back to us (from the company), but nothing that would indicate they’re any closer to a decision," Zaferos said.
Zaferos and other city officials remain confident that downtown has a fair chance to land the new jobs, primarily because they believe the young professionals who will occupy those high-tech jobs tend to prefer diverse urban settings.
"Young people like an urban environment. They don’t like to be stuck out in a cornfield, where you’ve got to drive three miles to eat lunch," Zaferos said. "It’s also great to have a Milwaukee address."
According to real estate sources, the main sites being considered for the GE Medical facility are:
— The proposed Ovation Plaza office building, which would be developed at the site of the Marcus Center for the Performing Arts parking garage along Water Street north of State Street in downtown Milwaukee. Irgens Development Partners LLC continues to look for an anchor tenant, which would be needed before the $100 million, 22-story building could be constructed.
— A downtown Milwaukee site along West Cherry Street near the Milwaukee River. The site is owned by Milwaukee developer Gary Grunau.
— The Milwaukee County Research Park near Highway 45 in Wauwatosa.
— A Brookfield site near the intersection of Bluemound and Calhoun roads owned by V.K. Development Corp.
— Another Brookfield site near Bluemound and Calhoun owned by Ruby Realty.
— The Heritage Reserve office complex being expanded along Good Hope Road in Menomonee Falls by Strong Capital Management Inc.
— The Pabst Farms site being developed in Oconomowoc by Pabst Farms Development LLC and its president, Peter Bell.

GE Medical spokesman Patrick Jarvis, who will soon be leaving his position for a promotion to a position in General Electric’s transportation division in Erie, Pa., said the company has received several proposals and continues to weigh its options.
"We’ve made progress. However, we have not come down to a final cut yet," Jarvis said. "I would expect we would have a decision in the not-so-distant future."
The company is committed to keep the jobs in southeastern Wisconsin, Jarvis said.
Like their Milwaukee counterparts, Waukesha County officials remain optimistic they’ll land the GE Medical project.
"I think each has put their best foot forward," said Bill Mitchell, president of the Waukesha County Economic Development Corp. "I think, if it’s measured by prestige, it would be a loss for whichever county doesn’t get it. I would be disappointed, but I don’t think it would be a fatal blow to the county. What is important is that we keep them in the region."
Dan Ertl, Brookfield city planner, is hopeful that V.K. Development or Ruby Realty can land the new GE Medical complex.
"We are highly supportive of their efforts to secure an agreement," Ertl said. "A fair representation is that both owners are highly optimistic the sites will be selected."
After losing both the Roundy’s headquarters and the Bank One office — a combined job loss of 1,250 — Mitchell acknowledged that Waukesha County has some bruised egos.
"I think it’s fair to say, to have two back-to-back announcements like that caught us flat-footed. What I’m a little disappointed in is the knee-jerk reaction on the part of some organizations or people that say it’s a pattern," Mitchell said.
Mitchell said he disagreed with the notion that the trend of large employers migrating from the large city to the suburbs has reversed.
Roundy’s decided to leave Lake Country for downtown Milwaukee because the company’s leadership team from Chicago simply preferred a more urban setting, while Bank One chose to move to Milwaukee because the company owned its downtown building and did not want to continue leasing in Menomonee Falls, Mitchell said.
Steven Palec, the Polacheck Co. broker who is representing GE Medical in its site search, said he could not comment on anything regarding his client’s intentions or plans.
However, Palec said he is very bullish on the downtown Milwaukee office, retail and residential markets, in general. Palec noted how quickly the 875 E. Wisconsin Ave. office building filled up with tenants and the demand for condominium and office space in the $52 million Cathedral Place structure being constructed at 545 E. Wells St.
"One of the things I’ve been doing is talking to a lot of lenders from other cities that are taking notice how quickly we filled up two new buildings in downtown Milwaukee," said Palec, who also hosts a Sunday morning radio show devoted to rock ‘n’ roll classics on 96.5 WKLH-FM.
"I find myself sitting here as I’m looking out my window at the Calatrava (addition to the Milwaukee Art Museum), and we in Milwaukee are so self-effacing. We have a real story here, and about the only thing we have to apologize for is getting Elton John for Harley," Palec said.

Oct. 3, 2003 Small Business Times, Milwaukee