Walker, Burke cite clusters as roadmap out of economic swamp

Where do Gov. Walker and his Democratic challenger stand on “clusters?

It’s not a hot button campaign issue, yet almost all economic strategists have come around to clusters as the best organizing concept for how the economy works. It means groups of players from business, government, education and the supply chain in a particular industry that build products and services for export. These “trading” sectors create wealth for a state or region. Think papermaking or cheese in Wisconsin or wine making in California as examples.

Most strategists think in terms clusters as they try to figure out how to create prosperity, and so do our candidates for governor, to varying degrees.

Burke has grabbed the cluster concept more than any other Wisconsin politician ever has. She devotes five pages in her 37-page “Invest for Success” campaign document to clusters as a big lever for how she would try to accelerate a prosperity agenda if elected governor.

Gov. Walker devotes two pages to the clusters in his 62-page (larger print) campaign white paper, called “Continuing Wisconsin’s Comeback.” Because he is the the incumbent, he can and does point to decisions made on his four-year watch that align with cluster theory.

As a point of interest, the state’s seven regional economic development organizations have organized their strategies around their business strengths, so they are generally ahead of state government on this score. The Milwaukee 7 organization calls them driver export industries.

In Wisconsin, huge clusters like advanced manufacturing and agri-business have long stood out, and Wisconsin has long made huge investments to stay out in front on those two engines of the state’s economy.

Aside from Act 10, Gov. Walker’s most dramatic economic decision was to sign into law a virtual elimination of income taxes on businesses in those two sectors.

The creation in 1994 of the Center for Dairy Research at UW-Madison is another example of smart investment. Threatened by imports of cheese. The center helped the Wisconsin dairy industry to reposition itself as a world leader in specialty cheeses. Under its “Master Mark” program, Wisconsin has been winning international cheese competitions and new customers.

Walker cites his support for expansion of the dairy center and for a new Meat Science and Muscle Biology Laboratory.

It’s hard to fault the long-standing strategic level of investment under both Republican and Democratic leadership. Both sectors remain strengths, despite tough global competition and despite the shocks delivered in the Great Recession.

Burke’s program is prospective, of course. Her playbook, if elected, calls for a broad array of support and funds for clusters. She says she would personally lead a “Governor’s Cluster Leadership Council,” made up of clusters leaders from across the state. That kind of systematic embrace of key industries has not happened under previous governors.

Walker and his predecessor, James Doyle, who was Burke’s boss when she was secretary of commerce, have preferred small control circles in Madison. Doyle started a business council, but it only lasted about a year, meaning its input was largely unwanted.

Ideally, each cluster would have its own council, and a cabinet member and a representative from both the UW System and the Wisconsin Technical College System would both have a seat. Manufacturing and agribusiness do have strong voices in state government and advocates in education, but the Wisconsin economy has lagged because it is not varied enough.

Many industries have their own trade associations, and they lobby for attention in Madison. But they are not directly linked to political and education power. Burke proposes that each state agency would develop subject experts that would be assigned to the clusters.

The result of the weak linkage is that industries like insurance and finance have not received enough attention. These well-paying sectors are growing faster in neighboring states.

Wisconsin has made enormous investments in biotechnology, but that sector has not been nearly as productive as a job producer as others. Health care informatics, in contrast, has been a big winner.

Under Walker’s new Wisconsin Economic Development Corp. (WEDC), grants have been made to emerging clusters, such as water technologies and energy in the M7 region. Another touted by the governor in his plan was support for Maritime Center of Excellence in Marinette in the shipbuilding cluster.

But the grants have been modest in scope, reflecting WEDC’s belief that the clusters have to bubble up from the commercial fabric of the state. Not wanting to top-down economic strategy is fair enough.

But hip shots at targets of opportunity don’t build to a strategy for prosperity. Burke’s adoption of the cluster thinking from the Be Bold – Wisconsin Prosperity Strategy injects a serious note into the campaign.

Both candidates owe it to the citizens of the state to offer clear-headed leadership as they push the state to higher economic ground. Without an organized strategy, Wisconsin has been lagging on job growth for the better part of four decades.

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