Microsoft: A monster game-changer for Wisconsin

Back in the 1980s when the central political theme in Wisconsin was “JOBS, JOBS, JOBS,” I frequently asked the question during speeches on economic development: “Can you name a major employer in Wisconsin that didn’t start here?”

According to a brilliant study by the Wisconsin Taxpayers Alliance, the state had been a laggard in job creation for decades. That corresponded to a continual decline in the state’s share of the national Gross Domestic Product (GDP). The major strategy at that time for economic developers was to recruit companies to move operations here. It never worked very well.

Regarding my question, almost no hands went up, because almost all of our greatest employers, like Northwestern Mutual and paper companies, started in Wisconsin.

A few times someone would call out “Kikkoman!” But it came from Japan a decade earlier. That fine manufacturer of soy products has been true to Janesville ever since and recently announced a $560 million expansion. But, it currently employs fewer than 300 in two U.S. plants.

That sorry recruiting story line changed dramatically to the positive this year when Microsoft decided to make major investments in Wisconsin. It’s latest announcement was a $3.3 billion commitment in Mount Pleasant on the site where Foxconn defaulted on a promise to create 13,000 jobs. The Foxconn “con job,” similar to its practices elsewhere, was a disaster that left investors in the Mount Pleasant site holding the bag. But all’s well that ends well. Microsoft is an infinitely better partner than Foxconn. They are exceeding their promises, in stark contrast to the Foxconn bait and switch distortions.

The trigger for the Microsoft victory was the promotion to CEO of Satya Nadella (pictured left) of Microsoft in 2014. Fortuitously, he holds a Master’s degree in computer science from the University of Wisconsin – Milwaukee. UWM Chancellor Mark Mone immediately recognized the potential for a far-reaching partnership with Microsoft with Nadella at the helm.

We in Wisconsin could not hope for a more strategic partner. Microsoft is the most valuable corporation in the world with a market value that has passed $3 trillion.

It has developed more than 300 data centers around the world, and Mount Pleasant is one of its next large data centers at an initial investment of $1 billion. It’s big dollars, but data centers don’t employ a lot of workers.

That picture changed sharply last week when Microsoft president Brad Smith, a Milwaukee native and graduate of Appleton West High School (pictured right), announced that Microsoft will invest $3.3 billion in Mount Pleasant and eventually employ some 2,000 people. That means that Microsoft will be doing a lot more than a data center in Mount Pleasant. Hallelujah! Finally a huge recruiting victory.

Even more impressive is the reality that Microsoft is partnering and investing up and down the east side of Wisconsin.

At UWM, Mone convinced Microsoft to create a Connected Systems Institute (CSI). Microsoft has made two CSI donations for a total of $2.7 million. Rockwell Automation is also a partner. CSI will advance the use of artificial intelligence in manufacturing, a Wisconsin long suit.

It’s significant that Microsoft has also teamed up with our state’s greatest non-profit corporation, namely the Green Bay Packers. The two companies are collaborating on Titletown Tech, a venture fund for startups that has helped the launch of more than 30 new enterprises.

Wouldn’t it be great if Titletown and Microsoft extended their combined startup prowess and muscle to UWM? The Lubar family and Mone have already launched a hallmark initiative at UWM with the creation of the Lubar Entrepreneurial Center smack dab in the middle of the campus. UWM is an embryonic E-University. With the capital that Microsoft and the Packers can bring to bear, it could rival Babson University, MIT, Georgia Tech and Utah State as an startup university.

In terms of who gets credit for the Microsoft “invasion” of Wisconsin, there is plenty to go around. Former Wisconsin Commerce Secretary Bill McCoshen, points to the work of M-7’s Jim Paetsch, who just retired from M-7; to a bipartisan collaboration between the GOP-led legislature and Democratic Gov. Tony Evers on enacting a tax exemption for data center equipment in the 2023-2025 state budget; to local officials in Racine County who stuck their necks way out to create the shovel-ready site in Mount Pleasant.

The local officials, former Gov. Scott Walker, Republican legislative leaders, and M-7 all took a lot of heat when the Foxconn deal flopped. Note, however, that Foxconn does employ about 1,000 people at its Mount Pleasant plant making data servers, far from its original promise, but not nothing.

Karl Ebert, a reporter for the Milwaukee Journal Sentinel, dug deep on the permutations surrounding the transition from Foxconn to Microsoft and came up with a bold extrapolation. Because Microsoft recently purchased an additional 1,030 acres, he wrote, “Given the two square miles it now owns, the company could, over the next two decades, easily spend $10 billion or more, people familiar with the development said last week.”

Wisconsin strategists have learned that entrepreneurship is the best bet for a state known for its frozen tundra. It’s strongest job creations have come from startups like Epic Systems; Exact Sciences; Jamf, an Eau Claire Apple device management company, and Fiserv. They are entrepreneurial homeruns.

The layering of a recruiting win with Microsoft on top of the entrepreneurial victories is proving to be a great game plan.

I’ve always been skeptical of the recruiting strategy, but no longer. The recruitment of Microsoft is a game-changer for the state that grew out of a dogged strategic emphasis on recruiting.

Conclusions for Wisconsin’s prosperity:

  • Expand on our growing prowess for startups.
  • Keep recruiting operations of big corporations, only those that keep their promises.
  • Take care of the great employers that started here many years ago and that continue to expand.
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