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On Thursday, two days after being re-elected to a second term, Gov. Scott Walker toured technical colleges in five Wisconsin cities, promoting his worker training and job creation efforts.

The governor's message: He wants to "build off of the successes and investments of his first term to encourage economic development in all sectors across the state," said Laurel Patrick, a spokeswoman.

If Walker's second term is anything like his first, the biggest beneficiary could well be summed up in one word: manufacturing.

From an enormous tax credit that promises Wisconsin tax bills of nearly nothing on in-state production, to awards made by the economic development agency and training funded by the workforce development agency, manufacturing has won big.

Industry is a powerhouse in Wisconsin, representing about 20% of all jobs. But manufacturing is pulling in considerably more than 20% of all state business incentives. Some say this represents a shortsighted strategy that favors old-line industry over higher-potential sectors like biotech and information technology that create living-wage jobs and could breathe new life into the state's moribund job and business creation record.

The idea of favoring one industry like manufacturing — or even of choosing clusters to encourage — generally is frowned upon by economists, said Mark Partridge, an economics professor at Ohio State University.

"It comes down to the notion that it's really hard to see the future and pick winners," Partridge said. "We (economists) argue that politicians aren't well-suited to make those decisions."

But politicians in Wisconsin have essentially made them.

State tax on production by manufacturers and agricultural businesses is falling and will reach nearly nothing in 2016, when Wisconsin's Manufacturing and Agriculture Tax Credit is fully phased in.

Walker approved the credit as part of his 2011-'12 budget. It reduces taxes in steps until the two industries pay just 0.4% of production income in taxes in 2016, an estimated loss to the state of $127.8 million annually from that year on, according to the nonpartisan Legislative Fiscal Bureau.

Questioning impact

Several hundred studies have been done that suggest the overall effects of these types of tax credits are "quite small," said Robert Lynch, an economics professor at Washington College in Chestertown, Md. Giving such a big credit to just two industries either increases the tax burden for everyone else or takes away from other projects and programs the state could fund, Lynch said.

"If you're a manufacturer, you never have to pay taxes again," said Assembly Minority Leader Peter Barca (D-Kenosha). "But if you're (Verona-based Epic Systems Corp. leader) Judith Faulkner and you've single-handedly addressed the brain drain, you get nothing."

The tax credit was "the icing on the cake for us to be able to go out and sell Wisconsin as manufacturing heaven," James Buchen said when it was passed. At the time, Buchen was vice president of government relations for Wisconsin Manufacturers & Commerce, the state's largest business lobby.

Underneath that icing, manufacturers have found a lot of cake.

The Wisconsin Economic Development Corp. — Walker launched the agency to replace the state Commerce Department and serves as its chairman — has distributed $388 million, or 37% of its more than $1 billion in total incentives, to the manufacturing sector for the three fiscal years that ended June 2014, according to the agency.

Manufacturing employs about 458,000 workers in Wisconsin, said Kurt Bauer, president and chief executive officer of WMC. The industry has 22 subsectors and represents a vast slice of the economy, producing about 20% of the state's gross domestic product, Bauer said.

But manufacturers, including food processors, received most of the incentives WEDC provided to the industry. Less than 3% of the manufacturers receiving incentives were in the medical and electronics industries.

At this stage of the national economic cycle, service sector job growth exceeds manufacturing growth, said Tom Hefty, a retired health insurance industry executive. But in Wisconsin, he said, there is no strategy to grow service sector jobs.

Neglected service sector

WEDC is more responsive to existing businesses and better funded than its predecessor, the state Commerce Department, Hefty said. But Wisconsin continues to lag in job growth for higher-pay, higher-potential industries such as financial and business services, life sciences and technology, he said.

"They are still heavily focused on existing manufacturing industries rather than seeking new growth opportunities in growing industries," Hefty said.

"We are a manufacturing state," said Zach Brandon, president of the Greater Madison Chamber of Commerce. "And we're lucky to be a very diversified supplier-based state. To not have attention on manufacturing would be a mistake. The question is, can you strike a balance?"

One of the state's best chances to become a regional, high-tech hub is at the intersection of health, data and bioscience, Brandon said, given the presence of fast-growing Epic Systems, the country's leading maker of electronic health records software.

Many of the state's life sciences companies land in WEDC's "professional services" category, which received just $32 million, or 3.1% of the incentives distributed over the three years ended in June. That is despite all of the work being done at the University of Wisconsin-Madison, the state's flagship university and one of the top academic research institutions in the country. Among academic research institutions, UW-Madison is the seventh-largest for life sciences and 15th-largest for computer sciences in the country, according to National Science Foundation data.

Many of the state's digital companies — Madison has a growing health care IT cluster — fall into WEDC's "information technology and communications" category, which received $29.5 million, or 2.8% of the incentives distributed in the three years that ended in June.

Research and development activities in biotechnology and in the physical, engineering and life sciences areas received $1.7 million during those three years, according to data the agency provided the Journal Sentinel.

WEDC's support of manufacturing covers a broad swath of the economy and includes areas like medical devices, semiconductors and other technology, said Mark Maley, an agency spokesman. The agency also supports a range of other areas including start-ups, companies looking to expand or increase exports, and local communities through programs like its brownfield grant initiative, he said.

WEDC's cluster strategy has provided $1.3 million for Milwaukee's Global Water Center and its initiatives, and more than $800,000 for the Energy Innovation Center, Maley said.

Two other state agencies are heavily involved in economic development: the Wisconsin Department of Workforce Development and the Wisconsin Housing and Economic Development Authority.

Much of the money Workforce Development distributes comes from the federal government. But since Walker took office, it has added two new programs that distribute state dollars: Wisconsin Fast Forward, which will ultimately provide $15 million for employer-led worker training, and the related Blueprint for Prosperity, launched in July to provide $28 million to help the state's technical colleges add capacity and shorten their waiting lists.

Worker training

The manufacturing industry received $3.4 million, or 56%, of the $6 million that has been allocated for employer-led worker training to date, according to the agency's records. The next biggest allocation was to construction, which received $418,515, or 7% of the funding.

Technical college manufacturing training programs received $13.2 million, or 47% of the $28 million aimed at reducing waiting lists. Health care was next, with $4.9 million, or 17.5% of the total.

The emphasis on training workers for manufacturing jobs "makes sense because manufacturers are screaming for more workers," WMC's Bauer said.

"If you find me somebody who is willing to work, willing to maybe get retrained and willing to live someplace else, maybe northern Wisconsin, I can find them a job in manufacturing," Bauer said.

Manufacturing jobs pay a little more than many blue-collar jobs, said Partridge, the Ohio State economist.

"But manufacturing has experienced a lot of productivity growth, and the sector is shrinking in terms of employment. So in terms of creating jobs, you're picking an industry that's probably not going to be a major job creator," Partridge said.

He said he and other economists lean toward a more neutral approach, which doesn't feed short-term political agendas, but has more promise for the long term.

"Treat all businesses alike," Partridge said. "Because you just don't know which ones are going to be the winners."

As for WHEDA, its economic development department guarantees and lends millions of dollars to Wisconsin businesses through its bonding authority, which is backed by the state.

Recently, the authority has begun paying attention to emerging companies. It has provided $1.6 million to mostly high-tech start-ups in the three years ended in June, the WEDC database shows.

That's the kind of activity some economic development proponents would like to see more of.

"We have to be able to walk and chew gum at the same time," said Brandon, of the Madison chamber. "We have to support one of our core historical and future industries, while at the same time looking at trends that will influence the future."