Border battle for business is going strong

Here come those raiders from Wisconsin. Once again, they're trying to steal companies from Minnesota.

A team of Wisconsin business recruiters will decamp in the Twin Cities from Oct. 16-18. A key goal: persuade Minnesota companies to either expand or relocate in Wisconsin.

The Forward Wisconsin partnership, a government-business marketing arm of Wisconsin's development establishment, calls the trips "Minnesota Marketing Missions." It has led them every year since 1984. This time, though, the campaign has a sharper edge, even as the organization behind it is undergoing big changes.

In what it says is a first, Forward Wisconsin is armed with a one-page flier showing the lower costs of labor, workers compensation and state corporate income taxes in western Wisconsin compared with the Twin Cities area, claiming that a new study shows that Minnesota companies can save millions by expanding to west central Wisconsin.

In another dig, the Wisconsinites are making stronger use of a Minnesota group's study to bolster their case. In its annual business property-tax study, the Minnesota chapter of the National Association of Industrial and Office Properties found that such taxes are far higher in Minnesota than Wisconsin, even after significant reductions in Minnesota in recent years. Forward Wisconsin has mentioned the NAIOP findings before, but now for the first time it has posted the study on its Web site.

The Twin Cities, with its large concentration of businesses, is a natural hunting ground for Wisconsin boosters, as is Chicago. Combined, the two metro areas have a population twice that of all of Wisconsin. The Twin Cities area includes Wisconsin's St. Croix and Pierce counties, while Chicago counts Kenosha County as part of its metropolitan area. St. Croix County was the fastest-growing county in Wisconsin from 2000 to 2007, by state estimates, growing 25 percent.

In an interview, Wisconsin Commerce Secretary Mary Burke acknowledged, "Part of Wisconsin's growth is being fueled by proximity to the Twin Cities and Chicago."

Burke said the Twin Cities recruiting missions include courtesy calls to Minnesota companies already in Wisconsin. She said the trips help Wisconsin tout its advantages, something every state should do. She doesn't view the trips as raids. "We want to be sure people don't think Wisconsin is just about cheese, brats and the Packers," she said.

This year, Wisconsin Gov. Jim Doyle, who is Forward Wisconsin's chairman, sent more than 1,900 letters to Minnesota business executives, inviting them to meet with a 10-member delegation of Wisconsin development officials.

The mission's one-page flier claims a manufacturer with $100 million in annual revenue would save $15.2 million over 10 years by locating in the seven-county western Wisconsin area rather than on the Minnesota side of the Twin Cities. Lower labor costs would account for 85 percent of the differential.

Dan McElroy, who heads Minnesota's Department of Employment and Economic Development, said the claim is misleading because it compares the lower wages prevailing in outlying Wisconsin counties with higher wages in the Twin Cities counties. He said labor costs in outlying areas of the two states are virtually the same.

McElroy fires back with other rankings. A U.S. Chamber of Commerce study found Minnesota has the second-best legal environment; Wisconsin ranked 10th. A MarketWatch analysis rates the Minneapolis-St Paul region as the best market for business among the nation's 50 largest; the Milwaukee area ranked 23rd.

But the Minnesota NAIOP study shows property taxes on a 70,000-square-foot light manufacturing factory are $110,504 in Minnesota, nearly twice Wisconsin's $59,240.

Kaye Rakow, the Minnesota chapter's marketing director, said the study's purpose is to convince Minnesotans that business property taxes remain too high. "We're not doing it so Forward Wisconsin can come in here and nab away our businesses," he said.

It's hard to measure how effective Forward Wisconsin's efforts have been.

Ken McAdams, who retired in 2003 after 13 years as marketing director for Forward Wisconsin in western Wisconsin, estimates that from 1990 to 2003, about 90 Minnesota businesses expanded or relocated in Wisconsin after initial contacts made on Forward Wisconsin's trips.

The group's last study of its results, done in 2004, was more modest, estimating the trips led to about 30 expansions or relocations from Minnesota and roughly 1,000 jobs over the 1987-2004 period. It no longer does such studies, though the competition between the states hasn't let up.

Consider how, in recent years, both Minnesota and Wisconsin competed to win expansions of Bayport-based Andersen Corp. In 2000, Wisconsin officials helped persuade Andersen to build a factory in Menomonie, 60 miles east of St. Paul on Interstate 94. Three years later, just as Andersen was about to expand its Menomonie plant, Minnesota lured the expansion to North Branch in Chisago County. A key part of Minnesota's last-minute push: tax breaks offered under the state's new JOBZ incentive program.

Just as some Minnesotans find fault with JOBZ, some Wisconsinites disagree with Forward Wisconsin's approach. In a recent column in the Milwaukee Journal Sentinel, Milwaukee-area business executive John Torinus ripped the trips, saying they hadn't accomplished much, and called for a development strategy focused entirely on growing businesses already in Wisconsin.

That column referred to Forward Wisconsin's "demise," which turns out to be a bit of an overstatement, though the group is going through changes.

Forward Wisconsin President Eugene Randolph, who left at the start of the year, was not replaced. Instead, in a cost-saving move, the organization's staff will be led from within the state's Department of Commerce by Mickey Judkins, an Eau Claire businesswoman named last month as administrator of the department's export and investment unit.

The state also cut funding for Forward Wisconsin, a move that McAdams, the former marketing director, called "kind of a slap in the face."

Burke, the state's commerce secretary, said Judkins "will be reviewing all of Forward Wisconsin's marketing activities to see if we're getting results."

Jim Hough, legislative director for the Wisconsin Economic Development Association, said the association wants the trips to continue. "I think they have been effective."

Burke was more measured, saying, "I don't think you can ever tell when these (trips) pay off." But she pointed to a recent recruiting trip to Chicago, which produced the first contact with Abbott Laboratories. Last year, Chicago-based Abbott acquired 500 acres of land in Kenosha County for future expansion.

Whatever happens with the recruiting missions, the war between the two states for business and jobs doesn't seem likely to fade away anytime soon.

But last week offered some evidence the states can cooperate, as well as compete, when 22 Wisconsin and Minnesota development organizations joined to sponsor a symposium at the University of Wisconsin-River Falls to encourage investment along the "I-Q Corridor," better known as the 400 miles of I-94 that wind through Wisconsin from Chicago to the Twin Cities. The Wisconsin Angel Network, Minnesota's department of employment and economic development, the Minnesota High-Tech Association and the University of Minnesota's center for academic and corporate relations were among the event's backers.

The special guest?

None other than Doyle.

Dave Beal can be reached at dbeal@pioneerpress.com