United Alloy executive Jason Lichtfuss said he’ll hand his business card to anyone he thinks he can persuade to work at his fast-growing Janesville company.
Lichtfuss, who leads the company’s engineering division, said he’s even started visiting local, blue-collar taverns on de facto recruitment visits. He hands out his cards to tavern patrons and asks them to come work for United Alloy.
He tells them they’ll earn pay a cut above the recent standard for blue-collar wages in Rock County: $18 to $23 an hour for some entry-level welding and fabricating jobs.
“We’ve got 10 people working here right now from those (tavern) visits,” Lichtfuss said.
The tavern meet-and-greets are just one of several avenues United Alloy is plying to find more workers as it plans to construct a 100,000-square-foot expansion to its manufacturing space.
The metal fabrication and powder coating company is booming. Its expansion would grow manufacturing space 30 percent and allow it to specialize in some advanced manufacturing that it now outsources.
Recent booms for United Alloy and other local companies have kept Janesville among the top 40 best-performing small cities in the U.S. for three straight years, according to a report released this month by California economic analyst Milkin Institute.
The Milkin report shows the Janesville area has surged ahead of peer cities in Wisconsin in high-tech industry growth, and it’s ranked consistently high in job and wage gains in various sectors, including health care, advanced manufacturing, pharmaceutical production and construction, Milkin analyst Minoli Ratnatunga told The Gazette.
The Milken report uses federal data on wage and job growth by employment sector, focusing on short- and long-term growth.
“It’s been relatively stable (growth), which is a good indicator of an economy that is relatively robust,” Ratnatunga said. “Overall, looking at your (surveyed) industries, it does seem to be a pretty broad-based economic growth.”
Tech and manufacturing
United Alloy plans to add a highly automated clean painting area that will be in operation by 2019.
It’s the company’s second major expansion in Janesville in five years, and it’s being driven by growing demand from large machinery companies, such as Caterpillar and Generac, which it supplies with metal tanks and other welded equipment.
Luke Jaynes, vice president of marketing at United Alloy, reviewed the Milkin report last week. He said he was encouraged to see how far Janesville has risen in the analyst’s index in recent years, but he’s not surprised.
United Alloy itself has grown from about 150 workers in 2014 to about 190 workers now, and it plans to try to hire at least 50 new employees over the next year. The company continues hiring to fill demand that’s growing separate from its planned expansion, United Alloy President of Operations Jenna Newcomb said.
Coming out of the Great Recession, the Janesville-Beloit metropolitan statistical area has vaulted in Milkin’s annual small metro ranking from 108th out of 177 small cities in 2013 to as high as No. 4 in 2015.
In 2016, Janesville-Beloit fell to 32nd but climbed in 2017 to the 25th spot. That put the Janesville area back in the top 80 percentile for all small cities ranked in Milkin’s report.
Janesville-Beloit ranks higher than all other mid-sized Wisconsin metro areas, and only four Midwest small cities outranked Janesville-Beloit in the index.
Ratnatunga said an across-the-board-look at national data that compares small cities such as Janesville to burgeoning, tech-heavy metropolitan hubs such as San Francisco, Dallas and Nashville, Tennessee, shows the Janesville area is keeping pace with national economic growth, even compared to large, fast-growing metros.
“Given that the large metros, the tech-based, large hubs that have been growing like crazy, for a small metro (like Janesville and Beloit) to keep on pace with that greater national economy is pretty impressive,” Ratnatunga said. “It’s a good sign, I’d say.”
Milkin gives weight in its index to growth in the high-tech sector. Last year, Janesville-Beloit vaulted to fifth for all small cities in short-term growth in high-tech exports in 2015 and 2016, the Milken study reports.
Nuclear pharmaceutical startups SHINE Medical Technologies in Janesville and NorthStar Medical Radioisotopes in Beloit grabbed recent national headlines in the New York Times. The two firms say they continue to move toward production and marketing of the nation’s first-ever fully domestically produced medical molybdenum 99, a radioactive isotope used in medical tests.
Paul Jadin, president of the Madison Region Economic Partnership, which includes Rock County, said he thinks the Milkin report aptly highlights Janesville-Beloit’s growth in high-tech industries.
“It speaks very, very well for Janesville-Beloit’s resurgence and the fact that resurgence is not just in manufacturing, but it’s in IT and high-tech. That’s a very important factor, as opposed to the rest of the state that is very focused on manufacturing and advanced manufacturing,” he said.
Jaynes, the United Alloy sales executive, said he believes Janesville-Beloit also is winning battles wooing and retaining local manufacturing companies.
Janesville recently awarded United Alloy a $962,000 tax increment financing package with land and jobs creation incentives for its planned expansion in Janesville.
Prior to that, the city had underwritten a $10 million industrial revenue bond for the project, a loan that United Alloy is backing itself, city officials said.
The city TIF and revenue bond deals came as United Alloy was being courted by a Texas community to build the plant expansion there, Jaynes said.
The city’s help and the local economic boost comes as United Alloy and others industries locally and regionally face record low unemployment and a tight labor market. Jaynes said that’s made local workers who are looking to switch jobs more common than those who are simply unemployed and seeking work.
United Alloy has worked with Blackhawk Technical College to find a pipeline for more welders, fabricators, painters and product inspectors, workers it needs right now. But Jaynes said he believes area trade school enrollment hasn’t grown fast enough to meet the hiring demand some local manufacturers are seeing.
United Alloy has begun to invest over the last year in its own in-house welding training, and it’s added new wage incentives to its recruiting. For instance, some second- and third-shift workers can earn entry level pay of $23 per hour, Lichtfuss said.
Average local entry-level welding pay, according to recent federal surveys, is $15 to $16 an hour. At employers such as United Alloy, those rates are climbing. It’s out of necessity to meet hiring demand and be an “employer of choice,” Newcomb and Jaynes said.
“We don’t sell on having the cheapest labor force and the cheapest equipment. That’s not what we want,” Jaynes said.
Wage increases such as those at United Alloy would factor into Janesville-Beloit’s rank in indexes such as Milkin Institute’s “Best Cities” report, but manufacturers locally, regionally and nationwide are split on the issue.
A major manufacturer that United Alloy supplies, Caterpillar, is starting to bail out of manufacturing markets in Illinois and move instead to states in the South that have lower average labor costs, such as Texas, Jaynes said.
Jaynes said there’s been pressure for supplier industries such as United Alloy to make a geographic move alongside the companies they supply.
“CAT is telling us, ‘We want you to be where we are.’ So it was a huge decision for us to want to expand here in Janesville rather than move where they’re moving. It was also a cautious decision for Caterpillar to source all the way up in Wisconsin. We’re going to be sending our product to Texas and Georgia,” Jaynes said.
Officials from Southern communities see that trend. Over the last year, the San Antonio, Texas, suburb of Sequin tried to woo United Alloy to move its expansion there, Jaynes said.
United Alloy preferred not to make such a move, Jaynes said—in large part because the company believes in Rock County’s workforce.
“The part we bet on in Janesville is the workforce. We’ve been to Georgia plants, and people work on a different pace and a different skill level,” Jaynes said.
Lichtfuss said the upper Midwest worker has a “different standard” than Southern workers, and he said his company is willing to pay higher wages to stay here.
“People here work hard. They come to work every day,” he said.
“Those are the people you need.”