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From Site Selection magazine, November 2013

Building a Better Climate

Tax law changes and other reforms are remaking the Upper Midwest.


hen Kenall selected Kenosha, Wis., for a new advanced manufacturing investment, the facility location decision reaffirmed the wisdom of recent changes to the Wisconsin business climate.

The commercial lighting manufacturer announced Sept. 13 that it would relocate its headquarters and factory from Gurnee, Ill., to a 354,000-sq.-ft. (32,887-sq.-m.) building being constructed in Kenosha.

Kenall will vacate its 120,000-sq.-ft. (11,148-sq.-m.) plant in Gurnee within 18 months and move to the new facility in the Business Park of Kenosha — a relocation that is part of a growing trend of advanced manufacturers flocking to the Upper Midwest.

Wisconsin and Minnesota — two states that haven’t always been known as welcome havens for business — are suddenly part of this emerging trend, and the governors of both states say they have no intention of reversing course.

“Wisconsin has changed a lot under the leadership of Governor Scott Walker,” says Bradley Migdal, the Newmark Grubb Knight Frank managing director who led the site selection team for Kenall. “Governor Walker has done a lot with the Wisconsin EDC to improve the business climate in Wisconsin. They have gotten out of the way.”

So has the state government of Minnesota. Under the leadership of Gov. Mark Dayton, Minnesota changed its sales tax exemption for capital equipment from a rebate to an up-front exemption. The state also lowered the threshold for qualifying data centers to receive sales tax benefits over 20 years to $30 million invested over a four-year period.

Minnesota also this year provided $108 million for various economic development programs, including:

  • $30 million for the Minnesota Investment Fund for loans and grants to businesses to support capital expenditures and job creation.
  • $24 million for the Minnesota Job Creation Fund for grants to businesses investing in Minnesota and creating jobs. Up to $1 million is available per project.
  • $8.3 million for the Job Skills Partnership Program for training grants for businesses and higher-education institutions.
  • $6 million for Minnesota Redevelopment Assistance for grants to help with private redevelopment of property that fosters economic expansion.

Gov. Dayton’s investments have paid multiple dividends. Since the start of 2013, Minnesota has seen sizable capital investments from Emerson Electric, Agco, Enbridge, Pinnacle Airlines, New Flyer and Valley Cartage.

Migdal says the Upper Midwest will win its fair share of advanced manufacturing facility investments if it can supply the real estate to match its abundance of skilled technical talent.

“Not a ton of real estate product is out there right now,” he notes. “Shovel-ready sites are needed.”

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