Friday, June 26, 2009

Merc Outta Here?

The speculation is rampant. Will Merc Marine leave?

One blogger, Maichle, opines that Merc will depart and indicts Doyle, Sheridan, Decker, and Pocan. Those four are certainly in the Hall of Shame, if that Hall consists of politicians who did their damndest to drive businesses out of Wisconsin.

But it's not quite that simple.

Yes, the tax rate in Wisconsin is a factor. Yes, the union-labor situation is a factor. Yes, Wisconsin's repressive regulations are a factor. And the uncertainty of what the NEXT round of budget/policy/regulations will bring is a really big factor.

But distribution counts. Wisconsin is located in a part of the country which is very cold in the winter; people do not use powerboats on frozen lakes. The South doesn't have that problem, AND the South actually has lakes. A lot of them. And fishermen, too. (We could also postulate that "taxing the rich", a Wisconsin "solution" has an effect on boat-and-motor purchasing.)

An aging plant is another factor. The Oklahoma site is not encumbered by that problem.

Maybe, as Maichle states, OSU has talent. But so does MSOE, the UW system (especially Stevens Point's manufacturing program), and Marquette (ask Briggs and Stratton.)

Finally, if Wisconsin and Oklahoma get into a bidding war for Merc's plant, ........

Who has more money available? Wisconsin, with a projected $2.3Bn deficit??

10 comments:

John Foust said...

Yeah, but the South has Southerners.

Anonymous said...

"Yes, the tax rate in Wisconsin is a factor. Yes, the union-labor situation is a factor."

If you holler loud enough...

Marcus Aurelius said...

Mercury is an international company. Winter affects their sales equally if they are located in Miami, Oklahoma, or Aput Northwest Territories. Their location is not going to change the fact a major portion of their market freezes from November to April every year. What the WI winter does to them is to force them to have a warm location for product testing and that location is in Florida not Oklahoma.

Dad29 said...

Marcus, I specifically said DISTRIBUTION for a reason. Moving product from Wisconsin to the South (parts and accessories) is 12 months/year.

Moving P&A from north to north is only 4 months/year.

Big difference.

Marcus Aurelius said...

I am digging deep now for the locations of their PnA DCs, I recall one in BC, in Ontario (Mississauga), one in New Jersey, I think there was a West Coast US (CA I want to say but am uncertain) as well but can not recall where that one was. I was never really familiar with their engine business.

I am still not convinced on your notion here that distribution costs are playing a huge role in this decision (or even a mid-sized role). I think they are looking to reduce some redundancy and escape what is becoming a punitive business climate -- as long as they were able to move sufficient product they could tolerate the environment but can no longer do so.

We are seeing this happening with other firms as evidenced by Thomas Products in Sheboygan and GM turning down WI again (but in the case of GM the center of the UAW universe is MI so of course that was going to happen like that).

Dad29 said...

Yes. It IS cumulative, rather than single-event. Kimberly-Clark simply saw it much, much earlier than Thomas, Merc, ....the long list.

But there are business factors which are also present. No CEO would make the decision to dump 1000 employees including skilled machinists solely based on left-elbow twitches regarding the political climate.

Marcus Aurelius said...

Dad29,

Now, why does it seem the jobs flow one way, and I am not just talking about this situation, do we know of any such consolidations of late landing in WI?

That political climate is seriously and adversely affecting the business climate, the only jobs our Gov seems to recognize are those requiring PhDs.

Dad29 said...

the only jobs our Gov seems to recognize are those requiring PhDs

You hit dead-on to something I was discussing with a friend a couple of weeks ago. Not that Doyle's alone; TThompson swung the same way, although he was not openly animose toward manufacturers.

The emphasis has been on "smart" sector--biological/research stuff, IT stuff, all falling mostly into the Madison-area orbit. The rest of the State, and regular ordinary Joes?

Screw 'em.

TerryN said...

"Yeah, but the South has Southerners."

Who have so much more acumen than the union slobs in Packer sweatsuits perched on barstools throughout Wisconsin.

Dad29 said...

Who have so much more acumen than the union slobs in Packer sweatsuits perched on barstools throughout Wisconsin

Well, they may have more street-smarts than some drive-by commenters, (Hint to Foust)...