What's the best recipe for business growth?

Wisconsin officials have decided it's better to grow your own. The question is whether that's the best recipe for expanding the state's job base.

Under Gov. Jim Doyle, the state has focused its job growth efforts largely on existing Wisconsin companies.

Last year, the state Department of Commerce gave out $170 million in tax credits, loans, grants and other help to 403 projects. All but 10 of them were at existing Wisconsin companies.

The agency says that aid helped produce $1.3 billion in private investments, the retention of 36,000 jobs and the creation of 12,000 new positions.

Still, Wisconsin had the fifth-lowest job growth among the 50 states and Washington, D.C., for the 12-month period that ended in July, according to the Bureau of Labor Statistics. The state gained 17,700 jobs, according to the bureau, a growth rate of 0.6 percent.

Of Wisconsin's neighbors, Iowa had the highest growth rate at 1.2 percent, while Michigan was the only state in the country to lose jobs for the period, dropping 63,900 positions.

Seeking new businesses

Commerce Secretary Mary Burke said the state is starting to make moves to ramp up its efforts to attract new businesses. But research has shown the best opportunities for growth are in existing companies in state that already match up well with its strengths and want to expand.

"It might be new companies coming to the state that get the biggest headlines, but in fact it's not going to be the thing that overall drives the economy," Burke said.

"That said, it doesn't mean we don't put an emphasis on it and we don't think it's important to recruit companies from out-of-state. You need to be doing both."

The biggest project from out of state that Wisconsin lured here last year was Abbott Labs, which has plans to build a facility in Pleasant Prairie. The state offered a $12 million block grant to help the project, though final details of the plant have been delayed.

Honda Motor Co. plant

Wisconsin's inability to land one headline-grabbing plant last year became a topic in the 2006 gubernatorial campaign. Doyle was criticized by some for not being more aggressive in trying to land a new Honda Motor Co. plant.

The company selected southeastern Indiana for a new $550 million assembly plant after Walworth County in Wisconsin made a late bid for the facility.

In addition to getting in late, Wisconsin had a number of factors working against it, including existing Honda plants in Ohio that made locating the new plant near them attractive.

Greensburg, Ind., halfway between Indianapolis and Cincinnati, was able to land the plant after Indiana officials offered $141.5 million in incentives and training assistance along with improvements to an interchange along Interstate 74 near the proposed plant site. The plant is expected to employ some 2,000 workers.

Burke said such high-profile plant projects often involve big-time public investments, and she questioned whether it's the best use of public dollars. By comparison, the $141.5 million Indiana pledged to the Honda plant isn't that much less than the $170 million the Department of Commerce gave out to the 403 projects for all of last year.

"There's nothing about Wisconsin as a state or a business environment that means we couldn't get those," Burke said. "It's whether we think it's the best use of our money and whether we want to put additional resources into that.

"So far, the Legislature has said no."

Helping in-state companies

Pepi Randolph, the former head of Forward Wisconsin, said focusing on in-state companies makes the most sense for the state. But he added Wisconsin needs to do a better job of marketing itself to make it easier to land firms that aren't already familiar with its assets.

Randolph said as he tried to sell the state to business through Forward Wisconsin, a nonprofit organization funded jointly by the state and businesses to promote economic development, he often ran into the perception that the state was just beer, cheese and the Green Bay Packers.

"But once we got a chance to flush out what they're looking for and what their company felt they needed to grow, we heard people, people, people, and as we started telling them about the assets of the state, there was always this 'A-ha!' point where they didn't know that," said Randolph, now vice president of sales and marketing for the Potawatomi Business Development Corp.

Burke said the state is trying to improve its marketing efforts with a new approach for Forward Wisconsin. The Department of Commerce will take over management of the organization in an attempt to up efforts to attract businesses.

As part of the restructuring, the Forward board and staff will focus on improving the marketing effort for the state, including trade shows and other public relations efforts. She said that goes along with a financial boost Doyle proposed in the budget to help attract more businesses.

"Basically, we've put together an effort that will be much more effective and focused on business attraction than it has in the past," Burke said.

JR Ross is the editor at WisPolitics.com.