State building 'new economy' with global reach

What do the following companies have in common? Abbott Labs, Cardinal Health, CDW, Eli Lilly, GE Healthcare, Genzyme, Invitrogen, Merck, Microsoft and Roche.

Leaders in their respective technology sectors, each firm has planted (or re-planted) a corporate flag in Wisconsin in recent years.

While the state has lost its share of manufacturing corporate headquarters over time, it is quietly building ties to "new economy" companies with global reach.

Microsoft's purchase of Madison-based Jellyfish, a comparison shopping search engine, stands as the latest example of a mega-company investing in Wisconsin.

Not only will current Jellyfish employees stay in Wisconsin, but Microsoft will likely invest in the company's growth and its unique approach to discount shopping.

Microsoft is no stranger to Wisconsin; in fact, its executives from Bill Gates on down have worked with the UW-Madison's Department of Computer Sciences for years. But the Jellyfish purchase is proof the company will now pay more than the occasional consulting or recruiting visit.

The list of Big Tech companies with a stake in Wisconsin is getting longer. Other examples:

• GE Healthcare has long been a part of Wisconsin, but it has reinvested of late by acquiring companies such as Lunar and the former Datex-Ohmeda in Madison. GE Healthcare recently announced a joint venture with pharmaceutical giant Eli Lilly. Four of the seven divisions of GE Healthcare are headquartered in southeast Wisconsin.
• Cardinal Health, a multibillion dollar healthcare company, with operations on five continents, acquired Madison-based Gala Design Inc. in 2002. Earlier this year, Cardinal Health's pharmaceutical and biotech operations were spun off to become Catalent, which remains a multibillion dollar firm with operations in 100 countries.
• In mid-2007, Roche Pharmaceuticals purchased NimbleGen, a Madison firm, for about $272 million.
• In early 2006, Abbott Labs purchased nearly 500 acres in Kenosha County for possible expansion.
• CDW purchased Berbee Information Networks, based in Fitchburg, a year ago and continues to invest in the company's growth in information technology services - even as ownership of CDW passed to Madison Dearborn Partners.
• European pharmaceutical giant Merck operates in Madison through EMD Biosciences, once known as Novagen.
• Invitrogen, with sales in 70 countries and 4,300 employees around the world, operates its Drug Discovery Solutions center in Madison. Invitrogen also acquired Dynal Biotech ASA, a Norwegian company that based its U.S. operations in Brown Deer.
• In what may be the only story with a relatively unhappy ending, Massachusetts-based Genzyme purchased Bone Care International and released most of its employees.

New sales channels

What does all this mean to Wisconsin?

• It means more sales channels for homegrown companies that sell into global corporations.
• It means more investment from outside Wisconsin flowing into the state.
• And it means more "exit strategies" for Wisconsin investors, who are then likely to reinvest some of their profits in other start-up firms.

John Neis, managing director of Madison-based Venture Investors LLC, sees the trend as having far more positive than negative effects.

"Every time an acquisition is announced, there's some hand-wringing about whether the company will be moved and the jobs will be taken out of Wisconsin," said Neis, whose firm recently raised a $117-million Midwest early-stage investment fund. "That has not been the case. In fact, it has largely been the opposite."

Global companies are discovering that Wisconsin has first-rate technology, access to enough talented workers and affordable costs of doing business when salaries, land costs, utilities and construction costs and quality are weighed.

Increasingly, Neis added, those companies are also finding a pool of experienced managers in Wisconsin - or can attract them here.

"The bottom line is that it speaks to the quality of the companies being built here," Neis said.

Wisconsin will never stand toe-to-toe with states that hand out tax subsidies or free land to attract companies, but it can recruit the heavy corporate hitters in another way: Continue producing start-up companies that grab the attention of the Bill Gates of the world.

Tom Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal.