Sunday, February 16, 2020

Hundreds of Oshkosh tech jobs go unfilled even as factories look to next wave of automation

Photo by Joseph Shulz
Fox Valley Metrology uses this inspection lab in its Oshkosh facility for making spherical measurements.
By Joseph Schulz
The high-wage, low-skill factory jobs that have shaped Northeast Wisconsin are being replaced by high-wage, high-skill jobs, but it isn’t clear that either workers or employers are ready for the shift.

Local companies currently have 1,500 tech jobs that they cannot fill, according to the Oshkosh Chamber of Commerce’s 2019 Economic Report. A new wave of automation, known as Industry 4.0, is emerging, but 88% of local manufacturers either have no plan or only a partial plan for implementing this technology.

Some of today’s high demand jobs include process engineers, data management analysts, cybersecurity officers, industrial computer programmers, data engineers, data architects and application developers. These jobs and the lack of employer preparation were shown in a 2019 survey of 104 manufacturers conducted by the NEW Manufacturing Alliance (NMA), an organization that promotes the industrial sector in Northeast Wisconsin.

The need for a new type of worker is likely to increase as more businesses begin to adopt Industry 4.0, which combines production and operations methods with smart technology, creating an autonomous and interconnected digital business, according to NMA.

“Even Oshkosh Corp. says, ‘We’re a tech company that builds trucks,’” said Rob Kleman, the Chamber of Commerce’s vice president of economic development.

Ann Franz, director of NMA, said the organization is working to increase awareness about Industry 4.0 because she expects it to take three years for supply chains to begin implementing it.

“By helping [businesses] be proactive now, we'll be able to, hopefully, make them successful three years from now,” she said.

NMA’s survey found that automation-robotics and cyber security were the two areas that companies plan to invest the most heavily in over the next two to three years, with 62% planning to invest in automation and 56% planning to invest in cybersecurity.

Locally, the state Department of Workforce Development’s 2019 Workforce Profile for Winnebago County says 61% of the job tasks in the Fox Valley have the potential to be automated.

Wednesday, February 12, 2020

UW Oshkosh saga comes to a close as legislative committee says state can drop its civil lawsuit

A civil suit against two former UW Oshkosh officials has been pending in Dane County since 2017.
By Miles Maguire
A legislative committee agreed Wednesday to drop a civil lawsuit against two former top officials of UW Oshkosh who entered guilty pleas last month in a criminal case for their role in shifting funds between the school and its fundraising arm.

The approval of the Joint Finance Committee is required under a 2018 law that was passed during a lame duck session of the Wisconsin legislature. The panel’s OK will bring the curtain down on a legal battle that started in January 2017 and was close to resolution last summer.

The civil case, brought in Dane County Circuit Court, accused former Oshkosh Chancellor Richard Wells and former Vice Chancellor of Administrative Services Thomas Sonnleitner of illegally transferring funds from the school and making promises that the state would stand behind loans taken out by the UW Oshkosh Foundation.

“The resulting potential liability led to numerous court cases, including cases by the commercial lenders against [the University of Wisconsin System] and claims by the foundation in its eventual bankruptcy filing,” according to a memo from the Department of Justice requesting the committee to let the case drop.

Most of the legal rulings in the various cases have gone against the UW System, and it is unclear what financial damages were actually suffered by the state. At one time the exposure was estimated at $18 million, but the system ended up paying out only about $4.6 million and as part of that agreement took control of two facilities that were valued at a higher amount.

The system has also collected on a $1.5 million insurance policy to cover the actions of Wells and Sonnleitner.

Ultimately the state was able to convince Wells and Sonnleitner to plead guilty, pay a fine and make restitution. The two men, both retired and widely admired within the local community and among influential alumni, faced what would likely have been a long and costly legal battle.

They were never accused of personally profiting from the transactions but only making agreements that exceeded their legal authority.

In their defense the Oshkosh officials said they were acting at a time when the state was cutting support for higher education and when public institutions were being encouraged to act more like private businesses in assuming risk and pursuing new opportunities.

They have also said that higher officials in the UW System, including some members of the Board of Regents, were aware of their activities. Although the system initially argued that the transfer of funds from the university to an affiliated organization was illegal, an internal audit later found that such transfers had happened more than 2,000 times over a seven-year period at more than a dozen UW schools.

Wells has already paid the state $75,455 to settle his fine and restitution obligation. Sonnleitner has paid a $5,000 fine and still owes $70,455.

Legislators were told that if they did not agree to have the civil case dropped, Wells and Sonnleitner could reopen their criminal cases and amend their restitution agreements.

The finance committee agreed to close the case, and two others, without debate over the specifics of the settlement agreements.

The only criticism came from Rep. Chris Taylor, a Dane County Democrat, who objected to the fact that the legislature has taken a role in settling legal disputes that historically were left to the executive branch.

“This approval is an abuse of power,” she said. “It’s totally unprecedented.”

Last July, the Justice Department told the legislature it was ready to settle with Wells and Sonnleitner but needed the committee’s OK. When no approval was given, the parties went back to court and traded arguments during the fall in the criminal case, which was heard in Winnebago County.

Friday, February 7, 2020

Oshkosh arena lawyers say financial reorganization is coming together even as short-term losses mount

The Menominee Nation Arena is described as being in a "ramp-up" phase as it moves toward financial stability
By Miles Maguire
Although losses continue to mount at the Menominee Nation Arena, lawyers for its owner say they are optimistic about the prospects for exiting bankruptcy.

At a court hearing last month, attorney Jerome R. Kerkman said the owner, Fox Valley Pro Basketball Inc., has received a “term sheet for some exit financing” related to tax incentives from the city. A term sheet is a nonbinding document that outlines the key points of an investment agreement.

Additional financing is also being negotiated, Kerkman said, although he declined to go into details at the hearing.

He said he has “a fair amount of confidence” that Fox Valley will be able to submit a plan of reorganization by the end of the month.

New financing would be central to the plan because it would allow the developer to reduce its debt and lower the sky-high interest rates it has been charged.

The arena’s losses in December came to almost $314,000, compared to $287,000 in November. Its net worth continued to drop, to a negative $5.8 million at the end of last year.

“This was a company that was fairly far, I would say, underwater on many fronts,” Kerkman said. “I’m not that surprised that it’s taking us some time to stabilize the debtor’s business operations.”

He said the arena is currently in a “ramp-up” phase that involves “a lot of working capital expended.”

The goal is “booking events, having events and then getting revenue,” he said. There is necessarily a lag between paying to schedule performers and then receiving income from ticket and related sales, he said.

“There are losses,” the lawyer said. But “we’re not concerned with those. From a business plan side, the debtor continues to get to where it wants to get.”

With a big gain in food and beverage sales, the arena’s December income rose to $259,000, from $148,000 in November. But performer payouts jumped from $10,000 to more than $113,000 during the month, helping to push the cost of goods sold to $314,000, compared to $168,000 the previous month.

Kerkman noted that Fox Valley was able to pay the first installment of its property taxes on time this year. The $113,128 payment keeps the developer eligible to receive a rebate later this year from the city.

The rebates that the city has agreed to send to Fox Valley, known as tax increment financing or TIF, have always been part of the developer’s business plan. Fox Valley hopes to sell the promise of future payments at a discount to an investor that can provide an immediate infusion of cash.

The developer has now lined up a third financing broker, Nauth Advisory Group, to help it raise capital.  

Nauth was founded by Geoff Nauth, who has worked in commercial real estate for M&I Bank, Bank One Wisconsin, LaSalle National Bank and Northwestern Mutual.

"Geoff Nauth has experience with TIFs, in obtaining financing based on that," said Evan P. Schmit, an attorney for Fox Valley.

According to court papers, Nauth recently helped secure TIF financing for The Rock, a sports complex in Franklin.

Meanwhile the state has filed another tax warrant against Greg Pierce, the president and principal owner of Fox Valley. This time the Department of Workforce Development says that Pierce owes $8,529 for unpaid unemployment coverage.

The agency said it could not provide additional details because unemployment insurance records are confidential under state and federal law.

Schmit said the state's claim is based on debts incurred before the company went into bankruptcy and cannot be settled while the court process is ongoing. The money is expected to be paid as soon as Fox Valley's financial reorganization plan is approved, he said.