By Tom Still
MADISON – With 11 stores and more than 1,000 employees
spread over three states, American TV & Appliance stood as an iconic
homegrown billboard for “too big to fail.”
But fail it has, after a run that spanned 60 years, in part
because the innovation that characterized American in its “Crazy TV Lenny” days
faded into static on a black-and-white picture tube. Competing on price alone
no longer worked in an era when the Internet guaranteed someone could always
sell for less.
As American prepares to shut its doors, lessons about
competing on quality, service, product and price can be found in recent
company expansions in Wisconsin.
Amazon.com may strike some people as the kind of online
company that led to American TV’s demise, but the secret to Amazon’s success is
more than the triumph of clicks over bricks. From its roots in book sales,
Amazon has grown into the world’s largest online retailer, offering consumers
seemingly endless choices for products – new, used and virtual.
With those clicks come bricks in the form of distribution
centers, the likes of which Amazon will build in Kenosha over the next few
years. The first phase will span 1 million square feet and a second will cover
half that size, with a total investment reported as roughly $200 million. About
1,200 good-paying jobs will be created over time.
Wisconsin competed with 12 other states for the Amazon
project and won, not just because it offered tax breaks and incentives, but
because a partnership emerged between state and local governments. Confidential
talks between Amazon and the Wisconsin Economic Development Corp. began in late
2012 and concluded inside a year with local assistance.
Some benefits are already showing up in state tax coffers:
With the future distribution center giving the company a physical presence in
Wisconsin, Amazon began collecting taxes on sales to Wisconsin residents last
fall. That will raise about $30 million in the first year alone.
Why Kenosha? Beyond the partnership, key factors were land,
location and logistics. Amazon prides itself on speedy delivery, which is
facilitated by being within a half hour of Milwaukee’s airport and minutes of
the interstate highway system. Several other distribution centers and light
industrial projects have been landed by Kenosha for similar reasons.
Another success story that revolves around innovation and
consumer service is United Natural Foods, a leading distributor of organic,
natural and specialty foods. United Natural Foods is in the midst of hiring
about 220 workers for its $40-million Sturtevant distribution center, which
covers 425,000 square feet. Total employment at the Racine County site could
hit about 260 within five years.
Again, land and logistics made a difference, but so did
workforce, state and local partnerships and a streamlined permit process.
United Natural Foods must have felt good about the
Sturtevant process because it recently announced plans to build a $38-million
distribution center in Prescott, near the Minnesota border, that will create up
to 314 jobs over three years. The story behind the second facility was much the
same as the first, with location, overall business costs and state and local
government cooperation combining to pave the way.
That’s not just a Wisconsin phenomenon. Two years ago, when
Site Selection magazine surveyed corporate experts on their most important
location criteria, state and local tax climate was No. 1 on the list.
Transportation infrastructure, utility infrastructure, and land and building
prices and supply were second, third and fourth, respectively. Wisconsin is
well positioned to deliver on all three, and perhaps the first.
For every older business model that fades away, there is an
innovative successor. It’s a part of the process economists call
“creative destruction,” the notion that new ideas naturally push up from below
to crowd out those the market no longer supports. No one should celebrate
American TV’s demise, but it’s good to know Wisconsin is poised to attract and
grow the next generation.