Legacy companies like Generac and Kohler transformed by technology
HOLLAND, Michigan - When a former automotive interiors factory was repurposed to manufacture lithium-ion batteries in this city of tulips and Dutch wooden shoes, the transformation was felt around the world.
Now, the plant owned by Milwaukee-based Clarios International Inc. ships battery cells to Hanover, Germany, and Shanghai, China, where they’re assembled with electronics and software into battery packs used by global automakers.
Holland, a city of 33,000 residents on Lake Michigan, also has an LG Energy Solution factory that makes high-voltage batteries for electric vehicles. South Korea-based LG recently announced a $1.7 billion expansion at the plant that's expected to create 1,200 additional jobs and boost western Michigan's reputation as a battery technology hub.
More than a century ago, big industrial machines and the internal combustion engine transformed the Great Lakes region into a global manufacturing center. Now, Wisconsin companies such as Clarios, Generac Power Systems, Rockwell Automation and Kohler Co. are leveraging new technologies to augment legacy businesses and pursue new markets.
Clarios could expand in Wisconsin
Clarios, at its headquarters in the Milwaukee suburb of Glendale, has 550 employees and two product testing laboratories.
“We’ve got a few critical things we’re really focused on out of Milwaukee,” said CEO Mark Wallace, including the integration of electronics and software in advanced-technology batteries.
“I can’t think of anything that would stop a company like Clarios from expanding its operations in Wisconsin,” he added.
Worldwide, the company has 55 manufacturing plants, six research facilities, and 16,000 employees. Its Michigan plant was the first in the U.S. to manufacture lithium-ion battery systems, starting in 2010 when it was owned by Milwaukee-based Johnson Controls Inc.
Clarios has developed low-voltage “smart batteries” essential for full-electric and hybrid vehicles — supplying power to electronics and safety systems while high-voltage batteries power the wheels. As more autonomous driving features are added to cars, there will be an even greater reliance on the low-voltage battery.
“We have the technology to be able to do that unlike anyone else in the world,” Wallace said.
Leveraging technologies for the future
Five years ago, Waukesha-based Generac began to ponder what its future would look like without the internal combustion engine that powers portable generators. Those machines are still important, especially during electric outages, but the company has also ventured into home energy storage systems that could be powered by solar, wind, and other renewable fuels.
Generac has focused on long-term issues such as climate change and the reliability of the nation's energy grid.
“Our journey into clean energy started almost defensively but has led us down a path of seeing so much more opportunity there,” said Chief Executive Officer Aaron Jagdfeld.
Homes in the future will likely generate much of their own electricity. Instead of having a few solar panels, an entire rooftop could capture the sun's energy. That power would be stored in battery packs for use at night or on cloudy days.
Generac has an engineering team focused on energy storage solutions that might not be realized for years. The work is especially challenging because technologies are changing at a rapid clip, and beyond a few years out, it's difficult to make predictions with much accuracy.
Still, one thing is certain. "The overall need for more power is only going to grow as we electrify everything in our lives,” Jagdfeld said.
Kohler embraces 'Internet of Things'
Kohler Co., in Kohler, offers another look into the home of the future.
Its “Internet of Things” laboratory is a testing ground for the fast-growing network of products, including kitchen and bath items, that can communicate with each other to perform various tasks.
Who knew you needed a bathroom mirror that could start your shower or warm your toilet seat? Those are just two examples.
Later this year, Kohler expects to launch its “PerfectFill” bath controller that fills a bathtub to a preset water level and temperature using the Kohler app or a voice command from something like Alexa or Google Home Assistant.
Kohler, a 149-year-old privately held company, says it takes a long view on technology that's not restricted by the clamor for quarterly profits on Wall Street.
“It allows us to dream about what’s possible in a big way,” said Kathryn Clouse, the company's senior manager of innovation.
Rockwell CEO: Dare to innovate
Advanced technologies are reducing the number of dirty, dull and dangerous jobs in factories that fuel much of Wisconsin's economy. They're even transforming workers into “superhumans” by boosting creativity, problem-solving skills and physical strength.
Soon, says Milwaukee-based Rockwell Automation, more companies will have a “digital twin” of a manufacturing plant — a computer model for testing ideas before they’re implemented on the shop floor. You could push the virtual system to its breaking point without any consequence, damage or interruption to the real thing.
Rockwell designs and builds factory systems for nearly every industry imaginable. For more than a century the company and its predecessor, Allen-Bradley Corp., have had a unique window into manufacturing.
Southeast Wisconsin companies are well positioned for technology changes, according to Rockwell Chairman and CEO Blake Moret.
"Specifically in Milwaukee, there's a really strong industrial base," he said. "There's an ambient understanding, an awareness, an expertise in manufacturing that's hard to find anywhere else in the world."
Still, Moret says business leaders should be prepared to move forward without having all the answers. "It might sound counter-intuitive, but getting comfortable with that reality will better prepare you for the new directions and opportunities," he said.
Especially in older companies, "there's a stigma about failing in anything," according to Moret. "But in a world driven by new ideas and software, you have to be willing to course-correct and take a rational approach to deciding on different paths. Very rarely are you going to have the luxury of waiting for all the answers."
Companies must improve their work environment and encourage new ideas, according to the Rockwell CEO.
“It’s really important to remove any obstacles, so that your talent has the confidence that when they come up with a good idea, it's going to see daylight," he said.
Not everyone's ready for change
A recent survey of 194 U.S. manufacturers, by La Crosse-based business consultant Wipfli, found that 19% lacked dedicated innovation strategies and goals.
"This is a critical failure," Wipfli said.
Also, a strategy is also only as good as its execution, and the firm found that best practices such as open innovation, customer satisfaction surveys and idea suggestion systems were missing at the majority of companies.
Only 28% of the survey respondents said they could launch new products in less than six months. A third of them said it would take at least a year.
Innovation strategies should be documented on a company's balance sheet, said Mark Stevens, a principal and partner with Wipfli.
"If it's baked into the budget, do you think it will get attention? Yes, I think so," he said.
Booming Milwaukee Tool hiring 1,000
Largely through new products and technologies, Brookfield-based Milwaukee Tool says it will add 1,000 jobs over the next three years.
The 98-year-old company, one of the state's fastest-growing employers, said many of the positions will be in technical roles in Menomonee Falls, Brookfield, Milwaukee, Mukwonago, Sun Prairie and West Bend.
The hiring, which is in addition to previous job announcements, has started and will run through 2025. It's part of a $206 million investment by the company and is supported by up to $22.5 million in state Enterprise Zone tax credits.
In 2021, Milwaukee Tool announced plans to bring around 2,000 jobs to its new office in downtown Milwaukee. The company recently opened a technology center in Chicago that will have 250 people in engineering and product design.
Why Chicago rather than Milwaukee?
One reason was the company couldn't find enough engineers and other professionals in Wisconsin, or who were willing to move here.
"Our biggest challenge is getting the kind of talent we need to be able to flourish and continue to grow ... every single day," said Milwaukee Tool Group President Steven Richman.
Wisconsin universities need to "up their game" in areas such as electrical engineering, machine learning and software development, according to Richman.
"Just by sheer numbers, if we had more of those people coming out of our schools, we're going to keep more of them here," he said.
Dwight Diercks graduated from the Milwaukee School of Engineering in the 1990s. Now, he's senior vice president of software engineering at Silicon Valley-based Nvidia Corp., which has around 22,000 employees worldwide.
One of southeast Wisconsin's strengths, according to Diercks, is its wide range of industries. A technology like artificial intelligence is applicable to any of them, much like electricity transformed the region a century ago.
"It would be strange if all of a sudden Milwaukee, or some other place, becomes the hotbed of semiconductor innovation. It could be, but it doesn't have to be, because there's already so much innovation in Milwaukee," Diercks said.
Clarios pursues new battery technology
In 2023, the Clarios plant in Holland is expected to become the first factory in the U.S. to mass produce sodium-ion batteries that don’t require minerals in short supply. That will place Holland at the forefront of another promising technology along with advanced lead-acid batteries used in millions of vehicles.
Holland is also home to Volta Power Systems, which designs and manufactures electric power storage systems for big vehicles such as firetrucks and RVs. The company was founded in 2014 by former Johnson Controls executive Jack Johnson who was a leader in the development of lithium-ion battery production when JCI owned the Clarios plant.
Volta Power CEO Dave DeGraaf also worked for JCI. He says Volta has done well in areas such as providing electric power for motorhomes and travel trailers where the owners prefer to camp in places without electric hookups and don't want to run noisy generators.
The company is developing hybrid electric power for military vehicles including a tactical truck made by Wisconsin-based Oshkosh Defense.
These trucks often spend much of their time parked with the engine running. Even when standing still, power has to be delivered to the essential electronics, heating and cooling systems, resulting in significant fuel consumption.
Especially with the high cost of diesel now, the systems Volta offers could pay for themselves in short order, according to DeGraaf.
"We could more than double our sales from last year if it weren't for the supply-chain constraints we've had," he said.
"COVID taught us how dependent we all are on the microchip processor. The shortages brought everyone to their knees."
Boosts from government, investors
The U.S. is well positioned for the expansion of lithium-ion battery production, according to Clarios.
“I think you’re going to see a lot more of it coming here because we need local supply chains to be able to satisfy the needs of our automaker customers in the future," Wallace said. "Clearly over the last few years, things have definitely kind of reverted away from globalization.”
Holland's reputation as a battery technology hub has been boosted by federal, state and local government funding as well as private investments.
In 2009, for example, Johnson Controls was awarded $299 million under the American Recovery and Reinvestment Act to convert the Holland plant, which had made car interior parts, to lithium-ion battery production.
"I think it was a perfect location," Wallace said.
Now the plant ships more than 3.5 million battery cells a year. It has 41,000 square feet of manufacturing space with operating environments the company says are as hygienic as those found in the pharmaceutical industry. Highly automated, it only employs about 130 people.
LG Energy Solution has around 1,500 employees in Holland. Under an agreement with Michigan economic development officials, the company would hardly pay any taxes on the plant expansion for 17 years.
State officials said the incentive was important because LG could have moved the work elsewhere in the U.S. or to its factories in South Korea, China or Poland. The expansion, and others like it, come at a critically important time for the industry and the state, officials told the Holland Sentinel newspaper.
“I would argue that the next 14 to 20 months could decide the next 20 years,” said Quentin Messer Jr., CEO of the Michigan Economic Development Corp.
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