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Q&A: Komatsu commits to Milwaukee, Harbor District for long term

Next-gen automated machines, solar cells and wind turbines, robotic manufacturing operations and other components of Komatsu Mining Corp.’s planned Milwaukee headquarters promises a more futuristic image than the muddy drilling, boring and digging the mining business would usually conjure.

Their $285 million manufacturing plant and office space in Milwaukee’s Harbor District is intended to be “unique and unrivaled,” said John Koetz, president of surface mining at Komatsu Mining Corp. It will transform a contaminated former industrial site south of East Greenfield Avenue into a campus powered by on-site, sustainable energy systems, where engineers will develop heavy mining gear and the automation systems that will let people operate them from miles away. Their equipment will support the smart phone and battery-powered future by digging up the rare minerals needed for that technology, he said.

It’s the kind of jobs that cities are competing for internationally. For Milwaukee, the 1,000 or more Komatsu employees planned at the new headquarters will lead to local training efforts and bolster ongoing redevelopment efforts in the Harbor District. It’s also the largest investment in Milwaukee outside of its downtown area since Miller Park, coming at a time Mayor Tom Barrett is pressuring businesses to move more jobs to city neighborhoods. 

Komatsu Mining will move its operations in 2022 to that new facility from its 45-acre plant on West National Avenue in West Milwaukee, which now becomes a prospect for redevelopment.

Koetz on March 22 spoke in detail about the planned project, which is to break ground later this year, at the Milwaukee Business Journal’s Power Breakfast. 

Have you selected an architect and contractor for the new headquarters? 
“We are really pleased that recently we’ve made decisions on that. We’ve selected Eppstein Uhen and Graef as our architect team. Our hope is these two organizations will be able to work together; they’ve got a lot of experience to help us design not just the overall campus and facilities, but also to create that remarkable workspace. We’ve selected Hunzinger to be our general contractor. They showed us a lot of experience, number one, in their ability to do large industrial machinery installations, which is a large part of what we do, but also the depth of relationships here in metro Milwaukee to help us with our hiring objectives on this important project.”

When do you hope to break ground? 
“Our hope is to be able to break ground yet this year. That is dependent on partnering with We Energies on the remediation, and the city as well, and then to be fully moved in in 2022 — so a pretty aggressive schedule.”

Why did you select this site? What drew you there? 
“The Harbor District is a very exciting development, and I have to complement the city and others with that. It started with this tremendous alignment and collaboration between the state, at the time Gov. (Scott) Walker, and (the Wisconsin Economic Development Corp.) and Mark Hogan, the region through Milwaukee 7, the city through Mayor Barrett, the (Department of City Development) and commissioner (Rocky) Marcoux and his team. They were really well-aligned at showing us different sites and different opportunities, but also showing a very unique alignment and focus in terms of creating family-supporting jobs and careers in the manufacturing sector, long-term investment in local, state, city, community partners drive that growth, and that vision for the harbor development.

"Of course the icing on the cake is that it's blocks from where we were founded. But there’s also the transportation infrastructure, very close proximity to the port of Milwaukee. They do a tremendous amount of our shipping today. That’s an important, long-term piece of what we do. The confluence of the rail networks at that site, the Canadian Pacific and Union Pacific, at that site, the highway construction there, to be close to I-94 for our suppliers, for our employees, but also that vibrant community that is coming up around it.

“But very importantly, too, our talented people who are here. Making sure we can continue with those folks to grow their careers long term with us. The last very important factor is the premier universities and technical schools. Many areas don’t have the number and the depth and the quality of the universities and the technical schools we partner with on a lot of programs today in welding, machining, technology and automation. All of those together were elements we saw in this site and location. The alignment of the city, state and region were incredibly important.”

Was it hard to envision at first?
There’s not a whole lot there now other than the UWM School of Freshwater Sciences. “The vision the city and the Harbor District were able to lay out for this area made it very clear to see beyond what it is today. Also that partnership from We Energies’ commitment to transform that site through remediation, and then partnering with the city, state and Harbor District over what that could be in the future. A long-term industrial focus but also that vibrant place to live, work and play that is so vital to our employees.”

Was it a deliberate move to put these new jobs in the city versus farther out? Did access to workforce make this site more attractive? 
"That was one of the key focal points that the state, region, M7 and WEDC, the city made throughout this. Number one, we want to invest and grow workforce that is family-supporting jobs that is in that manufacturing sector because that then supports all of our supply base and the jobs they have there, but also our partnerships we have with technical schools today for a lot of those factory technology jobs, but also the university partnerships for automation, technology, and robotics types of jobs we’re very focused on for the future. That really was the connecting point.

“The other benefit of being in such a vibrant urban area is for that emerging workforce that is joining the company, you’ve got a tremendous place to work and live. You’ve got easy access to transportation, great housing, recreation trails, a vibrant waterfront. It was really an ideal site from that perspective.”

Are there specific programs and planning to leverage that opportunity to take full advantage of it? 
“We’ve got a lot of programs underway right now. Continuing the programs and partnerships we have right now, but also expanding those as we move into this new area and get involved with the Harbor District and expanding the work we do with FIRST Robotics and other things into Bradley Tech and other areas. Even before we get to the building, we want to start connecting people to become part of the fabric of the community we’re going to be in. We’ll be volunteering at Harbor Fest and other initiatives. We want our people to start feeling that this is home before they even get there.”

You could’ve gone to a suburban location where others have gone. What other sites did you look at? Why did you end up back here? “We did look at sites globally that were part of the Komatsu network and facilities where we are at. I would say that close alignment of the state, the region and the city — to the point that the governor and members of WEDC and the M7 built those relationships with the company — but they even went as far as to travel to Japan to meet with our global leadership there to explain the vision of the city and the focus the region had on maintaining that manufacturing heritage, and building relationships there that helped us make the decision we believe is the right one, and we agree will be the right one for the next century.”

What has been the reaction from your staff? How have you worked with them to meld them into that area? 
“For our employees, it’s been one of excitement to see the investment we’re putting into the business to create a remarkable workplace for excellence. We’ve got teams of employees who are engaged at looking at how do we work today, how do we think we’re going to work in the future, what are the things we need in that new workspace? 

“Many of them immediately came down to look at the things that are going on in the Harbor District and were very excited because they can see the same things we saw in the (Menomonee) Valley with the emergence of recreational trails, vibrant restaurants, activities outside of the workplace and a really tight connection to that neighborhood. Because it’s not a vast distance, we’re moving five miles essentially, for most employees it wasn’t an impact.

“When we look at our workforce today, it is very different from what it was several years ago. Our workforce today is over 30 percent GenX and over 10 percent millennial. They’re excited about the opportunity to live and work in a community like Bay View and downtown and be part of that exciting community close to work.”

What’s going to be new about it, what’s going to be something I wouldn’t expect to see in a manufacturing facility? 
“That goal of getting to a near net zero emission is driving a very different approach to design and building, which is a key part of choosing the partners we did here. We’re going to be involved in using solar, wind, steam, renewable energies in a micro-grid. Our goal is to get to near net zero so you are looking at rooftop gardens. You are looking at solar. Then that connection with the city’s vision for the river walk, harbor walk and harbor plaza, and creating those open public spaces and activity nodes is very different from the traditional thought process for building manufacturing facilities.

“Inside the facility then looking at where can we bring state-of-the-art manufacturing technologies and automation to continue our drive toward a zero-harm workplace environment. We’re very, very proud of the safety work our team is doing. Last year we were named one of America’s safest companies. We were a finalist for one of Wisconsin’s safest companies. Our overriding focus on this new facility is to create something that embraces that zero harm and drives to more efficiency and technology that will let us weather the mining business for years to come.”

The campus includes a training center and museum. From how far away will people come to visit the training center, and who will be visitors to the museum? “What’s exciting about the training center and conference space is that provides an opportunity for internal and global partner training, but also spaces for conferences and meetings for our nonprofit partners to be part of that. We regularly train employees, service technicians, distributors, as well as customer technicians from around the world. In any given week we’ll have people from anywhere around the globe at our facilities. Today we’re really constrained on that. This gives us the opportunity to create spaces that are scalable, for small groups or larger groups, and really do more of that training that they depend on. Our customers like to come to the factory, to be able to see the product made, and then to be trained by those engineers and automation experts on how to use it and how to use it better. That’s something we see as a competitive advantage. This new facility will create spaces for us to do that.

“The museum is really an opportunity for us to connect with what is going on with the public spaces there at the harbor, to show some of the legacy over the last 135 years, but also connect that the future is made possible by mining. We often forget that the growth in everybody’s mobile devices is really made possible by mining. Those industrial minerals and rare earths is what makes this. Hybrid cars, electric battery cars, solar and wind, those are all mining-intensive. There’s an opportunity for us to connect students with that, let people come experience it and get to know us. Being right next to that Harbor View Plaza, it creates a public-private space to transition for us and really connects the campus to the neighborhood better.”

If something does happen in the mining industry and demand goes down for that kind of equipment, could you make construction equipment at this plant?
“This plant is really focused on our mining equipment. Mining has been a cyclical business. But in designing this we are able to work with the facility as well as our supply partners to create an operation that is productive and successful and safe regardless of the industry. That is the challenge that the team has. They are working very, very hard to make sure we are putting in the right capacities and capabilities for that cycle.

“The long-term view for mining is very strong. You’ve got projections that as the growth of mobile devices, battery power, solar and wind, all of those are driving that intensity around minerals and most of those today are projected to be in deficit supply in the future. Over the long term, you are going to need more of those minerals, even with aggressive recycling, which means you are going to have more demand for equipment. Certainly there are cycles there as customers invest and change, but we see that long-term strength in the mining industry.

“Most of those minerals are getting father flung and harder to get to, driving the intensity in automation. Many of our customers today are investing in remote operating centers. Rather than having to staff thousands of people in very remote, difficult sites, they can be comfortably working in a suburban office building. If you look at western Australia, some of our customers today are in remote operating centers comfortably located in the city. They can attract a diverse, integrated workforce comfortably working there, safely working there, monitoring thousands of machines running remotely. 

“Komatsu is a leader in that today. A lot of what we do in our new campus is going to be those engineers and innovators working on automating those blasthole drills, automating our shovels. We’re really excited about that.”

Is there a chance some suppliers and other companies that work with you are going to locate to this area? 
“We would hope so. If you look over the last two years we’ve spent $260 million with our supply chain partners here in Wisconsin. We certainly would encourage and hope that they would, like us, continue to invest in Milwaukee. Our supplier partners are a key portion of our fundraising activity annually, supporting Milwaukee Habitat for Humanity and the Midtown 100 project. We want to engage them even more so with this new campus.”

What else would you like to see around the site in the Harbor District? 
“The Harbor District has done a really great job of looking at all aspects of that, and just launched a new marketing campaign around that: Gritty, Green and Real. What’s great about that proposal is it focuses on industrial, you’ve got these green public spaces, you’ve got real businesses and a workforce of people. One thing we’re hopeful of is that at some point commuter rail becomes part of that. We’ve heard from our employees that they would see that as being effective, having more transportation options. The plan that the Harbor District and the city have laid out is really pointed in the right direction, and for us that fit really well.”

Even before announcing this Milwaukee plant, there was more hiring happening in your West Milwaukee plant. Can you give us an update on that hiring effort and what’s currently happening in West Milwaukee? 
“We continue to invest there. It may be a big surprising or counterintuitive to some but in 2018 we reopened our heavy fabrication facility where we fabricate the largest structures for the equipment we build. It involved significant hiring and establishing new work processes and new equipment. This past fall 2018 and ongoing into right now we’re still installing brand new machine tools, some equipment is coming back from a factory that we’re reshoring from China. We’re working very closely with United Steelworkers Local 1114 on that hiring process and also with our education partners to increase our intern, coop and entry positions to support those technology jobs. We’ll continue running that facility right up until the time the new one is ready, and our goal is that every employee makes that transition with us, to stay long-term partners with us.”

The new operations you’re bringing in, is there an estimated number of jobs?
“Our goal is that with this new site we think we can get to employment levels of around 1,000 employees with a longer-term goal beyond that.”

You’re going to have an empty plant in a couple of years in West Milwaukee. Have you thought about what could happen there? 
“It’s still too early to tell. We can all look at it and say it’s a very unique location. You’ve got a world-class stadium, the vibrant Menomonee Valley next door, you’ve got the vibrant retail and residential of West Milwaukee right there. Our goal over the next several years is to work with all of those stakeholders, the village of West Milwaukee, Menomonee Valley Partners and others to look at what is the vision for that area, what is the next use? It’s an exciting opportunity but it’s still too early to tell."

How are things from a business standpoint and how do you see both 2019 and 2020 from an economic standpoint? 
“The long-term trends do look good. The recovery we saw in 2017 in commodity prices is continuing. Some of the key commodities we look at, some of them are 8 to 10 percent lower than they were last year, but those are still levels where miners are investing, and it makes sense for them to invest. They’ve got healthy balance sheets and are looking at additional future capacity to support those deficits in supply. We see there’s still good activity there. The long-term fundamentals for mining are very strong.”

Has finding people to hire been an issue for you? 
“It’s always an issue because of the special training and skills that are needed. That’s why these partnerships exist. A number of years ago we set up partnerships with technical schools in the area around developing talented welders, partnering with them for curriculum development so workers who went through that program in the technical schools could come apprentice with us. This year we started a partnership with GPS (Education) Partners to extend that further into high school students who can work with us for part of the day, be in school part of the day and develop a career path.

“We’re also spending a lot more time and energy with a lot of the STEM activities we have. FIRST Robotics is one of those key ones, as well as the universities. If we can work these automation career paths early, we can get great people. It’s always a challenge. We’re glad to see the economy overall is doing great. That does create hiring challenges, but it reinforces why we’re investing in these partnerships.”

Are you seeing youth being open to jobs in manufacturing?
“There’s a general realization in the population today that college isn’t necessarily the path for everyone, and these technical jobs are family-supporting jobs. You can build a family, a home and have a long-term career with us. That’s why we’re investing in helping to provide the right training. When students see that, they get excited by it. This GPS partnership with the high school students has been a tremendous help.”

Sean Ryan
Milwaukee Business Journal

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