Milwaukee Tool Deal Gets First Approval

The complicated public financing proposal to bring Milwaukee Tool downtown received its first approval Thursday afternoon.

The core component of the deal calls for the fast-growing tool designer and manufacturer to bring 1,210 employees to the building at 501 W. Michigan St. by 2026 in exchange for a $12.1 million grant.

A future phase could include a four-story addition to the five-story building and up to 790 more employees. The city, which included clawback provisions in the deal, would provide an additional $7.9 million if that comes to pass.

“It’s an incredible opportunity for Milwaukee Tool and the City of Milwaukee,” said Department of City Development economic development specialist Dan Casanova in presenting the proposal to the board of the Redevelopment Authority of the City of Milwaukee.

The company, a division of Hong Kong-based Techtronics Industries since 2005, is headquartered in Brookfield and has recorded 22% annual growth since 2009 as its sales have reached $5 billion.

Chief financial officer Ty Staviski said the company has 14,800 global employees with 5,300 in the United States.

“One of the challenges we have had is our headcount add,” said Staviski of the rapid growth. The company had 227 employees in southeast Wisconsin in 2008, but has seen that total climb to 2,600 today and a plan to reach 3,200 by the end of the year. Much of the growth can be attributed to the launch of a hand tools product line in 2011.

“If you spend some time looking through their website or catalog, first you convince yourself you need to buy a couple thousand dollars worth of power tools, but you also realize this isn’t the Milwaukee Tool of 15 years ago,” said Casanova.

After multiple expansions in Brookfield and a new campus in Menomonee Falls, Milwaukee Tool is also short space.

“Right now our company is about 800 seats short and we are getting by with remote working,” said Staviski.

The company envisions having 650 employees in the Milwaukee facility by the end of 2021. The financing agreement requires them to have at least 450 by March 2022 before a clawback provision could be invoked.

One of the draws to the building is that the building is sitting empty, ready for rehabilitation. “All of the options that we are looking at for different sites are predicated on that we need a quick turnaround,” said Staviski. “This is a building, that after touring, we could renovate in a fairly quick and phased approach.”

Assurant Health was the last tenant, vacating the space in 2016. Developer Scott Lurie purchased the property in late 2019 for $4 million and will sell it to an affiliate of Milwaukee Tool. The city would recoup the costs of its grant through a tax incremental financing district and increased property tax revenue.

The company intends to relocate an entire business unit, representing a specific product line, to the building. “It’s going to be a wide gamut of different job categories,” said Staviski, ticking off a list including engineering and sales positions.

Of its current employment roster, 486 employees live in the city. Staviski said city officials made a successful pitch that a downtown location would make it easier to recruit and retain young employees. He said the company was drawn in part by the growth of downtown, including Fiserv Forum.

Staviski said the company already has a significant spending presence in Milwaukee adding up to $1 million annually on meals, 3,500 hotel nights and thousands of trips out of the airport.

Casanova said the company’s absorption of the 350,000-square-foot building would yield benefits to the downtown office market, similar to a wave of other redevelopment projects.

Hiring Concerns

But the proposal didn’t draw universal approval.

Milwaukee Tool is committing to paying $15 per hour wages to all employees and contracted service workers by 2023. But labor leaders want to see the company commit to a community benefits agreement.

Anthony Steward, a member of Milwaukee Area Service and Hospitality Workers Organization (MASH), said the pay was just one piece of the puzzle. He said responsible contractors needed to be hired and secure jobs needed to be provided. “It’s time for policymakers to include all of us,” he said.

“There is too little attention paid to ensuring that all jobs created here will be decent jobs,” said MASH research and policy analyst Jack Hanson.

MASH president Peter Rickman said the janitorial, food service and service sector jobs need to be good jobs. “You have a chance to deliver for cooks and cleaners,” he said. “We need you to choose us.”

He said it wasn’t about Milwaukee Tool, but structuring the deal to benefit all. “Don’t kill the deal, hold off on moving the deal forward until there is a community benefits agreement,” said the labor organizer.

MASH has had success establishing labor agreements at other large facilities including Fiserv Forum.

Alderwoman JoCasta Zamarripa testified in support of the worker’s requests. “I am very passionate about this issue,” said Zamarripa. She said the labor agreement was important, but would cover fewer than 20 employees. “I don’t think it’s asking too much.”

“We are working very closely and have plans in place to discuss this with local stakeholders,” said Staviski. He said the company was also working to determine if any agreement should be with Milwaukee Tool or with the contractors that will actually directly oversee the employees. “We are still working through some of those details.”

Rickman said such an agreement should only take 30 minutes to be negotiated and he was happy to buy coffee for the meeting.

But Staviski said Milwaukee Tool would continue on its process. “We are committed to supporting the jobs and committed to supporting the community,” he said.

City Development Commissioner Lafayette Crump defended the deal.

“I don’t want us sitting here in this meeting thinking that Black and Brown people only have $15 per hour jobs,” said Crump. He said the company was coming to the city to hire Milwaukee residents, and that includes many jobs that pay more than $70,000 per year.

“I fear that our loss will be the gain of some other community,” said Common Council President and RACM board member Cavalier Johnson, comparing the deal to the city’s failure to approve the Strauss Brands plant. He said he didn’t want to see Milwaukee Tool choose Franklin, Greenfield or Wauwatosa. “It is for these reasons I am going to be in support of this, knowing that conversations will continue.”

The RACM board unanimously endorsed the deal. But the Common Council still needs to approve it.

Milwaukee Tool History

The move would reflect a partial return by Milwaukee Tool to its namesake city.

The company was founded on the south side of Milwaukee in 1924. It moved to Brookfield in 1965 and relocated most its manufacturing to Mississippi in 1973.

Staviski said the company now has 11 manufacturing plants across the globe, including six in the United States. “That’s actually going to be eight at the end of this year,” he said, noting that new plants would open in West Bend and Greenwood, IN. An expansion is also underway at its Sun Praire plant.

It was sold for the first time in 1975 and at least three times since. Staviski, who has been with the company since 2008, credits the Techtronics acquisition and newly installed leadership team with the recent growth.

Milwaukee Tool is the flagship brand owned by Techtronics, but it also owns Ryobi and Dirt Devil. The company reports having more than 30,000 employees.

According to a 2019 Wisconsin Economic Development Corporation release, since 2016 Milwaukee Tool has pledged to create up to 1,812 new jobs and invest $174.5 million in capital projects in exchange for up to $46 million in tax incentives.

It produces cordless power tools, lighting fixtures, accessories, hand tools and storage items.

2019 Renderings

Photos