UW-Madison’s economic impact statewide hits $12.4 billion

The University of Wisconsin–Madison’s profound impact on Wisconsin’s economy, one that totals $12.4 billion annually, is detailed in a new report (PDF) that underscores the importance of the university to the state’s economic well being.

The report’s findings indicate that UW–Madison, along with its affiliated organizations and startup companies, support 128,146 Wisconsin jobs and generate $614 million in state tax revenue.

“The work and workforce that are developed at UW–Madison have concrete benefits for virtually every part of Wisconsin at a time when the state is faced with serious economic challenges,” says Chancellor Biddy Martin. “Preserving UW–Madison as a talent magnet and a driver of the state’s economy is more critical today than ever before.”

The report, done by Madison-based NorthStar Economics Inc., found that UW–Madison research has fostered the formation of at least 283 startup companies in Wisconsin that support more than 21,000 jobs.

Economists also found that for every $1 of state tax investment in the university, there is $21.05 in economic activity in the state.

“UW-Madison’s economic reach and benefit to the state’s job base is significant and on the increase, as research awards have grown to more than $1 billion annually on the campus,” says David J. Ward, president of NorthStar Economics.

The 2011 economic impact report is the first time the numbers have been updated since 2003, when economists measured the university’s economic impact.

Mark Bugher, director of University Research Park, says the numbers are reflected in the park’s growth and its influence on the Madison economy, but also show the university has benefits to communities statewide.

“We have more than 125 tenants and there are about 3,500 employees at University Research Park, many of them with links to people or technology with university ties,” Bugher says. “Those connections build family-supporting jobs and contribute to the state’s tax base in a time of economic downturn.”

Martin says the report’s findings emphasize the need to protect UW–Madison’s ability to provide a world-class education and to conduct pioneering research that can solve problems and help lead the way out of recession.

“Most regions of the world are eager to build world-class institutions of UW–Madison’s quality to teach their young people, drive innovation and spur economic growth,” she says. “Wisconsin citizens have invested over time in what is now one of its biggest assets. It falls to us to protect and sustain it into the future.”

Enterprises around the state also recognize the impact of the university’s work in their workplaces, hometowns and in their local economies.

When Mike Brennenstuhl launched Seymour Dairy Products in January 2005, he was armed with market research that pointed toward blue cheese as a potential cornerstone product for his fledgling dairy business.

But in more than 20 years of cheese-making, Brennenstuhl had never made blue cheese.

So Brennenstuhl went to work with John Jaeggi and Mark Johnson, researchers at the UW–Madison Center for Dairy Research, which provides education and technical support for Wisconsin’s dairy processing industry. Together they perfected a new recipe, called Ader Kase, which was not only an immediate hit with customers but an international sensation.

“In 2008, we entered our cheese in the world cheese contest. Out of 63 or 65 cheeses, it took first place. It was the best blue cheese in the world,” Brennenstuhl says. “That cheese was from the original recipe developed by John Jaeggi and myself at the CDR. It still stands today.”

And business is booming. Brennenstuhl’s company now employs 54 people at its plant in Seymour, Wis., with an annual payroll of more than $1.25 million. Seymour Dairy will purchase up to 70 million pounds of Wisconsin milk in 2011 and has recently begun a plant expansion project to help it meet increasing customer demand.

After Kettle Foods opened a potato chip production plant in Beloit in 2007, the company reached out to UW–Madison crop scientists to initiate a strategic partnership.

“We are constantly looking for potato varieties that have better characteristics and perform better,” says Lori Aljets, Kettle Foods’ director of procurement. “And we have found that it’s very advantageous to have our researchers work with academic researchers toward this common goal.”

In the past few years, the Kettle-UW-Madison team, with the help of area potato growers, has focused on improving a public potato variety developed by UW–Madison scientists in the 1990s that accounts for just under half of the potatoes processed in Kettle’s Beloit plant. The aim is to create a new-and-improved variety that lasts longer in storage, but still makes a perfect chip, enabling Wisconsin growers to provide Kettle with a steady, year-round supply of high-quality chipping potatoes — a win-win for everyone involved.

Cray Inc. manufactures supercomputers in Chippewa Falls, Wis. In November 2008, the company’s “Jaguar” supercomputer at Oak Ridge National Laboratory topped the list of the world’s 500 most powerful computers. The Jaguar system held that top position through November 2010.

“It’s amazing to think that some of the world’s most powerful computers come out of Wisconsin,” says Tim Shedd, associate professor of mechanical engineering at UW–Madison. “I really like the fact that we can help support Cray, a company that’s providing high-paying, good jobs in the Chippewa Valley area.”

David Kiefer, Cray vice president for business development in custom engineering, says the company derived multiple benefits from its collaboration with UW–Madison. “Working with the University of Wisconsin–Madison mechanical engineering department — specifically Tim Shedd and his team — enabled Cray to tap their technical expertise, their testing capabilities and resources to improve the spray-cooling technology beyond what we could have done in the same time frame, or to the same level of understanding,” he says.

And in La Crosse, a partnership involving the UW–Madison School of Nursing, Gundersen Lutheran and UW-La Crosse attracts promising nursing students and trains 50 students a year for careers in an in-demand field. The program has been a boon to health care in western Wisconsin.

“The partnership is outstanding,” says Paul Larson, a faculty member of the western campus since 2003. “Students get a degree from an internationally renowned university, while at the same time attending school in a setting where class sizes are smaller and maybe more manageable to some.”

Download the report.