A Message from Doug Kohlbeck

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February 8, 2024 | Article | 5 min | Business Insights

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Wisconsin’s strong manufacturing economy is expected to remain solid in 2024 as businesses focus on increasing margins that took a hit during COVID and the following years.

Starting in 2022 and throughout 2023, there was a pullback of capital investment. The level of expansion, new equipment, and growth investments was tepid.

While companies, post-Covid, are focused on driving up their returns from the investments they made in 2021 and 2022, that should not hold back manufacturing in 2024.

“We’re also seeing a normalization of inflationary pressures, which will also help boost margins,” Doug Kohlbeck, President and CEO of Wisconsin Bank & Trust, a division of HTLF Bank, said.

The bank’s portfolio is 65 percent commercial and industrial, 15 percent production agriculture, 20 percent commercial real estate.


Kohlbeck has enthusiasm going into the new year due, in part, to the reduction in supply chain issues and labor issues have improved.

Quote from Doug Kohlbeck

“What we’re hearing from our customers is they’re now getting stronger candidate pools for their openings. There are companies adding new and better talent,” Kohlbeck said.

Some of those companies are using stronger candidates to replace less productive workers they hired when the labor market was tighter.

Better talent means labor costs continue to rise.

“You’ve got to pay a lot for good, quality talent and I don’t see that stopping,” he said.


There are a few challenges for service industries to highlight going into 2024. With low housing supply, high interest rates, and increased construction costs, this market has a few obstacles to overcome this year.

While job cuts in that sector will improve 2024 budgets, sales of new units are extremely low due to the cost of construction. Rates are driving this trend.

“A lot of multifamily construction was done in 2022, but not a lot of new projects started in 2023. So, we’re going to hit a little lull here in terms of housing units coming online, particularly in the multifamily,” he shares.

As Wisconsin faces affordability issues seen in many places nationwide, rental rates of the new multifamily are at much higher levels because home ownership is harder.

“At least for the foreseeable future, our housing environment is going to be kind of stuck,” Kohlbeck summarized.


Let’s talk about inflation.

“Any nonservice company in our portfolio has either recently invested or plans to invest in more technologydriven automation whether it’s robotics or taking out steps in their production lines,” shares Kohlbeck.

A company that makes building supplies has gone all in on robotics. They’re still maintaining a manual line until they can work out production, but it would take them 13 people to do the work of two people plus the robots.

There’s a significant cost savings and they can produce more products faster through robotics. Companies that do not make these changes have had to transition to what Kohlbeck calls a specialized business. These are shorter run manufacturing companies that take on harder projects with harder engineering in order to bring in higher revenue and support labor costs.

Kohlbeck highly recommends businesses have a recession contingency plan.

“If we were to enter a shallow or deep recession and if that persisted for a while, what would those indicators be? How would your businesses respond to that? We really still don’t know where this economy is going. Is networking part of your strategy? What is your peer group saying? These are questions that I believe companies should consider to be prepared,” he said. It’s also important for your business to have foresight into your projected pipeline.

“You don’t want to get caught flat-footed,” Kohlbeck explains, “You need to understand if your cash-flow cycle is short, medium or long and then zero in on demand.”

Manufacturing is holding up well, considering all of the factors in play. In other industry pockets, there are companies that aren’t as fortunate.

“If your company’s margins don’t bounce back in 2024, I encourage you to investigate why, then manage changes to get the company back to an acceptable return,” Kohlbeck recommends.


The bank can help with that investigation.

“This is an everyday discussion internally and externally. Almost every company I see has lower gross margins in 2023 versus prior years,” Kohlbeck said.

When the bankers reviewed similar numbers from 2019, the stories they told were very different. The pandemic years brought stimulus payments, supply chain issues, and an entirely new host of issues for companies.

Quote from Doug Kohlbeck

“We encourage our clients to bring in that historical data for context when evaluating their current state. What impacts are they seeing? What strategies have they employed? What is their current plan? We listen, learn, and offer strategic insights based on our client’s unique situations.”

Then there’s fraud – an issue that’s not going away.

"There are small-to-medium companies that do not fully understand their risk from fraud,” Kohlbeck said.

“It’s still surprising to me how many of these companies have checks as their primary transactions. That’s not best practice for security reasons,” he said.

Cyber risk is also a concern.

“I don’t think the owners really understand how easily their systems could be exposed,” he said.

The bank has a very strong Commercial Card program that alleviates this pain point.

“Our Commercial Card remains the safest transaction form,” he asserts.

The Commercial Card and Treasury Management not only fight fraud, but they also allow customers to extend their cash flow.

The Commercial Card is only one part of the value that the bank offers. With individual support, market insights, and fraud detection, the bank has provided a comprehensive solution for business needs.

“We’re unique. You don’t see a lot of banks our size offer this kind of Commercial Card,” he said. If companies still want to write checks, we also offer Positive Pay, enabling customers to review account numbers, check amounts, and payee names before the bank processes the check.

We put the client at the center of everything we do. We’re here to help your business grow.

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