By Steve Arwood, CEO of Michigan Economic Development Corporation
In just five years, the Michigan economy has been transformed.
Today, the economy of the Great Lakes state is thriving with significant growth and promising prospects in all sectors. And, today, without a doubt, Michigan is recognized nationally as a state providing solutions to businesses that want to grow and relocate their enterprises.
Indeed, Michigan is among the top 10 pro-business states of 2015 and the Most Improved State of the Year, according to an annual study by the Pollina Corporation, a real estate firm specializing in selecting sites for international clients. The study noted: “Michigan is now transforming into a prime example of how to turn a state’s economy and economic fortunes around. This is yet another piece of the mounting evidence that Michigan is indeed the Comeback State.”
Initially, the objective and empirical signs of Michigan’s economic success was termed a “comeback.” But now, after moving beyond the pre-Great Recession economic measurements, Michigan is clearly reinventing its economy. Current economic policies and strategies are aimed at addressing economic realities and preparing for future economic challenges.
The comeback state is now in upward perpetual locomotion.
Keys to Michigan’s economic reinvention include a competitive tax structure; fiscal stability; strengthening position as global automotive capital; 32.7 percent reduction in workers’ compensation premium rates; common-sense regulatory reforms (which led to elimination of nearly 2,000 burdensome rules); and, access to world-class talent.
While the economy has grown steadily and unemployment now stands at five percent—the lowest level in more than a decade—the ongoing economic transformation can be seen in Michigan’s nation-leading manufacturing jobs, dramatically appealing entrepreneurial climate (sixth in nation) and as the top Great Lakes state for major new and expanded facilities.
It’s widely known many companies locate or expand in Michigan to be in close proximity to 63 of the top North American auto suppliers, not to mention close proximity to three-quarters of all research and development facilities for the automotive industry.
Since 2009, automakers and auto suppliers have invested about $16 billion in the state (through second quarter 2015). An unparalleled collaboration and heightened productivity is the result of automotive manufacturers, suppliers, R&D facilities and ancillary services located in close proximity.
In addition to the state-of-the-art automotive factories and facilities, Michigan ranks first nationally in high-skilled job concentration of electric, mechanical and industrial engineers.
Michigan is focused intensely on developing well-trained, educated workers. A core tenant of Michigan’s talent strategy is that initiatives should be “employer-driven” because job providers are in the best position to know their local and regional needs.
Governor Rick Snyder initiated the largest investment in the nation ($50 million for equipment/training) aimed at preparing/educating students for in-demand jobs in the skilled trades, expected to be one of the fastest-growing job sectors in the next five to 10 years.
The state’s Talent and Economic Development agency oversees an online labor exchange (www.mitalent.org), skilled trades training fund (largest in the nation), and hundreds of apprenticeship programs. And, the Michigan Economic Development Corporation has embarked on an international campaign to attract the world’s best scientific, technical and engineering minds, inspiring them to invest their talents working in Michigan.
The best evidence of Michigan’s pro-business success can be found in the recent record of businesses that have expanded and relocated to the state.
In fiscal year ’15, more than $4.2 billion in private investment was incentivized through the state’s business and community development programs. A sample of the private investments include: Detroit Diesel Corporation (projected jobs: 245; projected private investment: $208M; Detroit, Wayne County); Brose North America, Inc. (projected jobs: 475; projected private investment: $97.6M; New Boston, Wayne County); Toyota Motor Engineering & Manufacturing (projected jobs: 85; projected private investment: &74.65M; Ann Arbor Township, Washtenaw County); ZF North America, Inc. (projected jobs: 606; projected private investment: $71.2M; Northville, Oakland/Wayne County); Denso Manufacturing Michigan, Inc. (projected jobs: 100; projected private investment: $56.6M; Battle Creek, Calhoun County); and, Sakthi Auto Group USA (projected jobs: 350; projected private investment: $31.86M; Detroit, Wayne County).
Innovation is on display in the state’s entrepreneurship community.
Michigan-based venture capital firms have $1.7 billion in capital under management, an increase of 45 percent in the last five years. For every $1 invested in a Michigan startup company by a Michigan-based VC firm, $2.90 of investment is attracted outside of Michigan. And, Michigan has the highest research spending-to-venture capital investment ratio in nation. For every $1 invested in venture capital in the state $149 is investment in research in Michigan.
In the area of foreign investment and trade, Gov. Snyder and Lt. Gov. Brian Calley have led a team of business and economic development leaders on trips to China, Japan, Europe and South America. Since 2011, these trade missions have attracted 351 projects, $8.59 billion in capital investment and nearly 30,000 jobs. Foreign direct investment came from Fiat, Toyota Motors, Denso, Federal Express and PSA Peugeot-Citroen. The top three determinants for a foreign company locating in Michigan are: 1) proximity to markets or customers; 2) available skilled workforce; and 3) business climate.
To prepare for upcoming economic challenges, Gov. Snyder and the MEDC are working together to support initiatives aimed at the future automotive/manufacturing/high-tech economy.
In the State of the State, Gov. Snyder introduced the Commission on Building the 21st Century Economy, which will provide a blueprint on how to strengthen Michigan’s economy for the future. The commission on the economy compliments the commissions for Building 21st Century Infrastructure and the Commission for the 21st Century Education.
And clearly, the global capital of the automotive industry, Michigan, is preparing for the challenges ahead.
A 330-acre American Center for Mobility at Willow Run has been selected as the strategic location for the testing and standardization of connected, and autonomous vehicles. ACM is a collaboration with industry, government, academia, and private-sector partners, located within a high-tech corridor in southeastern Michigan where nearly three-quarters of all auto-related research in the world is conducted.
ACM will serve as a complementary site to the University of Michigan’s Mcity, the world’s first controlled environment testing site designed for connected and automated vehicle research.
In the ongoing challenge for Michigan-based automakers and manufacturers to find ways to build high-tech, safer, and cost-and-fuel efficient vehicles, a new research center provides a major boost to address engineering and manufacturing issues while improving competitiveness.
With a U.S. Department of Defense grant last year to the Lightweight Innovations for Tomorrow (a.k.a. LIFT and formerly known as American Lightweight Materials Manufacturing Innovation Institute), the state is strategically positioned to become a leader in developing multi-materials to be used in leading-edge manufacturing processes. Applications for these materials can be used in defense, energy and transportation.
LIFT is a nonprofit founded by the University of Michigan, Ohio State University and Ohio-based engineering and technology organization EWI. The institute is supported by a $10 million grant from the Michigan Economic Development Corporation over the next five years.
LIFT shares a 100,000-square-foot innovation acceleration center in Detroit’s Corktown district with the Institute for Advanced Composites Manufacturing Innovation (IACMI), a recipient of a $70 million grant last year from the U.S. Department of Energy to fund composites manufacturing research. Its mission is to develop and deploy advanced lightweight materials manufacturing technologies, and implement education and training programs to prepare the workforce. MEDC has pledged $15 million to support IACMI activities in Michigan for the next five years.
Working collaboratively, LIFT and IACMI engage in research on metals and composites research. No other state has under one roof the capability to research metals and composites while exploring the applications for mixed materials expected to be used in vehicles over the next decade. A specific research focus is on advanced fiber-enhanced polymer composites that combine strong fibers with rigorous plastics to produce a lightweight material stronger than steel.
From the growing agri-business industry to the expanding manufacturing base to the high-tech start-ups and state-of-the-art automotive testing, there is a place for any type of business, and a statewide network of economic development agencies ready to do whatever it takes to assist in the growth of business around the state.
For the above mentioned reasons – among others – the Pew Charitable Trust referred to Michigan as the biggest success story since the Great Recession.
There’s no doubt Michigan is back. The focus is forging ahead into a prosperous economic future.
Visit http://www.expansionsolutionsmagazine.com/michigan_ed for local economic development office directory listings.
