LANSING – Oakland County’s strategy to deal with the rapid downsizing of the auto industry is a diversify and survive approach, county leaders told a Senate committee on Tuesday. County Executive L. Brooks Patterson and economic development chief Dennis Toffolo said key areas are medical facilities, emerging sectors, the film industry, alternative energy and communications.
One shortcoming in the state’s economic development arsenal is the absence of working capital, they said, adding that some other states can offer cash – important to high-tech and other knowledge-based companies – while Michigan’s programs support bricks and mortar.
Patterson said the county picked 10 sectors to target for diversification, and have gained $1.2 billion in investments.
But despite the successes, they acknowledged the gains are often in the hundreds while the losses often number in the thousands in the auto industry’s restructuring, with the unknown futures of General Motors and Chrysler in particular holding potentially additional challenges. The county is home to Chrysler’s headquarters and officials had formed a rapid response team last year to deal with a potential Chrysler bankruptcy and now have formed one to react to any large losses at GM, which is the county’s largest employer.
Patterson told the Senate Commerce and Tourism Committee that Chrysler officials told him on Tuesday that the next 48 hours are critical to the company’s future. “We’ll know in two days,” he said. An important step Tuesday to try to avert bankruptcy was the agreement by creditors to accept $2 billion in cash for $6.5 billion in debts.
He added that a structured bankruptcy, as many on the national scene have urged as a necessary step to force restructuring, does not work for auto companies. “Once you’re in you don’t get out,” he said. “You can’t be a little bit pregnant and you can’t be a little bit bankrupt.”
Toffolo said the projects are getting smaller but the dollar amounts are larger.
Making the county, and Michigan, a medical destination – he dubbed it “Medical Mainstreet – with the appeal of a Mayo Clinic or Cleveland Clinic is also feasible, Patterson said given the number and quality of hospitals in the county, nursing programs and new ventures such as the planned medical school at Oakland University.
The county has 93,500 employees in 4,300 medical facilities, and Patterson said if nothing is done, another 45,000 are projected to be added in the next five years. “We said, ‘Let’s brand it.’ It’s a no-brainer to jump on this and polish it,” he said.
Toffolo also cautioned the legislators to be careful about pressing a “Buy Michigan” strategy because of the damper it puts on further expansion of foreign-owned businesses with significant facilities in Michigan. He said 700 companies from 35 countries have facilities in Oakland County and “they’re really sensitive to those kind of decisions.”
Patterson did complain about a new law that he said puts his county at a competitive disadvantage because it provided a personal property tax exemption for new property in Wayne County due to its status along an international river. He said a better approach would have been to define the exempted area as along a five-mile band along an international border.
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