LANSING – James Epolito, who headed the Accident Fund of Michigan after the former state agency was purchased by Blue Cross Blue Shield of Michigan, will become the new CEO of the Michigan Economic Development Corp. on September 1. Current CEO Don Jakeway will focus on attracting international business activity to the state.

MEDC and administration officials and legislators hailed the move as a new step for the public corporation charged with attracting and retaining business in the state. But sources indicated the move was an attempt to rescue a struggling organization.

Matt Cullen, chair of the MEDC Board of Directors, said the move was not an indication of dissatisfaction with Jakeway’s leadership.

“I think we had the opportunity in talking to Jim and his circumstance and availability that adding him to the team would enhance the MEDC,” he said of Epolito.

“They’ve had successes under Don Jakeway,” said Liz Boyd, press secretary for Gov. Jennifer Granholm. “This is all about taking the MEDC to the next level.”

Rep. Bill Huizenga (R-Zeeland), chair of the House Commerce Committee, said there are improvements the MEDC could make, but did not lay its troubles at Jakeway’s feet.

“Michigan is one of the only states losing jobs. Some of that may be out of their control, but when we’re the only one losing jobs, something has to change,” Huizenga said. “And I do hope that they’re not just hanging this on Don Jakeway and it doesn’t sound like it is.”

But he said the new leadership was an opportunity for the MEDC to look again at its structure and operations, which have been criticized by the Republican legislators as too top heavy with vice presidents.

“I think MEDC’s day to day operations could be tightened up,” he said. “I hope that DLEG, (Department of Labor and Economic Growth Director David) Hollister, the governor and frankly Jakeway himself will take this opportunity to make sure this is the structure they want to have in place. If not, then let’s acknowledge that and change something. If it is, then let’s start creating jobs.”

Sources also said there was a lot of friction between Hollister and Jakeway. Jakeway had to report through Hollister to Granholm. In the Engler Administration, MEDC CEO Doug Rothwell reported directly to Engler.

Michigan Republican Party Chair Saul Anuzis was not as kind to Jakeway’s administration of the MEDC.

“Michigan has no economic development,” Anuzis said. “It’s good that the governor has finally admitted that and attempted to make a change. Of course, this is the same governor that left the MEDC without a leader for almost her entire first year.”

Cullen said the change was not about any failings on the part of Jakeway, but about what Epolito would bring, namely business experience and team leadership.

“What he brings in particular is a real strong business acumen. It’s important to have that perspective as we’re developing and formulating strategies,” he said. “He’s got a tremendous track record at building teams. He runs the operations well and really has a lot of experience taking care of an organization of this complexity.”

In the release announcing the appointment, the MEDC pointed to Epolito’s operation of the Accident Fund, noting that he developed it from a $117 million worker’s compensation provider operating solely in Michigan to operating in 40 states and generating $500 million a year as the 15th largest worker’s compensation provider and ninth most profitable insurance company.

And sources indicated that kind of organizational leadership has been lacking under Jakeway. They indicated the decision to replace Jakeway was not come to quickly, but had been under consideration for many months.

Though denying those rumors, as well as rumors that Jakeway has had run-ins with Hollister, whose department oversees the MEDC, Cullen said Jakeway’s input on economic development issues will be valuable and he expected Jakeway to remain with the MEDC for some time.

In fact, it was Jakeway’s ability to attract job providers, not his organizational leadership, that was trumpeted when he was first hired.

“Don’s proven ability to attract jobs and revitalize cities is a winning formula for Michigan,” Granholm said in a release at the time.

In an April 2004 interview with Gongwer News Service, Jakeway challenged various interests to “judge us on our results and what we’re trying to do in an economy right now that’s desperately trying to come back.”

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