LANSING – Economists have been hedging about the timing of Michigan’s economic comeback, but it will be this year, said Michigan Economic Development Corporation CEO Greg Main in a recent interview with Gongwer News Service.
At the most recent revenue estimating conference, and at several prior conferences, economists have indicated that Michigan employment should begin to climb in 2011. But Main said the efforts of the MEDC and other economic development programs in the state have moved up that job growth date.
“We’re coming off the best year ever last year,” he said. “This year we’re going to start to see employment start to grow in Michigan again.”
But he warned that Michigan will not be the state it once was in terms of a manufacturing powerhouse. In addition to the losses in the automotive industry, he said there is also some thought that economic power is leveling worldwide, which means that power is flowing out of the United States.
“That doesn’t mean we can’t have a great economy,” he said. “We have a more diverse economy than we’ve had in the past. What we’re working on is a trade off of boom and bust for a more stable economy.”
And he said the infrastructure building MEDC and others have done in recent years will mean faster job growth over the next couple of years.
Job growth generally comes from the creation and expansion of small businesses, and Main said the state has been building the supports needed for those businesses to thrive.
“You can’t focus all your efforts on elephants,” he said. “Elephants don’t change your economy.”
A number of universities and community colleges have begun entrepreneurship courses to help those interested in starting a business. “We think we can train 1,000 people next year,” he said.
Those businesses will also need financing, and he said that is also coming. “We’ll marry (the training) up with financing provided by credit unions,” he said, though adding that banks are also beginning to open to small business lending.
The MEDC has recently come under fire by some, including some in the Legislature, questioning the efficacy of its programs. But Main said he welcomes the criticism. “In some ways you get good ideas that come out of this stuff,” he said.
But he said in large part the Legislature understands the need for the economic development programs. “All the programs we have all have been adopted by large bipartisan majorities because people recognize these things ultimately do work,” he said. “You can’t unilaterally disarm yourself.”
The agency also now audits all off the companies to which it provides incentives to be sure they are creating the jobs and investment promised.
Recent legislation requiring the MEDC to provide that information to legislators also should bolster the agency’s credibility, Main said.
The MEDC, through the 21st Century Jobs Fund and other programs, has also been working to attract venture capital to the state. “What really happened is we spent a lot of time and money trying to develop the infrastructure,” he said. “Now we have 15 different venture funds. Ten years ago we had three.”
But those funds also are more targeted in their investments, supporting high tech and biotech businesses.
There are also business incubators around the state supplying services to budding businesses, he said.
Now, the state needs to attract people to actually start new businesses. “We have to start communicating to a broader array of people that it’s time to consider entrepreneurship,” he said. “I’m not sure everyone in Michigan thinks about starting their own business.”
Some efforts have meant potential growth again in the state’s traditional powerhouse: the auto industry. “Because we’ve been so successful in battery, we’re about to capture new investment by GM and Ford,” he said. Chrysler has also committed to some new development in the state.
Both the Chevrolet Volt and the Ford Focus are to be built in Michigan, at least preserving some automotive jobs. And Chrysler is renovating one of its plants to build new engines.
“We’re going to bring work back from Mexico. When’s the last time that happened?” Main said of the Focus plant.
The state could have seen more development had there not been so much battling over state budgets and taxes in recent years, Main said. “There was a sense that Michigan’s government structure wasn’t very coherent,” he said was a primary reason the state did not get a new Volkswagen assembly plant in 2008.
The flip between the Single Business Tax and the Michigan Business Tax, the rise and fall of the sales tax on services and the debates over tax credits have made the state less attractive to development. “It’s stuff like that that drives people crazy,” he said.
Unions also have to step up and help sell the state, Main said. “We still have a reputation as being a strong union state,” he said. “Union membership is not much different than other places.”
And he said some recent union contracts have shown a shift in organized labor thinking.
MEDC has begun including labor leaders in discussions with business prospects to show both sides the potential benefits of bringing the project to the state.
But MEDC also has new relationships with some of the major corporations in the state. “We’ve never had the relationship with GM and Ford and Chrysler that they’re willing to share with us where they’re headed,” he said. “We’re doing the same thing with Dow.”
And development of the batteries alone has brought some $6 billion in new development, Main said.
“That’s all going very well, way beyond what our expectations were,” he said.
The state is also becoming a center for solar and, though more slowly, wind energy equipment development.
“They’re here because we were able to show them Michigan was committed to the space and had the supplier base,” Main said of recent solar energy developments.
While the MEDC is focused many years out, Main said he was only focused on the next year. “I’m trying to concentrate on getting as much done as we can,” he said, adding he had “no expectation” of continuing in his post under the next administration.
And he said a primary goal for the year is encouraging the Legislature to at least maintain, if not increase, funding for the 21st Century Jobs Fund. “We’ve not been very successful at maintaining that. If we can protect that and get Pure Michigan funded, we can live with the rest of the cuts,” he said of expected cuts for the agency’s operations.
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