An Efficient Engine for State Growth
Nonprofit Michigan Economic Development Corporation is a public-private partnership between the local economic development organizations and the state that is designed to stimulate economic growth by developing policies that will lead to the creation and retention of jobs and investment.
A successful mission statement requires more than mere words. These words must be driven by conviction, consistency and an all-embracing vision for the common good. A mission statement is an organization’s reason to exist, premised by a mindset for action to achieve a predetermined goal.
The mission statement of the Michigan Economic Development Corporation (MEDC) is simple – to implement the tools and create the environment that will lead to job creation, job growth, and investment in the region.
Economic development in Michigan dates back to the 1970s and, “has always been part of true state government,” says Jennifer Nelson, the MEDC’s executive vice president and chief operating officer. Established in 1999, MEDC is a partnership between state and local economic development agencies and was formed with the assistance of the Michigan Strategic Fund (MSF) created by Public Act 270 of 1984.
The MEDC functions as an autonomous entity. The corporation was, “formed primarily for continuity and flexibility,” says Nelson and to, “be able to respond to the growing demands and needs of helping to attract and grow businesses in our state.”
With the formation of the MEDC, Michigan was one of the first states to implement its current model as an economic development arm. The implementation of this successful model has garnered interest from other states that have been trying to replicate the MEDC’s structure, Nelson reveals. “We do work closely with other states as they’re trying to help solve some of their problems. They want to look at our structure.”
Nelson also notes that, in 2010, the Small Business Jobs Act became law that led to the MEDC creating the State Small Business Credit Initiative (SSBCI). The SSBCI program received over $1.5 billion in funding to help with programs that will assist with the financial requirements of small businesses that may not be able to secure financing for expansion or job creation from banks.
The MEDC’s SSBCI is now available in all fifty states. “As a result of our innovative problem solving to address the needs in the market here in the state, it was adopted at the federal level and then other states were able to take advantage of that program,” explains Nelson. “Given our flexibility and the way that we can drive solutions, we do what we can to take it to another level and hopefully help some other states with models.”
Like all economic development corporations, the MEDC uses several metrics to determine its overall performance. Based on the actionable objectives it plans to address, the corporation develops its unique combination of tools as part of its state’s strategic plan. The process involves not only planning and implementation, but, perhaps more importantly, an evaluation of effectiveness. Even though proposed course of action may fail, it still holds merit in terms of pinpointing unrealized weaknesses or highlighting strengths that may be utilized for future goal strategies.
The MEDC looks at key metrics to assess its efficiency including assessing the leveraging of private investment, state wage increases, and job creation. “Those are our high-level metrics,” says Nelson. “Then we have a subset of metrics below each of those. We primarily focus on job creation and private investment.”
It is MEDC’s scorecard (MiScorecard) which serves as a management tool to gauge performance levels, the value the corporation brings to the state and influences it has on selected goals.
“On a monthly basis, we review how we are doing against the scorecard and against our targets,” Nelson says. “So we do measure. We have a very active compliance unit that monitors all of our agreements that we enter into with our companies and communities.”
For the U.S. to remain globally competitive, Barack Obama has been noted as saying, in part, “We must create an environment where invention, innovation, and industry can flourish.” Innovation has a pivotal role to play in driving an economy forward. Without innovation and the spirit of entrepreneurship, economies remain stagnant and unsustainable.
Michigan has long been recognized for its strength in the auto industry and is making significant gains post-recession. In fact, Michigan’s economic growth has been substantial with more than 407,000 new jobs – an eleven percent gain – from 2009 to spring 2015.
Just one example of the continued long-term growth in the auto industry is General Motors recently announcement of $1 billion investment in Warren, Michigan. The company has begun new construction and renovations to its existing Warren Technical Center facility that will create close to 2600 new jobs in essential departments such as product engineering. The facility currently employs more than 19,000 and construction is expected to be completed by 2018.
However, the automotive industry is not the only sector propelling Michigan’s economy forward. Growth in manufacturing sectors is quickly leading to those becoming predominant players in the economic arena. Michigan is home to over 14,000 manufacturers producing an array of products such as, but certainly not limited to, food and beverage; industrial machinery; plastics/rubber; fabricated metals; and furniture.
“Michigan is home to twenty Fortune 500 companies, many of which are not automotive.” She notes, for example, that companies such as Whirlpool, Kellogg, Stryker (medical devices and equipment), and grocery store retailer Spartan Nash, are substantial players in the advanced manufacturing sector. “So it’s not just the automotive industry, although that is the foundation for the other innovations we’ve seen in the state… We’ve had many successes just based on being home to the auto industry.”
Speaking about entrepreneurship in Michigan, Nelson relates that the MEDC invests in smaller entrepreneurial companies – especially those with a high tech focus – which are vital to the state’s growth. “There are many different sectors that Michigan is supporting through its various efforts,” she adds.
According to the Bureau of Labor Statistics, Michigan ranks number one in the nation for its access to skilled trades’ workers – all 200,000 of them. Although it is difficult to determine skill gaps nationally, at the local and regional level, the evidence becomes more recognizable. Skill gaps make it difficult for industries to perform at optimum levels. The reasons for the skills gap are many, but one factor is an aging population of workers who retire without replacement.
The state also ranks number one in terms of its access to research and design professionals. Says Nelson, “We have the nation’s highest concentration of industrial engineers. So, IT talent is very important to our economy.”
MEDC works in close collaboration with its colleges and universities to attract high-tech graduates who will be essential contributors to state growth. “One of the things that we work with is trying to get that research out and to attract the high-tech folks that can run some of these companies,” says Nelson. “Beyond this, we have a very robust entrepreneurial support system to help companies get their first customer.”
She explains that recently the MEDC invested $50 million to provide state of the art equipment for use in eighteen community colleges as part of the Community College Skilled Trades Equipment Program (CCSTEP). CCSTEP will assist colleges in the training of students in machinery used by various companies. CCSTEP is the largest program of its kind in the nation and will help close the skills gap.
“It’s a partnership to understand what the companies need, where they are headed and to make sure our community colleges are equipped with that machinery so that we can start training students to have that practical knowledge and training.”
Another program Nelson refers to is the Michigan Advanced Technician Training Program (MAT²), a no-cost three-year apprentice program combining class instruction with paid work experience. The program currently centers around three key sectors: mechatronics, IT and Technical Product Design. MAT² is a “partnership with our community colleges and our companies to make sure that we are preparing the workforce for the needs that our companies have.”
Michael Shore, MEDC’s director of communications, discussed the recent EB5 Program directed at attracting foreign investors to live and create jobs in the state. Vermont and Michigan are the only two states to implement an EB5 Regional Center with approval from U.S. Customs and Immigration Services (USCIS). The center works in conjunction with the Michigan Office for New Americans created in 2014.
“We were just assigned the management of the state’s EB5 Program a few months ago. Our folks are in the process of actually creating our capability to deal with this,” he says. “We’ve received a significant amount of foreign direct investment in Michigan over the last number of years, particularly from China. Probably more than a hundred different Chinese companies – mainly automotive – have located.”
He also says that foreign investment has amounted to hundreds of millions of dollars. “We’ve done very well in recent years. That’s the direct result of Governor Snyder’s travels to China over the last few years.”
Also, the Pure Michigan Business Connect (PMBC) Initiative is the MEDC’s foundational program that they developed and have been focused on for the past four years. This multi-billion dollar Initiative is a public/private venture that connects buyers and suppliers to the state’s goods and services. “We have a lot of buying and purchasing power,” adds Shore. The initiative is connecting the MEDC with companies in Michigan that can, “provide that purchasing ability and capability to these companies,” he says. “That program has really taken off… It’s been very successful. It’s a growing very important program that we have in our toolbox.”
Nelson says that the mission of the MEDC, “has remained the same – it’s job creation; it’s growing our existing businesses and attracting new businesses to the state. The tools that we use to do that are constantly evolving,” she affirms. “We just need to be prepared to respond to market conditions as well as the resources that we have available.”