State of the Year Award: Michigan
The dovetailing of 10,000 new jobs and nearly $14 billion in corporate investment leads to a blowout victory for Michigan, our 2008 State of the Year.
The call for entries for Business Facilities’ second annual State of the Year Award sparked a palpable excitement within economic development agencies across the United States. As the American people—most with dignified stoicism undercut by genuine, legitimate concern—grapple with the unfolding financial crisis, state-level economic development offices relished this opportunity to showcase their wide-ranging economic successes during the past year. They submitted data for their five largest projects (measured by total capital investment and by creation of new jobs) announced between October 1, 2007 and September 30, 2008. The Business Facilities editors analyzed and tabulated these numbers using a predetermined formula to determine 2008’s State of the Year. The resounding winner—bolstered by nearly 10,000 new jobs and, most notably, one jaw dropping, multi-billion-dollar business partnership—is the crown of the Midwest: Michigan.
A dual-peninsula poised along four of the five Great Lakes, Michigan’s triumph is a well-deserved accolade for a state that recently has been linked to unflattering headlines pertaining to the struggles of the U.S. automotive sector—a long-standing pillar of the state’s economy. But those headlines don’t portray the complete picture of Michigan. In fact, Governor Jennifer Granholm announced in September the state’s approval of a whirlwind of incentives to allow General Motors (GM) to develop and produce the Chevrolet Volt, a revolutionary electric car, along with additional advanced energy and conventional fuel vehicles and components. This project is expected to generate 3,723 new jobs for the state’s targeted industry of advanced automotives, in addition to the retention of more than 14,000 jobs (an impressive figure that wasn’t even a part of our State of the Year calculations). The details of the $838-million project include proposed upgrades to GM’s Detroit-Hamtramck assembly plant, the Pontiac Metal Center, the Bay City Components Plant and the GM Technical Center in Warren, MI. This multi-pronged project also showcases the construction of a new facility on a Brownfield site in Flint. Based on the Michigan Economic Development Corporation’s (MEDC) recommendation, the state’s Economic Growth Authority approved a state tax credit worth approximately $122.5 million over 15 years and a Brownfield tax credit valued at $10 million to entice GM’s investment. Additionally, the cities of Flint, Pontiac and Bay City have approved tax abatements to support the project.
To compound the state’s job creation bonanza, MPI Research announced in April a $330-million expansion in Mattawan and Kalamazoo that will spur 3,300 new jobs. This particularly innovative project received an Honorable Mention in Business Facilities’ 2008 Economic Development Deal of the Year awards, judged by a panel of eight industry experts. Rounding out Michigan’s top five projects by job creation are North American Bancard (1,500), Echo Global Logistics (950), and K-Dow Petrochemicals (800).
In July, K-Dow Petrochemicals announced an astonishing $11-billion investment in the state, and this pack-leading figure unequivocally propelled Michigan to its State of the Year status. A partnership between The Dow Chemical Company of Midland and the Kuwait-based Petrochemical Industries Company, K-Dow will locate its headquarters in Michigan, which won the contract over competitors Louisiana and Texas, our inaugural State of the Year winner in 2007. The joint venture will manufacture and market polyethylene, ethyleneamines, ethanolamines, polypropylene, polycarbonate, and related technologies.
“For decades, Dow Chemical Company has been an important part of Michigan’s economy by creating jobs and investing in our communities,” says Gov. Granholm. “K-Dow, which will bring hundreds of jobs to our state, would rank in the top half of the Fortune 500 if it was publicly traded, and the fact that it will be headquartered here is good news for Michigan.”
“Like Governor Granholm, we are pleased that the headquarters of K-Dow Petrochemicals will be located in the great state of Michigan—home to The Dow Chemical Company for more than 110 years,” says Dow Chairman and CEO Andrew N. Liveris. “This affirms that the state of Michigan is willing to work hard to attract new investment and jobs to our state.”
The Runner Up: Montana
Interestingly, all of the Montana’s State of the Year statistics revolved around one multifaceted industry: energy. The Many Stars coal-to-liquids facility, an investment worth $7 billion, will stimulate 4,000 to 5,000 new jobs and produce 50,000 barrels of diesel and other fuels per day. This mega-deal helped cement the runner-up nod for Montana.
TransCanada’s Keystone XL Pipeline will pump crude oil for 281 miles beneath Montana’s Big Sky country thanks to a $1-billion investment. Meanwhile, Signal Peak Energy’s new mining operation will create 191 jobs in Montana and bring $450 million to the state economy. Additionally, General Electric announced in May the creation of 125 jobs in Billings, MT. To counterbalance the state’s booming carbon-based resources, two wind power companies are pumping a total of $525 million into Treasure State’s alternative energy sector.
In addition to the previously mentioned investments of K-Dow, GM, and MPI, a $1.5-billion expansion of Marathon Petroleum Company’s refinery in southwest Detroit skyrocketed Michigan’s staggering investment tally. The Ohio-based company will utilize a $10-million Brownfield state tax credit to expand its existing refinery on a 22-acre adjacent site, formerly the location of a steel plant. The project will include the addition of new processing units that will enable the refining of more crude oil from Canada, while increasing the refinery’s capacity by 15 percent. Current employment of 480 at the refinery will increase by 135 jobs, and the city of Detroit has approved a 23-year abatement valued at an estimated $174 million to support the project.
“Turning Brownfield sites into productive new development is a win-win for Detroit and Michigan,” Gov. Granholm says. “These developments will mean new investment and new jobs for Detroit and that’s great news for the state.”
“Brownfield redevelopment credits are among the most effective tools we have to help cities like Detroit address the need to replace abandoned properties and help industrial facilities expand,” says MEDC President and CEO James C. Epolito. “These are the uses for which the program was intended.”
With a resourceful economic development team, a proactive and determined governor, and a willing, waiting workforce, Michigan’s successes landing lucrative corporate investments and, in turn, multiplying its employment totals should not come as a surprise—especially to those who read beyond the harrowing headlines.
A Regional Recognition
While our second annual State of the Year is a flagship award for Business Facilities and 2008’s undeniable winner is Michigan, if we had to identify a U.S. region that comprehensively dominated the competition, the answer would be clear: the South. No other piece of the American pie, no matter how you slice and dice it, came close to the participation rate and competitiveness of this region. Strong entries poured in from Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, Tennessee, and Virginia, making a blazing statement that the South always is a contender.