Michigan is Still in Motion

The automotive industry may have hit a stop sign, but Gov. Jennifer Granholm’s aggressive strategy is maintaining forward momentum in the crown of the Great Lakes. From motion pictures to nanotechnology, the Wolverine State is in the hunt for new jobs.

Nowhere has this year’s economic debacle hit harder in the United States than in Michigan. The state that is synonymous with a U.S. auto industry on the brink of bankruptcy currently is suffering with the nation’s highest double-digit unemployment rates.

To add insult to injury, the crown jewel of Michigan’s economic development efforts—a $17-billion project between Midland, MI-based Dow Chemical and the government of Kuwait—was canceled abruptly by the Kuwaitis earlier this year when they felt the bite of the sudden plunge in the price of oil.

So it is understandable if you wouldn’t expect to hear a lot of good news coming from the crown of the Great Lakes these days. But you would be wrong.

Governor Jennifer Granholm and her economic development team have been extraordinarily busy since the beginning of the year. Hardly a week goes by without the announcement of a major new job-creation initiative from the governor’s office. More than a dozen new projects expected to create nearly 9,000 new jobs and an investment of more than $300 million in the state have been unveiled since the beginning of the year, and Granholm says more are on the way.

Diversification has been the watchword of Michigan’s counterattack against the pervasive economic gloom.

“We are undertaking the most aggressive economic diversification strategy in the nation, and helping Michigan manufacturers expand into new, high-growth sectors is a critical component of that effort,” Granholm says.

“Despite these challenging economic times, our strategy is producing results for communities across Michigan, and we will continue to go anywhere and do anything to bring new jobs to our state,” she declares.

The state has formed a coalition of state, local and community officials called Keep Michigan Working (KMW) to develop short- and long-term solutions to keep workers and businesses in Michigan, primarily through diversification.

A successful statewide diversification conference, held by the Michigan Economic Development Corporation in November, will be replicated on the local level this year with 12 regional summits aimed at Michigan manufacturers with the resources and/or capacity to diversify. The summits are targeting more than 2,500 companies with a goal of $1 billion in contracts.

Michigan’s New Economy: Not Your Father’s Gas-guzzler

It’s time to put away the stereotype of Michigan’s economic engine as an archaic, gas-guzzling eight-cylinder clunker. The emerging Michigan economy is staking a claim as a research leader in everything from electric car batteries for tomorrow’s transportation to rare isotope beams used in linear accelerators that promise to unlock the secrets of nuclear astrophysics.

And, believe it or not, Michigan is making a bid to become the Hollywood of the upper Midwest.

“Companies in every industry, from film production to alternative energy, are choosing to invest in Michigan because of our world-class workforce and competitive business climate,” Granholm notes.

In January, Granholm announced an aggressive film production effort designed to create almost 6,000 new jobs in the Wolverine State, including 4,066 new film, animation and programming jobs. Three companies—Wonderstruck Studios, Motown Motion Pictures and Stardock Systems—plan to invest more than $156 million in locations in Detroit, Pontiac, and Plymouth, MI.

Wonderstruck is creating the Detroit Center Studios, an $85.9-million investment that will create 700 jobs and make downtown Detroit a hub for computer-generated visual effects and animated content. The Michigan Economic Development Corp. (MEDC) arranged a state tax credit worth about $17 million over 12 years to convince Wonderstruck to choose the Detroit location over competing sites in China and Korea. Motown Motion Pictures, a new film production venture, will invest $70 million in a 600,000-square-foot studio with nine sound stages in Pontiac, creating more than 5,000 jobs. Stardock, which received a $1.2-million tax credit from the state, is creating 154 new jobs at its existing facility in Plymouth to expand the production of PC video games. Michigan State University staked its claim as a leading advanced research center recently when its East Lansing, MI campus was chosen by the U.S. Department of Energy as the site for DOE’s $550-million Facility for Rare Isotope Beams (FRIB).

The research facility is expected to bring $1 billion in economic activity and 400 jobs to Michigan, according to an analysis by the Anderson Economic Group. FRIB will provide intense beams of rare isotopes—short-lived atomic nuclei not normally found on Earth—that will enable physics researchers to address leading-edge questions in nuclear structure and nuclear astrophysics, such as the origins of basic elements.

FRIB will build on the success of MSU’s National Superconducting Cyclotron Lab, which has become a recognized leader in rare isotope research that has led to breakthroughs in medicine, materials research, and national security applications. While automotive manufacturing has been clobbered by the recession, Michigan continues to make progress in establishing itself as an alternative energy hub for everything from advanced electric batteries to wind- power turbines.

MEDC recently granted Ford Motor Co. a $55-million incentive in refundable tax credits to continue the Dearborn, MI-based automaker’s work in electric vehicle and battery development. The incentive will accelerate Ford’s aggressive electrification strategy, which aims to bring at least four electric-powered vehicles to market by 2012.

The state also is expanding its advanced automotive research outside of the metro Detroit area. For example, Mercedes-Benz is expected to hire more than 200 workers for a hybrid technologies research and development center that will be relocated from Troy, MI to Washentow County. The center will be the first major alternative propulsion technology operation in the Ann Arbor, MI region, which is steadily assembling a range of companies devoted to advanced batteries and electric-vehicle technology.

Mercedes-Benz Hybrid LLC, a subsidiary of Daimler North America, is said to be seeking a 65,000-square-foot facility to establish what will be called the Mercedes-Benz Engineering Center for Powertrains USA.

Also in Ann Arbor is Sakti3, a venture-capital startup said to be close to commercializing an advanced battery manufacturing process; Advanced Battery Coalition for Drivetrains, a five-year, $5-million project joining University of Michigan researchers and General Motors engineers in electric-vehicle research; and A123Systems, a Massachusetts-based battery development company that is seeking federal energy loans to build a billion-dollar battery production plant in southeast Michigan.

On the wind-energy front, Great Lakes Towers LLC is planning to invest $19 million to locate its first manufacturing facility in Monroe, MI. The company expects to produce more than 500 wind towers annually at the site, creating about 290 new jobs. The Michigan Economic Growth Authority (MEGA) approved a state tax credit of $3.7 million to convince the company to choose Michigan over Ohio.

Even old-line automotive suppliers are busy reinventing themselves in Michigan. Metal fabricator W Industries is investing $36 million to expand its operations in Detroit and diversify into the aerospace and defense sectors. The project, which received a $9.7 million tax credit from MEGA, will create 943 new jobs.

Ironically, two mega-projects that were the primary reason for Michigan’s emergence as Business Facilities’ 2008 State of the Year Award winner currently are in a state of flux. Dow, which originally intended to use $9 billion from the K-Dow deal with Kuwait to finance its purchase of competitor Rohm & Haas, says it still expects to receive at least a $1 billion investment from the Kuwait Investment Authority to help it fund the $15-billion Rohm purchase, expected to be finalized this month.

General Motors, meanwhile, had some disappointing news for Flint, MI, when it disclosed that as part of its drive to remain solvent, the largest U.S. automaker would retool an existing plant in the city to produce electric-car batteries for its upcoming Chevy Volt rather than build a new facility on a Brownfield site in Flint.

Despite these setbacks and the depressing state of the economy, we can report without hesitation that Michigan is still in motion—and it is clearly moving forward.

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