TOM WALSH

Michigan moving up but still far from Top 10 economy

Autos, mobility and life sciences drive state's growth, but top-tier status remains far away.

Tom Walsh
Detroit Free Press Columnist

LANSING -- Michigan's top corporate CEOs are a worried, paranoid lot. As they should be.

They're hiring again, investing carefully, but they also fret that Michigan has only recovered 400,000 of the 1 million jobs lost during the dismal first decade of the 21st Century -- and that we're not yet growing jobs or incomes as well as the top U.S. states.

That was the pervasive feeling Thursday as 575 people gathered for Business Leaders for Michigan's 2015 Leadership Summit here.

Doug Rothwell

Wednesday's report that Michigan's jobless rate has fallen to 5.9% is "terrific news," BLM president Doug Rothwell told the summit attendees. "I never thought we'd get back under 6% this fast."

But other states are are progressing faster, Rothwell added. Michigan's unemployment rate is still above the national average. Incomes lag well behind it. "We don't see any studies that show Michigan becoming a Top 10 state anytime in the near future," he said.

"We need to invest more in our assets," Rothwell told me in an interview, "like we have in tourism with Pure Michigan. We made a bet there and it worked."

Sectors that need a push to accelerate growth, he said, are in automotive and mobility technology. "What's going on with Google and Tesla in Silicon Valley should scare us," he said.

BLM, the statewide organization of top corporate CEOs and university presidents, released an update of its 2012 report on strategies to create a New Michigan economy by focusing on mobility, logistics, life sciences and other sectors where the state has strong assets.

BLM also invited leaders from Ohio's Third Frontier economic development initiative to share the Buckeye states's tactics and outcomes.at Thursday's BLM summit.

Their key message: make sure to get public buy-in and collaborative support from the private sector and philanthropic foundations, so that ket program survive and prosper even as political administrations change.

Michigan hasn't been consistent on that front, dropping the life-sciences focus of Gov. John Engler's administration for broader-based and sometimes brand new initiatives, such as the film credits under Gov. Jennifer Granholm.

"We need to make sure we have ground-up support" to sustain economic development efforts over time, said Sandy Pierce, chairman of FirstMerit Michigan, noting that Michigan's challenge is more difficult than other states. Of the 2 million U.S. jobs lost from 2000 to 2010, 1 million were in Michigan. "We have to come back from way behind," she said -- and that takes perseverance and consistency.

"Michigan has made progress, but we're still not competing at the level of our top 10 competitor states," the new BLM report states. "If we were, Michigan would have 230,000 more jobs, and $14,000 more in average annual earnings."

"Michigan continues to show great strength in engineering, mobility, manufacturing and innovation," the report states. But while average incomes in Michigan are up slightly in in the six target sectors, "they are not growing as fast as the top 10 states"

"Michigan needs to get serious about investing, boosting its talent pipeline" the report states, but the report also notes that Michigan is in the bottom 15 of all states for the amount of state support provided in colleges and universities.

From 2008 to 2012, Michigan's rank edged up – from 50th to 44th in employment; 38th to 36th in personal income; and 40th to 38th in economic growth.

BLM issued its first Michigan Turnaround Plan in 2009 with a goal of becoming a Top 10 state for jobs, income and a healthy economy – and followed up in 2012 with a "New Michigan" strategy, identifying six areas of competitive strength to leverage in order to gain ground.

There appears to be reason for some Ohio envy, judging from the most recent Site Selection magazine, which ranked Ohio No. 2 in the nation in its annual ranking of economic development projects fro 2014, both in total number and projects per capita.

Michigan wasn't mentioned at all in Site Selection per capita Top 10. It was 7th in total projects, down from 5th in 2013 – and was passed by North Carolina, Georgia and Kentucky, the No. 4,,5 and 6 states last year.

The top 10 states in the BLM's last benchmarking report -- based on employment, income, population and productivity data -- were North Dakota, Wyoming, Alaska, Massachusetts, South Dakota, Texas, New York, Iowa, Nebraska and Connecticut.

Research for the 2015 New Michigan report was conducted for BLM by the Anderson Economic Group, of East Lansing.

Contact Tom Walsh: twalsh@freepress.com, also follow him on Twitter @TomWalsh_freep.