Crain’s Detroit Business
June 03, 2022
MACKINAC ISLAND — Leaders in Michigan left the yearly confab on Mackinac Island knowing that the state’s efforts to compete for jobs and people are coming up short.
It’s not that there haven’t been wins, as confirmed by Ford Motor Co.’s big announcement Thursday that it will add 3,200 jobs in Southeast Michigan. But the consensus is that the state is at a crossroads and more must be done or else it will lose, not gain, ground.
The next steps aren’t clear, though John Rakolta Jr., chairman of the Detroit-based Walbridge construction company, wants a state commission of business leaders and others to be created to propose a turnaround plan. He helped lead a coalition that lobbied for the 2016 state bailout and restructuring of Detroit’s school district. He has voiced concerns that Michigan isn’t prepared for the transition to electric vehicles and the multistate scramble to land EV plants.
“Whatever we need to do, we need to do something robustly. We need to do something big and we need to do it quickly and it needs to be done in a bipartisan way,” said Sandy Baruah, president and CEO of the Detroit Regional Chamber, which organizes the Mackinac Policy Conference.
A number of private-sector and government leaders met privately for lunch, where Baruah said a discussion on competitiveness “was what I thought we were going to hear turned up to 11.” Talent and education were a significant focus.
The problems are known. The state ranks near the bottom in student reading scores and graduation rates. It has low labor force participation and an aging population.
“People aren’t going to come to the state when they look at those statistics and they don’t have the talent here,” said Sandy Pierce, chair of Huntington Bank Michigan.
Tina Freese Decker, CEO of the newly merged Beaumont Health-Spectrum Health, also highlighted education as playing an important role in development. She pointed to the health system’s $19 million program with Grand Valley State University to build a pipeline of nurses amid an exodus from the profession due to COVID-19 pandemic stresses. Prioritizing mental health means is also pivotal for recruiting and retaining talent, she said.
“We need to be more innovative, and I also think we need to focus on wellbeing,” Freese Decker said. “We need more access to the services. We also need to focus further upstream.”
The shifting economic development strategy across governors hasn’t helped either, though there’s hope that a new incentives fund for critical industries and site preparation will be lasting and consistently funded.
Business Leaders for Michigan is calling for improvements to the K-12 system, an increased number of workers with degrees or credentials, and additional infrastructure spending. The group wants to make Michigan a leading state for business attraction and retention. That includes preparing large tracts of land in advance for companies considering expansion and developing a statewide program to provide fast, flexible customized training for companies.
“We are playing catchup. But we are catching up. Twelve, 15 years ago, Michigan was a bottom 10 state across almost every dimension. Today, we are middle of the pack. … So there’s great opportunity, great optimism but we’ve got to do better,” said Howard Ungerleider, Dow’s president and chief financial officer.
Jeff Donofrio, who leads Business Leaders for Michigan and spent the week talking about its “Compete to Win” plan, said businesses expanding in states like Ohio, Indiana and Kentucky have pointed to ready-to-use sites as a factor.
“We have got to get these shovel-ready sites in place as quickly as possible,” he said. “We haven’t invested in that same way in Michigan. So we’ve got to really make up for lost ground.”
Tech entrepreneur Dug Song, co-founder of Duo Security in Ann Arbor and now at Cisco Security, said Michigan does not have a strong reputation for being a tech hub even though it has all the assets and potential to be one.
“We have all that here, but we don’t bear that reputation,” he said. “There’s a lot more that we have to do. We have to fight harder for the jobs in manufacturing. We have to fight harder for the jobs of the future.”
The state’s divided political climate is detrimental, however, with too many people focused on what Gov. Gretchen Whitmer called “angertainment.” The alleged plot to kidnap her over COVID-19 pandemic orders hurt Michigan’s image nationally and comes up when companies consider locating in Michigan, according to several officials.
“You’re meeting with a company that wants to invest millions in your state and the first question is, ‘Do you really want to kill your governor in Michigan?’ How in the world do you start a business conversation with that?” said Maureen Krauss, president and CEO of the Detroit Regional Partnership.
Whitmer, for her part, is trying to move forward while facing re-election — emphasizing short-term proposals to boost education spending and recruit and retain educators while also outlining longer-term goals for the year 2100. The hope is that there’s a spirit of cooperation among political, business, educational, and other leaders to proceed in a cohesive way.
“It’s going to be really important so our residents believe we have assets that are valuable to others and we can build on them,” Pierce said.
— Crain’s Detroit Business reporter Kurt Nagl contributed to this report.