More than $1 billion in business investment to create nearly 4,600 jobs in Michigan, announced Wednesday, ain’t nothin’ — and it isn’t an accident.
The moves by the state Strategic Fund to support private investment in a broad array of business sectors shows that comparatively upbeat macroeconomic conditions nationally and pro-business policies in Lansing are combining to speed Michigan’s climb out of its “Lost Decade.”
“The auto industry coming back is a big part of it,” says PVS Chemicals Inc. Chairman Jim Nicholson, whose Detroit-based company operates in 20 states and four foreign countries but is adding jobs here instead of elsewhere. “But you set the conditions with good policy. Is it a better place to do business than it was two years ago? Absolutely.”
PVS Chemicals is not among the 14 companies targeted by the state incentive programs. It is, however, emblematic of a trend unmistakably playing out in corporate Michigan and that’s this: businesses seeing increasing demand for their goods once again are sowing seeds for expansion in their own backyard.
Units of Magna International and Denso International America Inc., longtime players in the state’s community of auto suppliers, are investing in Battle Creek and Southfield. Lear Corp. and one of its subsidiaries are investing $32.6 million to create nearly 1,100 jobs in Detroit and Hamtramck. And Whirlpool Corp. is repatriating its refrigeration R&D center to Benton Harbor from Indiana.
As much as conventional wisdom has long held that Michigan needed to diversify, diversify, diversify and lessen its dependence on the economic engine that is Detroit’s automakers and their suppliers, the aftermath of the auto implosion in 2008 and ’09 is delivering (with a few exceptions) sort of the opposite.
The annual rite of the North American International Auto Show (and the run-up to it) brought new announcements by the automakers. Like it or not, they signal that Michigan, post-crash, is home to an increasingly concentrated presence of the industry that has defined its economy for nearly a century even as the state pushes to build on recent successes in life sciences and high technology.
Last week, General Motors Co. said it would invest $1.5 billion in its North American plants and suggested that the spending would follow its newest products. The Cadillac ELR, sister of the Chevrolet Volt extended-range electric car, will be built in Hamtramck.
GM’s retooled full-size pickups will be assembled in three plants, one of which is in Flint. And ranking officials with the United Auto Workers used the Detroit Auto Show to say that GM is planning to add 2,000 hourly jobs to its payroll this year.
Last month, Ford Motor Co. said it would invest $773 million in six manufacturing sites across southeast Michigan — including Michigan Assembly, Dearborn Stamping and Flat Rock Assembly — to create 2,350 jobs and retain 3,240 jobs. Also last month, Chrysler Group LLC said it would invest $240 million in three Michigan plants and hire 1,250 employees.
Is all this hiring and new investment by the automakers and their suppliers a happy political coincidence for the administration of Gov. Rick Snyder? Partly, yes, just as his successor, Jennifer Granholm, had the misfortune of being governor when recession hit, the industry teetered on collapse and it ran to Washington to beg for an unprecedented bailout.
But there’s more at work here, as much as the armchair cynics may not want to acknowledge it. Pro-business rhetoric and growth-oriented policies on taxes, regulation and competitiveness matter to business decision-makers, and they matter even more when conditions are improving.
Where Granholm’s Michigan struggled to deliver a state budget, Snyder and his allies in the Legislature routinely get them done ahead of schedule. Where Granholm slapped a surcharge on the odious Michigan Business Tax, Snyder scrapped both and replaced them with a competitive, flat corporate income tax.
Where Granholm and her allies worked to protect revenue streams to local government, irrespective of their impact on business investment decision-making, Snyder and Republicans in the Legislature moved to eliminate the personal property tax on industrial equipment — a move rival states already have taken.
Still a long way to go? Sure, but this is what progress looks like when private business is doing better and government does a better job staying out of the way.
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Daniel Howes column runs Tuesdays, Thursdays and Fridays.
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