Michigan business leaders say state lags in economic growth
Michigan leaders must set aside political differences to create a cohesive economic development strategy because the state is expected to fall further behind the others in economic growth, according to Business Leaders for Michigan.
The State Affairs Roundtable on Thursday shared its annual benchmarking, which placed Michigan 29th in economic growth of the 50 states after some revamped measures that now include more measures ranging from education level to perception of the business climate through poverty.
The ranking is an improvement from the Great Recession, but that ranking could worsen in coming years if the organization’s projections are true. The gap between Michigan’s economy and the nation’s, when pegged to 2008 levels, has widened 22% during the pandemic since 2019. The difference could increase another 73% by 2030. , leaving the Great Lakes State further behind.
“There needs to be certainty and consistency in our approach to economic development,” Roundtable CEO Jeff Donofrio told the Detroit News. “Many times, not only in economic development, but particularly in economic development, our strategy seems to pivot every time an office holder changes hands, so that a new governor comes in or a new legislature .
“Sometimes we put things in place, and there’s a big ribbon cutting or a press release or a sensational event, and then a few years later we pull the funding for it.”
The goal is to be a top 10 state. This group currently includes Utah, Washington, Colorado, Texas, Massachusetts, Virginia, California, Oregon, Florida and Arizona. All show strong results in terms of economic growth, education and talent.
The forecast comes at a critical time, especially for the state’s auto industry which is undergoing a historic transformation toward electric vehicles with billions of dollars in investment and thousands of jobs at stake. Michigan is underserved. strong for battery factories with just two of the 12 announced in North America and six more with locations on hold, according to the roundtable. The state has about a quarter of internal combustion engine jobs in the United States, and electric vehicles have fewer parts.
By 2025, 43% of Michigan’s 14 assembly plants, or six plants in total, will produce electric vehicles, compared to 37% nationally, according to the analysis. Nearly 170,000 of the 290,000 automotive jobs are potentially affected by the passage of the ICEs, including 46,110 directly affected in 310 companies.
General Motors Co. is looking to manufacture batteries on its Lansing Delta Township plant property, and LG Energy Solution plans to invest in its battery plant in Holland. Meanwhile, Ford Motor Co. last year announced an $11.4 billion investment to manufacture electric vehicles and batteries in Tennessee and Kentucky, sparking a public spat with the governor. Gretchen Whitmer. But the State of Tennessee worked for 20 years to prepare the huge site chosen by Ford for investment.
“Let’s look at Tennessee,” Donofrio said, noting that the state has fallen from 34th to 16th in the benchmark analysis over the past five years. “They’ve been persistent, but they’ve also had single-party control of the governor and legislature, which makes it a little easier, doesn’t it? They’re not constantly fighting each other every two-year cycle.
“We need to put aside our political differences and do more of what we saw in December,” Donofrio said, referring to the state’s bipartisan effort to spend $1.5 billion on economic development.
The “Michigan talent crunch,” according to the roundtable, also contributes to the potential economic loss. Michigan is aging and could lose nearly 120,000 working-age people between 2020 and 2030. The state also lost a higher percentage of labor force participation than the country amid the pandemic — nearly erasing the gains it had made since the Great Recession.
“We’re 41st in the country when it comes to labor force participation,” Donofrio said. “Our growth rate is 44th, so that means we’re going to struggle to maintain our position, not just grow.”
Innovation has also been a headwind for Michigan in terms of the number of entrepreneurs and startups here and their survival rate.
More positive was educational attainment, whose growth kept pace with the top 10 states. Michigan’s ranking for the percentage of residents with a college degree or certification is expected to rise from 35th to 20th in the next year; state programs like Reconnect or Going Pro are meant to get the one million residents who don’t have a degree to get one for free at community college or update worker skills and certifications.
K-12 test scores, however, fell 8% year-over-year, and that’s likely with inflated results because not all districts were required to take the exams during the year. pandemic-hit 2020-21 school year, according to Business Leaders for Michigan.
Wolverine State has the opportunity to invest to improve long-term results, Donofrio said. The top 10 states spend about $2,000 more per student than Michigan. With COVID-19 relief funds available, Michigan has an opportunity to use this money to consolidate administrative services and duplicate school departments, install air conditioning in buildings to offer after-school and summer programs, and train teachers. .
“If we come together, if we do more things like we did in December around economic development, that we did around setting up places to reconnect and the Going Pro program, if we double those things, if we persist with a strategy to help us become a top 10 state, those investments that the legislature can make in the coming months,” Donofrio said, “will help put us on that path that will help us leapfrog other states and really accelerate our growth.