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H&A’s Kerr discusses need for clear and consistent economic development policies

In a recent article featured in the Detroit Free Press, H&A’s John Kerr speaks about what helps attract companies to invest in a location. In this case, Kerr discusses the critical need for a state like Michigan to have a clear and consistent message and economic development philosophy to showcase its advantages. Kerr leads the Detroit office for H&A, which has been providing companies with site selection and public incentive advisory services for 30 years.

The full article is below. To view the article on the Detroit Free Press website, please click the following link: Michigan needs to stick to coherent economic growth plan.

 

Michigan needs to stick to coherent economic growth plan
Tom Walsh, twalsh@freepress.com
11:56 p.m. EDT March 28, 2015
freep.com

Last year Michiganders came together from east and west, city and suburbs, raising vast amounts of private and public and philanthropic cash, to fast-track the fiscal rescue of Detroit via Chapter 9 bankruptcy.

Now we need to forge another “grand bargain” of sorts — across political party lines with broad public-private-philanthropic support — to create a coherent economic growth agenda for the state.

Otherwise, Michigan risks squandering its recent gains in jobs, economic activity and fiscal stability.

We can’t seem to settle on a consistent, reliable set of economic policies and incentives for persuading companies to invest and to locate and stay in Michigan.

The was clear last Thursday at the Business Leaders for Michigan’s 2015 leadership summit in Lansing, where a morning panel discussion devolved into lamenting Michigan’s herky-jerky economic policy detours during the past 10 to 15 years.

If Michigan is ever to regain its long-lost status as one of the top U.S. states for economic growth, jobs and incomes, it must persuade investors from around the globe that it is a place with solid, consistent pro-growth economic policies. Not a grab bag of goodies for flavor-of-the-month industries or companies.

As site selector Brian Pollina of Chicago told me in 2012, “Competing states say Michigan isn’t going to help you out anymore, with no incentives — or they say Michigan has these cash incentives instead of tax credits, but only big companies can get them.”

If all of this sounds like Michigan is a fickle state that can’t stick to a plan, well, now you know why site selection consultants around the nation sometimes scratch their heads at us.

Here’s the quick history.

Back in 1999, then Gov. John Engler hatched a $1-billion plan to fund a “life sciences corridor” of medical and biotech innovation in Michigan.

In 2003, Gov. Jennifer Granholm widened the concept to a “technology tri-corridor” by adding homeland security and emerging automotive industries as priority targets. At the same time, with Michigan’s economy tanking several years before the rest of the nation, the state created Venture Michigan and other attempts to jump-start growth in a feeble venture capital sector.

In 2008, with Detroit’s auto companies pleading for a federal rescue, Michigan’s Legislature overwhelmingly supported creation of generous new film incentives to make the Mitten Sate a destination for making movies.

Two years later, Michigan elected as its governor former venture capitalist Rick Snyder, who had openly expressed his dislike of the film incentives — and he quickly scaled back on the use of tax credits for economic development incentives, although they had been widely used in both the Engler and Granholm eras.

I don’t mean any of this as a specific slap at Engler or Granholm or Snyder or the legislators who are gamely trying to plug budget holes created by revenue shortfalls.

Granholm did not cause the free fall of Michigan’s economy in the early 2000s — indeed, the generous tax credits doled out on her watch to Ford, Chrysler and General Motors probably saved Michigan from a much worse fate by persuading the Detroit automakers to keep Michigan factories open while closing others elsewhere.

And Snyder deserves great credit — as previously noted in the column — for balancing Michigan’s budget, cutting and simplifying business taxes and approving the state’s credit rating.

But today, with Michigan facing a budget pinch, the GOP-dominated House appropriations committee — against the wishes of Republican Gov. Snyder — is proposing to do away with film incentives altogether in 2016.

And legislation has been introduced to stop future state funding for Venture Michigan and other such investment programs.

And even as the BLM panel was in session Thursday, there was chatter on the sidelines about a proposed cut to next year’s business attraction budget for the Michigan Economic Development Corp.

Some BLM members also groused that term-limited legislators weren’t around at the creation of programs like Venture Michigan, which helped kick-start a venture capital community in the state that is now much larger and has helped launch successful companies like Esperion Therapeutics, of Plymouth, which went public in 2013 at $14 a share. It closed Friday at $90.65 a share and now has a market value of $1.8 billion.

John Kerr, of the site location consulting firm Hickey & Associates in Detroit, who attended the BLM summit Thursday, acknowledged that Michigan’s mixed messaging can be a problem.

“Clearly, having a consistent message and economic development philosophy would help companies remember your strengths and the tools you’ve developed to achieve them,” he said, citing a classic Michigan example of doing this right.

“Look at what Pure Michigan has done for tourism,” he said. “Clear and consistent message. Started to take root, and now that’s the first thing everyone thinks of when it comes to travel in Michigan.”

We’ve done it with Pure Michigan. And the public and private sectors and politicians of both parties did it with the “grand bargain” that saved the Detroit Institute of Art s and a significant chunk of retiree pensions during the city’s bankruptcy.

There’s no good reason why Michigan can’t do a better job of forging a set of consistent pro-growth economic policies that need not be tossed aside and reinvented with each shift of the political winds.

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

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