Michigan is in a sustained comeback, the head of the Michigan Economic Development Corp. says.
But that did not happen by itself and it won’t continue without the ongoing help of communities like Kalamazoo, said Michael A. Finney, presidnet and chief executive officer of the state’s top business development organization.
“We don’t think that comeback is happening just because,” he said. “It’s happening because good policy is in place, great leadership is in place, and it’s important to continue in that direction.”
But he also said, “We need the community to continue to support the activities that are happening across this entire region.”
Finney was in Kalamazoo Wednesday to address a group of more than 30 regional civic and business leaders participating in the first of a three-part Public Service Academy conducted by regional economic development organization Southwest Michigan First.
It was held from 9 a.m. to noon at the Groves Campus of Kalamazoo Valley Community College.
Speaking of Southwest Michigan First and other economic development organizations that are coordinating multiple municipal and business groups to share information and create new strategies, he said, “These organizations need support from the business community. They need support from elected officials. They need financial support, and that’s the only way it works.”
Finney said numbers bear out Michigan’s comeback: nearly 300,000 jobs have been created since December of 2010; the state’s unemployment rate continues to drop (8.6 percent in July); Michigan’s gross domestic product growth (the market value of all goods and services produced here) has been positive; and the state’s population, which had been in decline for a decade, is starting to grow.
“These are all positive indicators and that’s important for our citizenry to understand,” Finney said.
Asked if the state was seeing any benefits from the December 2012 passage of right-to-work legislation, he said it was too early to tell how that would affect state and local economies. But he said the word from business executives involved in selecting new sites for their companies is that they see Michigan as a better place to locate.
Many businesses favored the legislation, which says workers cannot be compelled to join a union or pay dues as a condition of employment.
Here is what Finney had to say on other issues:
Question: Have there been some positive outcomes from doing away with the personal property tax for businesses?
A: “So we’re a few weeks behind the change in personal property tax. It’s one of the important resources for us. We made a lot of improvement with the change from the Michigan Business Tax to the new Corporate Income Tax. That moved us from being the second worst state when it came to business taxes to being in the top 10. The change in the personal property tax will likely improve things a little further. But most importantly it’s allowing small and medium size companies in particular to get rid of a burden that was a disincentive for investing. And so far, we’re hearing very positive feedback from companies that they will look more favorably at Michigan as they make investment decisions.”
He said he thinks its going to make a very big decision in the long-term.
Q: Over the last 20 years or so, the most effective assistance the MEDC has provided to help with job creation has been tax breaks, offered as incentives. What else does the MEDC have to help communities?
A: “You probably know that tax credits are no longer a primary tool of ours. There are a few remnants that remain that simply over time will go away. Our primary tool now is a cash incentive that we use. We try to use it when there is an economic gap for a company’s decision to locate in Michigan versus other choices they may have.”
Q: How is that any different that the tax credit program?
A: “The old tax credit program was a tax credit that companies had to apply for and receive over time when their tax returns were filed. Under our new cash incentive, we actually can provide a cash payment to the company at a point when they complete some negotiated milestone. Those milestones are typically investments and job creation. … This is much more up-front and we also base it not on some formula, we base it on a negotiated need.”
Q: Where are things headed in the future for the MEDC and communities like Kalamazoo?
A: “To some extent, it’s really dependent on each local community. We’re not trying to prescribe a certain amount of our activity or effort in any community. But the Collaborative Development Council partners (a network of 13 business groups that meet and share ideas) can provide us with good intelligence on where we can play an effective role. So we’re really relying on them. We’re trying to be an enabler rather than make everything core activities for us. Because of that, the process is much smoother. Our resources are much more effectively deployed.”
He said they also help with the retention of businesses.
“Our biggest job growth comes from the retention of existing businesses and their growth. The local partners are one who are best positioned to know when companies is going to grow. And when thinking about downsizing, which is the opposite side of that. So they provide us with that intelligence and that allows us to react to it in a favorable and timely way.”
Before being appointed to lead the MEDC by Gov. Rick Snyder in January of 2011, Finney was president and CEO of Ann Arbor SPARK, an economic development group that Snyder co-founded.
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