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Sunday, 22 December 2013 22:15

Q&A: Gov. Rick Snyder

Written by  Brian Edwards/Joe Boomgaard
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MiBiz publisher Brian Edwards and editor Joe Boomgaard sit down with Governor Rick Snyder. MiBiz publisher Brian Edwards and editor Joe Boomgaard sit down with Governor Rick Snyder. PHOTO: JENA McSHANE

As Michigan’s turnaround governor, Rick Snyder says the state’s progress depends on it executing on the fundamentals. But he believes the policies from the first three years of his term — including tax reforms and programs to support the state’s second-stage companies — simply set the table for the next phase: growth. As Snyder heads into an election year, he has publicly pointed to Medicaid reform as one of his proudest legislative achievements of 2013, but he acknowledges there’s more to do to position the state on a growth path. He sat down with MiBiz in his executive office to discuss his efforts to “swipe” German business models, the possibility of doing a quarterly conference call on the state’s financials and how Right to Work is actually performing.

Governor, are you running for re-election?

I will let people know after the first of the year.

Why wait?

I’m very busy being governor. I mean, that’s the way I view it. I think people know that. I stay focused on the governor role as much as I can. I don’t want people to believe I’m diverted onto the campaign until it becomes relevant.

You’ve spent a good portion of the last three years operating as a turnaround guy, fixing problems and working on customer service. At a certain point, though, you’ve got to stop being a turnaround guy and start being a growth guy. What do you see for the next five years that takes the state on the growth path?

Well, I’ve been in growth companies, too. Gateway was a growth run, and I like it. But you’re right, there is a different set of skills and an approach to it. Two or three things. One is I’ve talked about the need to continue on the ‘more and better jobs’ path. And not just using incentives because I want a competitive playing field that’s as good as possible for people.

Give us an example.

One huge thing that’s working well is Pure Michigan Business Connect. That program has gone better than I think most people have expected and the benchmark is really DTE and Consumers — our two original (companies) signing up for it. [Editor’s note: The two companies in 2011 agreed to procure $500 million in goods and services from in-state companies over five years, but two years in, they increased the commitment to $2 billion.] Roughly for every $200,000 (they spend with companies based here), that’s another job in Michigan. That’s just those two companies. And then you’ve got the Big Three signed up, (and) we’ve got a number of other companies signed up. That’s really cool. That’s not about us spending money. It’s about us really facilitating good neighbor policies. So that’s exciting.

What else?

The second part ties into helping people connect to careers. If you go to the business community … (their) greatest long-term concern (is) about having the right talent. Many of these organizations are more sophisticated and require more specialized skills. And those skill sets are retiring or they’re evolving where they need them. So, we’re being very proactive. I want to lead the country in that particular area.

What types of actual programs are you talking about?

A great illustration of a program that I’m very excited about is in its pilot this year with about 30 or so students. (It is called) MAT2 – Michigan Advanced Technician Training. (It) goes back to a trade mission. I did this consciously: I went on this trade mission and besides building (business) ties, I went to say, ‘Can’t we swipe the German apprenticeship model?’ A very technical term: swipe. (Laughs.)

Governor, we don’t swipe ideas, we borrow best practices. (Laughs.)

Yeah. So we went to two places — Brose and Daimler, in particular. They were actually great about partnering, so we’ve brought that back. It’s at Oakland Community College, Henry Ford Community College, and we’re doing it in mechatronics, which is mechanics and electronics. Those are the people operating sophisticated robots or CNC equipment – very skilled work. You go in the program, (and) you work for the company while you’re in the program. You get an associate degree paid for during the program. If you’re successful at the end, you have a guaranteed job and you have a work commitment for a couple of years. … This is a really cool opportunity to do something that is relatively unique.

You mentioned manufacturing. During the downturn, you talked about diversifying the economy, but it seems most economists believe that our recovery has been based primarily on manufacturing. How do we continue to make those moves to diversify?

It’s not so much changing the portfolio as it is growing the pie. Let’s keep on growing the pie and if a good chunk of that is in manufacturing, I’m not going to complain about that. That’s a good thing. If you look at it and you pick some of our bigger industries, it’s not just been a resurgence of autos, which is very strong and we should be happy with that. Pure Michigan is a great illustration. That’s an area that (has) done very well in the last two or three years. They continue to show outstanding results in terms of the tourism and leisure industry. Agriculture is a great case. We had a tough time last year because of some of the weather issues and some of the crops, but if you want to see a happy group and you don’t normally see smiles, go talk to a bunch of farmers. The export opportunities and the value-added processing that we can continue to do is very strong.

As governor, you’ve championed customer service and transparency. In looking at the state’s dashboard today, we saw a lot of thumbs up, but we also noticed that some of the data was fairly old. You were a VC and a corporate guy at a public company. We’re curious to know: Would you consider doing a quarterly conference call like public companies do where you talk about the state’s financial results and its operational progress?

Um, I would consider it. That’s an interesting idea. You’re the first person to bring that up. ...I used to do those calls.

Sure, Gateway was a public company. Why don’t governments do quarterly earnings releases and conference calls?

They don’t even do dashboards. Typically, politicians don’t want to be measured. When I did my first dashboard in the State of the State, the main feedback that I got was that I was nuts. People would come up and say, ‘Why in the world would you want to be measured?’ It’s like, no: How do you know if you’re succeeding if you aren’t measured?

You’re the CEO and your treasurer is the CFO. It seems like a quarterly call might interest a lot of people. We might even be able to get Seeking Alpha to transcribe it.

The one concern and the one issue I have on that – because I do appreciate that (suggestion) – is that you brought up the biggest challenge. In an organization and in a company, you have viable, more real-time results. And the problem on many of these metrics is they lag one to two years in terms of the data points and in terms of what’s presented at the national level or how you can benchmark other places. That’s something I learned by actually starting this process. I’ve got another set of metrics that might be worth sharing, but they’re sort of leading indicators on what will eventually show up in those numbers.

Absolutely, but you have to admit that profit-and-loss statements, balance sheets and cash flow statements are generally accepted as viable metrics for measuring progress.

Yes. But to be open, most people don’t care about the cash flow and metrics of the state during the middle of our budget year.

We’re from a business publication, so our readers are always interested in things like that.

I know. (Laughs.) I’ll look at that. I think that’s an interesting idea.

Since taking office, you worked with economic developers to focus on economic gardening, especially over the first 18 months of your term. And then earlier this year, the reports noted that the state was going to switch more into hunting. For 2014, are we going to do more gardening, hunting – or both?

We’re always going to do more gardening than hunting. What we sort of had done is scaled hunting back to a very small percentage. And you should always be gardening first. We haven’t walked away from that at all. In fact, we’ve enhanced programs. A couple of partnerships that I’ll mention are the Goldman Sachs 10,000 Small Businesses program [that committed $15 million to small business lending through two programs in the Detroit area] and the Huntington Bank microloan program [that aims to make available up to $250 million in microloans statewide]. Those are very consistent with gardening. What I would say is that now we’re in the hunt to hunt.

So it’s a broadening of the focus from just looking to grow companies within the state.

(During my first year in office) I did not do national interviews. I didn’t do that for two reasons: One is politicians talk too much. The second piece is, when you’re 50 out of 50, for you to go out and say you’re going to do a whole bunch of stuff, no one will believe you. My view is let’s go do this stuff for a couple of years. Now, we have a track record. When we say something, I hope people look at our record (and) that we will get a high degree of confidence that a chunk of that is going to get done.

It’s been a year since Right to Work passed and about nine months since the law took effect. Have jobs been created in Michigan because of it?

I think we’ve seen some jobs. But the bigger benefit is the pipeline is filling up. It’s really a pipeline question. Previously, Michigan was sort of disqualified because there was this screen that people went through to say, ‘Are you going to consider Michigan or not when you look at opportunities?’ We were screened out. … The point is, now we’ve changed those boxes from Xs to check marks. Now we’re seeing our pipeline fill up a lot more. I couldn’t tell you a jobs number today. Secondly, to say it’s solely because of Right to Work — that’s a tough one. But are we getting a lot more consideration, is the pipeline filling up a lot more? The answer is absolutely yes.

Going into 2014, what’s your message to our business readers?

We’re going to continue (working) hard on making Michigan the most competitive environment possible. Our role is not to create the jobs. That’s up to our great small- to medium-sized business people who are a core of that job creation. Our goal is to create the most competitive environment, the best playing field possible for that.

Sure. How can you do that?

I’ll give you two illustrations that I don’t get to talk about very often. A great one is on workers’ comp. We did reforms. For the last three years, when you look at pure premiums, the base rate … has come down 7 percent a year in each year. So we’re down about 20 percent, where a number of the surrounding states have actually had increases. So that’s really cool. (Secondly,) our unemployment insurance system was a mess in terms of owing billions of dollars to the federal government. And because of reforms and the bond issue and the other things we’ve done and the recovering economy, you’re going to see a lot of businesses in ’14 hopefully have a reduction of … about a percentage point in their unemployment insurance rate. You add those things together, that adds up. That’s not turnaround stuff as much as it’s just this continual ‘how do you create this opportunity for growth?’

Last thing, Governor. The personal property tax repeal is a huge issue for our readers. What are you going to do to make sure the personal property tax reform measure passes?

That’s a big deal. Well, we’re going to get out (the vote). In 2012, there were six ballot proposals and we went five for six. … We’ve got a pretty good track record of supporting things we believe in. (Laughs.)

So you’re going to make it happen?

That’s not on theory. We’ve got a track record now, right?

Interview conducted and condensed by Joe Boomgaard and Brian Edwards

Read 3334 times Last modified on Sunday, 22 December 2013 22:50

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