In 2016, The Right Place Inc. attracted $240.6 million in new capital investment through 19 projects across West Michigan. Although the Grand Rapids-based economic development organization fell short of its three-year goals for jobs and payroll growth, President and CEO Birgit Klohs remains optimistic about Michigan’s economy. Klohs expects to attract more high-tech jobs and industries to the state while continuing to work with companies to find available talent in the region. Klohs discussed with MiBiz some of the issues that West Michigan employers and economic development professionals will face in the coming year.
What’s your take on President-elect Trump getting involved in state-level economic development with Carrier Corp. in Indiana?
One-off economic development is not a good idea. I appreciate his passion for attracting and retaining jobs, but we have never had in the United States an overarching industrial development policy. Personally, this is an editorial comment from Birgit Klohs: I don’t think in a country this large, with 50 very diverse states, that that would ever work. To me, economic development is a state (and) local policy issue.
What’s the concern with doing economic development on a case-by-case basis?
Every time somebody wants a big pile of money for incentives, let’s just threaten we’re moving to China and we’ll give you a boatload of money. This is not the way to do economic development. There needs to be a strategy through state organizations like the MEDC and organizations like The Right Place at the local level.
Can companies in Michigan expect any new incentive programs from the Michigan Economic Development Corp. next year?
The Business Leaders for Michigan, in a coalition with economic development organizations, proposed a new incentive program for large projects, and unfortunately it died in lame duck. We’re all very upset, but the Speaker of the House would not let it come to a vote. That was beyond disappointing. We still have to compete and the same thing happened with brownfield tax credits that we tried to get reinstalled. The TIF reform died as well.
So businesses shouldn’t count on new incentives next year?
We have all year to try, but until we know the stance of some of our newly elected officials, there is nothing I can comment on. Every time we do this, our competitors win and the people of Michigan lose.
The MEDC got its budget slashed last year. What happens if it gets cut further? Does it put more pressure on your organization?
It does. We’ve been here for 31 years, Southwest Michigan First has been here for how many years, and Saginaw Futures has been there for 30 years. We carry our load. But the idea that because we exist negates the need for a statewide economic development organization is folly. Every state has an economic development organization, a statewide umbrella organization. This is a very symbiotic and very collaborative relationship. We need each other, and you can’t eliminate a state agency.
Looking ahead to 2017, what’s keeping you up at night?
How do we compete against states like Mississippi, Louisiana, Arkansas, Texas and the Carolinas where there is never an argument over do we have economic development at a state or local level? We do have a much better business climate in Michigan than we did several years ago. However, when the state of Mississippi throws hundreds of millions of dollars at $6 billion of new investment, how do we compete? That’s the question. Yet, we have folks in the state who would like to unilaterally disarm (economic development). Some think it’s picking winners and losers. I call it competing.
West Michigan businesses are struggling with the availability of talent and a lack of buildings. When you’re courting companies to come here, how do you get around those two challenges?
It all depends on the company and what they’re looking for. Not everyone looks for a building, but yes, building inventory across the state is very low. However, we’ve managed our way through it. Some companies locally have built new facilities, which opens up an old facility. On the talent side … our unemployment rate is low, but we also have unemployment rates in some parts of our region that are fairly high where people need to be retrained. The DiCastal folks went up to Greenville because there’s a good community college and a labor force that was available. We’re still managing, but I would agree it’s very tight.
Most businesses seem to be in a wait-and-see mode with regards to the incoming administration. How does that impact your operations?
We’re in the same boat. Until we know what the new rules are, we’re seeing people with the same wait-and-see-attitude. It makes our job tougher because we have a bunch of projects in the pipeline, which you hope to get through the pipeline, and then it’s like, ‘Let me wait.’