Published in Economic Development

Crystal Ball 2019 Outlook Q&A: Birgit Klohs, The Right Place

BY Sunday, December 23, 2018 03:25pm

Change is inevitable in government and in business. Just ask The Right Place President and CEO Birgit Klohs, who next year will have worked in economic development during the terms of five different Michigan governors. Still, with all the uncertainty surrounding international trade and politics, now is not the time to wreak havoc on the state’s economic development policies, she said. 

What’s your outlook for West Michigan in 2019?

Birgit Klohs COURTESY PHOTO

I’m not sure that it is as clear as it was a year ago, because there is some murkiness regarding taxes, new government, tariffs and so on. I think the region as whole is on pretty good footing. I’m cautiously optimistic, but it’s not as clear as it was a year ago. … We’re all going to have to roll with it. One thing we always talk about is the election happened, but all of this didn’t just get decided. It’s going to take us at the state level a few months to kind of get into the new groove. That means when we have a project, do we have the same rules? You’ve got to get used to the new rhythm. I don’t mean that is to be a bad rhythm, but this could be different.

Given that changeover in Lansing after the election, what’s your advice for policymakers? 

We certainly are encouraging that if it ain’t broke, don’t fix it. I’m never saying that things don’t need tweaking. In Michigan, we’ve all been on a train going in a certain direction, so if we change direction and go another direction, we will lose our place in line. … Businesses hate uncertainty, so if you insert uncertainty in our economic development process and our regulatory process, then site consultants and companies are going to say, ‘OK, I’m going to sit this out.’ Then our pipeline will slow down and we really don’t want that, if there’s already enough uncertainty coming from the feds.

Governor-elect Gretchen Whitmer has said that she wants to unleash the power of the Michigan Economic Development Corp. What does signal to you?

I don’t exactly know what that means yet. Obviously, the MEDC has been a good organization to make sure that companies at the top level receive the help that they need in coordination with the help of our local partners. This is a partnership. Sometimes, we bring them deals, sometimes they bring us deals, but at the end of the day we’re partners. … The MEDC is doing a good job. Could there be tweaks? Sure, but every organization goes through some.

What’s your pitch to policymakers around the importance of investing in economic development?

It’s incumbent upon all of us in the economic development business to make sure that our new legislators understand the importance not just of the MEDC as an organization, but of economic development in general, because (some people think) this all just happens by itself. We have 28 projects this year that we finished, and that doesn’t happen by happenstance. There’s a plan behind this; it’s very deliberate. 

What are some of the tweaks or improvements that you’d like to see with the MEDC? 

What The Right Place does is we compare ourselves to our competitor organizations at least once a year, and say, ‘How is Oklahoma City doing this?’ Or Charleston, Indianapolis, Columbus — cities that are close to our size and that have really, really good economic development programs. Are we staying relevant? What are they doing that we are not doing and can we learn from them? Just like we’re going to go through a strategic planning process, I think it would probably be a good idea for the MEDC to do that and to really hone their skills. 

The other one is this whole idea that transparency is good, reporting is good, but over-auditing and over-reporting is (counterproductive). What the MEDC is having to go through (shows) they’re over-regulated, in my opinion. They have to spend more time on reporting than they do on actual dealmaking. I’m all for transparency. Can you stay transparent, but without overloading the agency and making a bureaucracy out of it, if you want to unleash the MEDC?

Most executives we interview talk about their companies’ struggles to find qualified people. What’s your take on this persistent problem? 

Over the next 10 years, the United States will have 2.4 million jobs that are going to go unfilled. Now, there is still talent out there that’s not trained, needs to be retrained, needs to be re-engaged, but I think to me that’s a national question that we need to somehow answer. The number of men between the ages of 45 and 55 who are not participating in the labor force is the highest that it’s been in 50 years. My question is: How do we as a country struggle with this or as a state at least take a look at it? Who’s sitting on the sidelines? … Right now, everybody is talking about talent, and that problem will not go away, because we no longer have the same number of kids graduating from high school that we did 10, 15 years ago. You have to kind of figure out what do you do to ameliorate that. 

What are some of the other issues on the periphery that companies should be paying attention to in the upcoming year? 

I think one of the things that we are trying to make them pay attention to is automation, robotics, Industry 4.0. How are you getting ready for change in the car industry and what does that really mean to you? If you’re making drivetrains and it’s going to be electrification, then how does that impact you? In our strategic plan, we want to look at where do we need to position ourselves to help our companies down that journey around thought leadership about what’s next.

How is West Michigan positioned to weather the next inevitable economic downturn?

I’m looking at it this way: I think what had stood us in good stead in the last 10-plus years is diversification. Everybody talks about it, but if you look at our projects, half of them are still manufacturing. It’s still our strength, obviously. We make things here, which is great, and we make it across many different products. If you look at the rest of that, you have food processing, you have medical devices, you have life science projects. When you look at the four key sectors that The Right Place is focusing on, it’s given us a much broader, steadier base to kind of ride it out.

Interview conducted and condensed by Joe Boomgaard.

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