State lawmakers passed a landmark incentive bill last week that “sends a powerful signal” and gives Michigan new tools to compete with other states for major projects, according to the state’s top economic development official. Lawmakers and the Whitmer administration worked out details for the $1 billion Strategic Outreach and Attraction Reserve Fund following Ford Motor Co.’s announcement in September to invest $11.4 billion and create 11,000 jobs in Tennessee and Kentucky to build facilities that manufacture both electric vehicles and batteries. Michigan Economic Development Corp. President and CEO Quentin Messer Jr. spoke with MiBiz a few days after the legislation passed.
How significant is this legislation?
It demonstrates what we always knew. Team Michigan will rally, come together, be remarkably pragmatic, and respond to a challenge. There was a lot of conversation pre-Ford, but I think the announcement helped people sort of say, ‘OK, how do we figure out how to compete in an intensifying global competition where you’re seeing trends that demand great acceleration?’ Whether in the passenger vehicle space, the supply chain, agri-business: We’re seeing tremendous amounts of money required by companies to invest in technologies and research and development. And one of the things that became very apparent — and the Ford announcement underscores this — is the need for states to de-risk the project economics. What the legislation did was show that Michigan understood that, was prepared to respond to it, and that’s what we did.
Is more work needed for Michigan to better compete in today’s world?
There is work that we need to do to make sure that there are additional things that are required. We are not fixated on just a narrow set of projects, but we’ve set up these frameworks for us to be competitive and responsive to the future. All in all, (the legislation is) a total team effort and it’s just an initial and important down payment in what we hope will be a continued nimbleness, aggressiveness, and a sort of can-do spirit that has always defined Michigan.
Given the Ford announcement, and the auto industry’s push toward electrification, what was the risk of not doing something to better compete for these kinds of projects?
We see that because of the change in industry, and it’s not just the propulsion system that’s changing, it’s the structure of these partnerships that are changing. They are typically joint ventures. They are equally invested in by foreign companies that have a different expectation and appreciation of governmental support, and if we didn’t do the very simple things, we were at risk of three things: Michigan jobs, Michigan households, and Michigan small businesses. The passenger vehicle space, the semiconductor space, agri-business — these critical industries have deep and long value chains and supply chains that provide jobs, they support not only the direct employees of the companies, but communities.
We know that GM is looking at a battery plant in Lansing and you mentioned in your House testimony on the legislation that there are other major projects in the pipeline. What are the state’s chances of winning those projects?
I don’t like to make predictions. Those are dangerous, but this legislation sends a powerful signal: We are actively and aggressively competing. This is not a theoretical exercise. This was for us to compete and we’re going to work and grind and continue to work hard.
How do you respond to the view that this kind of assistance is just a corporate giveaway of public funds?
Michigan can unilaterally disarm and say, ‘We will be the purist. We will not do this.’ But the game is being called and companies are obligated and have fiduciary responsibilities to find ways to de-risk their investments. Ford showed us. Ford constantly is talking to us (that) they would love to be here, but they have to make capital allocation decisions based upon the way the game is being called.
The reason you do economic development is because people matter. Dinner tables matter. Livelihoods matter. Michiganders are owed the best possible economy. All of us have to figure out, given competitive intelligence and what the market is telling us: how do we respond in the best way for Michiganders? And that, frankly, is the reason why we have to make sure that we’re being fiducially prudent and we’re meeting market responses.