Published in Economic Development
Birgit Klohs, President and CEO of The Right Place Inc. Birgit Klohs, President and CEO of The Right Place Inc. Courtesy Photo

Right Place CEO: Michigan has most at stake in preserving NAFTA

BY Sunday, December 24, 2017 05:28pm

Next year, Michigan voters will elect the person who will become the fifth governor that The Right Place CEO Birgit Klohs has worked with in her career in economic development. While her organization is “agnostic” when it comes to who wins the election, Klohs hopes to continue to have a strong working relationship with the new chief executive and that the new governor continues to support the efforts of the Michigan Economic Development Corp.

How is The Right Place’s economic development pipeline shaping up for 2018? 

When we look at our pipeline of leads, we’re still looking at a really good pipeline. Macro-wise, I do believe, from everything I hear, that the auto industry is going to slow down some. …  and, that, of course, will impact some of our auto suppliers. … Part of our job is then to figure out who are those companies, and that happens through our retention calls. But we continue to find projects even when times are not so good. We continue our work. Our pipeline looks pretty robust at this point.

Do you see any other industries that could face some issues next year? 

Yeah. The food industry is always going to be strong here. Obviously, we have a strong agricultural sector. But we’re also having a pinch point in some of our communities with wastewater treatment, and that is an infrastructure issue that the region is going to have to wrestle with, and the state of Michigan actually has to wrestle with. We need to make sure that we have the capacity to treat that waste and help continue to make sure that the food industry can continue to do their work.

What other issues are you paying attention to? 

The other challenge is still broadband. I can use this (cellphone) on a train going 320 kilometers an hour through France or Spain and do my emails, and here I lose my signal on Pearl Street or up in Montcalm County. 

The other unknown for the auto suppliers is what could happen with NAFTA, given the rhetoric from the Trump administration. What do you see happening?

I think NAFTA is flying under too many people’s radar. … Canada is our largest trading partner, both as a country and as a state. NAFTA needs tinkering, it’s been 23 years. It’s like your house is in need of new roof, right? But I don’t have to tear the house down to put a new roof on. So, our biggest concern is: What are we going to do? … The number one state if NAFTA gets totally rewritten, or we walk as a country, is Michigan — because of the auto industry, but also furniture and ag. We export billions from here to there. … But nobody’s sort of understanding the impact it will have on the state after we’ve made all of these strides over the last seven years.

West Michigan executives seem pretty bullish on the tax reform being pushed in Washington. What’s the view from the economic development community?

One of the biggest concerns for us as economic developers in this tax bill is municipal and industrial revenue bonds. If you’re a hospital, if you’re a county, if you’re a state, if you’re a community, those bonds are tax-exempt. That’s how many of our communities around the country are funding expansions of a hospital or their own (local) road infrastructure. How do you fund that? If we’re going to talk about wastewater treatment and we need to expand the wastewater treatment system over here, it would be a bond issue, which is tax-exempt. So I’ll buy the municipal bonds as an investment. If they’re no longer tax-exempt, it’ll really, really impact funding of some really serious projects at a time when we need it.

How would you rate Michigan’s ability to weather any upcoming economic downturn?

I get very frustrated, to be very honest, when people talk about, ‘Well, we should have diversified out of the auto industry.’ First of all, the state is already much more diversified, and West Michigan is way more diversified. Yes, it’s still a very strong manufacturing center, and we’re proud of it, but we also have health and life sciences, you’ve got a very strong food processing industry, and the I.T. industry is creating a lot of new jobs. We have pretty much created a regional economy. Of course, whatever happens at the state and national level will impact us. … If it isn’t as bad as it was 10 years ago, if we can ride out the cycle again, we’ll be fine.

People forget that the automotive industry was responsible for helping us climb out of the recession, too. 

There isn’t a country in the world that doesn’t want an automobile industry. I mean, the Chinese are building one, the Indians are building one. Why would we not want to keep ours? ‘Well, we’ve got to get out of the auto industry.’ Really? That will be a million jobs that go away, and what are you thinking? 

At a recent MiBiz real estate and construction roundtable, executives mentioned it would be nice if Grand Rapids could bring a large corporate headquarters downtown. Do you think there’s any likelihood of that in the next 12 months? 

No. From where? To be in the attraction business of a large headquarters is probably a two- to five-year proposition. To dislodge a headquarters from their headquarters is not an easy job. … I know this is everybody’s dream, they’ve all talked to me about it. But you cannot dislodge one of our own headquarters in the region to come downtown. All you do is trade off — it goes from A to B. I mean, it doesn’t make any sense. 

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