Michigan: Life Sciences and Technology Elevating Auto-Devastated Economy

There is no denying that the difficulties facing the U.S. auto industry have taken their toll on the state of Michigan. Not surprisingly, in February, the unemployment rate in Detroit, Michigan's largest city, was 13.1 percent and the state's as a whole was 12 percent, considerably higher than the February national rate of 8.1 percent. Michigan communities connected to the auto industry are experiencing all kinds of negative fallout due to industry woes. Statewide, one in 10 citizens accept food assistance, property values are falling, and the foreclosure rate for Michigan homes is among the highest in the U.S.

Fortunately, according to some state economic development officials, the old saying "As Detroit goes, so goes Michigan" no longer applies to the state's overall economic development health. Why? Slowly but surely, sector diversification plans developed for many Michigan cities are starting to pay off in select regions battling this hard economy.

"Anyone who says Michigan is a dying economy or that we're only the automotive industry is wrong; our 2008 results prove how strong and diverse we are," says Tim Mroz, senior communications director of The Right Place in Grand Rapids. He points to western Michigan, which represents about a quarter of the state, geographically speaking. "Last year alone, we had $70 million in capital investment, 1,600 new or retained jobs, and almost $76 million in new annual payroll." Many of these economic development wins represent the manufacturing sector, he says, while others are in life sciences and medical device manufacturing, back-office functions, aerospace work and new alternative energy projects.

Last summer, Priceline.com established a call center in Wyoming, Michigan, to support its international bookings. It brought in 424 jobs and a $7.7 million investment. The main attraction, Mroz says, is the area's 70,000 college students representing "a huge talent pool." It also doesn't hurt that eight to 10 different foreign languages are spoken by residents of this area. In another project of note last fall, California-based Sequenom, a provider of genetic analysis products, announced an expansion into Grand Rapids' "Medical Mile," with more than 500 planned jobs and a $20.5 million investment.

Elizabeth Parkinson, spokesperson for Ann Arbor's SPARK economic development agency, agrees with Mroz that certain Michigan pockets have avoided intense job-loss pain due to the regions' diversification efforts. While only an hour's drive from downtown Detroit, Ann Arbor has quite a different story to tell when compared to its big neighbor. It offers two million workers within its metropolitan statistical area (MSA), a nearby metro airport, and college town amenities due to the presence of the University of Michigan (UM).

Life sciences is an important industry in the Ann Arbor area. The University of Michigan Health System, one of the nation's leading medical and research institutions, is known for its advanced medical care and biomedical research. Because of its presence, when Pfizer's R&D center closed in 2008, Parkinson says about 400 of its research scientists opted to remain in Ann Arbor and help grow local science-related firms.

Advanced automotive research is another employment focus. "Almost every automotive company has a presence here in R&D facilities," she says, "and it's growing." The city is also a state-identified "center of excellence" for clean technology. UM spinoff Sakti3 plans to invest $1.1 million to develop/commercialize high-powered batteries, most notably for electric vehicles. Information technology, a third sector of strength, is represented well by Google's AdWords division and a number of other California-based companies.

While Parkinson says she hopes the automotive industry will emerge from its present crisis "stronger and smarter," the situation sends a message statewide that cities must be stronger and smarter as well about the kinds of businesses they attract. With strong infrastructure, manufacturing assets, and well-trained people, Michigan is ready for the rebirth of its economy.