A TALE OF 2 MICHIGANS: Job opportunities exist in new sectors, but growth is slow
June 10, 2007
BY JOHN GALLAGHER
FREE PRESS BUSINESS WRITER
Jennifer Baird is that rare thing -- an optimist about Michigan's economy.
Baird heads Ann Arbor-based Accuri Cytometers. The University of Michigan spin-off firm with 13 employees is testing biomedical instrument technology that it hopes to market to cell researchers around the world.
"I think sometimes we get blue because of all the struggles that the auto industry is going through," she said last week of Michigan's economic outlook.
"But that doesn't mean that there aren't great resources here. We can always get better, of course. But we do have a lot more here, I think, than sometimes people appreciate."
Baird's optimism hints at a resilience in Michigan's tired economy for which few people give the state credit. For Michigan really is two states economically.
The state in the gloomy headlines suffered the nation's worst unemployment rate in April, as well as nation-high gas prices in May, and has had among the highest housing foreclosure rates.
But the less-well-known state boasts a $376-billion-a-year economy, roughly the size of Sweden's, and remains a top 10 state in total output, exports and manufacturing, despite the elimination of one in four factory jobs since 1999.
Nor, despite all the worries over globalization and automotive restructuring, is it hard to see where Michigan's new economy will come from. Health care, professional services, finance, logistics and tourism are among the fastest-growing sectors in Michigan.
Already, health care alone employs more workers in Michigan than auto manufacturing.
Economists say the real problem isn't the size of Michigan's economy, which is huge, nor the direction it's heading, which is toward a more knowledge-based workforce. The problem is the rate of growth, which is dismal.
"Michigan's glass is more than half full, but we have some big holes that we're not plugging in the bottom, and what we're spilling is being lapped up eagerly by our competitors in other states," said Patrick Anderson, an East Lansing-based economic consultant.
Charles Ballard, a professor of economics at Michigan State University and author of the book "Michigan's Economic Future," agreed.
"I try to not overemphasize how bad it is, but also to not gloss over the fact that we do have to change our behavior if we want to grab the future opportunities," Ballard said.
Not fast enough
Examples of Michigan's dual economic status -- a premier state imperiled by slow growth -- lie scattered throughout the piles of economic data collected by the federal government.
Michigan's output of goods and services -- trucks made in Flint, furniture made in Grand Rapids, surgical instruments designed in Kalamazoo and hamburgers served up in Port Huron -- ranks ninth in the nation, according to the U.S. Commerce Department.
But Michigan's anemic growth rate -- just 0.2% from 2004 to 2005, the most recent period when full data were available -- ranked 48th among the 50 states. Only the economies of Alaska and Louisiana were worse.
Meanwhile, Sunbelt states -- notably Georgia, North Carolina and Virginia -- enjoy economies that are almost as big as Michigan's and are growing much faster. They'll likely pass Michigan in a few years if nothing changes.
Or consider exports. Thanks to the huge volume of automotive shipments, Michigan ranks fifth among the 50 states as an exporter.
But between 2001 and 2005, the value of Michigan's exports grew 16%, while the nation's exports grew 24%.
If Michigan can't supercharge its exports, Ohio, Illinois and Florida might pass it soon in the export rankings.
Look at bank deposits, a basic measure of wealth in a community.
As of mid-2006, Michigan bank deposits totaled $152 billion. That was up from $104 billion 10 years ago -- but Michigan's ranking among the 50 states had slipped to 14th place from 10th as several other states grew more quickly.
Signs of hope
Much of the reason for this slow growth lies in the painful restructuring of the domestic auto industry. Yet even as Michigan's signature industry continues to struggle, there are signs of hope elsewhere in the state.
Michigan's three major research universities -- U-M, MSU and Wayne State University -- are contributing to the growth of life sciences and other new high-tech industries of the future.
U-M alone has been spinning off an average of eight to 10 high-tech firms each year for the past five years, said Ken Nisbet, executive director of U-M's Tech Transfer office.
Those spin-off firms, like Baird's Accuri Cytometers, are small yet promising.
"I think we're planting a lot of seeds," Nisbet said last week. "Although it will take awhile, obviously, to replace the base we are losing, it's very encouraging because the industry of tomorrow is coming out of a lot of the stuff we see here in the university."
Baird said her optimism stems in part from her firm's ability to find both the high-skilled employees and the venture capital it needed in the state.
"We have an absolutely tremendous talent pool," Baird said. "As a state, we have a growing expertise in the life sciences as well as in engineering and a wonderful work ethic, and those kind of things are what make it possible to build a capital-efficient, high-growth organization here."
In another sign of hope, a recent study that tracks how states are preparing for the knowledge-based economy of the future reported in February that Michigan had made more progress since 1999 than any other state.
Michigan ranked 19th overall in the 2007 State New Economy Index, up from 34th in the 1999 version of the report and up from 22nd place in the 2002 index.
Belying fears of a brain drain because of young people leaving the state, Michigan ranked sixth among the 50 states in attracting highly educated workers.
Robert Atkinson, president of the Washington, D.C.-based Information Technology and Innovation Foundation and chief author of the index, said that reflects the influx of engineers coming to Michigan from nations such as China, Korea and Taiwan.
They come for jobs not only in the automotive industry, but also in life sciences and other fields.
"That's a great number," Atkinson said. "Most people don't think of Michigan as a haven, but that's a really very good number."
June 10, 2007
BY JOHN GALLAGHER
FREE PRESS BUSINESS WRITER
Jennifer Baird is that rare thing -- an optimist about Michigan's economy.
Baird heads Ann Arbor-based Accuri Cytometers. The University of Michigan spin-off firm with 13 employees is testing biomedical instrument technology that it hopes to market to cell researchers around the world.
"I think sometimes we get blue because of all the struggles that the auto industry is going through," she said last week of Michigan's economic outlook.
"But that doesn't mean that there aren't great resources here. We can always get better, of course. But we do have a lot more here, I think, than sometimes people appreciate."
Baird's optimism hints at a resilience in Michigan's tired economy for which few people give the state credit. For Michigan really is two states economically.
The state in the gloomy headlines suffered the nation's worst unemployment rate in April, as well as nation-high gas prices in May, and has had among the highest housing foreclosure rates.
But the less-well-known state boasts a $376-billion-a-year economy, roughly the size of Sweden's, and remains a top 10 state in total output, exports and manufacturing, despite the elimination of one in four factory jobs since 1999.
Nor, despite all the worries over globalization and automotive restructuring, is it hard to see where Michigan's new economy will come from. Health care, professional services, finance, logistics and tourism are among the fastest-growing sectors in Michigan.
Already, health care alone employs more workers in Michigan than auto manufacturing.
Economists say the real problem isn't the size of Michigan's economy, which is huge, nor the direction it's heading, which is toward a more knowledge-based workforce. The problem is the rate of growth, which is dismal.
"Michigan's glass is more than half full, but we have some big holes that we're not plugging in the bottom, and what we're spilling is being lapped up eagerly by our competitors in other states," said Patrick Anderson, an East Lansing-based economic consultant.
Charles Ballard, a professor of economics at Michigan State University and author of the book "Michigan's Economic Future," agreed.
"I try to not overemphasize how bad it is, but also to not gloss over the fact that we do have to change our behavior if we want to grab the future opportunities," Ballard said.
Not fast enough
Examples of Michigan's dual economic status -- a premier state imperiled by slow growth -- lie scattered throughout the piles of economic data collected by the federal government.
Michigan's output of goods and services -- trucks made in Flint, furniture made in Grand Rapids, surgical instruments designed in Kalamazoo and hamburgers served up in Port Huron -- ranks ninth in the nation, according to the U.S. Commerce Department.
But Michigan's anemic growth rate -- just 0.2% from 2004 to 2005, the most recent period when full data were available -- ranked 48th among the 50 states. Only the economies of Alaska and Louisiana were worse.
Meanwhile, Sunbelt states -- notably Georgia, North Carolina and Virginia -- enjoy economies that are almost as big as Michigan's and are growing much faster. They'll likely pass Michigan in a few years if nothing changes.
Or consider exports. Thanks to the huge volume of automotive shipments, Michigan ranks fifth among the 50 states as an exporter.
But between 2001 and 2005, the value of Michigan's exports grew 16%, while the nation's exports grew 24%.
If Michigan can't supercharge its exports, Ohio, Illinois and Florida might pass it soon in the export rankings.
Look at bank deposits, a basic measure of wealth in a community.
As of mid-2006, Michigan bank deposits totaled $152 billion. That was up from $104 billion 10 years ago -- but Michigan's ranking among the 50 states had slipped to 14th place from 10th as several other states grew more quickly.
Signs of hope
Much of the reason for this slow growth lies in the painful restructuring of the domestic auto industry. Yet even as Michigan's signature industry continues to struggle, there are signs of hope elsewhere in the state.
Michigan's three major research universities -- U-M, MSU and Wayne State University -- are contributing to the growth of life sciences and other new high-tech industries of the future.
U-M alone has been spinning off an average of eight to 10 high-tech firms each year for the past five years, said Ken Nisbet, executive director of U-M's Tech Transfer office.
Those spin-off firms, like Baird's Accuri Cytometers, are small yet promising.
"I think we're planting a lot of seeds," Nisbet said last week. "Although it will take awhile, obviously, to replace the base we are losing, it's very encouraging because the industry of tomorrow is coming out of a lot of the stuff we see here in the university."
Baird said her optimism stems in part from her firm's ability to find both the high-skilled employees and the venture capital it needed in the state.
"We have an absolutely tremendous talent pool," Baird said. "As a state, we have a growing expertise in the life sciences as well as in engineering and a wonderful work ethic, and those kind of things are what make it possible to build a capital-efficient, high-growth organization here."
In another sign of hope, a recent study that tracks how states are preparing for the knowledge-based economy of the future reported in February that Michigan had made more progress since 1999 than any other state.
Michigan ranked 19th overall in the 2007 State New Economy Index, up from 34th in the 1999 version of the report and up from 22nd place in the 2002 index.
Belying fears of a brain drain because of young people leaving the state, Michigan ranked sixth among the 50 states in attracting highly educated workers.
Robert Atkinson, president of the Washington, D.C.-based Information Technology and Innovation Foundation and chief author of the index, said that reflects the influx of engineers coming to Michigan from nations such as China, Korea and Taiwan.
They come for jobs not only in the automotive industry, but also in life sciences and other fields.
"That's a great number," Atkinson said. "Most people don't think of Michigan as a haven, but that's a really very good number."
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