Banner Image

Tuesday, May 28, 2013

State's Economy on Rebound

Michigan's top economic official sees state's rebound

May 26, 2013 | 
Michael Finney
Michael Finney / Courtesy photo

Michael Finney

» Age: 56
» Residence: Washtenaw County’s Superior Township
» Current job: President and CEO, Michigan Economic Development Corp.
» Education: Bachelor’s degree in business administration from Saginaw Valley State University, master’s degree in human resources from Central Michigan University
Since taking the helm of Michigan’s economic development agency more than two years ago, Michael Finney has worked to get Michigan ranked among the 10 best states in the nation for employment and income.
The state that at one point led the nation in unemployment, driven by manufacturing-led job losses during the recession, has a long way to go before it can be considered fully recovered. Yet Finney, president and CEO of the Michigan Economic Development Corp., said he notices more progress now than in the early months of his tenure in 2011.
More companies say they have access to capital today, Finney said, and core industries such as manufacturing and financial services — including insurance, which has a prominent presence locally — are rebounding. The MEDC is working to start new programs to keep Michigan’s talent base from defecting to other states. And it wants to loan money to more companies in more industries than traditionally has happened before.
Finney recently sat down with the State Journal to discuss the state’s economy and some of his agency’s plans going forward.
Q: What are some of the most significant accomplishments thus far in your tenure?
A: The fact that we fixed the business tax and went away from the (Michigan Business Tax) to the corporate income tax.
The regulatory environment was also a very big issue for our state and we continue to just eliminate outdated regulations that make it more challenging for businesses to operate here than in other states. And I think we are well above 1,200 regulations that have been eliminated that really did not serve the purpose of protecting the environment, protecting our people or making it more efficient to do business.
(Eliminating the personal property tax) was a very, very important change for (companies) because now it will, when it’s fully in place, it will encourage them to invest their limited capital in Michigan because there won’t be a penalty for investing it with the burdensome personal property tax. Of course, the flip side of that is we’ve got to figure out how to fund the tax base of the various communities and other taxing jurisdictions because the personal property tax is obviously what they’ve relied on.

Q: What are some of your priorities as Michigan’s economy continues to recover?
A: We’ve now started to build into our model resources that can actually help entrepreneurs of every type, from lifestyle businesses to technology-based companies to manufacturing companies.
Banks typically don’t lend to this kind of an entrepreneur because they don’t have a business plan that says they can be successful. But if we can provide support for them, or what we call business acceleration support — so, resources to help them with a business plan, resources to help them get prepared for presentations to bankers and other friends and family who might be early lenders to help them launch their businesses — we can do that.
We think there is probably a need for that $5,000 to $100,000 range that has not been very effectively supported, and in many cases it ends up being a collateral issue.
Q: What are you doing to keep people from leaving Michigan to find work?
A: One of the pilots that we are rolling out — we haven’t announced it in a big way, but we’ve done a soft launch — is we have a number of companies that have agreed to participate in a program that we call the Michigan Advanced Technician Training Program, or MAT2.
We now have it down to about 20 individuals who will be signing contracts to work for a half a dozen companies as their employees while also going to school at either Oakland (Community College) or Henry Ford Community College and earning an associate degree in mechatronics.
It’s a real small-scale model, but we think we can fairly rapidly scale it in 2014 to bring it to other companies.
Q: What has been the impact of right to work?
A: The kinds of opportunities that the state of Michigan has missed out on, per our site location consultants, typically are not the kind of jobs that are here. For example, there’s a lot of high-end technology and call centers and things like that, and while they may not and are typically not organized in the state of Michigan, those companies still take a pass on us because of the potential (to unionize). So it’ll open up those opportunities to us that we typically haven’t seen.
Q: What has the MEDC done to make sure that companies receiving economic incentives — after Gov. Rick Snyder eliminated many business tax credits as part of a series of reforms — actually create the number of jobs they promised?
A: Historically, we gave out the tax credits, but that model is not effective. ... Our new approach is to provide a cash incentive.
Our challenge is knowing we have enough money. The governor has set an expectation of us that we only award incentives when there’s a competitive advantage. The more we fix our structural business costs and climate, the less demand there is (for incentives). ... Local partners want us to put incentives in every package. We try to be judicious.
The incentives all are tied to milestones (such as job numbers and level of investment). The companies must achieve those milestones and sustain them. We do audit it.

Note:  Regardless of the specific reasons, Rogers City is seeing a rebound too!