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Wednesday, July 24, 2013

What can Rogers City Learn from China?

Rogers City has a lot to learn from China.  In the article below, wherever you see "Detroit" substitute "Rogers City."  Anyone who knows Rogers City will see a similarity.  This question is adapted from an article (below) by Tom Watkins a reporter for the Detroit News:

The city that put the world on wheels, the Arsenal of Democracy, the Motor City, Detroit, has filed for bankruptcy. A once-proud city is humiliated in the world’s eye.
Detroit can learn from China about how to turn adversity into strength. China suffered through a century of humiliation to a historical rise to preeminence today.
Wei Yuan, a Chinese scholar attempted to combine traditional scholarly knowledge with practical experience to find workable solutions to problems of the day. In his book, Records of the Conquest, Wei writes, “Humiliation stimulates effort; when a country (city) is humiliated, its spirit will be aroused” or “To feel shame is to approach courage.”
With insight and leadership China could play a role in revitalizing a once iconic American city.
We need to pay attention as China returns to a historical position of strength. It must be noted, China had the world’s largest economy — 18 out of the past 20 centuries.
The China-United States Exchange Foundation, a non-government and nonprofit organization based in Hong Kong seeks to foster a strengthened and improved relationship between China and the United States under the leadership of Tung CheeHwa, vice chairman of the 12th National Committee of the Chinese People’s Political Consultative Conference and founder and chairman of the foundation, recently released a report: “U.S.-China Economic Relations in the next Ten Years.”
It should be mandatory reading for government and business leaders with an interest in rebuilding Detroit.
The report concludes that Beijing and Washington share the desire to “establish a pattern of secure, high-quality sustainable growth and employment for their people.”
It could be argued in the early days of the normalization of the relations between China and the U.S. that the China bridge was more of a one-way span in China’s favor. That certainly is not true today.
Chinese investment in the U.S. is at an all-time high.
According to the Heritage Foundation, total Chinese investment in the U.S. since 2005 stands at $54 billion, and expected to grow significantly over the next decade.
According to the Asia Society, the Chinese will be seeking overseas investment opportunities from $1-2 trillion over the next decade.
Detroit needs to be aggressive about securing a chunk of this Chinese investment.
Michigan’s business community now includes more than 50 major Chinese companies that have invested more than $1 billion in our state and growing,” recounted Michael A. Finney, president and CEO of the Michigan Economic Development Corporation.
As our new immigrant and business-friendly governor, Rick Snyder, who has traveled to China twice as governor with a third trip planned for this fall, likes to say: “Michigan is open for business.” Investment in Detroit ought to be a priority of the governor’s upcoming China trip.
Snyder is seeking foreign direct investment in our state and wants to export our agricultural products, technology know-how and other goods and services around the globe.
As the report, “U.S.-China Economic relations in the next ten years,” spells out, over the course of the next decade this important economic relationship has the potential to create enormous economic opportunities and millions of jobs, as well as public good, globally.
Chinese Consul General Zhao Weiping, based in Chicago, recently said, “Michigan has many ingredients: Economic, social, cultural and educational that make it attractive to Chinese investors, and I suspect as the relationship matures, the investments and job creation will only continue to grow.”
John McElory, a global auto expert and president of Blue Sky Productions, understands Detroit is a fountain of opportunity for Chinese investors: “The Chinese are coming to Michigan because when they look around they don’t see shuttered factories, they see nothing but opportunity.”
Detroit can rise like a phoenix from the ashes of humiliation.
Remember, “To feel shame is to approach courage.”
Tom Watkins is a U.S./China business and educational consultant.

From The Detroit News: http://www.detroitnews.com/article/20130724/OPINION01/307240001#ixzz2ZzQO09tn

Monday, July 22, 2013

Detroit Matters to Rogers City

Here is an article from the Lansing Journal.  It tells why Lansing (and, in my opionion, Rogers City--see blogger's notes) should care about Detroit. 
Written by  Kristen M. Daum
Ninety or so miles away, Lansing residents likely feel insulated from the financial implosion the city of Detroit is grappling with this week.
But local, regional and state observers in Michigan’s capital city are keeping a close watch on Motown, knowing that whatever happens there could affect numerous other communities in the state — and even the nation.

(Blogger's note:  Rogers City may be 250 miles away from Detroit, but we too are close in many ways.  Many residents of Rogers City and the surrounding area are retired from employment in the metro Detroit area.  Also, many people from the Detroit area have summer homes in Presque Isle County.)
Here are five reasons why Lansing-area residents and all Michiganders should care about Detroit’s historic bankruptcy filing:
Without changes, Lansing could have a similar fate in years to come.
Lansing faces more than $600 million in unfunded obligations for its retirees, including $218 million in unfunded pension liability and $431 million in unfunded benefit costs, primarily for health care.
By comparison, Detroit’s debts amount to as much as $20 billion.
“There’s no doubt there are big differences, but the trend line is the same,” said Eric Scorsone, an economist at Michigan State University who specializes in government finance and who was a member of a team appointed by Lansing Mayor Virg Bernero that earlier this year recommended solutions to fix Lansing’s own financial issues.
“Lansing has been better managed and they have more cash right now, so they have more time to figure out a solution,” Scorsone said. “Lansing has several years here, but they’re going to have to fix this. They don’t ever want to get near this situation.”
Bernero agreed, calling Detroit’s bankruptcy “a warning shot for mayors everywhere.”
“When things are unsustainable, they tend to stop,” Bernero said. “Bankruptcy looms for those who live in denial.”

(Blogger's note:  Rogers City uses the Michigan Employees Retirement System (MERS) to manage our employees' and retirees' pension fund.  Rogers City's pension liability is currently 56.4% funded with about $5,083,500 in combined pension reserves.   The City's unfunded pension liability is about $4,494,000--that is the amount we would have to pay if the City went out of business right now...to pay off all liabilities immediately.  We currently have 57 participants in the MERS program: 23 active members, five vested former members, and 29 retirees and beneficiaries.  One of the reasons our pension funding percentage is low (lower than we would like) is that the City of Rogers City has reduced the number of our employees over the last few years. We did this reduction in work force to cope with reduced revenues and control the cost and size of your local goverment.  With fewer active employees, there is less funding into the pension fund.  Currently, employees contribute five percent of their wages to the MERS system. Due to fewer employees and other factors, the percent unfunded has grown.  Over time, the City will reduce the unfunded percent, catching up as the City and its employees make increased contributions to the fund.  The City's employees have increased their contributions to the pension fund from 3% to 5%.  Also, we hope MERS investments will perform better, now that the economy is beginning to recover from the great recession.  MERS, the employees and retirees, and the City count on sustained operations, including contributions from future employees and regular payments from the City to help pay for the "unfunded" liability.  In other words, as long as the community is stable and employment does not significantly decrease, there is no major cause for concern over the large "unfunded" liability.  If you have comments or questions about the City of Rogers City's pension fund, please contact me at mslown@rogerscity.com)

As the state’s largest city, Michigan depends heavily on Detroit.
Detroit is the lifeblood of Michigan’s economy. It always has been since the Motor City rose to prominence as a manufacturing hub and became the heart of the American auto industry.
“It’s got major convention centers and sports complexes; it’s important even if you’re in the U.P.,” Scorsone said. “The closer you are, the more the impact is — but it affects the whole state in the sense that we’re all in this boat, too.”  Despite the state’s severe economic downturn a few years ago, more than 2 million people still work in the Detroit area, which is about 40 percent of Michigan’s workforce, according to the state Bureau of Labor Market Information & Strategic Initiatives.
Detroit’s business climate continues to be significant for the country’s well-being, too.
According to the federal Bureau of Economic Analysis, metro Detroit had a gross domestic product worth nearly $200 million in 2011, the 14th largest in the country at the time. GDP reflects the total value of all goods and services produced by an area and is a primary indicator of economic health.

(Blogger's note: If Detroit were doing better, more people from Detroit would visit here and spend money or even retire here.)

Detroit’s bankruptcy could make life harder for other Michigan cities.
One of the “most obvious potential impacts” of Detroit’s bankruptcy is the impact it could have on other communities in the state and their ability to fund certain services or improvements for their residents, Scorsone said.
He said interest rates for municipal bonds could rise, making it far more costly for cities — and potentially counties, villages and townships, too — to borrow the money they need to pay for, say, major infrastructure projects.
“We won’t know if that’s going to happen for a while yet, though,” he added.
Republican Gov. Rick Snyder told the Detroit News Editorial Board on Friday that he doesn’t believe speculation of higher lending costs will come to fruition.
“In the short term, it’s clear that we’re going to increase negative perception, but for how many decades we’ve been beaten up in terms of the image of Detroit and how many decades has this can been kicked down the road where people would sort of ignore the realities of the crises?” Snyder told The News. “Isn’t it about time we say, ‘Stop. Enough is enough? The people of Detroit deserve better services.’”

(Blogger's note:  Detroit's problems have made things tougher here. We need Detroit to get its act together. We deserve better!)

The damage done to Michigan’s reputation could halt the state’s growth.
Michigan leaders have spent the last couple of years trying to recover from the recession by balancing the state budget, attracting new businesses and lowering the unemployment rate.
However, that progress could be put on pause, or potentially diminish, because of Detroit’s bankruptcy, Scorsone said.
“There might be an impact on the state in terms of reputation and the willingness of investors to come here,” he said.
Michigan Economic Development Corp. President and CEO Michael A. Finney disputes that notion.
“The bankruptcy will not impact our efforts to revitalize Michigan’s economy,” Finney said. “Michigan offers great advantages to businesses of all kinds.”
Michigan’s tourism office within the MEDC also said Detroit’s bankruptcy shouldn’t negatively affect the “Pure Michigan” brand that brings in billions of travel-related dollars into the state.
“Detroit continues to have a compelling story, world-class cultural attractions, abundant and diverse events happening, and a creative spirit on display throughout the city. These are the things people are paying attention to when they are making travel plans,” spokeswoman Michelle Begnoche said.

(Blogger's note:  MEDC has helped Rogers City and the region with a large grant to help fund the new crane at the Port of Calcite.  This project will create many new jobs.)

Lawmakers might need to change the policies regulating local governments.
Michigan’s legislative leaders are still digesting the scope of Detroit’s bankruptcy, so it’s unclear yet what action could be taken at the Capitol in Lansing to help Detroit.
But some kind of legislative input is likely, Scorsone said.
“Bankruptcy isn’t going to fix all the other issues,” Scorsone said, “and there are other cities facing similar problems.”
The legislature could step in and make changes on anything from the municipal tax structure to how municipalities structure pensions — and those decisions could be far-reaching, Scorsone said.
“Those laws, they can’t be specific to Detroit, so they would apply to other cities in Michigan, too,” he said.
But, “it is too soon to tell right now,” said Gideon D’Assandro, a spokesman for House Speaker Jase Bolger, R-Marshall.
“In order to have a healthy Michigan, we need a healthy Detroit so we will do what we can to support a real, long-term solution for the city and get it back on the path to prosperity,” D’Assandro said.
Bernero, a Democrat, criticized Snyder’s administration for not implementing “city-friendly policies or solutions” in his quest to restore Michigan’s economy.
Bernero said lawmakers need to re-focus themselves on enacting legislation that improves education, transportation infrastructure, roads, land-use plans and other civic elements of communities.
Detroit is an example that “we ignore our cities at our own peril,” Bernero said. “There’s not a level of commitment or concern from the state until they run into severe financial difficulty.”

(Blogger's note: fortunately, Rogers City is nowhere close to facing bankruptcy. Our City is financially healthy and growing thanks to new economic development efforts and responsible goverance over the past few years. However, we do need to continue to work together to make Rogers City better, so that we can enjoy a prosperous future.)

Friday, July 19, 2013

Detroit Bankruptcy

Here is a link to the Governor announcing that Detroit is going into court structured bunkruptcy.  As the Governor states:  this is a painful but necessary step for Detroit and for Michigan. 


I recommend everyone support the effort to return Detroit to financial sustainability.  A strong Detroit would help make Michigan a better state.  Also, it would help make Rogers City stronger too.

Thursday, July 18, 2013

Area Development Article about Michigan Development Strategy

Here is a copy of a great article from "Area Development" about the efforts of the State to create jobs and economic growth:
First Person: Michigan Recalibrates Economic Development Strategy and Initiatives
Hit hard by the recession, Michigan is now offering a variety of initiatives and programs to address company needs and create jobs. Area Development discussed these tools with Michael A. Finney, President and CEO of the Michigan Economic Development Corporation (MEDC).
Michael A. Finney, President and CEO, Michigan Economic Development Corporation and Karen Thuermer (Q3 / Summer 2013)
AD: What can businesses looking to locate or expand in Michigan expect in the way of help from the state? What is the No. 1 tool they can avail themselves of?

Finney: The most active tool is the Small Business Credit Initiative — a loan program designed to help small- and medium-size companies that are in a growth mode and have challenges accessing debt. We can make loans up to $5 million in participation with a bank. The Small Business Credit Initiative has $100 million for that program.
Michael A. Finney, President and CEO of the Michigan Economic Development Corporation (MEDC)

Our second most active tool is the Michigan Business Development program, a cash incentive that the state makes available in increments up to $10 million. Funded with $170 million, this program can be used by any industry from film, pharmaceuticals, manufacturing and everything in between. Funds are made available as grants to companies that demonstrate they are creating jobs and making investments. Money is also available for startups for equity participation.

AD: Michigan will begin phasing out its Personal Property Tax (PPT) for most businesses beginning in 2014. How will this benefit companies and manufacturers?

Finney: Phasing out the PPT gets to the heart of the overall cost of doing business in Michigan. Without the PPT, companies will have an incentive to invest in capital equipment. While it’s too early to know how much this will save businesses, we believe it will be substantial.

AD: Are there any other tax initiatives that would be of interest to companies looking to locate in Michigan?

Finney: Michigan also refinanced its federal unemployment insurance, which will save businesses about $1 billion. Our unemployment compensation decreased 7 percent over the last two years, a savings that is passed directly to employers. And the elimination of Michigan’s business tax, which was replaced by a Corporate Income Tax (CIT), will save companies $1.8 billion. This is a flat 6 percent tax on net Michigan sales.

AD: What programs is Michigan introducing to advance its innovation economy, and how can these be utilized by an innovative company locating or expanding in Michigan?

Finney: Last year we pledged $8 million to support a business incubator program across the state, and another $3.5 million to support very high value acceleration services through those incubator networks.

We continue to put tens of millions of dollars into our entrepreneurial system to ensure that early-stage tech companies and innovation-based companies have the highest probability of success. We use our Business Accelerator Fund to provide high-value services to businesses that are in an early stage of commercialization. We provide grants up to $50,000 for prototype development or any other activity that leads to commercialization within two years.

Venture Michigan has $300 million that is being invested with venture capitalists who choose to do business in Michigan. This tells them that Michigan is serious about venture capital in our state. And we have identified gaps where small scale, early-stage companies are looking for seed venture capital funding, and address this with our venture matching program. Here we invest up to $500,000 on the basis of the same term sheet of venture capitalists headquartered in Michigan. It is an easy way for companies to get access to additional equity capital when negotiating deals with venture capitalists. Around $10 million has been set aside for the program.

AD: Can you provide any specific examples?

Finney: A new version of the Centers of Innovation Program tries to attract significant research facilities that can help innovation-based companies move forward faster. An example is SRI, which utilized Centers for Innovation funding to locate a clinical trials facility here. Its facility will be used to assist in commercializing the facility’s innovations and those of smaller life science companies in Michigan that have to search the country for clinical trial locations for their on going developments.

AD: What types of companies can take advantage of the Pure Michigan Business Connect initiative?

Finney: This is a very important initiative that does not involve tax credits or incentives — just us using our database and making connections. We leverage the relations we have with medium and large businesses in our state that are looking for a variety of goods and services and introduce them to Michigan businesses that are in a growth mode and looking for new customers. We help Michigan businesses find each other.

DTE Energy and Consumers Energy initially committed $500 million combined of Michigan-based procurement activity. Because the program has done so well for them over the last two years, they have increased their commitment to $2.1 billion.

We forecast that this initiative will deliver about $8 billion in B2B activity over five years. If we hit our goal, Michigan will see about 40,000 jobs created as a result of new business coming to Michigan.

AD: How has the Michigan Logistics & Supply Chain Strategy helped companies, and what does this mean for other industrial firms considering Michigan?

Finney: Michigan has been slow in getting into the logistic supply business. Although we recently completed a supply chain strategy that collaborated with other organizations, it’s too early for measurable results. We expect to ramp up this initiative during the balance of this year and in early 2014.

AD: Why did Michigan eliminate tax credits? What impact will this have on an industrial company?

Finney: We eliminated tax credits because companies said these credits did not help them make investments in facilities, people, and inventory since they are usually collected over extended periods of time. Instead, we introduced the cash incentive program that I described earlier.

AD: Now that Michigan is a right-to-work state, how is this affecting businesses locating or expanding there?

Finney: It’s too early to tell since the change was made at the beginning of this year, but we are getting positive anecdotal feedback. The site location community and selected businesses are telling us that Michigan is now being considered — whereby it would have eliminated if it were not a right-to-work state.

AD: What challenges are Michigan companies facing post-recession? How are they being addressed?

Finney: The single biggest challenge is access to talent at every level. Michigan has about 60,000 open jobs at any given time. Meanwhile, unemployment remains at a high of 8.4 percent. This tells us we have a skills mismatch. We need to identify, as early as possible, business needs and work with individuals who are looking for opportunities that are here today.

That effort is going on through a variety of programs. One is our Community Ventures program, designed to help people with limited skills and experiences find opportunities with manufacturing companies that have available jobs that pay decent wages for unskilled labor. Another, the Michigan Advance Technician Training Program, partners with companies that are prepared to invest in candidates to grow their own talent. We are running a pilot with two community colleges and expect to field the program in 2014. The idea is to get in front of the curve, understand business needs, and develop a pipeline of young talent that can meet demands of employers.
Blogger's note:  As you can see from this article, the State of Michigan is offering many tools to help with business development.  So too, Rogers City and Presque Isle County has some tools to help develop local business.  Please contact me if you are considering a business venture in Rogers City.  Together, let's make it happen!

Tuesday, July 16, 2013

Michigan Chronical Reports First-Ever Code Michigan Event

State to Hold First-Ever ‘Code Michigan’ Event
Code developers are invited to the state's first-ever Code Michigan event this October for an opportunity to build mobile applications and win cash prizes. The free "civic coding" event will also feature presentations from heavy-hitters in the technology industry.
"This unique event is only one example of how the State of Michigan is thinking outside the box on ways to improve customer service," said John Nixon, director of the Michigan Department of Technology, Management and Budget. "We are excited to tap into the many talented developers out there who can help us realize our vision of making state government even more innovative and responsive."
Code Michigan is scheduled to begin on Friday, Oct. 4 at 5:30 p.m. and run through Sunday, Oct. 6, at 4:30 p.m. at the Madison Building, 1555 Broadway St. in Detroit.
Individuals interested in participating may register for the free, three-day event by visiting the Code Michigan website at: www.codemichigan.com. There are only 200 tickets available, so early registration is encouraged.
Cash prizes and opportunities to pitch developed apps to real venture capitalists will be awarded to the best, most viable and useful apps developed at the event.
"Code Michigan is an exciting opportunity for civic-minded developers and designers to get together and create mobile apps for the public good," said CIO David Behen. "This is the first chance for coders to use state data to design and build apps with real social value."
The state is working on Code Michigan with several private partners, including Commercial Progression, Detroit Labs and Bedrock Real Estate, all of Detroit. Other sponsors include Windows Azure (Microsoft), GitHub, and the Michigan Economic Development Corporation.
"Coders have a skillset that they use every day that they can now leverage to contribute to the betterment of society," said Rick Mason, an entrepreneur who proposed the event. "I call it 'Democracy 2.0'"
Code Michigan will result in even more useful applications than currently exists today. Similar events in other parts of the country have resulted in the creation of new companies and new jobs.
For more information or to register for Code Michigan, please visit www.codemichigan.com.

Rogers City encourages any local IT talent, several names come to mind, to participate in this special event.

Monday, July 15, 2013

Alpena News Notes Economic Growth

Speer: Positive signs our economy is improving

July 12, 2013
Bill Speer - Editor/Publisher , The Alpena News
Just how far has the state of Michigan come regarding its business climate in recent years?
According to Onaway entrepreneur Tom Moran in a recent magazine article, the answer is very far indeed.
Moran is one of several business leaders interviewed for the July issue of Site Selection magazine. According to a news release from the Michigan Economic Development Corp., the article "details Gov. Rick Snyder's reinvention of Michigan."
"This rebound has really started to take hold," Moran says in the article. "Michigan has become friendlier to all kinds of businesses, not just manufacturing. I have never seen a situation where both business and government were parallel in working hand in hand as a team."
Moran's business - Moran Iron Works - has been in the newspaper a lot lately. The large metal manufacturing company is investing $16.2 million and adding 75 new jobs at facilities in Onaway and Rogers City. Just last month the region celebrated with Moran and others the completion of the Port Calcite Collaborative.
The four-page Site Selection article was prepared by MEDC staff, which obviously makes the reporting very interesting, but not objective. There is nothing wrong with that as long as readers understand the source of the information also is the author of the information. The magazine provides expansion planning information to 44,000 executives in 117 countries.
Regardless, the truth of the matter is the business climate across Michigan is changing. I talk regularly with newspaper publishers and editors in both the Upper Peninsula and downstate, and all have seen a more favorable difference in the business climate in the past two years.
Recently I had lunch with State Sen. John Moolenaar and State Rep. Peter Pettalia and the conversation quickly focused on the state's changing economy. We discussed a report released in June by the National Association of Manufacturers that showed from 2009 to March of this year, Michigan led the country in the number of new manufacturing jobs created. Michigan had 88,100 new jobs while the next closest - Texas, had 57,500.
And then there are these findings:
Michigan ranks number one for states that recovered most from the Great Recession (Wall Street Journal)
Michigan ranks eighth most competitive state for spurring business growth (Site Selection Magazine)
Michigan ranks fourth in the nation for new corporate expansions or building projects in 2012 (Site Selection Magazine)
Michigan's corporate tax ranking is the third most business-friendly among the nation's 12 largest states (Tax Foundation)
Michigan's credit rating has been upgraded to AA, the first time Michigan has rated above AA- since January 2007 (Fitch Ratings)
Michigan ranks third in the nation for high-tech job growth (Engine Advocacy)
Michigan's economy was the sixth fastest growing in the nation in 2011 (U.S. Bureau of Economic Analysis)
Michigan is on the rebound. Certainly that is good news for all of us.
Bill Speer can be reached via email at bspeer@thealpenanews.com or by phone at 354-3111 ext. 331. Follow Bill on Twitter @billspeer13. Read his blog, More BS?(Bill Speer) at www.thealpenanews.com.
- See more at: http://www.thealpenanews.com/page/content.detail/id/526120/Speer--Positive-signs-our-economy-is-improving.html?nav=5002#sthash.jaSnGnbV.dpuf

Blogger's note:  Thanks to Bill Speer for his contributions to regional economic growth!