MGFOA BLM Presentation
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This document outlines a plan to grow Michigan's economy and make it a top ten state. The plan involves six steps: 1) responsibly manage finances, 2) efficiently provide public services, 3) create a competitive business climate, 4) strategically invest for future growth, 5) accelerate economic growth in cities and metro areas, and 6) leverage Michigan's assets to drive growth. It identifies six key assets - engineering talent, geographic location, higher education, natural resources, automotive industry, and health/medical expertise - and opportunities to leverage each one. The plan calls for government, businesses, and citizens to work together to implement initiatives that achieve the goal of making Michigan a top ten state.
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MGFOA BLM Presentation
- 1. Growing the New Michigan © 2012 Business Leaders for Michigan
- 2. Business Leaders For Michigan Michigan’s Make Michigan a Business Top Ten State for Roundtable: Job, Economic & 80 Largest Job Personal Income Providers Growth 135,000 ~25% 320,000 $1 Trillion Students Jobs in in Annual in Michigan Michigan Revenue Economy Michigan 2
- 3. Business Leaders for Michigan Fact Gathering Education & & Strategy Awareness Development Public Policy Champion Advocacy Initiatives 3
- 4. The Case for Change: MI Lost 1M Jobs 2000-10 When the nation lost 2 million jobs.... Michigan alone lost 1 million jobs. Nearly 90% of Michigan job sectors under-performed national growth. 4
- 6. Michigan’s Competitive Position: Seeking the Right Balance COST > VALUE Regulatory Quality of Life Climate Labor Distinctive Assets Innovation Taxes Environment Total costs Talent 6
- 7. Michigan’s Competitive Position: Cost/Value Proposition Improving Positives Negatives Talent production Costs Technical talent Regulatory climate Innovation environment Education attainment Geographic location Infrastructure Urban vitality 7
- 8. 2012 MTP Overview: Characteristics of Top Ten States DISTINCTIVE COHESIVE Known for several Regions core competencies collaborate well to and unique assets minimize divisions that enable and facilitate economic growth progress Forward-looking Well-run, fiscally culture that stable, cost- embraces competitive entrepreneurism locations that are INNOVATIVE and innovation welcoming to COMPETITIVE business 8
- 9. 2012 Michigan Turnaround Plan Overview Michigan’s Characteristics of Benchmarking Cost/Value Top Ten States Position 9
- 10. Step 1: Responsibly Manage Finances Good Certainty Fiscal Services for Stability for Business Citizens 10
- 11. Step 1: Responsibly Manage Finances Progress on MTP Going Forward Multi-year revenue forecasts State strategic plan Multi-year budget plans “Price” the cost of legislation Reduced state debt by one-third Memorialize sound fiscal Citizen-friendly balance sheet management practices Reduce debt levels to achieve AAA bond rating 11
- 12. Step 2: Efficiently & Effectively Provide Public Services Many Large Michigan Cities C O S T Target VALUE 12
- 13. Step 2: Efficiently & Effectively Provide Public Services Progress on MTP Going Forward State workforce that matches Accelerate service sharing and size of state consolidation Benchmarked state, school & Align spending with greatest ROI local employee health care o Reduce corrections costs premiums to private sector Reevaluate state personnel Incentivized local districts to system consolidate and share services Reduce pension costs 13
- 14. Step 3: Create a Competitive Business Climate 14
- 15. Step 3: Create a Competitive Business Climate Progress on MTP Going Forward Replaced Michigan Business Phase-out personal property tax Tax Improve regulatory culture Paid off Unemployment Match education & training with Insurance system debt jobs Streamlining regulations 15
- 16. Step 4: Strategically Invest for Future Growth 16
- 17. Step 4: Strategically Invest for Future Growth Progress on MTP Going Forward Increased higher education Top Ten funding for Top Ten funding based on performance performing higher education institutions Build & repair infrastructure that connects Michigan with the global economy 17
- 18. Step 5: Accelerate the Economic Growth of Cities & Metros Population Exports By Scientists & Value Engineers 82% 85% 90% Top 12 Michigan Metros % of State Total 18
- 19. Step 5: Accelerate the Economic Growth of Cities & Metros Progress on MTP 2012 MTP Goals Develop an urban agenda to Fix the basics revitalize central cities and Target state investments metro regions Federal waivers for workforce training & immigration Support growth of innovation & manufacturing jobs 19
- 20. Step 6: Leverage Assets to Grow the New Michigan Get Steps 1-5 Competitive Top Ten State Leverage Step 6 Assets 20
- 21. Step 6: Leverage Assets to Grow the New Michigan Global trends & needs Michigan core competencies Assets to Alignment Leverage Michigan competitive advantages 21
- 22. Step 6: Leverage Assets to Grow the New Michigan 22
- 23. Asset: Engineering Talent Opportunity: Global Engineering Village • GDP driven by innovation & productivity gains • Engineering solutions drive innovation & productivity Advantages: • #1: Engineers per capita • #9: Science & engineering degrees awarded Potential Actions: • Education capacity • Branding • Engineering services 23
- 24. Asset: Geographic Location Opportunity: Gateway to the Midwest • Exponential growth projections for shipments • Chicago’s limited capacity to expand Advantages: • #5: Air transport capacity • Closest freight gateway to deep-water ports Potential Actions: • Airport development • Trade infrastructure 24
- 25. Asset: Higher Education System Opportunity: Higher Education Marketplace • Future jobs require more education • Innovation drives economic growth • Higher education ~ 12% state GDP Advantages: • High demand for Michigan university enrollment • Growing success creating businesses from university research Potential Actions: • Performance-based funding → Top Ten state • Grow enrollments 25
- 26. Asset: Natural Resources Opportunity: Natural Resources Economy • Increased global demand for natural resources Advantages: • Food production expertise & exporter • Tourism amenities • Under-utilized resources Potential Actions: • Food processing & exports • Leisure tourism • Sustainably utilize natural resources 26
- 27. Asset: Automotive Industry Opportunity: Global Center of Mobility • Growing global demand for personal mobility • Transformation of automobile Advantages: • #1: Vehicle production • #1: Vehicle R&D Potential Actions: • Sustainable mobility solutions • Multi-modal transport solutions • Connected vehicle technologies 27
- 28. Asset: Health & Medical Expertise Opportunity: Life Sciences Hub • Aging population • Demand for high quality of life Advantages: • #8: Bio-science degrees awarded • #10: Bio-science patents • #13: Clinical trials – drugs & medical devices Potential Actions: • Incubation hubs • Research, testing & lab facility expansion • Medical tourism 28
- 29. Growing the New Michigan GOVERNMENT ALL OF US 29
- 30. Growing the New Michigan New Michigan Board Track Leadership Results Convene Develop Champion Stakeholders Action Plans the Work
- 31. MGFOA Partnering Memorialize fiscal best practices • Fiscal notes • Multi-year spending plans • Multi-year revenue forecasts based on broad input • Citizen-friendly balance sheet that is widely disseminated State strategic plan that identifies spending priorities Align spending with ROI 31
- 32. My Michigan Turnaround Plan 6 Steps 6 Assets 1 Act 32
- 33. © 2012 Business Leaders for Michigan
Editor's Notes
- What type of game excites you? A blow out? A comeback? How about a comeback by an underdog?That’s the vision behind the MTP: A comeback by an underdogAnd it’s not only possible – We’re downright bullish on it happeningAnd we have a plan to make it happen.Hopefully: Enlightening & inspiring.
- State’s business roundtable.80 largest job providers: Chairman, CEO or the top executive of company.Brands you know = Michigan’s Main Street companiesMake Michigan a Top Ten state for job, economic & personal income growth.CLICK25% of state’s economy.
- To understand how to fix the problem, we believe you have to understand the factsof how we got here CLICKOver the past decade, America lost 2M jobs.CLICK1M or 1 out of every 2 of those jobs we’re lost in Michigan!CLICKHappened because we grew less than U.S. in 90% sectorsExample: Autos only 20% job losses
- Our view: Economic competitiveness is what determines a place’s ability to grow.Competitiveness = balance between a location’s cost and the value that location provides.No one factor: taxes, talent, quality of life, etc. drive competitiveness.Combination of factorsVary based on the needs of individual businesses.
- Michigan’s competitive position is getting better, but still isn’t competitive enough to be a Top Ten statePositives:Graduate more college educated students than most statesRank high for technical talent: degreed and skilledOne of top innovation states: High university and industry R&DLocation advantages: Short air routes to Asia, shortest water port access to midwestChallenges:3-4% higher total costsBusiness taxes getting better (low for small, average for larger), PPT (high), UI (high)Regulatory climate 43rd worstEducation level of existing workforce: 31st worstInfrastructure mixed: Roads & broadbandLess attractive perception of urban centers
- Based on our research, there are four characteristics that you see in most Top Ten states.CLICK: Distinctive: They have a couple of core competencies or assets that helps them drive growth.CLICK: Innovate: They embrace entrepreneurism, risk-taking.CLICK: Cohesive: Every state has internal tensions, but they collaborate well attracting and retaining jobs.CLICK: Competitive: They aren’t always low-cost - offer high value for a competitive cost.
- Developed the Michigan Turnaround Plan with these characteristics in mind…While reflecting on the hard facts and competitive benchmarking data I shared earlier.Original plan issued in 2009 – Totally updated this yearI’ll talk about where we stand on these 5 steps next
- First, government must responsibly manage its finances.Fiscal instability = Can’t provide services businesses and citizens need
- Original plan:Nearly all addressedMulti-year budgets based on multi-year forecastsNo budget gimmicksGoing forward:State strategic plan: Clear priorities and outcome metrics like a business Put a price on all pending legislationMemorialize good practices into law – beyond election cycles Use some of any surplus funds to pay down debt.
- For STATE services - Original plan: Size of the workforce better aligns with MichiganState employee benefits closely mirror private sector.Going forward: Top to bottom look at whether they have the right workforce, in the right jobs, paid the right levels Growth of corrections spending has been reduced: Still higher than Ohio5 times more than we spend on higher education per student.
- Third step: Importance of a competitive business climate. Michigan has slid to one of the worst ranked states for number of yearsWill take time and actions to improve
- Original plan:Michigan Business Tax eliminatedUnemployment insurance debt re-paidGoing forward:Personal property tax Regulatory environment Use car analogy: Common ED platform like southern statesFeel like one government rather than 3000 to business customers.
- Step 4 recognizes for the state to invest in its future – just like businessTwo areas have greatest return on investment based on our analysis: higher education and infrastructure.Michigan will need over 1M additional educated workers with at least an associate’s degree by 2016. Michigan has cut funding for higher education by 30% over the last ten years resulting in a nearly 1 for 1 increase in tuitionCan’t take advantage of our geographic location if we don’t invest in the infrastructure that connects us to the world economy.
- Because of the state’s fiscal condition: No progress madeBut…now that state is stabilizedRecommend increasing investments in these two areas at a level that would enable us to have Top Ten universities and infrastructure. Higher education:From Top 10 to bottom 10 funded system in ten yearsCost shift to students: MI > Other statesRecommend increased funding based on performance against best national peersInfrastructure:Need more money for roadsNeed to support strategic investments that enable us to leverage our location
- Step 5 of the Plan: Recognizes that cities and metro regions disproportionately drive the state’s economy.Where most people liveMost exports come fromWhere highly educated talent works.Michigan: Higher concentration in our metro regions than the nation as a whole.
- Worked with Brookings Institution this past yearHolistic strategy the state can use to accelerate growth in our metro regions. Recognizes cities are not “islands.”The principles of this strategy are to:Need strong regional manufacturing bases to grow innovation jobs and increase exportsImprove training of workers to better fit the needs of employers in each regionTarget what resources the state does have to realize greater impactIn addition, we stress the need for local governments to “fix the basics”
- Steps 1-5 will get Michigan economically competitiveStep 6: ADDITIONAL 500,000 jobs and $18,000 in per capita income to what we project a “competitive” Michigan can achieveResult: Top Ten state for job, economic and personal income growth!So, let’s take a look at each of these six assets and how we can leverage them into opportunities to grow our economy.
- How we identified Michigan’s most significant assets that could accelerate growth:Year’s research: What does the world need that we haveWhat are we good atWhere do we have competitive advantagesAlignment = Assets that can grow a New MichiganNOT like picking sectors!Building on assets means doing better at what we already have and are good atDifference between betting on mutual funds and individual stocks!The assets we identified aren’t the only ones we could have chosen to focus on. There are many other great assets in our state.Greatest potential to have the largest impact in the shortest period of time
- Video describes the vision we have of what the New Michigan can look like How we can achieve it by leveraging key assets we already have
- To raise incomes in developed nations – increase productivityIncreased productivity – engineering solutionsMichigan #1 engineers per capitaHow to leverage:Increase engineering graduatesBrand MI as engineering centerHelp engineering companies expand into servicing other sectors
- Exponential growth in shipment of products & servicesChicago is traditional logistics gateway to mid-westBut too far from coastal deep water ports, congested, land-lockedMichigan is 500 miles from 50% NA populationExcess airport capacity, available land, supply chain expertiseHow:Trade-related infrastructureMI companies to use MI as logistics hub
- Future jobs need more education & innovation increasingly will drive growthHigher education is a big part of MI economy: ~15% State GDPHow:ND ~ 50% out of state, MI ~ 50% less than US averageTop ten in R&D, but aspire to be Top 1-5
- World demand growing: Food, water, natural resources, leisure tourismMI leader: Food production, freshwater, energy resources (Shale gas, wind power)How:Increase food exportsSustainable water uses: attract industryUtilize energy resources to power worldMarket MI as tourism destination
- Only 10% world as access to personal transportationMI can leverage our expertise to design & engineer solutions to meet these needsHOW:Lead in solutions to great personal mobility challengesEnergy sustainabilityMulti-modal systems: integration with mass transitConnected vehicle systems: safety, info-tainment
- Aging population that wants increased quality of lifeMI: Health & medical talent hub with strong R&D resourcesHOW:Nurture growth of life science companies Incubators, venture capital, research fundingNow: Show video –Why these six opportunities can be our blueprint for building a New MichiganBLM champion of the New Michigan and some of our co-champions working to advance the opportunities
- I hope this video got you excited about the future of our state.By laying the foundation outlined in Steps 1-5 and simultaneously working to leverage our assets through Step 6, we can grow a New Michigan!
- Please go to our web sites for more information.Use MichiganTurnaroundPlan.com for information on the Plan and how to “drive it home”Or the BusinessLeadersforMichigan.com site for more information about us.….Let’s Turnaround Michigan!!!!