Sunday, February 6, 2011

Chamber: Let's focus on what matters: Development seen as key to its health

By Nancy Kaffer

As the Detroit Regional Chamber works to balance its budget, President and CEO Sandy Baruah says fiscal stability and long-term viability lie in realigning chamber programs with its core mission: economic development in Southeast Michigan.

"You're going to see much more focus on economic development programs, see a much more robust economic development staff," Baruah said. "And you're going to see more revenue coming in."

Facing a projected budget hole of "several hundred thousand dollars" -- Baruah declined to provide a specific figure -- the chamber began bolstering its financial situation, including laying off nine employees two weeks ago, leaving the chamber with 65 employees. The most recent cuts were necessary, Baruah said, to make budgetary room for a renewed emphasis on economic development.

"It's just like any other business," Baruah said. "We've got to focus on what's more important ... frankly, all of the functions that we cut last week in those very painful cuts are all things we would like to continue to do, but at end of day we have to focus on what's important, and what's important is to focus on economic development."

The chamber is composed of three related entities: the Detroit Regional Chamber, the Detroit Regional Chamber Foundation Inc. and a for-profit entity, Detroit Regional Chamber Service Inc. Revenue across all three entities was $18.1 million in fiscal 2010. The budget for fiscal 2011 is $15.3 million, CFO Karen Belans said last week. According to a federal tax filing, revenue for the chamber proper was $5.8 million in fiscal 2009, the most recent year available, compared to $6 million the year before. The chamber ended that year with an excess of $128,676. The foundation ended fiscal 2009 with $2.9 million in revenue and an excess of $5,278, according to the tax document.

Registrations for the chamber's signature event, the annual Mackinac Policy Conference, are up 39 percent over this time last year. The 2010 conference had 1,498 attendees, and Baruah expects this year's attendance to exceed that number. Baruah said the budget for this year's conference is $2 million, and the chamber expects profits of $100,000 or less.

Chamber membership, Baruah said, has started to rebound after a drop when the economy crashed.

"Sales have been up since late 2009," he said.

The chamber has about 20,000 members, including affiliates, or members of other chambers with reciprocal membership in the Detroit Regional Chamber, with just under 5,000 core members, whose dues are at a higher level.

Revenue from the insurance packages the chamber offers members through its for-profit arm has historically been more than one-third of its overall revenue. But the amount the program brings in is expected to drop from roughly $6 million to $4 million in fiscal 2012, Baruah said.

Further, health care reform changes due in 2014 mean the relevance of such a program to the small-business market could change, he said -- some recent surveys have suggested that post-reform small-business owners may stop offering medical insurance to employees, directing them instead to purchase insurance through the proposed state health insurance exchanges.

"The chamber has historically received a majority of the biggest single chunk of its revenue from its affinity programs, particularly the Blue Cross (Blue Shield of Michigan) programs. We're going to continue to do that, find products that are useful to our members, that provide a positive and reasonable return for us, but at the end of the day I can't count on any particular product to fund the chamber."

Barbara Allushuski, chairwoman of the chamber board and president of Right Management, said the chamber brought Baruah in because of his economic development experience -- his résumé includes the post of U.S. assistant secretary of commerce, during which time he led the federal government's Economic Development Administration.

"This is what we need, to help build the economy, to bring jobs back, and that's a huge focus for the chamber," she said. "There's no getting around that the health care reform means less revenue dollars coming into the chamber. Like other businesses, we are needing to change our business model. We need to have a strong value proposition for members."

Allushuski said the chamber is focusing on the value proposition it offers its members, especially its small-business members.

"We're going to have focus groups to make sure we have the services small business needs," she said. "I also believe that we need to be very focused on the state. We're very excited about the new governor and excited to partner with other chambers around the state."

Economic development programs Baruah is championing include:

• The reboot of the Detroit Regional Economic Partnership, a 10-county public-private partnership that works to bring business to the area, which was started by Baruah's predecessor, Dick Blouse. Baruah said he spent the summer working with the heads of metro Detroit counties and their economic development staffs to re-create the regional partnership.

In November, the partnership and the region's leading economic development organizations signed a letter of intent to work together on economic development.

"We went back to our investor group in the beginning of January and you are going to see a much more energized program" on regional economic collaboration.

• The MichAuto program, which became part of the chamber in July and is focused on bolstering the auto supply chain in the state.

• TranslinkeD, also started by Blouse, a project that would make Detroit a center for global and regional shipping.

"Logistics, the bridge, the energy cluster in Southeast Michigan that we should rebuild, because it's 70,000 jobs if we do it right," Baruah said.

A clearly defined mission is the right move for the chamber, said Beth Chappell, president of the Detroit Economic Club and past chairwoman of the chamber. She currently sits on the chamber board.

"I think Sandy's doing exactly the right thing," she said. "We're all doing more with less, which is pretty cliché though very true. Out of necessity, we're having to focus on what our core mission is and nothing else. There's all these ancillary things anywhere you go, and we're at a point in this economy where we don't have luxury of extra resources."

Nancy Kaffer: (313) 446-0412,

Wednesday, February 2, 2011

BGSU symposium focuses on future of Great Lakes


BOWLING GREEN -- Speakers at the 24th annual Reddin Symposium at Bowling Green State University Saturday discussed the importance of ecological preservation of the Great Lakes and investment in the natural resource for the benefit of our children and grandchildren, if not for our own.

"It's a priority issue of how we spend our money. Not all the solutions are known but many of them are known, and in many cases we know at least how to move in the right direction. But in many cases, we don't know even in which direction to move," said John Smol, professor of biology at Queen's University, Kingston, Ont.

"We need more money for the research -- that's one side of it. The other side is that governments and people should start investing in the solutions such as decreasing the greenhouse gases. Some of it might cost more in the short term, but there's nothing cheap about it."

Asked if we are talking about millions and billions of dollars, he said, "Yes. But we are also talking about the future of our children and grandchildren. But it would be very well spent. It will be like insurance."

One of three featured speakers, Mr. Smol spoke to about 100 faculty, elected officials, and businessmen from the United States and Canada who attended the symposium, "The Great Lakes: A Resource at Risk," held in Olscamp Hall. The event was presented by the Continuing and Extended Education program at the university.

Another speaker, John Gannon of Windsor, Ont., a limnologist recently retired from the International Joint Commission Great Lakes Regional Office in Windsor, talked about the research management policy in preservation of the Great Lakes environment.

Mr. Gannon said his message is that a lot of environmental factors such as climate change, algae blooms and nuisance algae, the continuation of wide-spread toxic substances, and invasive species interact with each other.

That's what makes it more complex for researchers, research managers, policy makers, and the public to understand what's going on, Mr. Gannon said.

On the bright side, he said, there is an opportunity for the Great Lakes Water Quality Agreement under renegotiation by the United States and Canada to encompass issues such as invasive species and climate change, and to jump-start more interest and focus on the pact as a mechanism to resolve these problems.

Michael McKay, biology professor at BGSU and one of the event organizers, agreed by saying that "the public has to look at how the Great Lakes affect them."

He added the lakes are important as a resource of fresh water, recreation, and commerce -- all vital for job creation.

If people examine the Great Lakes in the context of those issues, maybe they can elevate the lakes to a more important place and understand why it is crucial that more money is allocated to the lakes, Mr. McKay said.

Tom Blaha, executive director of the Wood County Economic Development Commission, said he hopes the event creates opportunities for new Canadian investment in northwest Ohio and helps the local businesses find new markets in Canada.

Contact Mike Sigov at:, or 419-724-6089.

Saturday, October 9, 2010

The Next Economy: Economic Recovery and Transformation in the Great Lakes Region

Jennifer S. Vey, Fellow, Metropolitan Policy Program
John C. Austin, Nonresident Senior Fellow, Metropolitan Policy Program
Jennifer Bradley, Fellow, Metropolitan Policy Program

Brookings Institution
September 27, 2010 —

As the American economy works its way slowly out of the Great Recession, a consensus is developing among public and private-sector stakeholders that simply re-constructing our old economy, one based on highly-leveraged domestic consumption, would be a serious mistake. The nation must instead focus on building the next economy, one that is oriented towards greater exporting, powered by a low-carbon energy strategy, driven by innovation, and that creates opportunities for all.

The Great Lakes region, too long tagged with the misleading nickname, The Rust Belt, could show the rest of the country the way forward to the next economy. Although battered by decades of declining economic health, and particularly by the recession, the nation’s heartland still has many of the fundamental resources—top-ranked universities, companies with deep experience in global trade, and emerging centers of clean energy research to name just a few—necessary to create a better, more sustainable, economic model.

This is not to disregard the region’s challenges. Its major metros have neither the economic development strategies nor the transportation infrastructure in place to fully take advantage of their export generating capacity. Many have inefficient physical development patterns, hollowed out urban neighborhoods, and concentrations of energy-intensive industries, and thus remain the epicenters of the nation’s fossil fuel-reliant economy. They lack the early-stage capital and other supports needed to strengthen existing firms and encourage start-up enterprises. And many suffer from deep, entrenched poverty, and have low educational attainment levels compared with their peers nationwide.

With both the strengths and challenges clearly in mind, this report provides a roadmap to economic recovery and transformation in the Great Lakes region, powered by its metropolitan areas. It describes how federal, state, and local stakeholders can leverage the region’s substantial assets to create a more productive, sustainable, and inclusive economic future.

The report finds:

First—The Great Lakes region, particularly its metropolitan areas, has significant resources essential to creating the next economy:

Global Trade Networks —These networks, developed in large part by the auto industry, are critical to an export economy. Seven Great Lakes metros—Dayton, Detroit, Grand Rapids, Indianapolis, Milwaukee, Toledo, and Youngstown—are already among the country’s top 20 metro areas in terms of the share of their metro output that is exported. In particular, Great Lakes metros can capitalize on the growth potential of knowledge exports, as they have a concentration of top universities and associated medical complexes.

Clean Energy/Low Carbon Capacity — Industries and universities in Great Lakes metros have created the research capacity and manufacturing prowess needed to build a clean energy, low-carbon economy. They have an outsized ability to lead on wind and solar renewable component manufacturing, and to capitalize on the “green-blue” potential of the Great Lakes and their waterways. The region’s research and innovation infrastructure is already spurring the development of new products and processes: Michigan, Ohio, and Illinois are among the top states in terms of green tech patenting, focused on new technologies in battery power, hybrid systems, and fuel cells.

Innovation Infrastructure — Great Lakes metros have the industrial and institutional infrastructure necessary to power an innovation economy. The 21 largest Great Lakes metros alone are home to 32 major public and private research universities, which attract substantial federal research investment. The region produces approximately 36 percent of America’s science and engineering degrees each year. Between 2001 and 2007, an average of nearly one-third of the country’s patents each year were awarded to the Great Lakes states.

Opportunities — Like innovation, opportunities grow in the presence of a robust educational network, such as the one that exists in the Great Lakes region. In addition to its public and land grant universities—the latter created in the 19th century to promote agriculture, science, and engineering—the region is also dotted with community colleges, which help the region’s workers develop skills and credentials necessary to secure jobs in the region’s industries, and in so doing maintain a pool of skilled employees to attract and support them.

Second — To realize the promise of the next economy, federal, state, and metropolitan leaders should join with the private and philanthropic sector to:

Invest in the assets that matter: innovation, infrastructure, and human capital

Devise new public-private institutions that are market-oriented and performance-driven.

Reimagine metros’ form and governance structures to set the right conditions for economic growth.

Tuesday, September 21, 2010

Michigan needs tax incentives to compete for jobs

Chris Knape | The Grand Rapids Press

GRAND RAPIDS -- Despite political rhetoric, Michigan needs tax incentives, lower taxes and fairer trade policies to remain globally competitive.

That was the collective conclusion of a panel of a top site-selection consultant and two economic development experts speaking Friday at the West Michigan Policy Forum.

Ron Pollina, a site selection consultant, said the country stands to lose many of the new "green energy" jobs it has created in wind, battery and other industries once subsidies run out if Congress doesn't create trade policies with the nation's interest in mind rather than special interests. Michigan also needs to create a more competitive environment.

"You have to change the business climate in this state or, long term, those companies won't be here," he said.

"The basic problem is in Washington, D.C.," said Pollina, author of the book "Selling Out a Superpower." "We have horrendous trade policies established by special interests."

For Michigan to quickly become more competitive, the state would do well to adopt a Right-to-Work policy, said Pollina. Doing so would take off the table some outsiders' concerns about problems with unions.

He also said Michigan has become less competitive because it has let some programs such as tax-free Renaissance Zones sunset while others have lost pace against more aggressive competing states.

"Your competition is not the surrounding states around Michigan, your real competition is global competition: Mexico, India, Brazil and China," said Pollina, whose company is based in Park Ridge, Ill.

Michigan has dropped in virtually every competitiveness metric measured by Pollina's firm. It was ranked No. 1 in 2004 for its incentives and economic development agency. Today it ranks 11th.

Overall it ranked 7th in 2004 and, today, ranks 31st in terms of total performance.

He blamed the sunset of tax-free Renaissance Zones and less competitive tax credits from the Michigan Economic Growth Authority for part of the drop.

Birgit Klohs, CEO of The Right Place Inc. in Grand Rapids, derided calls for the elimination of tax incentives. Doing so would immediately take Michigan out of consideration by many expanding companies, she said.

"I will be glad to lay down my weapons if 49 other states agree to do the same," she said. "We need a better tax climate, but if you unilaterally disarm me and my colleagues by cutting out incentives, then I'm out of this game."

Doug Rothwell, CEO of Business Leaders for Michigan, said Michigan needs to take a holistic look at reforming its tax system and simplifying tax incentives in order to remain competitive.

"The Michigan Business Tax equates to the highest corporate income tax in the country," he said. "We don't have enough assets to offset, compensate for the cost problem."
That being said, Rothwell said there are no quick fixes.

"There is no silver bullet for this stuff," he said. "I think that's something in Michigan that we fall in to. I am so sick of the economic development fad of the month."

E-mail Chris Knape: and follow him on Twitter at

Sunday, September 19, 2010

Michigan's economic recovery hinges on turnaround strategies debated by Rick Snyder, Virg Bernero

By: Nathan Bomey Staff

As Michigan’s gubernatorial candidates vie for the chance to lead the state’s economic revitalization efforts, regional economic developers are hoping to influence the state’s strategy after the Nov. 2 election.

Michigan’s economic development strategy is becoming a central issue in the race between Ann Arbor venture capitalist and Republican candidate Rick Snyder and Lansing Mayor and Democratic candidate Virg Bernero.

The new governor will shape the future of Michigan’s economic development strategy, which will decide the pace and complexion of the state’s resurgence.

At stake: the future of the Michigan Economic Development Corp.’s tax incentives and the state’s role in distributing small amounts of capital to private companies.

“There’s a fair amount of uncertainty at the MEDC with the change in administration,” said David Parsigian, managing partner of the Ann Arbor office of law firm Honigman Miller Schwartz and Cohn. “A lot of people have left, and it’s kind of hard to see what’s going to happen in terms of who staffs that thing, how it’s built and what it’s going to focus on.”

Since Gov. Jennifer Granholm took office in 2003, MEDC’s Michigan Economic Growth Authority Board has distributed $3.56 billion in tax incentives to 508 companies, according to a list of tax credits MEDC provided to Studies by the Anderson Economic Group and the Mackinac Center for Public Policy say the MEGA program has been a waste of government resources, while a competing study by the Upjohn Institute says the tax incentives are worthwhile.

Regardless, Michigan’s economy, pummeled by the automotive crisis and global economic trends, has lost 592,900 jobs since 2003, according to the Michigan Department of Energy, Labor and Economic Growth. Some 13.4 percent of Michigan’s jobs have been eliminated over the last seven years.

Snyder and Bernero told they would both take a harder look at the effectiveness of the state’s tax incentives and give more economic firepower to Michigan’s regional economic development groups.

But they differ on the tax incentives MEDC should be allowed to distribute - incentives local economic developers promote heavily in discussions with businesses that are considering their future in Michigan.

Snyder and Bernero both claim to be the most effective “job creator” in the race. But their policy proposals, placed in the context of Michigan’s evolving economic development picture, illustrate the increasing influence of groups like Ann Arbor SPARK, Grand Rapids-based The Right Place, Detroit-based TechTown and the University Research Corridor, a coalition among the University of Michigan, Michigan State University and Wayne State University.

Those organizations are convinced incentives need to stay in some form. But their main focus is on the pursuit of collaborative opportunities with other economic development groups, major corporations, startup companies, universities and state government.

“It is all about collaboration if you’re going to make this work,” said Stephen Forrest, chairman of Ann Arbor SPARK and U-M's vice president of research. “People who want to come to this region are not interested in our differences. They’re interested in how we work together, how SPARK and any other economic developers can connect them to the state and how the state can connect them to the national.”

SPARK, for one, is emphasizing the importance of “open source economic development,” the idea that successful economic development practices should be shared with other communities because the various regions throughout the state rise and fall together.

“To have this what I would call boundary-less development strategy is extremely important and it has borne many fruits for the Washtenaw County area as well as for southeast Michigan in general,” Forrest said. “And I believe that philosophy has extended appeal to other economic developers around the state and outside the state.”

SPARK’s collaborative moves offer pathway

Increased collaboration in Michigan’s economic development process is already unfolding as the gubernatorial transition draws near.

SPARK announced in August that it would lead a $1 million business plan competition in cooperation with Oakland County-based Automation Alley, Detroit-based TechTown and the new Macomb-Oakland University Incubator. The New Economy Initiative for Southeast Michigan is funding the project through the new Business Accelerator Network for Southeast Michigan.

The statewide business plan competition - which aims to encourage entrepreneurialism in Michigan - is the latest in a series of collaborative economic development projects SPARK has agreed to lead.

The group already manages the Michigan Pre-Seed Capital Fund, which invests in startup technology companies on behalf of the MEDC and the state’s 15 SmartZones, as well as the Michigan Microloan Fund, which provides small amounts of financing to companies that can’t get traditional bank financing. Collectively, SPARK has distributed $11.2 million to 84 companies through those programs.

The group has also coordinated with local communities, universities and the state to launch several business incubators. The biggest, a 57,000-square-foot life sciences facility in Plymouth Township, was the result of cooperation among SPARK, MEDC, Wayne County and private companies.

Collaborative economic development efforts like those, which have been praised by local businesses, should serve as an example for Michigan’s future economic development strategy, SPARK CEO Michael Finney said.

“I think it’s part of the solution,” said Finney, whose ties to Snyder could make him a candidate to become the next CEO of the MEDC. “We think we’ve created a model that has huge upside potential, and the upside potential is definitely beyond the Ann Arbor region.”

The evolution of SPARK provides a framework for understanding the economic development mindset of Snyder, who co-founded SPARK in 2005.

Snyder said MEDC should encourage economic development organizations throughout the state to replicate successful business services offered by groups like SPARK. One program he likes is a service in which SPARK collects job openings at local companies and connects talented local jobseekers to those businesses. SPARK posted 2,781 job openings for 1,001 companies from 2006 to 2009.

“I’m still amazed that more organizations aren’t doing that,” Snyder said. “That’s something that we should be doing statewide.”

Jeff Mason, executive director of the URC and a former vice president at MEDC, said collaborative efforts among the state’s top economic development groups are vital.

“It just becomes stronger when everyone is rolling in the same direction,” he said. “We see the opportunity to work with the MEDC and with a new administration and the existing administration to effectively harness the assets and the resources we have to benefit the future of the state’s economy in anyway that we can be of assistance.”

Bernero’s economic development approach can be viewed through the lens of his strategy in Lansing.

Over the last five years, the Lansing Economic Development Corp. gave out $177.6 million in tax incentives in 121 installments - including 37 brownfield redevelopment credits, 24 obsolete property rehabilitation tax certificates and 18 tax abatements. LEDC claims those efforts created more than 5,100 jobs in the city of Lansing.

“Much of my strategy is what I’ve done in Lansing,” Bernero said. “It’s not based on hypotheticals. It’s based on actual things we’ve implemented in the city. We’ve leveraged every asset we have locally.”

Bernero said that without incentives, the state would be missing a vital element in its economic development tool kit.

“I believe in a global economy we’re competing not just in a local basis, but state and global basis. It would be disarmament, waving the white flat, to scale back the use of economic incentives,” Bernero said.

That aggressive use of incentives reflects a philosophical divide between Snyder and Bernero.

Snyder believes MEDC’s incentives are indirectly making it more expensive for Michigan’s existing companies to do business. He wants to significantly slash the number of incentives MEDC distributes through programs like the Michigan Economic Growth Authority (MEGA) Board’s tax credits.

Snyder wants to eliminate the state’s controversial Michigan Business Tax in favor of a 6 percent corporate income tax.

“A natural consequence of that is you should be able to reduce the amount of incentives that are required,” he said. “Why do you need incentives at that level? It’s because we’ve got a broken tax system. In some ways those are Band Aids. You’ve almost got to buy someone to come into our state because of our broken tax structure.”

Opinions about Michigan’s tax incentives strategy vary among the state’s economic development leaders, past and present. Several economic development leaders said in interviews that they believe the incentives need to stay, although they also said they’d like to see the Michigan Business Tax reworked.

“I believe we need to make Michigan a much more business friendly state,” said James Epolito, who served as CEO of the MEDC under Granholm before resigning in spring 2009. “But at the same time you can’t just throw away your tax incentives and expect people to come to Michigan. You’re not only competing against other states in the Midwest but all over the county and all over the world.”

Doug Rothwell, CEO of Business Leaders for Michigan, which has endorsed Snyder, said the MEGA tax credits have been misguided. He said the state shouldn’t be focusing on specific sectors of the economy MEDC has historically favored, such as life sciences, alternative energy and advanced manufacturing.

“I think the issue here is not too much that they have too many incentives, it’s the way it’s being used,” said Rothwell, who served as CEO of MEDC when Snyder was chairman of the agency under Gov. John Engler.

“We get enamored with the economic development fad of the month. There is no one answer to this. The answer is the basic blocking and tackling, which is get yourself a competitive business climate, make sure you’re having an aggressive economic development strategy and incentive program.”

Bob Trezise, CEO of Bernero’s Lansing Economic Development Corp. rejected the suggestion that incentives are part of the problem. He hopes “those core community tools,” like brownfield redevelopment credits, aren’t eliminated under the next governor’s administration.

“Those tools have been magic bullets for cities,” he said. “Without those tools, we would have really been dead in the water. I do not think this is the time to be cutting incentives. That is absolute insanity.”

Finney said some level of tax incentives is necessary though not always decisive for companies considering where to expand.

“Being on the ground and talking to companies on a daily basis, incentives is not one of the topics that come up very early in the conversation,” Finney said. “In fact, it tends to come up when companies are very close to their final decision making. You’ve got to package and sell all the other things. You’ve got to lead with the talent we have here, the infrastructure we have, the quality of education we have. When you lead with all those things, this state fares very well when compared to other states throughout the country.”

One of the main problems for small companies is lack of access to capital, which typically helps them expand, introduce new products and hire more workers.

Bernero wants to form a state-owned-and-operated bank to offer loans directly to Michigan companies that can’t get access to credit from big banks that “have basically stymied our recovery.”

“Our small businesses are being punished for the abuse of Wall Street,” Bernero said. “They’re the most creative, dynamic businesses. They’re the ones that create the jobs and they’re being stifled from the growth.”

Chuck Hadden, CEO of the Michigan Manufacturers Association, said he would be willing to consider a state-owned bank like that in North Dakota. But he’s not sold on it.

“It’s definitely worth exploring, if for no other reason than it puts some heat on other banks out there to make something happen,” Hadden said. “We’re not really comparable to North Dakota though.”

Access to capital is a key aspect of the success of Michigan’s research universities in their efforts to launch startup companies and boost the economy in their respective communities.

Forrest, Snyder’s successor as chairman of SPARK, said the state’s 15 public universities form a major asset that needs to be leveraged more effectively. He said the URC was “the single greatest resource we have to build on.”

But those university spinoff companies generally can’t get off the ground without access to loans or venture capital, financing that helps them get their products ready for the market.

Rothwell said a state-owned bank is not an effective way to get capital to startup companies. He said he is comfortable with programs that place state money in the hands of professional investors to back promising Michigan companies. But he said he was uncomfortable with Michigan offering loans directly to companies.

“At some point you have to let the market determine what is worth investing in and what’s not,” Rothwell said.

Forrest, for one, wants to see visionary leadership from the next governor.

“I’m most interested to see how the old equation is going to change. What are the ideas behind moving us from an entrenched, heavy manufacturing economy, which we all know has drained away? How do we make this transformation? What is the long-term vision?” Forrest said.

He added: “The state of Michigan used to be at the very heart of the American economy. It was the driver. So what do we do to make that happen again? It may be too big of an ask to hope that at some point that we can overtake the state of California or Texas, but we can certainly be a player in their league, and I want to know what’s the strategy to go there?”

Contact's Nathan Bomey at (734) 623-2587 or You can also follow him on Twitter or subscribe to's newsletters.

Tuesday, August 24, 2010

Great Lakes Water Should be Valued, Not Discounted

A central premise of the new Great Lakes Compact is that Great Lakes waters are worth protecting and that a premium be placed on water conservation and efficiency. In short, we need to put our own house in order.

That point is being missed by Milwaukee, however, as that city looks to offer Great Lakes water at a discount to lure high-volume business and industry water users to relocate and expand there.

It’s not that we shouldn’t lure sustainable businesses to invigorate the Great Lakes economy. In fact, quite the opposite.

But it’s time community leaders in Milwaukee and other Great Lakes communities put their money behind the words of the compact -– that the lakes are an asset to be touted and protected, not discounted and squandered. Put another way, if Great Lakes cities don’t recognize the intrinsic value of being situated near the world’s largest concentration of freshwater lakes, how can they convince others of their value?

In comments presented to Wisconsin’s Public Service Commission (PSC) in Milwaukee Wednesday, Alliance Water Conservation Director Ed Glatfelter urged the commission to reject Milwaukee’s bid for a discounted “economic development” water rate, terming it a “a false bargain with cheap water.”

“Great Lakes municipalities with a ready supply of water who want to promote economic development need to promote the reliability and long-term sustainability of their water resource -- genuine qualities that contrast with artificially low prices,” he said.

Indeed, Glatfelter –- with more than 26 years of water supply management experience under his belt -- notes that smart marketing could even help communities pay for water infrastructure if they use full-cost and conservation pricing for water.

There are other reasons to deny Milwaukee’s request. Among them: the city’s water rates are already low. A draft PSC survey of large cities in Wisconsin and throughout the United States determined Milwaukee’s water rates would be the fifth lowest of the 28 cities surveyed even after proposed rate increases on the city’s existing water users are enacted.

Another reason: Fully 68 percent of respondents to a recent survey of corporations considering relocation or expansion say sustainable development is more important now than ever.

Noting growing concerns about the availability of long-term water supplies beyond the Great Lakes Basin, Glatfelter said, “The reliability, long-term sustainability and quality of the Great Lakes Basin’s water resource should be attractive enough -- even at fully valued prices -- to be an effective economic development tool.”

Attractive enough, to be sure, but still taken for granted by many in the region. It was this same complacency that drove adoption of the Great Lakes Compact back in 2008, a policy that largely bans water diversions from the Great Lakes at the same time that it calls for ratcheting up conservation and water efficiency in the region.

The simple thinking was this: the region must demonstrate that it values and protects the waters of the Great Lakes before it can tell others who come calling for water to do the same.

Ultimately, the battle for maintaining the Great Lakes over time won’t be won with a single sweeping piece of legislation, but with many smaller acts that underscore our reverence and commitment to these waters.

The Wisconsin PSC has an opportunity now to send a clear message that Great Lakes water doesn’t belong on the closeout rack.

Alliance For The Great Lakes

Monday, August 9, 2010

Exports in the Great Lakes:

How Great Lakes Metros Can Build on Exports and Boost Competitiveness



Using newly developed information from the Brookings report “Export Nation,” this analysis of export activity in the 21 largest metros of the Great Lakes region for the years 2003 to 2008 reveals that:

■ Exports support 1.95 million jobs in the largest metropolitan areas in the Great Lakes. Even after decades of decline in manufacturing employment, export industries (primarily manufacturing) still employ millions of people in the region, ranging from 398,000 in Chicago, to 240,000 in Detroit, to 20,000 in Des Moines, as of 2008.

■ Great Lakes metros have some of the highest dollar volumes of exports and
the greatest reliance on exports of any of the large metropolitan areas in the nation. Chicago and Detroit rank third and ninth, respectively, in total dollar export volume among top 100 metropolitan areas, and Minneapolis, St. Louis, and Indianapolis all rank in the top 20. Great Lakes metros also tend to export a greater proportion of their economic output than most large metropolitan areas.

■ In general, Great Lakes metros with the highest levels of manufacturing employment are less innovative than their manufacturing oriented or export intensive peers. Nationally, metros that are manufacturing oriented or export intensive (or both) tend to create patents at much higher rates than other metros. But most Great Lakes metros underperform on innovation compared to their national peers, despite high levels of manufacturing employment and generally high export intensity. Only three of the 15 most manufacturing-intensive metros in the region, Detroit, Minneapolis, and Rochester, post above average patenting rates.

■ The region’s metros lag the nation’s other large metros in terms of service exports and service export growth. Only Chicago and Minneapolis export more services as a share of total output than do the nation’s top 100 metros as a whole, and only four Great Lakes metros (Syracuse, Buffalo, Des Moines, and Columbus) outpaced other large metros in the growth of their service exports. Despite this lackluster growth performance relative to other metros, infl ation-adjusted service exports grew faster than output in 20 of the 21 Great Lakes metros from 2003 to 2008 (Pittsburgh was the only exception).

■ Considerable growth in global customers for products and services produced in the Great Lakes metros will come from the large emerging markets of Brazil, India, and China. Most Great Lakes metropolitan areas (12 out of 21) send 8.6 percent or more of their export value to Brazil, India, and China (the BIC countries), meaning that they meet or exceed the average large metro export share going to the BIC nations. Some Great Lakes metros, such as Youngstown, Des Moines, and Columbus, have seen huge jumps in the value of their exports to BIC countries over the last five years.

A legacy of success in exports does not guarantee future dominance, a lesson that Great Lakes metros should have learned through rough experience. But raising exports holds out the promise of creating thousands of new jobs in Great Lakes metros that desperately need them. For that reason, metropolitan leaders and their federal, state, and private sector partners must be aggressive and creative in determining what new or re-imagined goods and services the world demands from them, and equally dedicated to expanding their global reach.