Michigan's Economic Outlook-- Michael A. Finney, Pres. Michigan Economic Development Corporation

By Roberta M. Gubbins Legal News "Michael Finney, our speaker, President & CEO of the Michigan Economic Development Corporation, is responsible for executing the strategy of Governor Snyder for the future economy of the state of Michigan," said Frank Reynolds, lawyer with Foster, Swift, the event sponsors, to a large group of lawyers and business leaders who, on June 27th, came to the Michigan Historical Museum to learn about 'Michigan's Economic Outlook.' "We are in the process of re-inventing Michigan, said Finney, beginning his discussion with a video of the new Pure Michigan campaign. Originally "aimed at everyone to encourage tourism, it is now adapted to attract businesses." The video, Finney noted, emphasizes Michigan's manufacturing and entrepreneurial spirit and the $16.7 billion in annual industrial Research and Development and it is the starting point of the Governor's campaign. "We are trying to be simple, fair and efficient,' he said. "Simple in how we are doing things, fair in taxation and efficient in removing red tape. We are developing practices that will make a difference." "To get business, we have eliminated all the tax credits. We are going to pay our way. This is the center point of the governor's programs. This was done because we have an 8 billion dollar liability from past economic development programs." The state has about $170 million to fund the incentive programs. "The tourism campaign got $25 million to drive tourism to our state. Our return on the tourism dollars is 3 to 1; for every dollar that we spend on the tourism campaign we get about $3.00 back in tax revenues. The tourism campaign is directed to the mid-west and to the states where there are a lot of Michiganders such as California silicon valley, Chicago and the East Coast." "Another $25 million will be spent to help entrepreneurial start-ups. Michigan was once an entrepreneurial powerhouse. We lost our entrepreneurs to other areas because the eco-system didn't exist. We are investing in new companies, business incubators and accelerators." "$100 million will be used to help existing companies grow. It is an appropriation--it is real money--we are not selling our future. Tax credits didn't help. An aftermarket was created with the tax credits being sold to the secondary market for 70 to 90 cents on the dollar because business needed cash to grow. Now we are going directly to the business owner. We are trying to have the resource up front." The loans, equity investments or grants cost a lot less and are one feature of the state's "economic gardening" toolkit. Finney explained that although the state has relieved businesses of some tax liability, it needs to do more. "Businesses, he said, "want customers, employees and access to capital from private sources. And, we need a better regulatory environment." "We found private banks to help out. Huntington Bank said 'we will put $2 billion out there.' I was told not to go there because the other banks will complain. I thought about it for a nano-second and then said 'let them complain.' When folks put their hand up and say 'why not me?' I say you, too, can have this deal--just put up $2 billion dollars or less. Our purpose was to create unique opportunities. Now I have two or three more banks to put money together for use in Michigan." The Federal Government offered the state $800 million dollars, three fourths of which it will use for collateral support for loans. Finney gave the example of a plan to restore an old building and the business doesn't have enough of a down payment. In those situations, the state will put on deposit in the bank 49% of the collateral needed by the business to get the loan. "Now," Finney said, "our money is sitting there and earning interest and as the borrower brings down their obligation, we get our money back. The remaining one-quarter of the money will be used for loan participation. We are creating a self-sustainable fund." "Companies also need customers. We created Interdepartmental Collaboration Council to pull all state departments together to help move the economic needle. We will work to find Michigan based companies. We have a web portal where any company that wants to buy or sell as part of this process can participate." The state's export team is planning a trip to the Far East in September to explore export business. Recognizing that it is often difficult for local businesses to get paid when dealing with companies abroad, the state put together some resources that will help them get paid. "We also help companies find talent." "Simple fair, efficient," he concluded. "Over the years you will see the impact of what we are talking about. We will solve the problems one step on a time." In answer to questions: 1. Spartan Motors from Charlotte asked about Michigan's licensing and regulatory maze. "The idea of lessening the burden on companies is important," Finney answered. "We have a Licensing and Regulatory Affairs group that is going through all of it to make it simpler." 2. New bridge? No answer on that. The Michigan Economic Development Corporation (MEDC) is a public-private partnership between the state and local communities. The MEDC promotes smart economic growth by developing strategies and providing services to create and retain good jobs and a high quality of life. For more information on the MEDC's initiatives and programs, visit the Web site at www.MichiganAdvantage.org. Michael A. Finney came to the MEDC from Ann Arbor, where he served as President and CEO of Ann Arbor SPARK, a public-private partnership created to advance innovation-based economic development in the greater Ann Arbor region. He currently serves on the board of directors for the State Science & Technology Institute; Trustee for the Washtenaw Community College Foundation and the Ann Arbor Area Community Foundation; The University of Michigan Life Sciences Institute, Office of Technology Transfer and College of Engineering Center for Entrepreneurship, National Advisory Councils. He also served on Governor Rick Snyder's Transition Team. Published: Thu, Jul 7, 2011

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