Tech Trek

from DBusiness | May - June 2023

Pull of Gravity

Michigan has had its share of success attracting large manufacturing projects in recent years, but with each new announcement, the subsidies have increased.

State leaders say they must offer aggressive incentives when competing for megaprojects with other parts of the country, whether for semiconductors or medical devices. But rather than favor certain industries, Michigan officials should better diversify the overall economy.

The problem is the rising amount of subsidies — $1.7 billion in recently announced assistance for a Ford EV battery factory in Marshall that will employ 2,500 workers represents a record $680,000 per job — masks a deeper problem. Michigan is not competitive with most of its peers.

Fast-growing states like Florida, Tennessee, and Texas, which have no income tax and are ranked higher in “Best States for Business” reports, are growing rapidly. One way to measure that success is through population trends.

In 1970, Florida’s population was at 6.8 million, Tennessee was at 3.9 million, and Texas had 11.2 million people. Michigan, according to the same U.S. Census figures, had 8.9 million people.

Flash forward to the 2020 census, and Florida added 14.7 million people, Tennessee grew by 3 million citizens, and Texas saw a boost of 17.9 million residents. Michigan’s population, meanwhile, rose by 1.1 million people.

Today, the state’s public school outcomes lag in reading and math testing (M-STEP), while fewer high school graduates are enrolling in a community college or a public university. If the state is to be a formidable competitor in the knowledge economy, public educational outcomes must improve.

Consider Ohio, which has an income tax and saw its population grow by 1.1 million since 1970 (the same as Michigan), landed what is considered to be the largest silicon manufacturing plant in the world when in 2022 Intel Corp. announced it would build a $20 billion megaproject for 3,000 workers outside of Columbus.

While Ohio is offering up to $2 billion in subsidies, which works out to some $667,000 per job, the average annual salary for those Intel employees is $135,000. By comparison, many of the jobs Michigan has attracted via its recent subsidy packages will pay an average annual salary of around $44,000.

Put another way, over the course of a year, the collective salaries of 3,000 workers being paid an average salary of $135,000 generates $405 million in total wages, while the same number of employees being paid $44,000 a year works out to $132 million in total wages.

Intel officials said one major reason they selected Columbus for a 1,000-acre campus was ready access to skilled workers, namely residents with four-year college degrees and above. Unless Michigan can figure a way to attract and retain more college graduates, it will have a tougher time competing in the knowledge economy.

One initiative Michigan could build upon is the Greater Grand Rapids Tech Strategy overseen by The Right Place, a nonprofit organization dedicated to advancing the west side of the state. Introduced last September, the plan calls for creating 20,000 tech jobs over the next decade by developing, reskilling, and attracting talent, supporting more entrepreneurs, expanding high-speed fiber connectivity, among other initiatives.

By supporting more entrepreneurs across multiple business sectors, reducing taxes, and retaining and attracting college graduates and skilled workers, Michigan could create much greater growth opportunities for generations to come.

Scaling Business

I’m sure you’ve received a lot of positive feedback on the Scaling Minority DBusiness Breakfast Series event that you hosted on Feb. 7 at the Gem Theatre in downtown Detroit, but allow me to add on. It was very well done. Everything from the selection of the venue to the panelists and the moderator — outstanding! I’m also writing to share or reintroduce you to a fund that Pat O’Keefe and I are involved with, Grow Michigan 2 (growmichiganfund.com). We would love to be considered in any future DBusiness publications that include lists. Also, as you develop your “Hustle and Muscle” network, please consider us, as well, as we would love to be a resource for Michigan businesses, including MBEs.

Derron Sanders Southfield

Hustle And Muscle

Our thanks to the editorial team at DBusiness.com for launching the new feature “Hustle and Muscle” to promote startups. Our company, DivDat, a payments company, is proud to be innovation ambassadors from the Motor City. We appreciate the interest from potential investors to assist in sustaining growth as we capture market share locally and nationally. We applaud DBusiness for engaging startups and investors alike.”

Bruce Babiarz Detroit

Brad Ziegler

Brad Ziegler is a Detroit-based commercial photographer specializing in editorial portraiture for magazines, corporations, ad agencies, and other clients. His work is characterized by rich lighting, classic composition, and modern style, and is featured on award-winning Fortune 500 websites and ad campaigns. In addition to DBusiness, Ziegler’s clients include Volkswagen, Minute Maid, Ally Auto, Inc. magazine, CFO magazine, Martha Stewart Living, and Midwest Living magazine. He earned a bachelor of arts in film study from the University of Massachusetts at Dartmouth and graduated with honors from the New England School of Photography. For this issue, Ziegler photographed the winners of the annual ACG Detroit M&A All-Star awards.

Dan Calabrese has been reporting on business in Michigan since 1992. He started at the Grand Rapids Business Journal and became a frequent contributor to DBusiness in 2009. He has written for a variety of trade magazines, including Transport Topics, Pet Age, ICF Builder, and several others. He also has aurhored four novels: “Powers and Principalities,” “Pharmakeia,” “Dark Matter,” and “Backstop.” Calabrese lives in Royal Oak with his wife, Angie, and their son, Tony. In this issue, the graduate of Western Michigan University wrote the cover story — “Triple Net” — about the three Schostak brothers who are following in their father’s and grandfather’s footsteps in the commercial real estate business and other markets.

Ricardo Martínez, who provided the art for the cover of this issue of DBusiness, was born in Santiago, Chile. In the early 1980s he moved to Miami, where he married his American wife and lived for 8 years. Martínez currently is based in Madrid, Spain, where he helped found the daily newspaper El Mundo He created a comic strip called “Goomer” that was made into a movie in 1998. He has been doing editorial cartoons since 1990, and using the scratchboard illustrating technique since 1989. Martínez counts among his clients Coca-Cola, Gillette, American Express, 7Up, The New Yorker, Science, Scientific American, Foreign Affairs, Time, and many others.

R.J. King

Tim Keenan

EDITOR Jim Stickford

COPY EDITOR Anne Berry Daugherty

DIRECTOR Lindsay Richards

ART DIRECTOR Justin Stenson

SENIOR PRODUCTION ARTIST Stephanie Daniel

JUNIOR ART DIRECTOR Steven Prokuda

ADVERTISING SALES

ACCOUNT EXECUTIVES Cynthia Barnhart, Regan Blissett, Karli Brown, Maya Gossett, Donna Kassab, Lisa LaBelle, Mary Pantely and Associates, Jessica VanDerMaas

PRODUCTION

PRODUCTION DIRECTOR Jenine Knox

SENIOR PRODUCTION COORDINATOR Jill Berry

PRODUCTION ARTIST Jonathan Boedecker

ADVERTISING COORDINATOR Amanda Kozlowski, GRAPHIC DESIGNERS Jim Bibart, Kathryn Dave

WEB

DIGITAL DIRECTOR Nick Britsky