Blog: David Hollister

What do Boston, Madison, Austin, Indianapolis, Columbus, the triangle in the Carolinas and Silicone Valley have in common? We know they are all thriving, but there is more to the story.

First, each of these communities has an innovative, entrepreneurial and engaged college or university that is partnering in the growth.

Second, each of these communities is thriving as an economic region, not as a single municipality. The region is being defined by the international marketplace and the labor force, not by some arbitrary configuration mandated by law or some governmental agency.

Third, because these areas are thriving by regions, they are being led by business people, not political leaders. The local political leadership must be involved and at the table, but the actual leadership is coming from the business community.

Fourth, in each of the thriving communities, the business community has created a multi-jurisdictional, non-profit, non-governmental organization (NGO) to advance the region’s agenda. NGOs can do this because state laws creating them allow great flexibility and, consequently, they are more nimble than state and local governments and bureaucratic agencies.

Finally, the communities that are thriving also have high concentrations of people with advanced degrees. The higher the number of degrees, the higher the per capita income and the more robust the regional economy. Diversity also helps fuel prosperity as people from around the world come to these innovative colleges and universities to acquire knowledge and skills that drive the new economy. Smart communities figure out how to attractand retain this foreign talent pool.

The formula is easy! An Engaged University + Regionalism + Business Leadership + NGOs + Talent = Prosperity. It is that simple!

Doing it is hard. That’s the challenge Mid-Michigan faces today.

As few as 10 years ago, Lansing was identified as an economic region supported by three pillars: State Government, General Motors and Michigan State University (MSU).

Today, state government is still present but smaller; General Motors is challenged, but locally-produced goods are doing well; and MSU is emerging as the engine driving the growth for the new economy.

Neogen is one example of a highly successful spinoff company from the university, doing high-end research, making products sold throughout the world to ensure the safety of food and animals. Neogen recently announced that it surpassed $100 million in annual income and now employs more than 450 employees in multiple U.S. and international locations.

Niowave is another spinoff company from the university. This company, located in the old Walnut Street School, is manufacturing components for the cyclotron and was originally expected to employ eight to 10 people in 2008. Today, Niowave employs 20 people — most of them retrained auto workers who quickly adapted to the advanced manufacturing operation. By seeking new markets and industry innovation, this relatively new company is already planning to expand its current operation and facility.

MSU is also driving the emerging information technology sector with its 350 companies rapidly becoming the newest pillar of our regional economy. A report from the Capital Area Michigan Works! specifically outlines how IT opportunities are growing in the capital area.

For example, between 1998 and 2004, IT grew by 20 percent, about seven times faster than the rate for all jobs. Earnings in the IT industry alone are 75 percent higher than the average for all industries. The vitality and opportunities available within the local IT industry are often overlooked —or completely off the radar—among capital area businesses and residents.

Another recent study by the Capital Area Michigan Works! documents the addition of the insurance and financial sector as another growing and stabilizing pillar. It shows that the capital area is home to several major insurance carriers — Accident Fund, Auto-Owners, Blue Cross Blue Shield of Michigan, Delta Dental of Michigan, Farm Bureau Insurance of Michigan, Jackson National Life, Michigan Millers, Citizens Insurance, AP Capital and FinCor Holdings, Inc. (parent of MHA Insurance Company).

The insurance and financial industry is the second-fastest growing sector and is one of only four private sector industries adding jobs between 2000 and 2006, when it expanded by nearly 1,600 jobs. Average pay in insurance and financial services ($53,885 annually) in the capital area is nearly 50 percent higher than the average for all private sector industries ($37, 087). The industry is having difficulty finding workers in several occupations, especially in college-degreed areas, and is concerned about scarcity of workers in the future.

The creation of the Office of Bio-Based Technologies by MSU President Lou Anna K. Simon has already resulted in a federal grant of more than $50 million, the assembly of one of the most talented bio related staffs and the recognition of MSU as a leader in the bio-economy. It is just a matter of time before we experience new business sprouting up as a result of this effort.

Lansing is no longer dependent on an economy shaped like an unstable three-legged stool, but is emerging as a more diversified and stable six-legged table.

One can hardly escape the drumbeat of bad news as it relates to Michigan’s manufacturing-based economy. It’s true that Michigan has the highest concentration of manufacturing of all states, and that sector is undergoing a stressful transformation.

But it is also true that manufacturing is not going away.Yes, we are losing low tech, high volume, basic manufacturing to low cost countries. But high tech advanced manufacturing is doing quite well.

In this region, the two new General Motor plants, Demmer Corporation, Spartan Motors, Neogen, Niowave, the Woodbridge Group, Magnesium, Dowding Industries, Emergent BioSolutions, Bekum and Hardtech are all thriving. They are growing and thriving because each has adopted advanced technology, developed new markets, and cultivated a skilled workforce.

These high tech, advanced manufacturing operations are something to behold. They are not the greasy, loud, dirty and physically exhausting assembly operations that my father and father-in-law experienced.

These new operations are quiet, clean, and operated by computers and robots. Instead of toiling to keep up with the assembly line, today’s workers monitor, maintain, and repair the robots, computers and lasers that are the essence of these advanced operations.

Today’s workers are ready and anxious to be trained and retrained, and they constantly interact with management to seek new ways to innovate, increase productivity and serve new markets around the world. The distinction between labor and management is blurred as all employees are expected to be essential members of the team.

The foundation for our successful advanced manufacturing means adopting a culture of innovation, technology and life long learning. It seems simple, but changing a culture is hard work!