It's great for Michigan when businesses do business here. Eating that tomato in that restaurant from the farm just outside of town. Drinking that coffee from the place that uses the beans from that guy at the farmer's market. These businesses keep it in the family, so to speak. Circular flow of money, some call it. But the world is flat, as Thomas Friedman famously pointed out, and like everything else, there needs to be a healthy economic mix of local and global business. Fortunately, some Ann Arbor-based companies have figured out how to become players on the outside, not just nationally, but also internationally.
Not to take anything away from the Michigan-to-Michigan relationships, but it's pretty sweet to know Tree Town companies – from aerospace to fuel cells to information technology services-- are known in Beijing, San Diego, Scandinavia, and Madrid.
Ann Arbor is home to more companies than there are stars. OK, that's an exaggeration, but, still, we've got a vibrant constellation of high-tech successes. Entrepreneurs have started companies here, moved companies here, and set up shop here. Companies have grown from a few University of Michigan buds to multi-million dollar firms. And a few companies have even made Ann Arbor their North American headquarters. Others still have transitioned from mainly Michigan-based revenues to internationally-focused business.
There's a consensus that comes from most of these companies: They stick around because of the University of Michigan ...and, a little fuzzier at heart, because Ann Arbor is "a nice place." But the factor many company bigwigs cite is that the market forced them to expand outward.
"We didn't have a geographic strategy," says the CEO of GDI InfoTech, Bhushan Kulkarni. "Our global expansion happened in need of support for our clients." GDI is an information technology solutions business specializing in the integration, consolidation, and management of a clients' data. But what does that even mean? Well, for example, when a bank merges with two other banks, GDI can quickly bring all of the members of the banks into a single platform and system.
GDI began in Ann Arbor in 1993, working predominantly in the automotive sector. Business was good, so why shouldn’t it? The company grew and around 2000 began to shift into other areas. It started working with pharmaceutical companies, then insurance companies, then financial companies.
"Up until that point," he says, "90 percent of our business was based in Michigan."
The shift, as you might have deduced, occurred before Michigan 's automotive industry bottomed out. Kulkarni says it was sheer luck. "I certainly didn't see what would happen," he says. "But we refined, stayed at it, changed along the way. We were very entrepreneurial with our business. It's hard to predict what would happen, but this helped us weatherize the downturn."
Today, with 140 employees globally, 80 percent of the revenue and 80 percent of the company's employees are based outside of Michigan. Larger clients like Pfizer and GM helped bridge their growth into international waters. GDI has a large chunk of business in India because of its massive IT industry, Kulkarni says.
Home is here, business is thereBrad Neagle and Kirk Schroeder started Essen Bioscience 11 years ago. They began working in Ann Arbor in 1993 when they invented a product called FLIPR (sounds like flipper) that gave pharmaceutical companies a tool for live cell testing. The duo sold that first company in 1996 but continued to work on molecular devices. Their ideas started to snowball in 1999 and that's when Essen Bioscience took shape.
Schroeder says that they do almost no business in Michigan. "It's a very small percentage," he says. "Maybe one percent." But that's not for a lack of love for the Mitten. It's the nature of their business. They work with practically every major pharmaceutical and biotech company in the country, as well as a lot of universities from coast to coast.
The company grew 30 percent over the last few years, shaking out of its 12,000-square-foot space on Oak Valley Drive and settling into a new 25,000-square-foot space on the south side of Ann Arbor. And last year Essen opened an office just south of Cambridge, England. Schroeder says despite the growth, Ann Arbor is where they'll stay. "We've had opportunities to move the business a couple of years ago," he says. "But we like Ann Arbor. … We believe in generating jobs in Ann Arbor and southeast Michigan."
Xoran Technologies, founded in 2001 by two University of Michigan research scientists, is another company that does almost no business in Michigan as well. But that's because the law won't let them. No, that's true. Xoran specializes in CT scanning devices that are no bigger than a telephone booth and can be plopped right into a doctor's office. But, here in Michigan (and Connecticut) there is a legislation called the "Certificate of Need," which stipulates that CT scanners must perform at least 7,500 scans a year. Most doctors typically scan less than 500.
"Because of this legislation, we are currently unable to sell to private physicians offices in Michigan despite that fact that most of our employees live and work here," says Xoran's Director of Marketing and Sales William Van Kampen.
Xoran, who employs 45 in Ann Arbor, does have a partnership with the UM biomedical school, but beyond that, the landscape is pretty barren. "We're an international company," Van Kampen says. "We do business in Europe, Scandinavia, and Asia."
Aernnova, a Spain-based aerospace company, has its North American headquarters in Ann Arbor. The company employs 3,800 people worldwide, with 50 in Ann Arbor. And again, most of their business is outside of Michigan, with some of the largest aircraft companies around. Its client list is topped with names like Boeing, Airbus, and Canada's Bombardier.
"We're in places like Mexico, Spain, Brazil, but in 2007 we looked to increase to other parts of the world," says Juan Carlos Ortiz, managing director of Aernnova Engineering U.S. division. They looked toward the east, towards India and China. Places that, as Ortiz says, "are kind of in fashion these days." They also looked at North America, in aerospace capitals like Seattle and Wichita. "We thought we'd be the last guys in town in those places," Ortiz says.
They then looked at three points: a great university, an engineering workforce that was familiar with the tools Aernnova uses (the car companies, for instance), and a supporting local government. Michigan jumped to the top of the list and Ann Arbor beat out Atlanta and Austin, Texas for the Spanish company's headquarters. "Ann Arbor SPARK really made the difference for us," Ortiz says. "The other places weren't as friendly or welcoming."
Aernnova has four divisions that design and build sections of aircrafts, such as elevators or the empennage (the back end, non-pressurized zone of an airplane). The company brings in $800 million in revenue a year, with most business coming from those large aircraft companies. Ortiz says the goal is to grow out the Ann Arbor space to 250-300 employees as soon as the economy begins to mend.
Shifting marketsAn Ann Arbor business that is seeing a lot of growth outside of Michigan is Logic Solutions. Most of its business is still based in the Mitten, but over the last year the situation has begun to shift.
"Historically, 90 percent of our business has been in Michigan," says Logic Solutions COO Bruce Richardson. "But that's changing. We're finding new revenue outside of Michigan." The ratio today is around 75 percent in-state and 25 percent elsewhere.
Logic Solutions, founded in 1995 by Jimmy Hsiao, is a web application, website, and software application company. However, since its inception it's grown to offer various types of support, sourcing, and different types of shipping solutions. The company has opened centers in Beijing, Nanjing, Shanghai, and now, one in Hong Kong. It employs 25 in Ann Arbor and nearly 130 worldwide.
The firm got its start by helping automotive companies navigate the Internet in the late '90s, Richardson says. As the Internet grew by leaps and bounds, so did Logic Solutions, creating larger-scale sites for more than just automotive companies. The dot-com bubble burst, but people still needed sites, Richardson says. They just didn't have the cash.
Logic Solutions started to expand its horizons, and in 2006 began leveraging Chinese talent. As it solidified ties in the East, other companies approached to gain access to China. "We were there to guide the waters for some of our clients," Richardson says. "Our expansion overseas was a natural progress," he adds.
Staying in Ann Arbor is also very natural for them.
"Many of our managers are grads from U of M," he adds. "Ann Arbor runs in our veins. And the University of Michigan offers a great pool of talent like no other. … For new talent, we won't have to look far."
Terry Parris Jr. is hoping to go global someday. For now he's a regular contributor to Concentrate, Metromode and Model D. His previous article was Pizza 2.0Send your comments here.
All Photos by Dave LewinskiPhotos:
Jimmy Hsiao of Logic Solutions
Logic Solutions-Shanghai
Bruce Richardson of Logic Solutions
Aernnova
Aernnova
Logic Solutions-Ann Arbor