Indiana, Ohio, Georgia, Kentucky, South Carolina and Texas, but not Michigan. Too often this is what the list of potential landing spots looks like for companies seeking to expand into new locations.
I know because I work as a site selector for Duff & Phelps, a global valuation and corporate finance advising firm that does business across the country and world. I’m based in Detroit and help lead our Michigan practice.
There’s no denying that the Great Lakes State is on the comeback. Michigan’s economy has experienced notable growth and rebounded in recent years after an especially tough time, but outdated perceptions linger and current economic development tools are often inadequate to compete for large projects. How can the state maintain its positive momentum and continue to grow its economy? One answer is that Michigan must become serious and strategic about tax incentives.
To make “the” list and be truly competitive and attract large-scale projects with hundreds of good-paying jobs, Michigan must level the playing field with other states that do offer such opportunities and are outhustling and outinvesting the state by up to seven to one. That much is clear. As it stands, there is a straightforward belief in the site selection market that Michigan just isn’t a player when it comes to large, transformational projects. It’s regularly, flat-out knocked off the list or not even in the running for projects with hundreds or thousands of jobs.
A sound and smart tax-incentive program would raise awareness that Michigan is serious about competing and drive investments for jobs, capital, research and development. Which in turn would provide major economic impact benefits in communities across the state — from Marquette to Monroe and from Decatur to Detroit, growing jobs and opportunities for those who live, work and play there.
Incentives certainly aren’t the only factor in successful site selection to be fair. In recent years, their importance has increased. As site selectors take a deep dive into the state and local costs, they net the value of incentives while assessing potential locations for clients and their business and investments. Incentives can re-rank the states and be a clear differentiator that drives decision-making.
In addition, Michigan has wonderfully talented young people graduating from its universities and colleges every year. Unfortunately, too many of them are quickly leaving the state after they’re done in search of more and better jobs. Simple incentives could go a long way in growing jobs that would help keep skilled future leaders home and bolster communities everywhere.
The national competition is intense and we see it heating up even more nationally as President Trump works to insource jobs back to the United States. Without implementing some kind of additional job attraction incentive program, Michigan is likely to remain on the sidelines and lose out on large transformational projects.
Incentives are about growing jobs. It is that simple. Michigan needs more good jobs, and incentives done right are a proven way to do so. Communities in both peninsulas could benefit from being able to leverage these tools and drive economic development.
The Good Jobs for Michigan legislation introduced this week can be just that tool. It’s straightforward, available to all industries and performance-based so Michigan is protected — no incentives are paid out if jobs aren’t created.
That’s the kind of tool that can help make sure Michigan is top of mind and can compete — and win — jobs and investments against other states.
From where I sit and what I see, it’s critical for Michigan’s policy makers to closely take stock of where the state is now and where it wants to be. Acknowledge the great progress that’s been made, but also the harsh competitive reality facing it. Take the necessary steps to ensure more good jobs and opportunities for Michiganians and grow and strengthen the state’s economy for current and future generations — enact a sound and strategic tax incentive tool.
Gregory Burkart is managing director in the Duff & Phelps Detroit office and leads its Business Incentives Advisory Practice.