Howes: Mich., gov join incentive game because they must

Daniel Howes
The Detroit News

Who says Gov. Rick Snyder’s Michigan doesn’t do big economic development incentives?

It does, state documents show, despite the widely publicized skepticism of the governor and pure-as-the-driven-snow Republican leaders in the Legislature. They passed a “Good Jobs” incentive package over the summer, and now they’re prepared to double down in the hunt for some of the biggest investment opportunities to come along in years.

Tells you everything you need to know about the interstate battle for jobs and investment. The cost of doing nothing can be measured in slower economic growth, weaker personal income expansion, political bragging rights and perceptions that a state is on the move — or stuck in a last-century economy.

Also tells you why the race to win is prompting corporate decision-makers to drop any pretense of confidential decision-making in favor of public free-for-alls. It’s because they can, because labor markets are changing and because capital is more mobile today than at any time in human history.

And people know it. Even as metro regions around the country are scrambling to bid for a chance to land Inc.’s “HQ2,” a second North American headquarters for the giant online retailer, state documents first published by the Milwaukee Journal Sentinel show Michigan offered billions to woo Taiwan-based Foxconn Technology Group — because it had to.

Major companies mulling jobs-creating investments measured in billions are changing the game. Instead of quietly shopping their intentions behind closed doors, a time-honored tradition in economic development circles, the likes of Amazon, Foxconn and Toyota Motor Corp. are going public and dramatically upping the ante.

That’s forced relative purists like Snyder and the Republican leadership to rethink their antipathy toward development one-upsmanship. As much as Snyder says the pursuit of Foxconn is not about the incentives, the more than $7 billion Michigan offered in tax breaks, savings and cash for three different projects suggest that it very much is.

The opportunity to land the world’s largest contract electronics manufacturer, along with a North American research and development center in Detroit, holds too much potential for an image boost and economic jolt to let it pass. No wonder Snyder remains so hot for Foxconn.

States like Michigan are only now recovering from their “Lost Decade” that preceded Detroit’s bankruptcy and the federal bailout of two of its three automakers. They cannot afford not to play — whatever the philosophical misgivings of the governor and fellow Republicans in the Legislature.

Being the home of the U.S. auto industry, as well as the would-be intellectual center of next-generation mobility and electrified autonomous vehicles, may be necessary for Michigan’s economic future. But it’s hardly sufficient.

Detroit’s automakers employ fewer people designing, engineering and building cars and trucks than any time in decades. Increasing chunks of their workforces will be rooted in the high-tech engineering, software development and electrified powertrains of the future, even as gasoline-powered vehicles continue to account for the bulk of revenue and profit.

Landing Foxconn or Amazon, which says it will make a headquarters decision next year, would help shift perceptions of Michigan. With HQ2, the home to Detroit’s century-old automakers, the center of the country’s most epic bankruptcies, could claim to be an exemplar of the high-tech economy.

Never mind that Amazon is roundly, and routinely, criticized for destroying American retailing as generations have known it. It’s a market juggernaut whose shares closed Thursday at $986.61 apiece, valuing the company at nearly $474 billion — 10 times the market capitalization of Ford Motor Co.

There’s a reason southeast Michigan’s leading business, political and civic leaders coalesced to bid for Amazon. And there’s a reason skeptical Republicans are rethinking their aversion to the incentive game: opportunities measured in more than dollars and cents don’t come along regularly.

Leadership in this town is more aligned between city and suburb, business and labor, old economy and new, Republican and Democrat, than anytime in who knows when. Collaboration trumps confrontation, a hard-won lesson finally being learned.

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.