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Howes: Michigan falling short in push to compete for jobs, investment in Economy 2.0

Daniel Howes
The Detroit News
As business leaders meet this week on Mackinac Island, Michigan shows signs of lagging in race to Economy 2.0.

Mackinac Island — The question posed in the brochure for this year’s Mackinac Policy Conference, opening for its first full day Wednesday, reads simply: “Is Michigan prepared?”

After roughly eight years of economic expansion, job creation, the nation’s largest municipal bankruptcy and startling redevelopment in Detroit, the state’s largest city, the answer might well be, “probably not.”

Not because there’s no capability here. There is. But the increasingly competitive race for talent and investment — epitomized best by the disruptive, tech-driven mobility revolution — is revealing just how far Michigan needs to go to get in the game.

In talent attraction, in K-12 education, in regional transit, in quality of life measures, in the belief of political and civic leaders that southeast Michigan will be the beating heart and thinking brain of the next industrial revolution — in all of that, recent evidence suggests, the state and its leadership still have a long way to go.

“It’s not a God-given right that we’re going to be the mobility leader,” said Brandon Mason, the Detroit-based U.S. mobility leader for the global accounting and advisory firm PriceWaterhouse Coopers LLP, in an interview. “Everybody knows we can develop cars. But everyone does not know we can develop software.”

That’s only part of the challenge as Michigan and its Motor City push to negotiate their place in a future arguably no one can completely discern in these opening years of Auto 2.0, the confluence of mobility, autonomy and electrification.

Mounting evidence suggests Michigan is competing for — and often losing — big economic prizes that would signal whether outsiders with options think the state and its largest metro area are “prepared,” in the jargon of the Detroit Regional Chamber’s Mackinac conference, for “the mobility disruption.”

And so much more.

Michigan and Detroit are reaping billion-dollar investments from such hometown names as Gilbert and Ilitch, Ford Motor Co. and General Motors Co. But Detroit missed the cut in Amazon.com Inc.’s sweepstakes to become home to its second North American headquarters, dubbed “HQ2,” despite a $4 billion incentive package.

The state and its largest city so far have failed to land investment from the Taiwan-based Foxconn Technology Group, the world’s largest contract manufacturer whom state officials predicted would make a decision on a Michigan site by last September. Still waiting.

Michigan’s ability to grow its own talent is suspect, too. The state ranks 30th in educational attainment, 46th in fourth-grade reading proficiency, 42nd for enrollment in high school and technical education. And third-graders here, says a report by Education Trust-Midwest, showed the greatest decline in third-grade reading compared with other states.

These conditions don't go unnoticed. The Department of the Army is scouting the country for a place to headquarter its new Futures Command, a comparatively small unit expected to scout the private-sector tech hubs for technology and innovation that could help speed development of weapons systems and war-fighting vehicles.

In a recent speech, Defense Secretary James Mattis cited southeast Michigan as one of four places around the country (the other three are Silicon Valley, Texas and Boston) conceiving and producing cutting-edge technology that could have military applications.

Yet when McKinsey & Co., a consultant hired by the Army to benchmark regions around the country, completed its work, Detroit failed to make the top 15 to compete for the Army Futures Command. The reason was not talent (seventh), private-sector innovation (ninth) or academic research in science, technology, engineering and math (seventh).

In all of those “technical” categories, Detroit outperformed Philadelphia, Denver, Austin, Dallas, even Atlanta. But the Motor City scored poorly because of, among other things, spotty access to health care, poor air quality, the comparative lack of broadband service (just 0.3 percent of  Detroiters, the AARP Livability Index found, have access to high-speed, low-cost Internet service, compared with 23.8 percent in San Francisco, 27.2 percent in Atlanta and 41.4 percent in Boston).

Detroit effectively did not rank in the “Quality of Life” category. The findings trouble Sen. Gary Peters, D-Bloomfield Township. They should: He asked Secretary of the Army Mark Esper to give Detroit another shot to compete for the command — a request he granted, even if the Motor City’s chances don’t look encouraging.

“It’s clear” engineering talent is “not enough,” Peters said in an interview. “It’s a lot more. This kind of livability index is what companies are looking at when locating business. This has given us a road map of what we need to focus on.”

Exactly right. The trouble isn’t diagnosing the problem. Absent an undeniable fiscal crisis, Michigan in general and the southeastern corner of the state, in particular, have a poor record of crafting consensus around broad-based solutions, executing them over time and sticking with them despite changing administrations and majorities in Lansing or turnover in local leadership.

The result is a state policy-making arc that tends to bend to the prevailing partisan tenor. That makes long-term gains on such disparate things as K-12 educational attainment, regional transit and funding for roads and infrastructure improvement all that much harder to achieve, much less maintain.

And the state is barreling toward an election in November that will deliver a new governor and possibly a change of control in one chamber of the Legislature. For eight years, Gov. Rick Snyder showed a bias for data-driven problem solving over ideology, but the front-runners in both parties looking to succeed him lean more heavily to the ideological end of the spectrum.

Rick Snyder, a former CEO, is making his final appearance as Michigan's governor at this week's Mackinac Policy Conference

Good? Probably not, especially if a tendency to view policy choices through more of an ideological lens delivers starkly partisan results. One common trait of the most effective policy choices in recent years has been the extent to which they’ve been light on petty politicking.

The metabolism of interstate competition is quickening, as is the rush for competitive advantage in a mobility revolution Detroit should own, at least partly. But it will not come easily to a region too often at war with itself — and in denial of how it’s perceived outside the bubble of its own making.

“We don’t have a history,” said Ray Telang, Detroit managing partner of PriceWaterhouseCoopers and chair of this year’s Mackinac conference, “of working together in a seamless way.”

He’s right. And that recurring reality doesn’t help Michigan prepare for a future where one of the few constants will be competitive change.


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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.