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Business Review Western MI
Business Review Western MI
Seeding or ceding the future?
(wgvu) - Seeding or ceding the future?

Feb. 28 2008

By Mark Sanchez
B. Candace Beeke

As a broader debate unfolds on how to pursue a better economic future
for the state, the latest initiative in western Michigan reflects a
course already set down.

The basic premise behind Inno vationWorks is to connect inventors with
people who can take their ideas to market, ultimately creating new jobs
for the region.

In a broader sense, the backers of InnovationWorks are embracing
western Michigan's manufacturing heritage and acumen while at the same
time pursuing the coveted so-called knowledge workers and industries of
tomorrow a strategy some advocate should become the sole thrust of
economic development.

In that regard, InnovationWorks represents one more front in the far
bigger effort toward building a better economic future by playing into
the region's strengths. And few areas of the nation are more engaged
or as capable of producing things as western Michigan, where nearly one
out of every four jobs is in the manufacturing sector.

It's absolutely vital to this area, InnovationWorks manager Jim
Ross said.

Funded by the region's $15 million WIRED initiate, Innovation Works
is an online data base where inventors can post their ideas and
companies can post their needs for a new product or process.

InnovationWorks staff aims to bring together both sides of the
equation, providing support to the inventor to test, validate and market
the idea and in accessing needed capital.

The goal is to translate intellectual property generated here into new
products produced by local manufacturers.

Ross considers it economic development at its purest and likens the
initiative to lighting a match to create fire.

If you don't put that flame to a candle very quickly, it's going
to go out, said Ross, noting only one out of about every 32 patents
is ever commercialized. He hopes to see the InnovationWorks site carry 1,000 entries within a year.

It doesn't do any good to have people with ideas and people with
resources if you don't connect them, he said. This is a seed and
hopefully that seed is going to grow.

The creation of InnovationWorks which targets ideas for
sustainability, advanced manufacturing and technology comes as
economic developers and economists preach the need for innovation to
drive economic growth and amid the painful transition to a
knowledge-based economy that some believe means steering away from
manufacturing as an economic driver.

I don't see how staying the course is the answer if you want high
prosperity, said Lou Glazer, president of the Ann Arbor think tank
Michigan Future Inc. If you care about what people earn, if you want
high prosperity, west Michigan and the state have to change.

Economist George Erickcek, senior regional analyst at the W.E. Upjohn
Institute for Employment Research in Kalamazoo, urges a more balanced ap

In creating new economic opportunity, Erickcek argued for a mix of
knowledge workers in the new economy while supporting an existing
economic base that's carried the region for generations. In Michigan,
that means supporting advanced manufacturing and driving innovation, he

We want an environment that nurtures all. We must try to create a
fertile landscape so almost any seed can grow, he said during a
recent address to the Economic Club of Grand Rapids. The one thing we
can't do is to say, manufacturing is over.'

Manufacturing is not over.

But Michigan Future Inc., in partnership with the University of
Michigan, has a report that says differently.

Michigan's Transition to a Knowledge-Based Economy: First Annual
Progress Report stressed the financial imperity of the state moving
beyond manufacturing and posits it is not doing so fast enough.

Manufacturing is not going to make us economically prosperous,
said Donald Grimes, senior research associate at U of M's Institute of
Labor and Industrial Relations, who visited Grand Rapids this month to
present the report to the Grand Rapids Area Chamber of Commerce.

Instead, the state needs to attract so-called high-education attainment
industries, such as education and health care, which accounted for 75
percent of the nation's job growth from 2001-2005. The average wage in
these industries, the report states, is nearly $53,000.

But Ross and others cited the investments western Michigan has made in
health care and life sciences, for example, as reflective of the
region's pursuit of the knowledge economy as well.

Those investments are made in concert with initiatives to support
advanced manufacturing and innovation as part of a broader economic
development strategy.

This is only one piece of the pie, he said of InnovationWorks.
To me it's not a battle. You have to have it all.

Right Place Inc. President Birgit Klohs noted that advanced
manufacturing is indeed a knowledge industry, from workers on the
production floor operating sophisticated high-tech equipment to the
designers, engineers and finance professionals in the front offices.

And it's about the talent, said Klohs, who terms the notion of
abandoning manufacturing as very short-sighted.

The report doesn't reflect the work that is going on in retaining
and attracting talent, she said.

Whereas Erickcek's data examines employment, the Michigan Future
report looked at per-capita income, in which Michigan ranked 26th of all
states in 2006 10 spots lower than six years earlier.

To raise the state's wealth, the report suggested, Michigan must
boost the per-capita incomes of its three largest cities Detroit,
Lansing and Grand Rapids or keep getting poorer.

You can't make it work without a vibrant central city, Glazer

To do that, the cities must boost their number of college-educated
adults and there's a long way to go. Of 53 metropolitan areas with
populations of one million or more, Grand Rapids ranked 49th in per
capita income and 45th in college attainment. Detroit ranked 37th in
college attainment.

And Michigan should naturally shift toward the higher-education
attainment industries, as the state pays those workers less than
elsewhere, U of M's Grimes said. Michigan pays its college grads about
$49,000, compared to the national average of $53,000, giving the state a
compelling advantage in attracting those industries, he said.

That is, companies that employ these college grads want to locate here
as they can pay a lower wage the reverse of what has happened with
manufacturing companies adverse to paying Michigan's higher wages for
manufacturing workers.

We tend to pay our low-education attainment industries $36,000.
Nationally it's $32,000, Grimes explained.

Within that, manufacturing employees here make $3 more an hour on
average, discouraging manufacturing companies from locating in the

And that seems to be the transition that's happening slowly.
Whereas Michigan has lost jobs every year since 2000, health care and
education employment in the state has grown every year in that time,
Grimes noted.

West Michigan's numbers are interesting, Michigan Future's
Glazer added.

Overall the data is not great. The per-capita income is below
Alabama. But progress data over the last five years or so compared to
the rest of the state, it's better.

Compared to the rest of the state, it's phenomenal, Grimes
said, noting that Grand Rapids leads Michigan metro cities in college
attainment, despite its low national ranking.

Twenty-eight percent of residents in 2006 held college degrees,
compared to Detroit's 11 percent and Lansing's 22 percent.
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