Mich. ranks 3rd-worst in business survey

Michigan once set the pace for supporting successful business, but a recent study ranks the state 3rd-worst in the nation in supporting jobs and business growth for the second year in a row.

Chief Executive magazine surveyed 543 chief executive officers on the best and worst business climates based on three criteria: taxation and regulation, work force quality and living environment. Michigan’s ranking represents a continued poor performance for the state, which was rated 48th last year, 46th in 2007 and 47th in 2006.

At one point, Michigan was an economic powerhouse in the United States ,but since has faced a downward spiral, said Doug Roberts, director of the MSU’s Institute for Public Policy and Social Research.

“Michigan was a manufacturing state; that’s what our economy was based on,” Roberts said.

“In 1990, manufacturing made up 21 percent of the state’s jobs. Now it’s 13 percent. That’s a loss of 300,000 jobs alone in manufacturing.”

A majority of those manufacturing jobs were in the automotive industry and are unlikely to come back, Roberts said.

Michigan was once a leader in all categories the survey examined, including gross state product, civilian labor force, unemployment rate, average salary, economic development and population growth rate, but now ranks near the bottom in every category.

A major contributor to Michigan’s declining business climate is the fact that, while the auto industry was prospering, Michigan businesses refused to diversify and create other business ideas, said Bryan Ritchie, associate professor of international relations and co-director of the Michigan Center for Innovation and Economic Prosperity.

“We sat on our (wealth) and enjoyed the spoils for as long as we could,” he said. “We didn’t change with the times and the innovations that came with the time.”

Even after the collapse of Michigan’s automotive industry, Ritchie said officials and companies still are too focused on saving jobs instead of moving to new industries that are more in tune to modern America.

“Places like Texas are more friendly to the economy right now; they are just in the mind-set to be innovative,” he said. “The states that are leaders are more inclined, and in a better situation, to fund new industries that are needed.”

Many out-of-state students such as food science freshman Matt Vicencio, an Illinois native, said the differences in mind-set that plague Michigan business can be seen in the state’s lack of attention on projects — such as infrastructure improvements — that would encourage businesses to locate in Michigan.

“It can start with something as simple as the roads,” Vicencio said. “If a state doesn’t take care of its people, why would businesses be doing well?”

Despite the gloomy current situation, Roberts said there is evidence Michigan is on the mend. The state’s push to offer incentives for the film industry is an example of efforts to diversify the economy, he said. If the government begins offering similar incentives to other industries, Michigan could see a fairly quick turnaround, Roberts said.