At the University of Michigan on Monday, February 9, the Center for Local, State, and Urban Policy (CLOSUP) will be hosting a panel discussion on “Michigan’s Economy in 2009 and Beyond.” The event will feature John Austin, the Director of the New Economy Initiative for Southeast Michigan, Charles Ballard, Michigan State economics professor and author of the book “Michigan’s Economic Future,” Christopher Hayter, of the National Governors Association, and Kim Hill, from the Center for Automotive Research’s Automotive Communities Program. The event is scheduled to run from 4:00 to 5:30 at the Gerald R. Ford School of Public Policy. The following comes from the official event abstract:
A consensus has emerged in the last few years regarding Michigan’s economic future. In order to return prosperity to the state most analysts agree that Michigan must develop a diversified knowledge economy featuring robust entrepreneurial activity and a highly educated, innovative labor force.
However, today Michigan is confronted with a severe economic recession and a meltdown of the economy’s core automotive sector. There has been much less discussion, and certainly no consensus, regarding how Michigan should respond to the current economic recession and yet stay on the path of transition toward a knowledge economy…
Coincidentally, a friend of mine, an inventor and entrepreneur by the name of Michael McCorquodale, is blogging on this very subject this week for Metromode. Here’s a sample:
…So where does that leave Michigan?
Michigan doesn’t have a model.
What I’m really saying is that Michigan has most of the ingredients and yet they have not been synthesized into an executable model. First, Michigan has well-differentiated technology. My work, among that of many other world-class researchers, at the University of Michigan and all of the Michigan institutions is proof positive that we do.
Second, Michigan has the passion. Of all of the places I have lived, nowhere in my life have I known people more passionate than those in Metro Detroit.
Third, Michigan has the capital, but it is not making its way into the irrational investments. Put simply, there is a terrible lack of risk capital. From Q1/02 to Q4/07, all of which is post-bubble, California invested $49.5B in companies while Michigan invested a measly $363M. In less time, Mobius has raised over $20M as a single company.
This is where it gets complicated.
There is also a lack of deal-flow. Related to my previous blog entry, there is a lack of “doers” in Michigan. Yet, it is not that simple. There is also a lack of experienced management. Start-ups are a cottage industry in the Valley where thousands of executives have had experience in one. They are an anomaly in the industrial Midwest so it is terribly difficult to build an experienced management team worthy of investment.
Further, our leadership in Michigan focuses on maintaining the status quo and has failed to diversify the economy with a focus on emerging business. Thus, there is little justification for the capital; yet, when someone like me shows up, I’m demanding capital and forced to relocate to California without it. Meanwhile, Michigan is sixth in the nation for new patents issued; yet most of those revolutionary innovations sit in laboratories, never to see the light of day.
So where do we go from here? Michigan is stuck between the chicken and the egg in developing its model….
As Michael mentioned above, his company, Mobius Microsystems, ultimately left Michigan for California, where they’ve been able to attract quite a bit of venture capital. They still have a research and development facility here in the state, but, in spite of his efforts, they weren’t able to keep the entire company here. And Michael is taking a lot of shit on Metromode right now because of it. People apparently don’t like hearing that their state is broken, and that’s essentially Michael’s message… The interesting thing — the thing that the folks leaving nasty comments don’t know — is that Michael really loves Detroit. When I first met him, he was living downtown and seriously contemplating a run for City Council (while earning his PhD). Sure, some of what he has to say might rub people the wrong way, but it’s not because he hates Michigan. If he hated Michigan, he would have gone to California and never looked back. Instead, he’s made an effort to keep some part of the business here, and he’s taking every opportunity possible to advocate for change. And, given the situation we now find ourselves in, I think maybe we should hear him out.