2012 michigan economic competitiveness benchmarking report

2012 Economic CompetitivenessBenchmarking Report:

Data Supporting theMichigan Turnaround Plan

November 2012

© 2012 Business Leaders for Michigan

Business Leaders for Michigan is a private, non-profit executive leadership organization whose mission is to develop, advocate and support high-impact strategies that will make Michigan a “Top Ten” state for job, economic, and personal income growth. Our work is defined by the Michigan Turnaround Plan, a holistic, fact-based strategy developed to get Michigan’s economy back on track.!!Serving as the state's business roundtable, Business Leaders for Michigan is composed of the chairpersons, chief executives or most senior executives of the state’s largest job providers and public universities. Our members drive over 25% of the state’s economy, provide over 325,000 direct and 820,000 indirect jobs in Michigan, generate over $1 Trillion in annual revenue and serve nearly one half of all Michigan public university students. !

2 © 2012 Business Leaders for Michigan!2012 Economic Competitiveness Benchmarking Report!

About Business Leaders for Michigan

Topic! Page Number!Introduction! 4!Key Findings! 5!Methodology! 6!Output Metrics! 9!Input Metrics! 14!Metropolitan Peers! 35!Leading Indicators! 46!Appendix! 51!

3 2012 Economic Competitiveness Benchmarking Report!

Table of Contents

This report provides a fact-based assessment of Michigan’s economic competitiveness relative to other states and nations. It is used by Business Leaders for Michigan to help develop strategies and recommendations for making Michigan a “Top Ten” state for job, economic, and personal income growth, such as those contained in the Michigan Turnaround Plan. !Comparisons are made of Michigan’s performance with other states on key output (e.g., GDP growth) and input (e.g., labor cost) metrics. A set of “traditional,” “new economy,” “global,” and “Top Ten” benchmark states and/or nations were used to provide multiple reference points to evaluate Michigan’s performance. While the intent of this report is not to make recommendations, general conclusions are outlined. !!Research for the 2012 Economic Competitiveness Benchmarking Report was conducted by Anderson Economic Group, a research and consulting firm with expertise in economics, public policy, finance, and industry analysis.!

4!2012 Economic Competitiveness Benchmarking Report!

Introduction

▪  Michigan is recovering faster than most states but from a deep economic recession.!–  Growth in per capita GDP and per capita personal income has outpaced most peers since 2009, but per capita

GDP and per capita income levels remain low & have not grown significantly compared to pre-recessionary levels !

–  Most leading indicators suggest modest growth in 2012, but this growth is fragile.!!▪  Michigan’s cost of doing business remains high despite improvements in some areas.!

–  Michigan has passed significant state business tax reforms that have improved the business tax climate for most small and medium-sized businesses.!

–  Michigan’s two largest metro areas—Detroit and Grand Rapids—have competitive tax rates compared to their metro peers.!

–  Michigan’s unit labor costs have fallen in recent years, but remain higher than “Top Ten” states.!!

▪  Michigan has extensive higher education resources, but will need to increase the number of workers with an education beyond high school to meet future workforce demand.!–  Michigan’s universities and community colleges confer a large number of degrees and award more STEM

degrees than almost all peer states.!–  Despite the presence of excellent higher education resources, the percentage of the population with a

bachelor’s degree or above is still lower than the “Top Ten” states.!–  Detroit’s and Grand Rapids’ residents have lower educational attainment than residents in peer metro areas.!

▪  Michigan maintains high levels of R&D, but has low levels of private sector venture capital investment and entrepreneurial activity to leverage this asset.!–  University R&D is among the “Top Ten” in the nation.!–  Michigan residents were awarded the 6th largest number of patents in the U.S. in 2011.!–  Venture capital investment is low, and the share of population starting new firms declined over the past year to

one of the lowest levels in the nation.!!


Key Findings

1 “Top Ten "is comprised of states with highest average rankings across Per Capita GDP Growth, Per Capita Personal Income Level and Employment Growth. See slide 8. 2011 “Top Ten” states Kansas and Montana are replaced in the 2012 “Top Ten” by Alaska and New York.


Peer States were selected based on traditional peers and new economy peers.!

California!

Texas!

Georgia

North Carolina

Massachusetts! Virginia

Traditional Benchmarks!

Alabama!

Ohio!

Indiana!

Illinois!

Key Indicators of Job, Economic, !and Personal Income Growth!

“Top Ten” states were selected based on average ranking on key job, economic, and personal income growth indicators (2002- 2011).!

!New Economy Benchmarks!

Tennessee!

Colorado!

Nebraska!

Maryland

Alaska!

New York!

North Dakota!

Washington!

Texas

South Dakota!

Virginia!

Wyoming!

Per Capita GDP Growth!

Per Capita Income Level !

Employment Growth!

“Top Ten” 1!

Michigan’s performance on economic output and input metrics compared!to selected traditional and new economy peers and the “Top Ten” states

Michigan’s performance on input & output metrics is tracked over time andagainst the average performance of “Top Ten” states & each state’s national rank.!


Improving!

Holding!

Declining!

At or better than! “Top Ten” Average!

Worse than !“Top Ten” Average!

Trend Against “Top Ten” Average!

Trend Against Past Performance!

TRENDING SYMBOLS: !Track Michigan’s performance over time !and against the “Top Ten” states.!

Output!

Changes in input !and output metrics compared across states!

Input!

BENCHMARK METRICS:!Were divided into input and output metrics. !

Cost Inputs!

•  Taxes!GDP!

•  Labor Costs!

•  R&D Investment!

•  Incentives!

•  Talent!

•  Infrastructure!

•  Venture Capital Investment!

•  CEO Perceptions!

•  Entrepreneurial Activity!

•  Metropolitan Areas!

Employment!

Income!

•  Cost of Doing Bus.!

Value Inputs!

•  Energy!

•  Government Factors!

Over the last ten years, these states averaged the highest ranking across three basic indicators of job and economic growth: per capita GDP growth, per capita personal income level and employment growth.!

“Top Ten” States for Job and Economic Growth (2002-2011)!

8!

Overall Rank! State!

Per Capita!GDP Growth!

Per Capita Personal !

Income Level!Employment

Growth!1! North Dakota! 1! 9! 1!

2! Wyoming! 10! 6! 2!

3! Alaska! 14! 10! 3!

4! New York! 6! 5! 18!

5! Maryland! 9! 4! 23!

6! Washington! 16! 13! 10!

7! Virginia! 18! 7! 15!

8! Nebraska! 5! 22! 16!

9! South Dakota! 17! 21! 8!

10! Texas! 15! 26! 5!

50! Michigan! 50! 36! 50!

! !Source: Bureau of Economic Analysis; U.S. Census Bureau; Bureau of Labor Statistics; team analysis!

2012 Economic Competitiveness Benchmarking Report!

Output metrics focus on areas indicative of strong economic performance!

Output Metrics!


Growth!

Per Capita GDP!

Per Capita Income!

Employment!

2.02%!

2.77%!3.05%!

0.18%!

1.24%!

0.89%!

1.42%!

1.92%!

1.51%!

1.58%!

1.99%!

1.47%!

1.49%!

1.87%!

Michigan’s private sector employment grew at the fourth fastest rate in the country between 2010 and 2011, but from a base of high unemployment.!

Michigan Turnaround Plan: “Top Ten” State for Job Growth !

10!

State!2002-2011 !

CAGR !2010-11 !

Rank!2010-2011 !

Growth!

! !Source: Bureau of Labor Statistics; team analysis


P !!E !!E !!R!!S!

4!3!

48!

29!

39!

25!

10!

20!

16!

7!

23!

22!

12!

6.3%!

10.3%!7.9%!

9.0%!

6.2%!

7.4%!

9.8%!

9.2%!

11.7%!

10.5%!

9.0%!

8.6%!

9.8%!

8.3%!

Michigan’s private sector employment is growing at a faster rate than the “Top Ten” and almost all of its peers, signaling economic recovery. !!However, !annual unemployment remained higher than all peers except North Carolina and California.!

MI!

Unemployment !Rate 2011!

0.95%!

-1.50%!1.29%!

-0.31%!

0.42%!

-0.19%!

-0.44%!

-0.15%!

-0.33%!

0.06%!

-0.36%!

-0.81%!

-0.12%!

0.20%!

"Top Ten"!

TX!

AL!

VA!

MA!

IL!

TN!

CA!

NC!

IN!

OH!

GA!

CO!

Employment Growth

1.35%!

-0.95%!0.94%!

0.88%!

0.89%!

1.14%!

0.59%!

0.28%!

0.39%!

0.19%!

0.38%!

0.28%!

-0.41%!

-0.45%!

"Top Ten" !

TX!

CA!

VA!

MA!

IL!

AL!

TN!

IN!

NC!

CO!

OH!

GA!

1.18%!

2.88%!3.69%!

2.29%!

-0.10%!

3.46%!

2.62%!

-1.52%!

2.05%!

0.84%!

1.60%!

3.21%!

1.18%!

5.21%!

$49,306 !

$34,140 ! $45,730 !

$46,582 !

$46,962 !

$53,237 !

$45,368 !

$31,452 !

$36,873 !

$37,159 !

$40,385 !

$46,590 !

$36,309 !

$37,760 !

Michigan Turnaround Plan: “Top Ten” State for Economic Growth!

11!

MI!

!State!

2002-11 !CAGR! 2010-11!

2011 !Level!

!Source: Bureau of Economic Analysis; U.S. Census Bureau; team analysis


P !!E !!E !!R!!S!

9

6

14

39

7

12

48

16

26

18

8

21

3

2010-11 !Rank!

While Michigan’s per capita GDP has declined since 2002, growth in the past year has been better than the “Top Ten” states !and most of its peers. !!Per capita GDP level!is well below the !“Top Ten” average.!

Michigan’s per capita GDP growth was 9th highest between 2010 and 2011 – 1.7 percentage points higher than the “Top Ten” average. However, recent GDP growth is off of a low base and absolute GDP remains lower than “Top Ten” & most peer states.!

Per Capita GDP Growth

1.45%!

-0.39%!0.99%!

0.95%!

0.89%!

0.81%!

0.49%!

0.49%!

0.41%!

0.19%!

0.14%!

0.04%!

-0.02%!

-0.25%!

"Top Ten" !

TX!

VA!

MA!

AL!

CA!

IL!

TN!

NC!

OH!

CO!

IN!

GA!

1.39%!

2.02%!1.68%!

0.56%!

1.31%!

0.25%!

1.42%!

1.78%!

1.41%!

0.14%!

1.30%!

1.05%!

1.41%!

0.72%!

$45,314 !

$36,533 ! $39,593 !

$45,920 !

$53,621 !

$34,650 !

$44,481 !

$44,140 !

$36,533 !

$36,164 !

$37,791 !

$44,088 !

$35,550 !

$36,104 !

Real per capita personal income growth was 2.02% between 2010 and 2011, !higher than the “Top Ten” average. !

Michigan Turnaround Plan: “Top Ten” State for Personal Income Growth!


MI!

!State!

2002-11!CAGR! 2010-2011! 2011 !

Level!

P !!E !!E !!R!!S!

5 !

9!

39!

19!

46!

14!

8!

16!

48!

20!

25!

15!

35!

!Source: Bureau of Economic Analysis; U.S. Census Bureau; team analysis

Michigan’s per capita personal income growth was higher than the !“Top Ten” state average between 2010 and 2011, but per capita income level in Michigan is almost $9,000 less than “Top Ten” states!

2010-11 !Rank!

Per Capita Personal Income Growth

$30,000 !

$35,000 !

$40,000 !

$45,000 !

$50,000 !

$55,000 !10 year Best State MI 2-‐yr Current Trend 10 year Worst State

Michigan’s future growth rates will have significant economic implications for its citizens. Michigan has been growing at a competitive rate since 2009 but from a low base.

Conclusions!

13

Note: The above graphs show Michigan’s projected per capita GDP, private sector employment , and per capita personal income over the next ten years if MI grows at the 10-yr average rate of the best state (ND), the 10-yr average rate of the worst state (MI), or at the rate of MI over the past two years. Michigan has had considerable growth in the past two years as the economy has recovered. The state’s two-year average growth rate was used to show Michigan’s future economic situation if growth continues on its current trajectory after the recession.

2011 Per Capita GDP $34,140

Michigan GDP per capita, Dollars (2005 chained), 2002-2022

Employment, Millions, 2002-2022

$18,528 more GDP per person than in 2011

$31,494 more personal income per person than in 2011


2011 Private Employment 3.32 Million

Michigan personal income per capita, Dollars (2005 chained), 2002-2022

Actual Michigan performance

Future Projections

Actual Michigan performance

Future Projections 565,000 more Michigan people working than in 2011

2011 Per Capita Personal Income $36,533

Future Projections Actual Michigan performance

2

3

4

5

$30,000 !

$40,000 !

$50,000 !

$60,000 !

$70,000 !

Source: Bureau of Labor Statistics; Bureau of Economic Analysis; team analysis

If Michigan continues on its current growth trajectory to 2022 there will be…

Input metrics focus on defining the costs to do business !relative to the value received from locating in a given state.!

Input Metrics!


COST!• Total Costs!• CEO Perceptions!• Taxes!• Labor!•  Incentives!• Energy!• Governmental Factors!

VALUE!• Talent!•  Innovation!• Entrepreneurial

Environment!•  Infrastructure!• Quality of Life!• Vibrant Metro Areas!

Michigan Turnaround Plan: Create a Competitive Business Climate!

93!

103!83!

87!

89!

95!

98!

98!

95!

98!

98!

100!

106!

122!

On average, businesses pay more to operate in Michigan than in Top Ten states. !Michigan is improving slowly but is still the 12th most costly state in which to do business.!

15!

1 Consists of 75% labor costs, 15% energy, 10% state/local taxes 2 Data used in this Moody’s publication is two years older than the report date; the 2012 report uses 2010 data.

Michigan has a !higher cost of doing business than every peer state except for California and Massachusetts.!

Index, US average = 100!


!State! 2002-2012 Avg.! 2012! 2012 Rank!2011!

P !!E !!E !!R!!S!

12!50!

42!

39!

29!

23!

20!

27!

22!

24!

17!

11!

2!

MI 95!

104!85!

91!

91!

95!

96!

96!

97!

99!

101!

101!

113!

119!

"Top Ten"!

NC!

IN!

TN!

VA!

GA!

AL!

TX!

OH!

CO!

IL!

CA!

MA!

94!

104!84!

88!

89!

97!

98!

97!

97!

98!

98!

101!

107!

124!

Source: North American Business Cost Review; Moody's Economy.com

Cost: Cost of Doing Business 1, 2!

In a national survey, Michigan’s business climate ranked 5th worst.!

Michigan Turnaround Plan: Create a Competitive Business Climate!

16!

Business leader perceptions of Michigan are negative, !but improving. !!Michigan’s workforce and living environment rank higher than its taxation and regulation system.!

!Source: CEO Magazine 2012 Best and Worst States for Business; team analysis

CEO Survey “2012 Best & Worst States for Business”!

Overall Rank!

Taxation and Regulations!

Living Environment!

“Top Ten” Average Michigan !

Workforce Quality! !

!


19.2 46!

Cost: Business Leader Perceptions

Michigan Turnaround Plan: Create a Competitive Business Climate

17!

Source: CEO Magazine “Best and Worst States for Business”; CNBC “Top States for Business”; Forbes “Best States for Business

States from the South & West dominate the major “Top Ten” rankings over the last four years.!


State!Avg. Rank!

2008! 2009! 2010! 2011! 2008! 2009! 2010! 2011! 2008! 2009! 2010! 2011!

Virginia! 4! 7! 4! 7! 2! 1! 2! 1! 1! 1! 2! 2! 3!

Texas! 1! 1! 1! 1! 1! 2! 1! 2! 9! 8! 7! 6! 3!

North Carolina! 3! 2! 2! 2! 6! 9! 4! 3! 4! 5! 3! 3! 4!

Utah! 15! 15! 9! 9! 3! 5! 8! 8! 2! 3! 1! 1! 5!

Colorado! 13! 10! 8! 12! 5! 3! 3! 5! 6! 4! 4! 5! 6!

Georgia! 7! 4! 7! 5! 8! 10! 10! 4! 5! 6! 8! 11! 7!

North Dakota! 19! 17! 24! 21! 16! 16! 12! 13! 13! 7! 11! 4! 13!

Florida! 10! 3! 6! 3! 17! 28! 28! 18! 8! 18! 26! 24! 13!

Iowa! 17! 19! 17! 22! 9! 4! 6! 9! 22! 14! 13! 10! 13!

Idaho! 16! 16! 13! 19! 4! 22! 26! 31! 7! 11! 12! 16! 14!

Michigan! 49! 49! 49! 46! 40! 41! 41! 34! 47! 49! 47! 47! 42!

Top Business Climate Rankings

6.11!

3.35!5.96!

5.88!

5.56!

5.31!

5.39!

5.33!

5.02!

4.07!

4.78!

4.67!

5.26!

4.42!

Michigan’s corporate tax climate is a significant factor affecting business perceptions and the cost of doing business in the state. !

18!

!State!

!2006-12 Avg. !

!2012!

!2011!

!!!!Michigan’s corporate tax environment was ranked among the worst on July 1, 2011. !!With the tax changes that went into effect on January 1, 2012, Michigan’s corporate tax environment is now ranked among the best.!

Scale of 0-10, 10 = best!

1  The Tax Foundation 2013 State Business Tax Climate Index ranks Michigan’s corporate tax climate 7th best due to changes that took effect on January 1, 2012. The 2013 index was not released in time to be fully included in this report.

2  Measures impact of principal tax on business. Unemployment and property taxes are measured separately (see Slide 19 and 20).

Index, US average = 5!


MI!

P !!E !!E !!R!!S!

49!6!

9!

13!

20!

16!

18!

29!

45!

34!

37!

22!

43!

!2012 Rank!

6.12!

3.67!6.20!

5.93!

5.71!

5.58!

5.20!

5.19!

5.03!

4.84!

4.31!

4.69!

4.70!

4.41!

"Top Ten"!

VA!

GA!

TN!

CO!

AL!

IN!

NC!

IL!

MA!

TX!

OH!

CA!

6.07!

3.36!6.13!

5.93!

5.62!

5.58!

5.08!

5.19!

5.07!

5.02!

4.63!

4.45!

5.23!

4.39!


Source: Tax Foundation 2012 and 2013 State Business Tax Climate Index

Ranked 7th in 20131

Cost: Corporate Tax Climate 2

With the changes that went into effect January 1, 2012, Michigan’s overall business tax climate improved to !12th best nationally. !

19

1 Includes both real and personal property tax in Michigan. 2 The Tax Foundation 2013 State Business Tax Climate Index ranks Michigan’s corporate tax climate 7th best due to changes that took effect on January 1, 2012. The 2013 index was not released in time to be fully included in this report.

Peer States’ Tax Environment Rankings 2012!


Business Taxes! Individual Taxes!

State!Corporate

Tax!Unemployment Insurance Tax!

Property Tax1!

Sales !Tax!

Personal Income Tax!

AL! 16! 11! 6! 41! 18!CA! 43! 13! 17! 40! 50!CO! 20! 23! 9! 44! 16!GA! 9! 22! 39! 12! 40!IL! 45! 43! 44! 33! 13!IN! 18! 16! 11! 11! 10!MA! 34! 49! 47! 17! 15!NC! 29! 7! 35! 47! 43!OH! 22! 10! 33! 29! 42!TN! 13! 27! 48! 43! 8!TX! 37! 15! 31! 35! 7!VA! 6! 36! 27! 6! 37!MI! 49! 44! 30! 7! 11!

Recent changes have made Michigan more competitive with peers in terms of overall business tax climate. Unemployment and property tax climates remain uncompetitive. !

2013 Corporate

Tax Rank2!

!7th!

Source: Tax Foundation 2012 State Business Tax Climate Index


Business tax climate!2012 state rankings, !1 = best, 50 = worst!

Cost: All Taxes


$0.48 !

$0.57 ! $0.52 !

$0.50 !

$0.53 !

$0.48 !

$0.54 !

$0.47 !

$0.53 !

$0.59 !

$0.52 !

$0.52 !

$0.53 !

$0.54 !

$0.47 !

$0.53 ! $0.51 !

$0.49 !

$0.50 !

$0.47 !

$0.52 !

$0.48 !

$0.52 !

$0.59 !

$0.52 !

$0.52 !

$0.52 !

$0.54 !

The cost of labor in Michigan has fallen more quickly than in most peer states, but remains slightly higher than the average of “Top Ten” states. !

20!

!State!

2000-2009 Growth! 2009!

2009 Rank2!2005!

1 Labor cost is calculated as labor compensation per dollar of GDP.!2 States with the same score receive the same rank!

Unit Cost of Labor = Total Compensation of Employees/Total Output!


MI!

P !!E !!E !!R!!S!

42 26

15

21

8

36

11

37

50

35

31

33

43

-7.7%!

-9.8%!-10.2%!

-9.7%!

-9.2%!

-7.9%!

-7.1%!

-6.9%!

-6.4%!

-6.3%!

-5.8%!

-4.7%!

-3.9%!

-2.7%!

"Top Ten"!

CO!

CA!

IN!

NC!

IL!

TX!

VA!

MA!

AL!

TN!

GA!

OH!

Michigan’s unit labor costs are similar to its peers and 12% higher than the “Top Ten” average.!

Source: Bureau of Economic Analysis; team analysis

Cost: Labor 1

10%

18%!4%

5%

6%

6%

6%

9%

11%

12%

15%

15%

17%

18%

Union representation is a key factor affecting business leader perceptions. !Michigan has the 5th highest rate of union representation in the country.!

21!

!State!

2010-2011 Average Representation!

2011!Representation!

2011!Membership!

Michigan’s union membership and representation rate is higher than its peers. !!It has similar rates to Massachusetts, Illinois, Ohio, and California.!

! Source: Bureau of Labor Statistics; team analysis

US average = 12.2%!


MI!

P !!E !!E !!R!!S!

46!1!

2!

7!

6!

9!

19!

23!

25!

34!

36!

41!

45!

!2011 Rank!

11%!

18%!5%!

5%!

6%!

6%!

7%!

9%!

11%!

12%!

15%!

16%!

17%!

18%!

"Top Ten"!

NC!

GA!

VA!

TN!

TX!

CO!

AL!

IN!

OH!

MA!

IL!

CA!

9%!

18%!3%!

4%!

5%!

5%!

5%!

8%!

10%!

11%!

13%!

15%!

16%!

17%!


Rankings !1= lowest union representation, 50 = highest!

Cost: Union Representation

22!

Source: 2013 Tax Foundation State Business Tax Climate Index

Michigan is one of !only four states without any Job, Investment, or Research and Development tax incentives. !!The other three states without any such incentives also have no corporate income tax.!


Incentives are an important consideration for businesses in site location decisions, !particularly when other factors are equal.!


Cost: Incentives

8.8¢!

8.6¢!6.7¢!

7.4¢!

7.7¢!

8.1¢!

7.5¢!

7.9¢!

8.2¢!

8.0¢!

7.9¢!

7.9¢!

12.1¢!

14.1¢!

Michigan’s electricity costs are lower than the “Top Ten” average but have been rising. Energy costs have been rising steadily in the past decade for all states.!

23!

Michigan’s electricity costs for business are better than the !“Top Ten” average and significantly lower than those in peer states California and Massachusetts. !!On-highway diesel prices in Michigan!are lower than the !“Top Ten” average.!

!Source: Energy Information Administration; team analysis


MI!

2010 Electricity !Cost per kWh!

P !!E !!E !!R!!S!

34 12

20

25

30

22

27

31

29

26

28

42

48

State!Avg. Electricity Cost per kWh!

2001-2010!2010 Elec. Price Rank!

2010 Highway Diesel Price!

8.1¢!

7.8¢!5.9¢!

6.5¢!

6.6¢!

6.9¢!

6.9¢!

7.2¢!

7.2¢!

7.4¢!

7.5¢!

8.4¢!

12.8¢!

13.7¢!

"Top Ten"!

IN!

VA!

AL!

TN!

NC!

GA!

CO!

OH!

IL!

TX!

CA!

MA!

$2.48 !

$2.44 ! $2.47 !

$2.44 !

$2.43 !

$2.47 !

$2.43 !

$2.43 !

$2.53 !

$2.46 !

$2.54 !

$2.44 !

$2.51 !

$2.59 !


Cost: Energy Costs for Businesses

$2,387 !

$6,715 ! $3,202 !

$3,792 !

$5,124 !

$5,312 !

$825 !

$3,239 !

$3,308 !

$5,825 !

$7,563 !

$4,381 !

$2,165 !

$9,372 !

$2,074 !

$5,607 ! $2,301 !

$3,743 !

$4,396 !

$5,221 !

$836 !

$3,038 !

$3,158 !

$5,309 !

$7,635 !

$3,719 !

$1,979 !

$8,200 !

Michigan has lower per capita state & local spending than the “Top Ten” average, but its state-level unfunded liabilities per capita are triple the “Top Ten” average.!

24!

Michigan’s unfunded liabilities per capita increased between 2009 and 2010 by a larger margin than most of its peers. !!Actions taken by the Governor and Legislature over the last two years will help reduce Michigan’s total unfunded liability, which is one of the highest in the nation.!

1 Unfunded liabilities include public sector workers pensions and retiree health care !!

State and Local Government Factors!


MI!

P !!E !!E !!R!!S!

41 19

24

31

35

3

20

21

38

45

29!

12

46

!State!

State and Local Spending per capita 2009 !

(in 000s of 2012 U.S. $)!

2010 State Unfunded Liability Rank !

2010 State Unfunded Liabilities per capita!

2009 State Unfunded Liabilities per capita1!

$12.33!

$9.20!$8.43!

$8.59!

$8.82!

$8.83!

$8.84!

$8.92!

$9.11!

$9.63!

$9.97!

$10.19!

$11.72!

$12.51!

"Top Ten"!

GA!

IN!

TN!

NC!

TX!

VA!

AL!

CO!

OH!

IL!

MA!

CA!

Michigan Turnaround Plan: Responsibly Manage Finances

Source: Pew Center for the States, “The Widening Gap,” 2011 and “The Widening Gap Update,” 2012; Census State and Local Finances Survey, 2009

Cost: Government

38%!

31%!51%!

43%!

40%!

39%!

37%!

40%!

34%!

33%!

28%!

25%!

24%!

20%!

$11,651 !

$10,923 ! $13,844 !

$9,344 !

$10,550 !

$11,415 !

$7,945 !

$8,923 !

$10,447 !

$10,890 !

$10,101 !

$10,052 !

$7,643 !

$8,657 !

Michigan 8th grade math proficiency ranks in the bottom half of the country, !yet K-12 school spending is only slightly below the average of “Top Ten” states. !

25!

Seven peers spent less per pupil!on average than Michigan yet had better educational outcomes.!

1 Defined as the average of 8th graders at or above proficiency in mathematics

!State! 2003-11 Avg. ! 2011!

2011 Rank!


MI!

P !!E !!E !!R!!S!

35 1

7

15

16

21

14

25

28!

41

44

45

49

36%!

30%!47%!

39%!

36%!

35%!

35%!

34%!

34%!

32%!

25%!

23%!

23%!

19%!

Top Ten!

MA!

CO!

VA!

OH!

NC!

TX!

IN!

IL!

GA!

CA!

TN!

AL!

19!8!

37!

21!

16!

46!

40!

24!

20!

26!

27!

49!

43!

Rank !2003-2009 Spending!

2003-2009 Avg. Spending per

Pupil !

!Source: National Center for Education Statistics; U.S. Department of Education

Michigan Turnaround Plan: Provide Efficient and Effective Public Services

Value: Talent, 8th Grade Math Average Proficiency 1

28%!

20%!43%!

32%!

31%!

30%!

30%!

28%!

24%!

23%!

23%!

21%!

18%!

15%!

The percentage of “college and career ready” high school graduates in Michigan is lower than almost all peers and has declined 5 percent since 2005.!

26!

!State!

2005-2011 Growth!

2011 Rank!2010!

Among peers, only Alabama’s and Tennessee’s high school graduates are less prepared for careers and college than Michigan’s.!

1 ACT's College Readiness Benchmarks are the minimum scores needed on the ACT subject area tests to indicate a 50% chance of obtaining a B or higher or about a 75% chance of obtaining a C or higher in corresponding first-year credit-bearing college courses.

2011!

High School Grads with “College and Career Ready” ACT Composite Score1!


MI!

P !!E !!E !!R!!S!

38!1!

13!

15!

18!

18!

23!

33!

34!

34!

36!

41!

50!

4%!

-5%!13%!

13%!

6%!

13%!

6%!

4%!

7%!

5%!

3%!

6%!

3%!

-1%!

"Top Ten"!

MA!

VA!

IN!

NC!

CA!

OH!

TX!

CO!

IL!

GA!

AL!

TN!

29%!

19%!41%!

31%!

31%!

30%!

31%!

28%!

24%!

23%!

23%!

21%!

18%!

16%!

Source: ACT.org; team analysis

Michigan Turnaround Plan: Invest for Future Growth

Value: Talent, College and Career Ready High School Graduates!

87!

83!139!

86!

92!

91!

86!

82!

77!

70!

68!

66!

63!

61!

The number of degrees conferred by Michigan universities per 10,000 Michigan residents has been increasing and is near the “Top Ten” average.!

27!

!State! 2004-10 Avg.!

2010 Rank!2009!

Among peers, !only universities in Massachusetts confer a significantly higher number of degrees per 10,000 population.!

Source: IPEDS; U.S. Census Bureau; team analysis

2010!Per 10,000 of Population!


MI!

P !!E !!E !!R!!S!

22 1

15

17

18

25

26

27

35

36

39

43

45

79!

78!126!

85!

85!

83!

74!

74!

72!

63!

62!

61!

57!

56!

"Top Ten"!

MA!

CO!

IL!

IN!

VA!

AL!

OH!

NC!

TN!

CA!

GA!

TX!

84!

82!133!

89!

91!

87!

81!

78!

76!

67!

67!

65!

61!

60!

Michigan Turnaround Plan: Invest for Future Growth!

Value: Talent, Bachelor’s, Master’s & Doctor’s Degrees Conferred

29%!

25%!39%!

36%!

34%!

30%!

31%!

27%!

27%!

26%!

25%!

23%!

23%!

22%!

The level of highly educated talent available in Michigan has stayed constant in the past decade at around 25%.!

28!

!State! 2002-10 Avg.!

2010 Rank!2009!

While Michigan is competitive with “Top Ten” states and peers in the number of degrees conferred, it ranks below the “Top Ten” states and below most of its peers in share of workers with at least a bachelor’s degree.!

! Source: American Community Survey; US Census

2010!


MI!

P !!E !!E !!R!!S!

34 1

2

6

14

12

24

27

30

37

43

41

44

27%!

26%!37%!

35%!

33%!

29%!

29%!

26%!

26%!

25%!

24%!

23%!

22%!

21%!

"Top Ten"!

MA!

CO!

VA!

CA!

IL!

GA!

NC!

TX!

OH!

IN!

TN!

AL!

28%!

25%!38%!

36%!

34%!

30%!

31%!

28%!

27%!

26%!

24%!

23%!

23%!

22%!


Value: Talent, Population > age 25 with bachelor’s degree or higher!

37.5!

39.4!49.7!

40.5!

26.5!

52.0!

37.2!

68.6!

43.9!

30.9!

36.0!

33.2!

56.9!

30.2!

Michigan is a strong producer of professionals with technical degrees!and certificates with a higher rate than the “Top Ten” average.!

29!

!State! 2003-2010 Growth in

Technical Education!

2010 Rank!

2009 Tech Associate’s and

Certificates !

Michigan has been a leader in growing its technical education degree and certificate programs with almost 35% growth since 2003. !

Note: STEM areas, as defined in the Fiscal Year 2013 Budget, include the following: Agriculture, Natural Resources, Architecture, Communications Technology, Computer Science, Engineering, Biological Sciences, Mathematics and Statistics, Military Technologies, Physical Sciences, Science Technology, Construction Trades, Mechanic Technology, Precision Production, Transportation and Materials Moving, and Health Professions.

STEM certificates and STEM associate’s degrees (per 10,000 working age population)!


MI!

P !!E !!E !!R!!S!

21!11!

19!

40!

9!

22!

3!

16!

33!

24!

29!

6!

34!

2010 Tech Associate’s and

Certificates !

17.4%!

34.7%!39.7%!

35.5%!

30.5%!

26.9%!

24.6%!

24.0%!

23.2%!

22.2%!

20.0%!

19.7%!

18.0%!

15.5%!

"Top Ten"!

OH!

TX!

MA!

GA!

CA!

CO!

IL!

IN!

TN!

VA!

AL!

NC!

32.7!

34.1!42.7!

32.9!

22.6!

45.0!

33.3!

59.3!

38.5!

27.1!

30.9!

29.2!

54.6!

27.5!

Source: IPEDS; US Census; team analysis


Value: Talent, Technical Education

3%!

4%!0%!

3%!

0%!

2%!

2%!

3%!

3%!

6%!

4%!

6%!

8%!

16%!

The percentage of urban highways in poor condition in Michigan is 4%, !the 29th worst in the nation. !

30!

!State! 2001-09 Avg. ! 2009!

2009 Rank!2008!

!Among peers, !only Alabama and California have a much greater percentage of urban interstate miles rated in poor condition.!!

! ! !Source: Federal Highway Administration; team analysis

Urban Interstate Miles in Poor Condition (Percent)!


MI!

P !!E !!E !!R!!S!

29!1!

25!

10!

19!

21!

26!

27!

33!

28!

35!

43!

49!

5%!

11%!0%!

3%!

1%!

1%!

2%!

3%!

6%!

6%!

2%!

6%!

7%!

21%!

"Top Ten"!

GA!

VA!

MA!

OH!

TN!

TX!

NC!

CO!

IN!

IL!

AL!

CA!

4%!

7%!0%!

3%!

0%!

2%!

1%!

2%!

2%!

7%!

3%!

6%!

2%!

25%!


Value: Infrastructure

493!

616!806!

652!

561!

513!

460!

452!

495!

498!

397!

392!

409!

320!

Michigan universities’ Research and Development expenditures were in the top ten in 2010. Michigan’s R&D expenditures are higher than the “Top Ten” average.!

31!

Michigan universities’ Research and Development expenditures are greater than all of its peers except Massachusetts and North Carolina.!

!Source: National Science Foundation; Bureau of Economic Analysis; team analysis

per $100,000 GDP !!


MI!

P !!E !!E !!R!!S!

8 3

4

12

18

25

26

21

20

34

35

33

41

!State! 2001-10 Avg.!

2010 Rank!2009! 2010!

414!

421!645!

479!

422!

382!

377!

368!

360!

358!

321!

315!

314!

259!

"Top Ten" !

MA!

NC!

AL!

CO!

CA!

GA!

OH!

IN!

TX!

IL!

TN!

VA!

465!

554!753!

586!

515!

471!

443!

447!

470!

447!

377!

379!

379!

299!

Michigan Turnaround Plan: Growing the New Michigan!

Value: Innovation, University R&D Expenditures

17 !

30 ! 51 !

54 !

19 !

14 !

13 !

23 !

32 !

21 !

19 !

15 !

6 !

9 !

Michigan residents were awarded nearly 4,000 patents in 2011, the 6th highest in the U.S. !Michigan outperforms the “Top Ten” states in patents per 100,000 residents.!

32!

Michigan ranked 13th in the nation in 2011 for U.S. patents per 100,000 residents. !!This is higher than every “Top Ten” state except for Washington and better than the majority of peer states.!

Source: U.S. Patent Office; Bureau of Economic Analysis; team analysis


MI!

P !!E !!E !!R!!S!

13!5!

3!

22!

29!

31!

18!

11!

19!

23!

26!

44!

38!

!State!

2002-2011 !CAGR!

2011 Rank!2010! 2011!

-2.4%!

-2.1%!0.8%!

-0.2%!

-0.9%!

-1.1%!

-1.2%!

-2.2%!

-2.4%!

-3.6%!

-4.6%!

-4.7%!

-4.8%!

-5.1%!

"Top Ten"

CA

MA

NC

GA

VA

TX

CO

IL

OH

IN

AL

TN

17 !

32 ! 52 !

53 !

18 !

13 !

13 !

23 !

34 !

22 !

20 !

18 !

6 !

10 !

Michigan Turnaround Plan: Growing the New Michigan

Value: Innovation, U.S. Patents per 100,000 Residents!

$83 !

$25 ! $857 !

$845 !

$265 !

$128 !

$173 !

$94 !

$84 !

$120 !

$44 !

$49 !

$74 !

$2 !

Venture capital investment in Michigan in 2011 was nearly half the 2010 level.!

33!

!State!

The availability of venture capital in Michigan has decreased in the past year. !!Michigan is lower than all peers except Alabama.!

Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report; Bureau of Economic Analysis; Bureau of Economic Analysis; team analysis

per $100,000 of GDP!

2001-11 Avg.! 2011! 2011 Rank!2010!


MI!

P !!E !!E !!R!!S!

32 1

2

3!

10

7

18

22

12

30

27

23

44

$88 !

$35 ! $861 !

$695 !

$273 !

$117 !

$124 !

$108 !

$112 !

$70 !

$38 !

$39 !

$39 !

$18 !

"Top Ten"!

MA!

CA!

CO!

TX!

VA!

GA!

NC!

IL!

TN!

OH!

IN!

AL!

$77 !

$46 ! $711 !

$691 !

$210 !

$93 !

$106 !

$92 !

$137 !

$109 !

$28 !

$43 !

$34 !

$0 !

Michigan Turnaround Plan: Growing the New Michigan

Value: Entrepreneurism, Venture Capital Investment!

0.30%!

0.22%!0.42%!

0.35%!

0.44%!

0.44%!

0.29%!

0.28%!

0.26%!

0.20%!

0.20%!

0.20%!

0.27%!

0.26%!

0.29%!

0.25%!0.45%!

0.51%!

0.47%!

0.40%!

0.41%!

0.35%!

0.32%!

0.26%!

0.19%!

0.24%!

0.30%!

0.25%!

The amount of entrepreneurial activity in Michigan declined from 2010 to 2011 and remains below the “Top Ten” average.!

34!

!State!

Entrepreneurial activity is higher in most peer states than in Michigan.!

1 Percent of individuals (ages 20-64) who do not own a business in the first survey month that start a business in the following month with 15 or more hours worked.

Index, Percent!

2001-11 Avg.! 2011! 2011 Rank!2010!


MI!

P !!E !!E !!R!!S!

42 4

14

3

2

20

26

33

47

46

45

30

32

0.32%!

0.25%!0.40%!

0.40%!

0.40%!

0.38%!

0.31%!

0.28%!

0.26%!

0.24%!

0.24%!

0.24%!

0.24%!

0.20%!

"Top Ten"!

CO!

GA!

CA!

TX!

TN!

NC!

MA!

IL!

IN!

VA!

OH!

AL!

Michigan Turnaround Plan: Growing the New Michigan!

Source: Kauffman Index of Entrepreneurial Activity, the Ewing

Marion Kauffman Foundation

Value: Entrepreneurism, Entrepreneurial Activity1

Comparing Michigan’s two largest metropolitan areas with their aspirational and traditional peers !


The colored symbols below compare Michigan’s metro performance on important business location factors to their aspirational peers.!

  Taxation!  Talent!  Infrastructure!  Public Safety!  Population!

Benchmarking Michigan to traditional & aspirational peers on factors important to businesses that local governments can influence.!

Local Indicators !Important to Business!

Metropolitan peers were chosen based on aspirational peers and

more traditional peers.!

Detroit Peers !

  Knoxville!  Madison!  Syracuse!  Tulsa!

Peer metros selected based on traditional peers and metros with aspirational economies.1!

1 Peer metros were selected based on an analysis of industrial clusters, population, resident demographics, unemployment rate, educational attainment rate, personal income growth, and GDP growth over the past ten years in all U.S. metro areas (MSAs). The pool of possible peers was narrowed first by demographics and economic make-up. Then, aspirational peers were selected based on personal income growth, GDP growth, and unemployment rates that performed better than Michigan’s metros. We discussed the traditional and aspirational peers with economic developers in both Grand Rapids and Detroit before making the final selection.

Grand Rapids Peers !

Performance Legend!

At or better than Aspirational Average!

Worse than !Aspirational Average!

Aspirational!

  Des Moines!  Louisville!  Omaha!

Traditional!

  Kansas City!  Minneapolis!  Nashville!  Pittsburgh!

  Cleveland!  Dallas!  Indianapolis!

Aspirational! Traditional!

Detroit residents and businesses face lower tax rates than peers.!

36!

!Source: Local government websites; Tax Foundation 2012 Report!

State and Local Tax Rates!


Corporate Tax Rate (highest bracket)!

Personal Income Tax (highest bracket)!

Sales Tax Rate!

State ! Local! Total!Gross Receipts

Tax! State! Local! Total! State! Local! Total!

Detroit! 6%! 1%! 7%! NA! 4.25%!Residents: 2.5% Non-Residents:

1.25%!

Residents: 6.75% Non-Residents:

5.5%!6%! 0%! 6%!

Aspirational Peers!

Kansas City! 6.25%! 1%! 7.3%! NA! 6%! 1%! 7%! 4.225%! 2.375%! 6.6%!

Minneapolis! 9.8%! 0%! 9.8%! NA! 7.85%! 0%! 7.85%! 6.875%! 0.9%! 7.775%!

Nashville! 6.5%! 0%! 6.5%! 0.1%! 6%! 0%! 6%! 7%! 2.75%! 9.75%!Pittsburgh! 9.99%! 1%! 10.99%! NA! 3.07%! 1%! 4.07%! 6%! 1%! 7%!

Traditional Peers! ! ! ! ! ! ! ! ! ! !

Cleveland! 0.0%! 2%! 2.0%! 0.3%! 5.925%! 2%! 7.93%! 6.5%! 1.25%! 7.75%!

Dallas! 0.0%! 0%! 0.0%! 0.5%-1%! 0%! 0%! 0%! 7.25%! 1%! 8.25%!

Indianapolis! 8.5%! 0%! 8.5%! NA! 3.4%!Residents: 1.62% Non-Residents:

0.405%!


3.805%!7%! 0%! 7%!

Note: Michigan's income tax rates are 6% on business income and 4.25% on personal income as of January 1, 2012. All other metro area tax information is current as of July 1, 2011.

Michigan Turnaround Plan: Accelerate the Growth of Cities and Metros

Metro Areas: Detroit Taxation

37!! !!

Average Hourly Wage!


Share of Employment in High-Tech Industries!

Educational Attainment BA or Higher!

$24.46 !

$23.06 !

$25.43 !

$22.50 !

$22.40 !

$22.54 !

$25.31 !

$22.33 !

Kansas City!

Minneapolis!

Nashville!

Pittsburgh!

Cleveland!

Dallas!

Indianapolis!

Traditional Peers!

Aspirational Peers!

Detroit! 3.3%!

6.6%!

6.3%!

3.0%!

3.8%!

4.1%!

4.8%!

3.9%!

27.3%!

32.5%!

37.9%!

29.7%!

29.2%!

27.7%!

31.1%!

30.7%!

Source: American Community Survey; Bureau of Economic Analysis; ESRI Inc.

Population Growth 2001-2010!

-4.2%!

9.1%!

8.7%!

18.6%!

-2.6%!

-3.2%!

19.6%!

13.1%!


Detroit’s share of employment in high-tech industries and educational attainment are below almost all peers both aspirational & traditional. It also has lost population where most of its peers have grown.

Metro Areas: Detroit Talent

29%!

58%!

47%!

63%!

36%!

44%!

43%!

38%!

Kansas City!

Minneapolis!

Nashville!

Pittsburgh!

Cleveland!

Dallas!

Indianapolis!

Detroit!

Aspirational Peers!

Traditional Peers!

$159,328 !

$72,545 !

$95,819 !

$65,449 !

$69,290 !

$67,808 !

$227,514 !

$83,984 !

38!! !!

“Good” or Better Quality Urban Roads!


Annual Hours of Congestion Delay per

Auto Commuter!

Value of Commodities by Truck through Metros!

(millions)!

Total Annual Hours of Truck Congestion Delay

(millions)!

33!

23!

45!

35!

31!

20!

45!

24!

5.2!

1.6!

4.1!

2!

2.8!

1!

9!

1.7!

Source: Federal Highway Administration 2009; 2011 Urban Mobility Report


Detroit has the lowest quality roads compared to its peers. It has the highest level of truck congestion next to Dallas. It also has the second most highly valued amount of commodities traveling by truck.

Metro Areas: Detroit Infrastructure

Though improving, the violent crime rate for Michigan’s largest metropolitan area remains high and rose between 2010 and 2011.!

39!

Detroit’s violent crime rate has decreased in the past 5 years but not by as much as its aspirational peers.!

Source: Crime in the United States 2006, 2010, and 2011 FBI Uniform Crime Report. Indianapolis not available for 2011, 2006-2010 growth shown.

Incidence of Violent Crime (per 100,000 of Population)!

2010! 2011! % Change 2006-2011!


City!

1,887!

1,140!

1,054!

1,135!

899!

868!

701!

1,160!

Kansas City!

Minneapolis !

Nashville!

Pittsburgh!

Cleveland!

Dallas!

Indianapolis!

Detroit! 2,137!

1,200!

965!

1,181!

802!

1,363!

681!

NA!

-11.6%!

-16.9%!

-38.8%!

-22.7%!

-25.0%!

-11.9%!

-43.5%!

25.0%!

Aspirational Peers!

Traditional Peers!


Metro Areas: Detroit Safety

Grand Rapids’ business taxes are lower than most of its aspirational peers.!

40!

Note: Michigan's income tax rates are 6% on business income and 4.25% on personal income as of January 1, 2012. All other metro area tax information is current as of July 1, 2011.

State and Local Tax Rates!


Corporate Tax Rate (highest bracket)!

Personal Income Tax (highest bracket)!

Sales Tax Rate!

State ! Local! Total!Gross Receipts

Tax! State! Local! Total! State! Local! Total!

Grand Rapids! 6%! 1.5%! 7.5%! NA! 4.25%!Residents: 1.5% Non-Residents:

0.75%!


5.0%!6%! 0%! 6%!

Aspirational Peers!

Knoxville! 6.5%! 0%! 6.5%! 0.1%! 6%! 0%! 6%! 7%! 2.25%! 9.25%!

Madison! 7.9%! 0%! 7.9%! NA! 7.75%! 0%! 7.75%! 5%! 0.5%! 5.50%!

Syracuse! 7.1%! 0%! 7.1%! NA! 9%! 0%! 9%! 4%! 4%! 8%!

Tulsa! 6%! 0%! 6%! NA! 5.5%! 0%! 5.5%! 4.5%! 4.017%! 8.517%!

Traditional Peers! ! ! ! ! ! ! ! ! ! !

Des Moines! 12%! 0%! 12%! NA! 8.98%! 0%! 8.98%! 6%! 0.0%! 6.00%!

Louisville! 6%! 0%! 6%! NA! 6%!Residents: 2.2% Non-Residents:

1.45%!


7.45%!6%! 0%! 6%!

Omaha! 7.81%! 0%! 7.81%! NA! 6.84%! 0%! 6.84%! 5.5%! 1.5%! 7%!

!Source: Local government websites; Tax Foundation 2012 Report


Metro Areas: Grand Rapids Taxation

Grand Rapids has a lower average hourly wage compared to its aspirational and traditional peers. !

41!! !!

Average Hourly Wage!


Share of Employment in High-Tech Industries!

$20.14 !

$20.22 !

$21.27 !

$20.87 !

$20.67 !

$22.24 !

$20.66 !

$21.20 !

Knoxville!

Madison!

Syracuse!

Tulsa!

Des Moines!

Louisville!

Omaha!

Grand Rapids!

Traditional Peers!

Educational Attainment BA or Higher!

Aspirational Peers!

3.0%!

5.6%!

7.0%!

3.9%!

4.2%!

2.7%!

2.4%!

6.2%!

26.2%!

28.8%!

43.3%!

29.2%!

24.7%!

32.0%!

25.8%!

33.0%!

Source: American Community Survey; Bureau of Economic Analysis; ESRI Inc.

Population Growth 2001-2010!

3.3%!

11.8%!

11.4%!

2.1%!

8.3%!

16.4%!

9.8%!

12.0%!


Metro Areas: Grand Rapids Talent

29%!

63%!

27%!

26%!

31%!

32%!

42%!

20%!

Knoxville!

Madison!

Syracuse!

Tulsa!

Des Moines!

Louisville!

Omaha!

Grand Rapids!

Aspirational Peers!

Traditional Peers!

Grand Rapids has fewer hours of truck congestion and the second highest commodity value!for goods traveling by truck next to Louisville.!

42!! !!

“Good” or better Quality Urban Roads!


Annual Hours of Congestion Delay per

Auto Commuter!

Total Annual Hours of Truck Congestion Delay

(millions)!

19!

21!

12!

NA!

18!

NA!

23!

21!

0.45!

0.44!

0.25!

NA!

0.56!

NA!

1.2!

0.31!

$37,551 !

$11,989 !

$17,361 !

NA !

$28,827 !

NA !

$55,226 !

$8,668 !

Source: Federal Highway Administration 2009; 2011 Urban Mobility Report

Value of Commodities by Truck through Metros!

(millions)!


Metro Areas: Grand Rapids Infrastructure

-25.4%!

-9.8%!

-20.5%!

-16.3%!

-19.9%!

-21.9%!

0.3%!

-6.9%!

The violent crime rate for Grand Rapids is improving and in 2011 was lower than its aspirational peers.!

43!

Violent crime in Grand Rapids is dropping at a faster rate than its aspirational peers.!

Incidence of Violent Crime (per 100,000 of Population)!

2010! 2011!% Change!2006-2011!


City!

!Source: Crime in the United States 2006, 2010, and 2011 FBI Uniform Crime Report

859!

946!

392!

947!

1,094!

529!

586!

487!

Knoxville!

Madison!

Syracuse!

Tulsa!

Des Moines!

Louisville!

Omaha!

Grand Rapids!

Aspirational Peers!

Traditional Peers!

742!

936!

348!

893!

1,000!

523!

614!

560!


Metro Areas: Grand Rapids Safety

Michigan today! Summary!

Labor costs!US avg. = $0.50 per $1 of GDP!(2009)!

!

“Top Ten”1!

1 Aspiration to be a “Top Ten” state for job and economic growth 2 Cost of Doing Business as measured by Moody’s uses data from two years prior to the report date. We project that Michigan’s index and rank will improve in the future due to tax changes in the past year. 44!

Conclusions: COST

Cost of doing businessUS avg. = 100 (2012)!


!▪  Michigan’s Cost of Doing

Business is higher than “Top Ten” states.2!

!▪  Michigan’s labor costs are

13% higher per unit of GDP than the “Top Ten” state average.!

$0.53 !

$0.47 !

103!

93!

Source: Moody’s North American Business Cost Review, Bureau of Economic Analysis; US Census; team analysis

▪  Michigan is still well below the “Top Ten” states for venture capital investment.!

Source: American Community Survey, U.S. Census Bureau; PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report; Federal Highway Administration; Area Development Magazine, CEO Survey; team analysis

45!

▪  Michigan produces a level of talent comparable to “Top Ten” states, but availability of talent is not keeping pace with demand.!

Michigan today! Summary!“Top Ten”!

▪  Attention to Michigan’s highway infrastructure must be a focus. Businesses consider access to highways a #1 priority in site selection.


25%!

29%!

$25 !

$83 !

4%!3%!

Population with Bachelor’s or above (2010)!

Venture capital spending per $100,000 GDP (2011)!

Urban interstate miles in poor condition (2009)!

Conclusions: VALUE


Trending symbols track Michigan’s! !

Average Weekly Manufacturing Hours!

Leading Indicators!

Weekly Initial Unemployment Claims!

New Private Housing Building Permits!

Value of New Manufacturing Orders!

Future

Economic Performance

What to Expect Next Year

Leading indicators provide the most up-to-date information on the current economic direction of the state. They can help predict where the economy is headed and future performance.

40.1!

44.0!41.9!

40.3!

42.6!

40.6!

40.0!

40.3!

39.2!

41.1!

41.0!

40.1!

38.7!

37.8!

40.5!

43.1!

41.8!

39.8!

43.9!

41.3!

41.2!

42.3!

39.8!

41.1!

40.9!

41.6!

36.9!

39.8!

Michigan’s average weekly manufacturing hours are some of the highest in the country. Hours are down in 2012 compared to year-to-date performance in 2011.!

47!

Michigan ranks #3!in average manufacturing hours with 43.1 hours !per week. !!This is higher than almost every peer state. !!Hours in 2012 through August are down 2.1% compared to last year indicating a possible slow down in the state’s recovery.!

!Source: Bureau of Labor Statistics; team analysis

!State!

Average Weekly Hours in Manufacturing!

2002-2011 Avg. ! Jan-Aug 2011!Jan-Aug !

2011-12 growth!


MI!

P !!E !!E !!R!!S!

-2.1%!-0.4%!

-1.2%!

2.9%!

1.8%!

3.0%!

5.0%!

1.5%!

-0.2%!

-0.3%!

3.7%!

-4.7%!

5.2%!

40.8!

42.5!41.6!

41.4!

41.2!

41!

40.7!

40.6!

40.5!

40.3!

40.1!

40!

39.6!

39.4!

"Top Ten"!

IN!

VA!

TX!

OH!

IL!

AL!

MA!

NC!

CA!

TN!

CO!

GA!

Jan-Aug 2012!

LI: Manufacturing!

Michigan’s unemployment insurance claims are higher than the “Top Ten” average, but falling.!

48!

!The number of claims are down 7.3% in 2012 compared to 2011.!!However, Michigan ranks below every peer state except for California in its number of unemployment insurance claims per 1,000 residents. !

Source: U.S. Department of Labor Employment and Training Administration; U.S. Census; team analysis

!State!

Average Unemployment Insurance Claims (Per 1,000 people)!

2002-2011 Avg. !


MI!

P !!E !!E !!R!!S!

-7.3%!-8.0%!

-3.8%!

-3.5%!

-1.8%!

-16.7%!

-7.2%!

-11.8%!

-15.0%!

-1.6%!

-6.1%!

-8.3%!

-4.7%!

1.16!

1.87!0.69!

0.76!

0.88!

1.25!

1.25!

1.28!

1.29!

1.30!

1.31!

1.38!

1.54!

1.74!

"Top Ten"!

CO!

TX!

VA!

IL!

TN!

OH!

GA!

AL!

MA!

IN!

CA!

NC!

1.16!

1.39!0.72!

0.71!

0.79!

1.10!

1.14!

1.06!

1.36!

1.32!

1.17!

1.08!

1.71!

1.33!

1.11

1.29

0.67

0.69

0.77

1.08

0.95

0.98

1.20

1.12

1.15

1.02

1.57

1.27

Jan-Aug 2011!

Jan-Aug 2012!

Jan-Aug!2011-12 growth!

LI: Unemployment Claims!

2.62!

0.77!3.35!

1.62!

3.55!

2.95!

2.26!

2.00!

1.68!

1.40!

1.01!

0.64!

0.94!

1.02!

In the past decade, Michigan has built fewer new homes than the average built in the “Top Ten” states. This appears to be slowly picking up.!

49!

!!!!Michigan’s decade average is lower than all of its peers except for Ohio and Massachusetts. !!While Michigan still lags behind the “Top Ten,” its 2012 January to August building is 24.8% higher than the same time frame in 2011.!

Source: U.S. Census Bureau Building Permits Survey; U.S. Census; team analysis

!State!

Annual New Privately Owned Housing Units (Per 1,000 people)!Annual !

2002-2011 Avg. !


MI!

P !!E !!E !!R!!S!

24.8%!45.3%!

30.6%!

42.0%!

66.0%!

15.6%!

48.6%!

20.3%!

9.8%!

27.5%!

15.5%!

22.9%!

59.4%!

4.85!

2.85!7.84!

7.45!

6.59!

6.42!

5.52!

5.2!

4.55!

4.21!

3.41!

3.23!

2.82!

2.37!

"Top Ten"!

NC!

GA!

TX!

CO!

VA!

TN!

AL!

IN!

CA!

IL!

OH!

MA!

2.00!

0.61!2.31!

1.24!

2.50!

1.78!

1.95!

1.35!

1.40!

1.28!

0.79!

0.55!

0.77!

0.64!

Jan-Aug 2011!

Jan-Aug 2012!

Jan-June!2011-12 growth!

LI: Building Permits!

The value of new manufacturing orders in the U.S. has been steadily increasing !since 2009.!

LI: Manufacturing Value!

50!!Source: U.S. Census Bureau Annual Survey of Manufacturers

Monthly Value of New Manufacturing Orders (National Level)!


$-‐

$100

$200

$300

$400

$500

$600

2008 2009 2010 2011 2012

billion

s of $

Michigan GDP and Personal Income growth has been similar to that of its global peers. !Michigan has higher GDP and per capita income that almost all of its peers.!

Note: Data for global competitors on slides 51-53 represents the most recent data available and is more complete for some countries than others. We will continue to pursue and refine global comparisons in future reports based on availability of international data. 1 Data reflects the time period 2000-2010 for per capita GDP and per capita income and 2000-2007 for unemployment

51!

Avg. ($)!Per Capita GDP!

Real Growth! Avg. ($)!Per Capita Income!

Real Growth!


$41,911 ! $47,849 !

$9,442 !

$44,326 !

$41,554 !

$37,405 !

$48,552 !

$40,837 !

$21,481 !

$11,084 !

$10,804 !

$1,526 !

$4,583 !

Canada!

Mexico!

Japan!

Germany!

United Kingdom!

Netherlands!

France!

South Korea!

Brazil!

Russia!

India!

China!

-2.114%!0.005%!

0.016%!

0.002%!

0.005%!

0.003%!

0.005%!

0.005%!

0.01%!

0.047%!

0.2%!

0.433%!

0.296%!

$32,803 ! $34,133 !

$12,892 !

$27,737 !

$31,746 !

$33,794 !

$35,181 !

$30,232 !

$23,184 !

NA !

$12,377 !

NA!

NA!

1.9%!0.8%!

0.8%!

0.3%!

1.1%!

1.0%!

0.5%!

0.2%!

3.0%!

NA!

5.7%!

NA!

NA!

Michigan!

Global Competitors 2000-2010!

Source: Bureau of Labor Statistics; Bureau of Economic Analysis; Organization for

Economic Cooperation and Development

Michigan’s unemployment rate is higher than most global competitors. !Michigan has fairly low educational attainment in comparison to other developed countries. The average wage is near the median for other developed countries.!

Global Competitors 2000-2010!

1 Data reflects the time period 2000-2009 for unemployment, 2006 for educational attainment, and years 2003-2010 for average hourly wage. Hourly wage does not include benefits and was presented by the ILO in each county’s currency. All currency adjusted from foreign currency to current U.S. dollars.

52!

Michigan!

Unemployment (Avg. Rate)!Growth! 2006 BA or Higher!

Avg Hrly Wage!(2011 U.S. $)!


8.5%!7.0%!

3.4%!

4.7%!

8.9%!

5.3%!

3.4%!

8.7%!

3.6%!

NA!

7.8%!

1.3%!

3.6%!

Canada!

Mexico!

Japan!

Germany!

United Kingdom!

Netherlands!

France!

South Korea!

Brazil!

Russia!

India!

China!

24.5%!47.0%!

15.4%!

40.5%!

23.9%!

30.5%!

30.2%!

26.2%!

32.9%!

NA!

NA!

NA!

NA!

$24.27 ! $18.89 !

$2.13 !

$19.73 !

$28.61 !

$19.07 !

$25.33 !

$28.25 !

$13.37 !

$1.84 !

$3.41 !

$0.51 !

$1.78 !

Source: Bureau of Labor Statistics; Bureau of Economic Analysis; Organization for

Economic Cooperation and Development; World Bank; and ILO Laborstat.

125%!22%!

100%!

4%!

0%!

40%!

26%!

-11%!

-18%!

NA!

-23%!

2%!

39%!

Michigan has a lower gasoline pump price than any global competitor. !Michigan also issued more patents per 100,000 than global peers.!

Global Competitors !

!Source: U.S. Census Bureau; United States Patent and Trademark Office; Organization for Economic Cooperation and Development; World Bank

53!

2010 Average Fuel Prices State/Country-wide!Energy Costs!

Patent Growth 2000-2010!

U.S. Patent Creation! Patents per 100,000 Pop.

2010!


$2.76 ! $4.58 !

$3.07 ! $6.06 !

$7.19 ! $7.27 !

$8.06 !

$7.50 !

$5.75 !

$5.98 !

$3.18 ! $4.35 !

$4.20 !

Canada!

Mexico!

Japan!

Germany!

United Kingdom!

Netherlands!

France!

South Korea!

Brazil!

Russia!

India!

China!

2010 Gas Price! 2010 Diesel Price!

429 ! 162 !

1 !

369 !

167 !

81 !

116 !

79 !

256 !

1 !

2 !

1 !

2 !

Canada!

Mexico!

Japan!

Germany!

United Kingdom!

Netherlands!

France!

South Korea!

Brazil!

Russia!

India!

China!

4.0%!40.5%!

15.0%!

42.7%!

26.0%!

23.3%!

36.1%!

22.2%!

26.3%!

93.8%!

55.1%!

767.9%!

1,952%!

Michigan! Michigan!

Business Leaders for Michigan: Board of Directors!

54!BusinessLeadersforMichigan.com | MichiganTurnaroundPlan.com!© 2012 Business Leaders for Michigan!

*This list represents the BLM Board members at the time of printing. For a current list of members, visit www.BusinessLeadersforMichigan.com.

JAMES B. NICHOLSON !CHAIR OF THE BOARD!PVS Chemicals, Inc.!!TERENCE E. ADDERLEY!Kelly Services, Inc.!!DANIEL F. AKERSON!General Motors Company!

G. MARK ALYEA!Alro Steel Corporation! !GERARD M. ANDERSON !DTE Energy Company! !DAVID W. BARFIELD !The Bartech Group, Inc.!!ALBERT M. BERRIZ !McKinley, Inc. !!!MARK J. BISSELL!BISSELL Inc.!!STEPHEN K. CARLISLE!General Motors Company!!MARY SUE COLEMAN!University of Michigan!!TIMOTHY P. COLLINS!Comcast Cable!!ROBERT S. CUBBIN!Meadowbrook Insurance Group, Inc.!!KURT L. DARROW!La-Z-Boy Incorporated!!DAVID C. DAUCH !American Axle & Manufacturing!!RICHARD L. DeVORE!PNC Financial Services Group!!DOUGLAS L. DeVOS!Amway!!J. PATRICK DOYLE!Domino’s Pizza!!JAMES E. DUNLAP!Huntington!!!!! ! !!

MATTHEW B. ELLIOTT!Bank of America!!FREDERICK H. EPPINGER!The Hanover Insurance Group!!JEFF M. FETTIG!Whirlpool Corporation!!WILLIAM CLAY FORD, JR. !Ford Motor Company!!YOUSIF B. GHAFARI!Ghafari Associates, Inc. !!!DAN GILBERT!Quicken Loans Inc.!!ALLAN D. GILMOUR!Wayne State University! !ALFRED R. GLANCY III !Unico Investment Group ,LLC!!DAN GORDON!Gordon Food Service, Inc.!!STEPHEN E. GORMAN!Delta Air Lines, Inc.!! !JAMES P. HACKETT!Steelcase Inc.!!RONALD E. HALL !Bridgewater Interiors, LLC!!RICHARD G. HAWORTH!Haworth, Inc.! !CHRISTOPHER ILITCH !Ilitch Holdings, Inc. !! !MICHAEL J. JANDERNOA!Perrigo Company!!MILES E. JONES!Dawn Food Products, Inc.!!DAVID W. JOOS !!CMS Energy Corporation!!HANS-WERNER KAAS !McKinsey & Company!!!! ! ! !!

ALAN JAY KAUFMAN!H.W. Kaufman Financial Group!!JOHN C. KENNEDY!Autocam!!STEPHEN M. KIRCHER!Boyne Resorts!!BLAKE W. KRUEGER!Wolverine World Wide, Inc.!!BRIAN K. LARCHE!Engineered Machined Products, Inc.!!ANDREW N. LIVERIS!The Dow Chemical Company!!KEVIN A. LOBO!Stryker Corporation!!DANIEL J. LOEPP !!Blue Cross Blue Shield of Michigan! !EVAN D. LYALL!Roush Enterprises, Inc.! !BEN C. MAIBACH III!Barton Malow Company!!TIMOTHY M. MANGANELLO!BorgWarner Inc.! !RICHARD A. MANOOGIAN!Masco Corporation! !FLORINE MARK!The WW Group!!SARAH L. McCLELLAND !Chase ! !CHARLES G. McCLURE !Meritor, Inc. !!!DAVID E. MEADOR!DTE Energy Company!!HANK MEIJER!Meijer, Inc.!!MICHAEL MILLER!Google, Inc.!!!! ! !

FREDERICK K. MINTURN!MSX International!!MARK A. MURRAY!Meijer, Inc.!!THOMAS D. OGDEN !!Comerica Bank! !JAMES O’LEARY !Kaydon Corporation !! !WILLIAM U. PARFET!MPI Research! !CYNTHIA J. PASKY !!Strategic Staffing Solutions! !ROGER S. PENSKE !!Penske Corporation !! !WILLIAM F. PICKARD!Global Automotive Alliance!!GERRY PODESTA!BASF Corporation! !CHARLES H. PODOWSKI!The Auto Club Group ! ! !STEPHEN R. POLK !!R. L. Polk & Co. !! !JOHN RAKOLTA, JR. !Walbridge!!DOUG ROTHWELL !!Business Leaders for Michigan!!ANDRA M. RUSH!Dakkota Integrated Systems, LLC!!JOHN G. RUSSELL!CMS Energy Company!!RICHARD F. RUSSELL !Amerisure Mutual Insurance Company!!ALAN F. SCHULTZ!Valassis !! !ALAN E. SCHWARTZ!Honigman, Miller, Schwartz & Cohn, LLP!!!!!

J. DONALD SHEETS!Dow Corning Corporation!! !BRAD SIMMONS!Ford Motor Company!!LOU ANNA K. SIMON, Ph.D. !Michigan State University!!SAM SIMON Simon Holdings!!MATTHEW J. SIMONCINILear Corporation!!BRIG SORBER!Two Men and a Truck/International, Inc.! !DOUGLAS W. STOTLAR!Con-Way, Inc.!!SCOTT C. SWANSON !!Charter One !!ROBERT S. TAUBMAN!The Taubman Company ! !!MICHAEL J. TIERNEY!Flagstar Bank, FSB!!SAMUEL VALENTI III!TriMas Corporation !! !STEPHEN A. VAN ANDEL!Amway! !MICHELLE L. VAN DYKE!Fifth Third Bank! !TIMOTHY WADHAMS !Masco Corporation !! !BRIAN C. WALKER!Herman Miller, Inc.!!WILLIAM H. WEIDEMAN!The Dow Chemical Company! !WILLIAM C. YOUNG !Plastipak Holdings, Inc.!!Citizens Bank!!Visteon Corporation!!! !!

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©2012 Business Leaders for Michigan