a new michigan: the 2013 report on michigan's progress in six opportunities

A New Michigan: The 2013 Report on

Michigan’s Progress inSix Opportunities

About Business Leaders for MichiganBusiness Leaders for Michigan is a private, non-profit executive leadership organization whose mission isto develop, advocate and support high-impact strategies that will make Michigan a Top Ten state for job,economic and personal income growth. The organization’s work is defined by the Michigan TurnaroundPlan, 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 thechairpersons, chief executive officers, or most senior executives of Michigan’s largest companies anduniversities. Our members drive over 25% of the state’s economy, provide over 325,000 direct and820,000 indirect jobs in Michigan, generate over $1 trillion in annual revenue and serve nearly one halfof all Michigan public university students.

Table of ContentsIntroduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Michigan’s Overall Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Base of Entrepreneurism, Innovation, and Manufacturing . . . . . . . . .5

A New Michigan: One Vision, Six Opportunities . . . . . . . . . . . . . . . .7

Aggregate Performance on Six Opportunities . . . . . . . . . . . . . . . . . .9

The Six Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

1. Global Engineering Village . . . . . . . . . . . . . . . . . . . . . . . . . . .13

2. Gateway to the Midwest . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

3. Higher Education Marketplace . . . . . . . . . . . . . . . . . . . . . . . .21

4. Life Sciences Hub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

5. Global Center for Mobility . . . . . . . . . . . . . . . . . . . . . . . . . . .29

6. Natural Resources Economy . . . . . . . . . . . . . . . . . . . . . . . . .33

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

Business Leader for Michigan Board of Directors . . . . . . . . . . . . .43

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In 2009, Business Leaders for Michigan (BLM)

released the Michigan Turnaround Plan, a plan

on how to make Michigan a Top Ten state for

job, economic and personal income growth.

The Plan was updated in 2012 to identify the

six most distinctive assets Michigan had which

could be leveraged to accelerate growth.

These assets include the state’s engineering

prowess, geographic location, and world-class

higher education institutions, among others.

The 2013 New Michigan Report is the first in

an annual series in which Michigan’s progress

in leveraging its assets into economic growth

will be tracked. Michigan’s performance on

various metrics will be charted over time, and

compared to the results achieved in other

high-performing states.

This report provides a baseline of Michigan’s

overall performance relative to other states in

the most recent year for which information is

available. In future years, we will build on this

data and show how Michigan’s relative

performance is changing.

All figures in this report, except for those that

show growth projections, show Michigan’s

rank among all 50 states on a particular

metric. First, we present Michigan’s

performance for the economy, overall. Then we

define each of the six opportunities using a set

of relevant industries, and rank Michigan’s

performance only within these industries for

each opportunity.

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Where we stand

Michigan’s Overall Economy

This section provides a snapshot of Michigan’s currentoverall economy on key output metrics BLM believes aremost critical to prosperity. In the BLM annual EconomicCompetitiveness Benchmarking Report we compare howMichigan, as a state, performs against other states onper capita income. For this report, we are comparinghow Michigan performs against other states in certainindustry sectors. As such, we must use average earningsas per capita income cannot be tracked by industry.

Projected Growth Scenarios

While growth has increased in the past two years,Michigan’s growth from 2005-2010 ranked at or nearthe bottom on each of these metrics. If it remains onthat path, Michigan would decrease GDP andemployment by 23% and 25%, respectively,representing a $75.5 billion decline in GDP and a lossof 822,000 jobs from current levels by the year 2020.However, if Michigan were to grow similar to the 5th-fastest growing state for each output metric, Michiganwould increase average earnings by 14%, increaseGDP by $109 billion, and create 391,000 more jobs bythe year 2020. The accompanying charts displayMichigan’s projected levels for each output metricgiven different growth rate trajectories.

Michigan’s rank in average earnings is higher than itsrank in per capita personal income because averageearnings are the total earnings per worker, rather thanfor the population as a whole.

34,140$ 48.03%5 53,237$ 60.28%1 46,962$ 57.98%M 41 42

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10

15

20

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30

35

40

45

50

2010 Average Earnings

2010 Per Capita GDP 2010 Employment/Working Age Population

R A N K

Michigan's Economic Outputs Across All Industries

41st 42nd

$42,211

$34,140 48.03%

Sources: Bureau of Economic Analysis, U.S. Census Bureau. Analysis: Anderson Economic Group, LLC

5th$53,23710th

$46,962

5th$50,70210th

$47,124

5th60.28%10th

57.98%17th

Outputs

Michigan’s performance on key metrics measuringeconomic output is, overall, lower than average. It ranksin the bottom ten states for employment and GDP, butranks in the top 20 states for average earnings.

MICHIGAN’S OVERALL ECONOM

Y

Understanding This Report

Outputs:

Output metrics are a measure of each state’s current

economic performance. For each set of industries that

we define as an economic opportunity, we have

measured the levels of per capita real GDP,

employment, and earnings in each state. We report

these values for Michigan, as well as for the fifth- and

tenth-ranked states, while also showing Michigan’s

ranking among all fifty states for each metric.

Inputs:

A strong showing on input metrics for an opportunity

signals that a state has a strong foundation in the

industries that define that opportunity. Input metrics

reflect high demand, a talented workforce, and a

vibrant supply chain, among other characteristics.

Each category and opportunity has its own specific

input metrics. We report Michigan’s levels and

rankings for each of these metrics, as well as those of

the fifth- and tenth-ranked states per opportunity.

Projected Growth Scenarios:

It is important to note that these scenarios rely on

historical data from 2005-2010, the most recent

available. Any growth Michigan has experienced in

the last two years will be reflected in future reports..

We project what each opportunity would contribute to

Michigan’s GDP, employment, and earnings in 2020

under three different scenarios:

1. If Michigan remains on the same trajectory for

growth as it had between 2005 and 2010,

2. If Michigan follows the patterns of growth between

2005 and 2010 for the 5th-ranked state in each

metric,

3. If Michigan follows the patterns of growth between

2005 and 2010 for the 10th-ranked state in each

metric.

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Where we stand

Base of Entrepreneurism, Innovation, and Manufacturing

An underlying need that spans economy-wide alsopertains to each of the opportunities identified in thisreport: a strong base of entrepreneurism, innovation,and manufacturing can help to inspire economic andjob growth in the state. The Michigan economy, as awhole, will thrive if the state improves its position inthese areas. This will lead to more companies, betterproducts, better jobs, and faster economic growth.

Inputs

Michigan presents strengths in its performance oninput metrics for entrepreneurism, innovation, andmanufacturing. It ranks in the top half of states for allinputs, placing in the top ten for number of existing firmsand R&D spending and just outside of the top ten forGDP from goods-producing industries and number ofnew firms in 2010.

9,618 141,344 2,031 85$ 5 15,631 204,525 3,127 770$ 1 9,919 136,400 2,031 485$ M 12 9 10 24

0

5

10

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20

25

30

35

40

45

50 2010 GDP of Goods-Producing

Indsutries 2010 New Firms 2010 Existing Firms 2010 R&D Expenditures at

Universities (1000s) 2011 Venture Capital Investment (millions)

R A N K

Entrepreneurship, Innovation, & Manufacturing Inputs

24th9,618

$84.8

141,344

Sources: BEA, U.S. Census Bureau, NSF, Pricewaterhouse Coopers. Analysis: Anderson Economic Group, LLC

11th

$68,651

12th 9th5th

$92,615

10th76,917

5th15,631

10th9,919

5th204,525

10th136,400

5th$769.810th$485

10th$2,031

5th$3,12710th$2,031

BASE OF ENTREPRENEURISM, INNOVATION, AND M

ANUFACTURING

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A New Michigan:

In 2012, Business Leaders for Michigan laid out howMichigan could leverage its existing assets in sixfundamental areas of strength to accelerate economicgrowth. Like the rest of the Michigan Turnaround Plan,these opportunities were identified through extensiveresearch and are based on facts. They are theopportunities we found would have the greatest impact ina ten year time period to accelerate growth, but they donot represent an exhaustive list. They merely constitutewhat we concluded to be the best possibilities.

We believe Michigan can build on the following:

One Vision, Six Opportunities

1. Grow and brand its industrial, production, and talent capacity to develop a reputation as a Global Engineering Village

2. Capitalize on its strategic location and infrastructure to become a Gateway to the Midwest

3. Develop a Higher Education Marketplace that boosts the state’s talent base and leverages its innovative strengths.

4. Take advantage of Michigan’s natural resources, to grow a Natural Resources Economy

5. Amplify our automotive and manufacturing expertise to become a Global Center of Mobility

6. Develop a Life Sciences Hub based on our robust health, medical, and bio-pharmaceutical capabilities

ENGINEERINGTALENT

Global Engineering

Village

Brand theengineering

sector•

Grow engineeringeducation capacity

•Grow

engineering firmsPo

tential w

ays to leverage th

e assets:

Opportunities:

Related Industries

Assets: GEOGRAPHIC

LOCATION

Gateway to the

Midwest

Consolidatelogistics base into

Michigan •

Scale theAerotropolis

•Invest in strategic

trade-relatedinfrastructure

HIGHER EDUCATIONSYSTEM

HigherEducation

Marketplace

Strengthen quality,affordability,

productivity &economic impact

•Grow university

enrollment•

Grow industry &university

funded R&D•

Grow commerciali-zation of R&D

HEALTH & MEDICALEXPERTISE

Life Sciences Hub

Create a Hub for

bio-pharmaceutical R&D

•Become the Center

for research, testing &

medical labs•

Grow medical tourism

AUTOMOTIVEINDUSTRY

Global Centerfor

Mobility

Lead in sustainable mobility

•Lead in multi-

modal systems•

Lead in vehicle/infrastructuretechnology to

improve road safety

•Grow the auto

industry

NATURAL RESOURCES

NaturalResourcesEconomy

Grow agriculturalprocessing and

exports•

Grow leisure tourism•

Lead in alternativeenergy technologies

Six Assets and Opportunities to Accelerate Michigan’s Job and Economic Growth

newmichigan

Machinerymanufacturing

Electrical equipment,appliance, and

componentmanufacturing

Nonmetallic mineralproduct

manufacturing

Primary metalmanufacturing

Motor vehicle, body,trailer, and partsmanufacturing

Space research andtechnology

Research anddevelopment in

engineering

Engineering services

Air transportation

Rail transportation

Water transportation

Truck transportation

Other transportationand support

activities

Warehousing andstorage

Highway, street, andbridge construction

Other heavy and civilengineeringconstruction

Process, physicaldistribution, and

logistics consulting

Pharmaceutical andmedicine

manufacturing

Medical equipmentand supplies

manufacturing

Medical anddiagnostic

laboratories

Research anddevelopment inbiotechnology

Highway, street, andbridge construction

Primary metalmanufacturing

Motor vehicle, body,trailer, and partsmanufacturing

Other transportationequipment

manufacturing

Rail transportation

Other transportationand support activities

Urban transit systems

Industrial design andengineering services

Computer andelectronic product

manufacturing

Crop and animalproduction

Forestry, fishing, andrelated activities

Oil and gas extraction

Mining, and supportactivities for mining

Water transportation

Pipeline transportation

Other transportationand support activities

Waste managementand remediation

services

Amusement andrecreation

Accommodations

Colleges,universities, and

professionalschools

Technical and tradeschools

Educationrehabilitation

services

Scientific researchand development

services

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Where we stand

Aggregate Performance on Six Opportunities

Michigan has the chance across six specificopportunities to improve its performance on key job andeconomic indicators. While each of these opportunitiesis important on its own, in this section, we reviewMichigan’s performance across all of the industriesrelevant to the six opportunities, in aggregate.

Outputs

The figure below shows Michigan’s economic outputaggregated across the industries representing all sixopportunities in the Michigan Turnaround Plan. In 2010,Michigan ranked 13th, 28th, and 27th in the nation foraverage earnings, per capita GDP, and employment,respectively, in these industries. 1

4,657$ 10.55%5 9,658$ 13.48%1 7,391$ 12.36%M 28 25

0

5

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30

35

40

45

50


2010 Per Capita GDP 2010 Employment/Working Age Population

R A N K

Outputs Across Six Opportunities

13th 10th$56,215

5th$59,676

5th$9,65810th$7,391

10th12.4%

5th13.5%

Sources: Bureau of Economic Analysis, U.S. Census Bureau. Analysis: Anderson Economic Group, LLC

28th27th

$53,788

$4,65710.6%

AGGREGATE PERFORMANCE ON SIX OPPORTUNITIES


If Michigan were to achieve Top Ten growthperformance in all six opportunities by 2020, thestate’s total economic output would be $36 billiongreater per year, average annual earnings wouldincrease by as much as $22,000, and the state wouldadd as many as 330,000 new jobs compared to itscurrent projected path. From current levels, GDP couldbe $26 billion greater, average earnings could be$11,000 higher, and employment could see anincrease of 129,000 jobs.2

We can’t anticipate how well Michigan will seize eachopportunity or how global economic conditions mightchange during the next decade, but these projectionsidentify the economic potential of these opportunitiesand their power in dramatically reversing a decade’slong downward trend into a brighter future in thedecades beyond.

1 There is extensive overlap between industries included in eachopportunity, so adding up each of the opportunities will not equal thevalues calculated for the aggregate performance on all six opportunities.

2 Projected growth scenarios for the aggregate numbers are based onstate performances across all opportunities, taking overlap out of theequation. Since top 5 growth rates are calculated separately for eachopportunity in other sections, the change realized by achieving the top 5growth rate on aggregate is not equal to the sum of changes realized byachieving the top 5 growth rate within each opportunity.

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Six Opportunities in Comparison to Overall Economy

Overall, while Michigan’s average earnings rank 17th, itseconomic performance in terms of GDP and employmentis not competitive in comparison to other states. Overall,Michigan’sper capita GDP ranks 41st, and employmentranks 42nd when compared to the 49 other states.Michigan’s rank in average earnings is higher than itsrank in per capita personal income because averageearnings are the total earnings per worker, rather than forthe population as a whole. The following chartsummarizes Michigan’s performance in the overall

economy, as well as for each of the six opportunitiesidentified in the Michigan Turnaround Plan. NoteMichigan’s high performance in three areas: GlobalEngineering Village, Global Center for Mobility and HigherEducation Marketplace. In the Global Engineering Villageopportunity, Michigan’s average rank across the threemetrics is 7th. In the Global Center for Mobility andHigher Education Marketplace opportunities, Michigan’saverage rank is14th and 20th, respectively. This isfollowed by Life Sciences Hub at 23rd, Gateway to theMidwest at 31st, and finally Natural Resources Economywith an average ranking of 33rd.

AGGREGATE PERFORMANCE ON SIX OPPORTUNITIES

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The Six Opportunities

1. Global Engineering Village

Engineering services are predicted to experiencesignificant growth in the upcoming years. The market isexhibiting increasing demand for high-techmanufacturing industries such as automotive,aerospace, medical devices, and precision instruments.The automotive industry’s adoption of cutting-edgetechnology and embracing start-ups could helpMichigan capitalize on this opportunity.

1,737 1,903$ 877 65,564$ 2,436$ 4.22%

5 1,570 3,026$ 712 80,368$ 1,680$ 4.02%1 930 1,903$ 605 73,563$ 1,376$ 3.37%M 5 4 10 1 14 3 3

0

5

10

15

20

25

30

35

40

45

50 2010

Average Earnings 2010 Per Capita GDP 2010

Employment/Working Age Population R A N K

Global Engineering Village Outputs

14th

3rd 3rd

$65,564

$2,436 4.22%

5th$80,368

10th$73,563

5th$1,68010th

$1,376

5th4.02%10th

3.37%

Where we stand

Outputs

Overall, Michigan ranks highly on output metrics forindustries in the Global Engineering Village opportunity. Itranks in the top three nationwide for GDP andemployment, and is 14th for average earnings.

Sources: Bureau of Economic Analysis, U.S. Census BureauAnalysis: Anderson Economic Group, LLCNote: Industries in the Global Engineering Village opportunity include: Machinery manufacturing; Electrical equipment, appliance, andcomponent manufacturing; Nonmetallic mineral product manufacturing; Primary metal manufacturing; Motor vehicle, body, trailer, andparts manufacturing; Space research and technology; Research and development in engineering; and, Engineering services.

THE SIX OPPORTUNITIES

Inputs

Michigan ranks well above average in each of the inputmetrics for this opportunity. The state ranks in the topfive states for number of engineering firms, engineeringpatents awarded, and engineers per capita.

How to leverage our engineering talent

Michigan can become a global engineering village bybranding the engineering sector, growing engineeringeducation capacity, and growing engineering firms.

1,737 1,903$ 877 65,564$ 2,436$ 4.22%

5 1,570 3,026$ 712 80,368$ 1,680$ 4.02%1 930 1,903$ 605 73,563$ 1,376$ 3.37%M 5 4 10 1 14 3 3

0

5

10

15

20

25

30

35

40

45

50 2011 Engineering Grads/

100,000 2010 Number of Firms 2011 Patents Awarded 2010 Engineering R&D

(in millions) 2011 Engineers/100,000

R A N K

Global Engineering Village Inputs

10th129

5th145

5th1,57010th930

10th605

5th712

1st8775th

7,2915th

7,29110th

4,720

5th$3,026

10th$1,903

Sources: National Center for Education Statistics, U.S. Census Bureau, U.S. Patent & Trade Office, National Science Foundation. Analysis: Anderson Economic Group, LLC

16th112

1,7374th

$1,90310th

Bureau of Economic Analysis, U.S. Census Bureau. Analysis: Anderson Economic Group, LLC

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Despite Michigan’s high performance on input andoutput metrics, these industries shrank considerablybetween 2005 and 2010 due to the economicrecession and downturn in manufacturing-relatedindustries that utilize engineering services. If Michiganfollows its current trajectory in Global EngineeringVillage industries, by 2020 its GDP and employment inthese industries will decrease from current levels by65% and 52%, respectively, and average earnings willdecrease by 13% from current levels, in real terms. It’simportant to note that other states are working to becompetitive in this arena. If Michigan follows thetrajectory for the 5th-ranked state, however, it has thepotential to increase earnings and employment by 23%and 14%, respectively. GDP is projected to decrease by11% from its current level, even if it experiences TopTen growth, as only four states experienced anincrease in real GDP between 2005 and 2010 forindustries associated with this opportunity.

Industry Insights

The National Science Foundation estimates that 80%of the jobs created in the next decade will require someform of math and science skills. Recognizing this, theEngineering Society of Detroit (ESD) is engaged in anumber of school-based activities designed toencourage more student interest in science,technology, engineering and math (STEM) fields.

• To encourage minority and female studentparticipation in STEM courses, the ESD developedtwo school-based programs that will serve nearly2000 students over a three-year period:

- Future City Competition – a cross-curriculareducational program where middle schoolstudents imagine, design, and build cities of thefuture over a four-month period.


- Engineering SMArT Detroit– a 15-week learningmodule where students learn about energy(including alternative energies and the energygrid) and apply their knowledge to an engineeringdesign project led by trained professionalengineers.

• To explain the impact of science and engineering onour day-to-day lives, the ESD underwritesSciEngiMatheploration, cable television programwith real-life experiments, interviews, and anecdotesthat is available as classroom tool for all Michiganmiddle schools.

• To augment learning in the classroom, the ESD hasdeveloped a Speakers Bureau of 110 technicalprofessionals that visit schools/universities to speakabout the various opportunities that exist within theengineering and technical professions. The intent isto grow the bureau to 250 speakers.

• To promote engineering as a career, ESD publishesa list of Children’s K–12 STEM Summer Campsavailable in Michigan each April.

• To drive innovation through facilitation andcooperation, ESD’s Institute is convening diversestakeholders of public policy issues to discuss howSTEM-related career paths for our youth can beoptimized for their quality of life and Michigan’seconomic benefit.

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2. Gateway to the Midwest

The movement of goods and people is crucial to economicgrowth and success, and shipments are expected togrow significantly in the future. Michigan’s uniquegeographic location enables it to be accessible by road,rail, sea or air. Michigan can leverage this advantage byadvancing as an integrated, multi-modal hub for trade.Specifically, Michigan has the capacity to encourage thedevelopment of aviation-dependent businesses, and takeadvantage of international border crossings. Theseactions could contribute to building a logisticsinfrastructure crucial for facilitating trade in the Midwest.

Where we stand

Outputs

Overall, Michigan ranks lower than average on outputmetrics for industries in the Gateway to the Midwestopportunity. It ranks in the bottom ten nationwide forGDP and employment, but its earnings levels are higher,ranking 12th in the U.S.

5,783 525$ 579 244 326 23,374$ 46,799$ 8,964$ 32,918$ 46,057$ 749$ 1.44%5 14,815 1,150$ 1,190 1,655 1,794 17,194$ 16,213$ 5,724$ 7,174$ 50,163$ 1,721$ 2.65%1 6,604 782$ 875 738 845 8,298$ 10,886$ 2,638$ 4,788$ 46,829$ 1,392$ 2.31%M 10 15 14 16 21 16 1 1 3 3 12 40 41

American Railroads. Analysis: Anderson Economic Group, LLC

1

Bureau of Transprotation Statistics. Analysis: Anderson Economic Group, LLC

2

0

5

10

15

20

25

30

35

40

45

50 2010



Gateway to the Midwest Outputs

12th

40th 41st

$46,057

$749 1.44%

5th$50,163

10th$46,829

5th$1,72110th$1,392

5th2.65%10th2.31%

Sources: Bureau of Economic Analysis, U.S. Census BureauAnalysis: Anderson Economic Group, LLCNote: Industries in the Gateway to the Midwest opportunity include:Air transportation; Rail transportation; Water transportation; Trucktransportation; Other transportation and support activities;Warehousing and storage; Highway, street, and bridge construction;Other heavy and civil engineering construction; and Process, physicaldistribution, and logistics consulting.


Inputs

Michigan ranks well above average in its performancefor each input metric for the Gateway to the Midwestopportunity. It ranks in the top three states for trans-border trade with Canada and Mexico, and also in thetop ten for number of logistics firms.

5,783 525$ 579 244 326 23,374$ 46,799$ 8,964$ 32,918$ 46,057$ 749$ 1.44%5 14,815 1,150$ 1,190 1,655 1,794 17,194$ 16,213$ 5,724$ 7,174$ 50,163$ 1,721$ 2.65%1 6,604 782$ 875 738 845 8,298$ 10,886$ 2,638$ 4,788$ 46,829$ 1,392$ 2.31%M 10 15 14 16 21 16 1 1 3 3 12 40 41

0

5

10

15

20

25

30

35

40

45

50

2011 Graduates per 100,000 2010 Number of Firms 09-10 Transportation Expenses by State and Local Governments (millions)

2010 Carloads of Freight by Rail (origination, in 1000s)

2010 Carloads of Freight by Rail (termination, in 1000s) R A N K

Gateway to the Midwest Inputs

14th525

16th

Sources: National Center for Education Statistics, Bureau of Economic Analysis, U.S. Census Bureau, Association of American Railroads. Analysis: Anderson Economic Group, LLC

16

5th3510th27

10th

5,662 15th$5,783

16th

579

5th9,59010th5,662

10th$6,604

5th$14,815

10th782

5th1,150

10th875

5th1,190


5,783 525$ 579 244 326 23,374$ 46,799$ 8,964$ 32,918$ 46,057$ 749$ 1.44%5 14,815 1,150$ 1,190 1,655 1,794 17,194$ 16,213$ 5,724$ 7,174$ 50,163$ 1,721$ 2.65%1 6,604 782$ 875 738 845 8,298$ 10,886$ 2,638$ 4,788$ 46,829$ 1,392$ 2.31%M 10 15 14 16 21 16 1 1 3 3 12 40 41

0 5

10 15 20 25 30 35 40 45 50

2011 Cargo Weight Enplaned at Airports

(lbs, millions)

2011 Cargo Weight Landed at Airports

(lbs, millions)

2011 Exports to Canada (millions)

2011 Imports from Canada (millions)

2011 Exports to Mexico (millions)

2011 Imports from Mexico (millions)

R A N K

Gateway to the Midwest Inputs, Cont.

3rd

244

$32,918$23,374

Sources: Bureau of Transprotation Statistics. Analysis: Anderson Economic Group, LLC

21st

1st

$46,799 $8,96416th326

1st 3rd

10th738

5th1,655

10th845

5th1,794

5th$17,19410th$8,298

10th$10,886

5th$16,213

10th$2,638

5th$5,724

10th$4,788

5th$7,174


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How to leverage our geographic location

Michigan has an opportunity to better leverage its aboveaverage performance on input metrics related to thisasset to achieve greater outputs. This can be done byconsolidating a logistics base into Michigan, scaling theAerotropolis, and investing in strategic trade-relatedinfrastructure such as roads, bridges, tunnels, and rail.Building such a logistics infrastructure requires a broad,unified commitment from state and local administrationsand permitting authorities, as well as the private sector.


Michigan input levels for this opportunity rank fairly highacross the board. However, its performance in theseindustries declined between 2005 and 2010 in GDP,employment, and earnings due to the economicrecession and downturn in manufacturing output. On itscurrent course, Michigan will see a decrease in averageearnings and employment in these industries of 14%and 8%, respectively, by 2020. GDP is projected todecline by 30% in that period. However, if Michigan canmimic the growth rates of the 10th-ranked states ineach output, by 2020, earnings and employment willincrease from current levels by 12% and 9%,respectively, and Michigan could limit its GDP decreaseto 9%. Even if Michigan were able to grow at the rate fora 5th-ranked state, GDP would still decrease by 4% by2020. This is because almost all states have recentlyexperienced a decline in GDP in the industries that makeup this opportunity: between 2005 and 2010, only twostates (Louisiana and North Dakota) saw an increase inGDP for these industries.


Industry Insights

We have made a great deal of progress toward growingMichigan as a Gateway to the Midwest:

• An agreement was forged between Michigan andCanada on the construction of the New InternationalTrade Crossing (NITC).

• The federal government agreed to allow Michigan toleverage Canada’s $550 million investment forMichigan infrastructure related to NITC as match for$2 billion of federal transportation dollars that can beused for projects throughout Michigan.

• To date, over $36 million of rail infrastructureimprovements have been made in SE Michigan tosupport more efficient intermodal connections. Moreimprovements are already planned for upcomingyears.

• The Michigan Department of Transportation’sacquisition of the Norfolk-Southern (NS) railroad linebetween Dearborn and Kalamazoo will allow for the

development of accelerated rail between Detroit andChicago, increase the viability of passenger rail, andboost the efficiency of freight rail.

• Construction of new intermodal passenger facilities inDearborn and Troy is underway.

• BLM worked with the Michigan EconomicDevelopment Corporation and other keystakeholders to develop a statewide Logistics andSupply Chain strategy that will create a foundationfor leveraging our assets and providing opportunitiesfor Michigan businesses.

• There is increased dialogue between Michigan andCanada on issues that impact the movement of goodsacross our borders. This includes bi-national eventsrelated to border crossings in Detroit, Port Huron, andSault Ste. Marie.

• Five Next Michigan Development Corporations havebeen created across the state to drive economicactivity around key infrastructure assets.

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3. Higher Education Marketplace

Increasingly, economic growth is being driven by gains inproductivity; in turn, gains in productivity are driven bytalent and talent-generated innovation. As a primarysource of both talent and innovation, our highereducation system represents a major opportunity to growMichigan’s economy.

Where we stand

Outputs

Overall, the state’s economic performance in highereducation industries vary by metric, with Michiganranking very high in average earnings and close toaverage for GDP and Employment.

11,430 504,870 9.37% 181 55,192$ 238$ 2.70%5 11,564 613,660 39.90% 333 57,438$ 771$ 3.70%1 8,485 406,800 28.76% 267 54,144$ 432$ 3.47%M 6 8 45 32 8 33 20

0

5

10

15

20

25

30

35

40

45

50 2010



Outputs for Higher Education Marketplace

8th

33rd

20th$55,192

$238

2.7%

5th$57,438

10th$54,144

5th$771

10th$432

5th3.7%

10th3.5%

Sources: Bureau of Economic Analysis, U.S. Census BureauAnalysis: Anderson Economic Group, LLCNote: Industries in the Gateway to the Midwest opportunity include: Colleges, universities, and professional schools; technicaland trade schools; education rehabilitation services; and scientific research and development services.


Inputs

Michigan is ranked in the top ten states for total degreesawarded, total enrollment, and science, technology,engineering and math (STEM) degrees awarded.However, it ranks lower than average in terms of out-of-state enrollment and state appropriations to publicuniversities.

11,430 504,870 9.37% 181 55,192$ 238$ 2.70%5 11,564 613,660 39.90% 333 57,438$ 771$ 3.70%1 8,485 406,800 28.76% 267 54,144$ 432$ 3.47%M 6 8 45 32 8 33 20

0

5

10

15

20

25

30

35

40

45

50 2011

Degrees Awarded 2011

STEM Degrees Awarded 2011

Total Enrollment(FTE Equivalent)

2011 Out-of-State Enrollment

2009-2010 Per Capita State Appropriations

to Public Universities R A N K

Inputs for Higher Education Marketplace

8th

32nd

10th113,775

5th178,134

5th613,660

10th406,800

10th$267

5th$333

127,527 504,870

$181

6th

11,430

5th11,56410th8,485

8th

45th9.4%

5th39.9%10th

28.8%

Sources: National Center for Education Statistics. Analysis: Anderson Economic Group, LLC

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How to leverage our higher education assets

Michigan’s opportunities as a higher educationmarketplace can be facilitated by growing communitycollege and university enrollment, growing industry-funded and university-funded research anddevelopment, and growing the commercialization ofresearch and development. To accomplish this, Michiganshould set a concrete goal of being among the top tenstates for higher education, as measured in quality,affordability, productivity and economic impact. Aperformance-based funding approach for state supportwould encourage our colleges and universities to striveto be best in class without undermining the strength ofthese institutions. Similarly, colleges and universitiesshould increase in- and out-of-state enrollments andaccelerate support for and spin-off of business creationopportunities.


On its current trajectory, by 2020 Michigan will see anincrease in employment of 14% in higher education.Earnings and GDP in higher education, however, woulddecrease by 17% and 11%, respectively. If the stateattained the growth rate of the 10th-fastest growingstate in this industry, Michigan would increase highereducation earnings, real GDP, and employment by 20%,9%, and 35%, respectively.


Industry Insights

• Michigan ranks near the bottom of the 50 states inper resident support for higher education. Over thelast decade, the state dropped its financial support forhigher education by 50 percent when inflation istaken into account, causing tuition to nearly doubleand student debt to escalate.

• In 2012, the state began to reverse the decade ofdisinvestment in our colleges and universities andmarginally increased funding based on performancemetrics.

• Michigan enrollment of out-of-state students increasedfrom 14 to 15% of total enrollments last year.

• Michigan ranks 9th in the nation in number ofinternational students enrolled in state universities;the University of Michigan and Michigan StateUniversity are in the top 10 nationally of internationalstudent enrollment.

• While still in high school, students now can accesspostsecondary experiences and non-credit programsthat lead to industry recognized skills or credentialsthrough dual enrollment programs.

• All 15 universities, and all 28 community collegesnow participate in Statewide Reverse Transferagreement.

• Community colleges play an increasingly importantrole in workforce development through customtraining programs like the Michigan New JobsTraining Program – which has now trained nearly10,000 new workers.

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4. Life Sciences Hub

Demand for higher quality of life is projected to growamong developing and developed nations alike. Seeking solutions in life sciences is causing healthcareexpenditures to outpace GDP in the developed world.Michigan already has a high amount of bio-sciencedegrees awarded, as well as high-end medical researchfacilities. Developing bio-pharmaceutical products, thebio-science arena, and market research and testing canhelp to promote the development of Michigan as a LifeSciences Hub.

Where we stand

Outputs

Overall, the state’s performance on output metrics inlife sciences is about average, with Michigan ranking28th for GDP and employment, and 18th for averageearnings.

1,122 28$ 1,775 235 61,124$ 286$ 0.32%5 1,859 231$ 2,838 648 85,823$ 958$ 0.72%1 1,122 152$ 2,152 436 72,108$ 662$ 0.55%M 9 10 24 11 19 18 28 28

0 5

10 15 20 25 30 35 40 45 50


2010 Per Capita GDP 2010 Employment/Working Age Population R A N K

Life Sciences Hub Outputs

28th 28th$61,124

$286 0.32%

10th$72,108

5th$95810th$662

5th0.72%10th0.55%18th

5th$85,823

Sources: Bureau of Economic Analysis, U.S. Census BureauAnalysis: Anderson Economic Group, LLCNote: Industries in the Life Sciences Hub opportunity include:Pharmaceutical and medicine manufacturing, Medical equipmentand supplies manufacturing, Medical and diagnostic laboratories,Hospitals and nursing and residential care, and Research anddevelopment in biotechnology.


Inputs

Michigan ranks in the top half of states for each inputmetric that we look at for life sciences industries, and isin the top ten states for number of firms as well as R&Dspent at universities in related disciplines.

1,122 28$ 1,775 235 61,124$ 286$ 0.32%5 1,859 231$ 2,838 648 85,823$ 958$ 0.72%1 1,122 152$ 2,152 436 72,108$ 662$ 0.55%M 9 10 24 11 19 18 28 28

0 5

10 15 20 25 30 35 40 45 50

2011 Life sciences grads per 100,000

2010 Number of Firms 2010 Life sciences R&D Spending at Universities

(1000s)

2011 Venture capital investment in life sciences

firms (millions)

Open clinical trials (as of Dec 4, 2012)

2011 Patents Awarded

R A N K

Life Sciences Hub Inputs

11th$1,122 1,775

9th

3,167

$28

Sources: National Science Foundation, National Center for Education Statistics, U.S. Census Bureau, Pricewaterhouse Coopers, National Instutite of Health, U.S. Patent & Trade Office Analysis: Anderson Economic Group, LLC

19th

218

10th

24th235

19th

5th27810th258

10th2,817

5th4,156

10th$1,122

5th$1,859

10th152

5th231

10th2,152

5th2,838

10th436

5th648

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How to leverage our health andmedical expertise

Michigan can leverage its health and medical expertiseand establish itself as a life sciences hub by creating acenter for bio-pharmaceutical R&D, attracting newresearch, testing, and medical labs, and growingmedical tourism.

Projected Growth

Michigan is on track to increase GDP in life sciences hubindustries by 34% by 2020. It also is on track todecrease average earnings and employment by 0.2%,5%, respectively, by 2020 in these industries. However, ifMichigan’s growth rates were equal to those of the 10th-ranked state in growth in each metric, it would increasethe same measures by 141%, 21% and 32%,respectively, by 2020. This would translate into anadditional $13,000 in average earnings in theseindustries, $40 billion in output, and 7,000 additionaljobs from current levels.


Industry Insights

• Employment grew in Michigan’s agriculturalfeedstock/chemicals (13%) and medical devicessectors (8.1%) during the period of 2007-2010despite declines at the national level.

• Michigan was recognized in 2012 as both a “SizeableState” and “Concentrated State” in terms of medicaldevice sector employment – a rise in placement thatputs it right behind traditional device-leading states.

• Michigan saw a 20% growth in theResearch/Testing/Medical Laboratories sector during2007-2010, largely attributable to an increase in newentrepreneurial ventures.

• A “We Work for Health” report revealed 4,928vendor relationships and total expenditures of$1,087,533, 451 paid by 17 globalbiopharmaceutical companies to vendors inMichigan during 2011– demonstrating the state’ssignificant bioscience industry economic footprint.

• Michigan ranks 9th nationally in number of clinicaltrials conducted (7,607) through 2012, and of them,4,179 clinical trials were sponsored bybiopharmaceutical companies.

• Michigan ranked 10th nationally ($1,028,561) inbioscience research funding received in 2011.

• The University of Michigan launched the Center forDiscovery of New Medicines that will help acceleratethe development of early stage research discoveriesto the marketplace through interdisciplinary effortsand industry collaboration.

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5. Global Center for Mobility

By 2020, the global automotive industry is projectedto expand by 31 percent. Almost a quarter of unitsproduced are expected to be hybrid vehicles. By2050, the internal combustion engine and the hybridalike are expected to be eclipsed by electric carspowered exclusively by fuel cells and batteries.Michigan, long the center for automotive innovation,has a unique opportunity to continue to expand withchanging technologies. The state must focus ontransforming its existing automotive cluster to arobust technological and production base capable ofmeeting the demands of global mobility. To advance

Where we stand

Outputs

Overall, the state’s performance in industries related tothe Global Center for Mobility opportunity is aboveaverage, with Michigan ranking in the top ten foremployment in Global Center for Mobility industries.

as a Global Center of Mobility, Michigan can increaseits focus on sustainable transportation that is multi-modal and develop cutting-edge research andtechnology for vehicles.

1,344 3.13% 4.40% 4.69% 68,319$ 2,100$ 3.86%

5 484 3.57% 4.40% 4.33% 84,685$ 3,378$ 3.87%1 369 3.00% 3.64% 3.38% 76,278$ 2,651$ 3.29%M 12 2 8 5 4 18 19 6

0

5

10

15

20

25

30

35

40

45

50 2010



Global Center for Mobility Outputs

19th

6th

$68,319 $2,100

3.86%

5th$84,685

10th$76,278

5th$3,37810th$2,651

5th3.87%

10th3.29%

18th

Sources: Bureau of Economic Analysis, U.S. Census BureauAnalysis: Anderson Economic Group, LLCNote: Industries in the Global Center for Mobility opportunity include:Highway, street, and bridge construction; Primary metal manufacturing;Motor vehicle, body, trailer, and parts manufacturing; Other transportationequipment manufacturing; Rail transportation; Other transportation andsupport activities; Urban transit systems; Industrial design andengineering services; and Computer and electronic product manufacturing.


Inputs

Michigan has high performance on input metrics for theGlobal Center for Mobility opportunity. The state is rankedin the top ten for number of auto-ready grads, patentsawarded, and share of national GDP, earnings, andemployment in mobility industries. It is also ranked 12thin number of firms in Global Center for Mobility industries.

1,344 3.13% 4.40% 4.69% 68,319$ 2,100$ 3.86%5 484 3.57% 4.40% 4.33% 84,685$ 3,378$ 3.87%1 369 3.00% 3.64% 3.38% 76,278$ 2,651$ 3.29%M 12 2 8 5 4 18 19 6

0 5

10 15 20 25 30 35 40 45 50 2011 Auto-ready Grads 2010 Number of Firms 2011 Patents Awarded Share of National GDP Share of National

Earnings Share of National

Employment R A N K

Global Center for Mobility Inputs

5th1,344

4.40% 12th

7,530 3.13%

Sources: National Center for Education Statistics, U.S. Census Bureau, U.S. Patent & Trade Office, Bureau of Economic. AnalysisAnalysis: Anderson Economic Group, LLC

10th

6,502

2nd 8th

4.69%

4th5th7,621

10th6,502

5th11,749

10th7,917

5th484

10th369

5th3.57%

10th3.00%

5th4.43%

10th3.66%

5th4.33%

10th3.38%


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How to leverage our automotive industry

Michigan is the number one state for vehicle researchand development, the number one state for vehicleproduction and home to 47 of the top 50 automotivesuppliers. Whatever technologies emerge to power thecars of the future, Michigan is uniquely positioned todesign and build the future of transportation with ourunmatched network of suppliers, talent, and R&Dcapabilities. It is here, in our labs and factories, that weshould strive to develop the next-generation of electricpowertrains, battery cells and cathode materials, and it ishere that we can design, test and manufacture electricmotors and work to improve the efficiency ofconventional power trains. The state can leverage itsautomotive and mobility industry prominence to lead insustainable mobility, multi-modal systems, vehicle andinfrastructure technology to improve road safety, andauto industry growth.

Projected Growth

Despite its current high performance in the auto industry,

the state’s prominence shrank over most the past decade

due in part to the downturn in the industry during the

recession. If the state maintains the growth trajectory in

mobility industries it has established from 2005-2010,

Michigan’s GDP and employment in these industries would

decrease by 68% and 51%, respectively, and its average

earnings in these industries would decrease by 13% by the

year 2020. However, by building on its inherent strengths in

this area, Michigan has a significant opportunity to turn this

trend around. In fact, there are signs that Michigan’s

automotive industry is leading the state’s recovery. If this

continues and Michigan were to achieve the growth rate

of the 10th-fastest growing state for each metric,

Michigan’s GDP, employment, and earnings in these

industries would increase from their current levels by

78%, 23%, and 23%, respectively, by 2020.


Industry Insights

• In 2012, Michigan added 12,400 jobs in automotivemanufacturing (more than any other state by far). Thischange allowed us to maintain our position as thelargest automotive state in auto manufacturingemployment by two to one over our nearestcompetitor (Ohio).

• Michigan’s second fastest growing area ofemployment was in the professional, scientific, andtechnical services industry. During 2012, 8,400 newjobs were created, primarily in the auto-related R&Dand product development sectors.

• Michigan is the leader in automotive R&D spending,at over $11 billion, ranking 2nd in private sectorR&D spending overall amongst the 50 states(behind California).

• For the first time in 10 years, Michigan will producemore vehicles than Canada.

• The University of Michigan is conducting a federalsafety pilot study for connected vehicles,demonstrating cutting-edge wireless communicationtechnologies.

89 14,148$ 50,565$ 1,037$ 2.97% 169 25,134$ 57,250$ 6,726$ 6.63% 105 16,824$ 55,260$ 3,794$ 4.67%

9 13 8 16 46 37

0

5

10

15

20

25

30

35

40

45

50 2010



Natural Resources Economy Outputs

46th

37th

$50,464

$1,0372.97%

5th$57,25010th

$55,26010th$3,794

10th4.67%16th

5th$6,726

5th6.63%

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6. Natural Resources Economy

Today, the demand for natural resources is morepressing than ever. The provision of these commodities,as well as the development of technologies thatmaximize the productivity of scarce resources, will becrucial for succeeding in natural resources markets.Michigan has competitive advantages in agriculturalinnovation and can leverage its natural beauty toincrease its tourism industry. Supporting policies andregulations that grow agricultural industries andtourism can help Michigan to leverage its assets toclaim the opportunity.

Where we stand

Outputs

The state’s performance in the natural resourceseconomy varies by output metric, ranking in the lowerhalf of states for employment and GDP, but in the top halffor average earnings.

Sources: Bureau of Economic Analysis, U.S. Census BureauAnalysis: Anderson Economic Group, LLCNote: Industries in the Natural Resources Economy opportunity include:Crop and animal production; Forestry, fishing, and related activities; Oiland gas extraction; Mining, and support activities for mining; Watertransportation; Pipeline transportation; Other transportation and supportactivities; Waste management and remediation services; Amusement andrecreation; and Accommodations.


Inputs

Michigan has high performance on most input metricsrelated to the natural resources economy. The stateranks in the top ten for number of firms in naturalresources industries and spending on tourism. Itsperformance on graduates in natural-resources-relatedfields, however, is lower than most states.

89 14,148$ 50,565$ 1,037$ 2.97% 169 25,134$ 57,250$ 6,726$ 6.63% 105 16,824$ 55,260$ 3,794$ 4.67%

9 13 8 16 46 37

0

5

10

15

20

25

30

35

40

45

50 2011 Graduates per 100,000 2010 Number of Firms 2011 Patents Awarded 2009 Total Spending on

Tourism (in 1000s) R A N K

Natural Resources Economy Inputs

8th

10,380 $14,14889

Sources: National Center for Education Statistics, U.S. Census Bureau, U.S. Patent & Trade Office. Analysis: Anderson Economic Group, LLC

39th

30

9th 13th5th80

10th66

5th13,455

10th10,214

5th16910th105

5th$25,134

10th$16,824

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How to leverage our natural resources

Agricultural processing and exports can be increased bysupporting policies and regulations designed to grow theindustry, increasing agricultural engineering solutions,expanding the export transportation infrastructure, andhelping expand overseas markets. To grow Michigan’stourism opportunities, we need to market our easyaccess to major population centers, relatively low costs,and the intrinsic and varied attractiveness of our naturalamenities. We must also strategically develop travel andhospitality infrastructures.

With our plentiful supply of fresh water, we can worknow to attract water-intensive industries to the state,ensuring that they adopt safe, sustainable practices toprotect our water resources. Finally, we should alsopursue the prudent utilization of natural shale, wind andprecious minerals resources.

Projected Growth

According to the current trajectory, by 2020 Michigan’searnings and employment would decrease by 28% and14%, respectively, and its GDP would increase by 19%in industries related to the natural resources economy. IfMichigan were to achieve the growth rate of the 10th-fastest growing state, Michigan’s earnings, GDP, andemployment would increase from their current levels by25%, 21%, and 20%, respectively, in natural resourcesindustries. This growth would add $12,700 to averageearnings in these industries, $2.8 billion to annual GDP,and an additional 40,000 employees to current levels.


Industry Insights

• In 2012, the agriculture and food industry contributed$91.4 billion to our state’s economy — a nearly 50percent growth in the past eight years.

• Improving market access is a continual challenge forour farmers. Michigan is ranked 13th worst nationallyin the overall condition of our bridges. This is notconducive to efficient business when 37.1 milliontons of agricultural commodities are shipped usingour roads and bridges, and 90 percent of farmcommodities are shipped by truck.

• A large, qualified work force is needed to sustain theagriculture industry. In the past decade studentenrollment in agriculture, food and natural resourcecourses has declined 20 percent.

• Parks and trail systems are being seen by morecommunities as assets to be enhanced, publicized,connected to local economic development plans, andleveraged to drive people into utilizing localbusinesses.

• Michigan’s tourism market brought in an estimated$17.7 billion in visitor spending and provided200,000 jobs for Michiganders in 2011.

• A substantial national investment has been made inthe hunting and fishing community, with Cabela’sopening a Saginaw store and planning another inGrand Rapids. Bass Pro Shop is also engaged inexpansion efforts in Mt. Pleasant. Field & Stream hasnamed Michigan as the number one place for fly-fishing in the U.S.

• Timber has risen in the public eye as a strongeconomic driver in the state. The Governor hasproposed the creation of a timber conference for earlyspring to help raise awareness.

• The widespread recognition of the Pure Michiganbrand has been responsible for building andenhancing the state’s image, and has played a pivotalrole in driving up hotel occupancies and creatingoverall tourism growth in the state. Regionally, thetransformation of Cobo Center and the resurgence ofeconomic development in downtown Detroit havepoised the city to become a more competitivedestination for tourism and convention business.

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Conclusion

No one is going to hand us what it takes to takeadvantage of these opportunities to accelerate economicgrowth; we have to earn it. We have to recognize that wecompete in a global marketplace and embraceleadership, policies, and attitudes that promote growth.

We have to focus our limited resources on building theinfrastructure and assets that will contribute most to oureconomic future. We have to forge a sense of commonpurpose among government, the private sector, and theinstitutions and organizations that bolster our economiclife. And we have to remain vigilant so we recognizechanging economic conditions and seize newopportunities as they arise.

The all-important point is that new levels of growth areeminently achievable for Michigan, but we can increasethe odds and accelerate the pace of achievement if wetake advantage of these unique opportunities.

Appendix

Methodology

Research for the 2013 New Michigan Reportconducted by Anderson Economic Group, a researchand consulting firm with expertise in economics, publicpolicy, finance, and industry analysis.

The data presented in this report is from severalsources, all of which are publicly available. The reportused the most recent data available for which therewas a complete data set. Earnings data is presented in2010 dollars, including future projections. Dollaramounts for all input metrics are in nominal amountsfor the corresponding year. Real GDP figures arepresented in chained 2005 dollars. (This is theconventional way to present real GDP data, as used bythe Bureau of Economic Analysis.)

Identification of opportunity components

In order to estimate Michigan’s performance for eachof the six opportunities, a set of 4- and 6-digit NAICSindustries associated with each opportunity weredetermined. 2010 U.S. Census Bureau CountyBusiness Patterns (CBP) data was used associated withthese codes for employment and earnings estimates.Furthermore, BEA industries associated with eachopportunity were used to estimate measures ofeconomic output (GDP).

Estimation methods

Input metrics

Each opportunity has an identified set of input metricswhich contribute to job and economic growth inMichigan. Each metric uses the most recent dataavailable from the data sources. Select metrics wereused to measure inputs in each opportunity. Theseinclude the following:

• Patents Awarded: A set of patent codes wereidentified that were associated with each opportunityto aggregate the total patents for that opportunityfrom 2011 data.

• Number of Firms: The number of firms werecalculated based on the NAICS codes identifiedduring the classification process. These correspondto “number of establishments” in CBP.

• Graduates: For each opportunity, a cluster ofdegrees and certificates were identified that arerelevant to the opportunity at hand. Using theIntegrated Postsecondary Education Data System(IPEDS) provided by the National Center forEducation Statistics (NCES), completions werecalculated, by state, in the 2010-2011 school yearfor those categories. The data include degrees andcertificates conferred at public and non-profitinstitutions, and do not include values from for-profitinstitutions.

CONCLUSION

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Output metrics

For each opportunity, economic output is calculated interms of GDP, employment, and earnings.Real GDPvalues, presented in 2005 chained dollars, areaggregated across each category for eachopportunity’s total value from the Bureau of EconomicAnalysis (BEA). Employment presented is the number ofemployees on the payroll at the time of data collection(March), and is an aggregation of the data for eachNAICS industry in each category. Employment is shownas a share of the working-age population, which is thepopulation of people in the state between the ages of20 and 64, according to U.S. Census Bureau data.

Average earnings is calculated by aggregating the totalearnings associated with each NAICS category, anddividing it by the total aggregate employment. Foremployment and earnings in the “Higher Education”opportunity, also includes numbers for publicuniversities from the National Center for EducationStatistics (NCES) Integrated Postsecondary EducationData System (IPEDS) because CBP data includes onlyprivate universities and colleges.

Note that, if Michigan’s rank in an opportunity is lowerthan the rank for the overall economy, that does notimply that the absolute value of the relevant metric islower for that opportunity than for the overall economy.For example, Michigan ranks 18th in average earningsin the Life Sciences Hub opportunity, but ranks 17th inaverage earnings when considering the economy as awhole, despite the fact that Michigan’s averageearnings in Life Sciences Hub industries are $61,000compared to average earnings economy-wide of$42,000. The rank for Michigan is lower in the LifeSciences Hub opportunity because the industries thatcharacterize this opportunity tend to be higher-payingindustries in all states, and Michigan’s averageearnings within these industries are just a bit lower,relative to other states, than the average earnings inMichigan’s overall economy.

GDP

For each opportunity, a set of industries were chosenthat aligned with BEA GDP categories for eachopportunity. These correspond to the “RelatedIndustries” displayed in the report. For most of theindustries, the entire amount of the Real GDP was usedwithin that category in the BEA data. For the LifeSciences Hub opportunity, however, only the followingBEA categories were used: “Miscellaneousmanufacturing;” “Professional, scientific, and technicalservices;” “Ambulatory health care services;” and“Chemical manufacturing.” In order to determine whichproportion should be used for each of these industries,we used the ratio of more detailed NAICS codes totalearnings to the total earnings of the NAICS industrythat corresponds to the broader GDP categories. Thatratio was then applied to GDP data. For example, todetermine the amount of real GDP attributable tomedical equipment manufacturing, the real GDP in the“Miscellaneous manufacturing” category, according tothe BEA, was multiplied by the ratio of medicalequipment manufacturing earnings (NAICS 3391) tomiscellaneous manufacturing earnings (NAICS 339),according to County Business Patterns data.

Employment and Earnings

Due to the nature of CBP data, some information forcertain industries is withheld. For these data, a specificmethod was used in order to estimate the missingdata.

• For employment data withheld, we used the averagein the range of values given by relevant code in thedata. For example, the letter “b” indicates a range of20-99 employees. For all recorded instances of b,included an assumption of employment of 59.5.

APPENDIX

• Earnings data may be withheld to avoid disclosinginformation for specific companies. In order toestimate earnings when there was withheld data, wefollowed several steps:

- If data for 4-digit NAICS codes was withheld,when available, average earnings data were usedfor the associated 3-digit NAICS codes, multipliedit by the number of employees in the industry, andadded it to the total earnings from the remainderof data for the opportunity

- In the event that the 3-digit NAICS code alsocontained withheld data, there was a reliance onestimations using US earnings data. The overallratios from state to US earnings data for allreported values in CBP was determined. Fromthose ratios, we estimated withheld data by takingeach state’s average earnings ratio, and applied itto the average US earnings in each 3-digitcategory, and multiplied the resulting value byemployment in each industry.

• If data from a state was too low to report in earningsor employment for a given NAICS code, we assigneda value of zero for that NAICS category.

For the performance of Michigan’s job and economicgrowth across all six opportunities, any duplicatedcodes or categories were eliminated in order to ensurethat values were not overestimated.

It merits note that employment data for governmentworkers and farm workers are not available in thesources, so this data is not included in totals shown.See Appendix B for a list of all industries excluded fromthe totals.


For each set of output metrics, 2020 levels forMichigan are estimated according to several differentprojected growth rates: Michigan’s historical growthrate, a “Top Five” historical growth rate, and a “TopTen” historical growth rate. Growth rates werecalculated based on data for each output metric ineach opportunity for 2005-2010 data. States wereranked based on how quickly they grew in each metric,separately, from 2005 to 2010. Then, for each separatemetric, the “Top Five” growth rate was simply the fifth-ranked state in growth of that metric. Similarly, the “TopTen” growth rate was that of the tenth-ranked state ingrowth of that metric.

The calculated growth rates were then applied toMichigan’s 2010 levels, and the state’s 2020performance in different scenarios was projected,assuming that its growth rate would be equal to the“Top Five,” “Top Ten,” and Michigan growth rate. Thesevalues do not account for population change, or anyother shift in economic or demographic factors.Projected growth scenarios use real GDP as a metric,and not per capita real GDP, as is used for all otherestimations. This is consistent with projections that thepopulation in Michigan will remain stagnant for the nextten years, rendering growth in real GDP and per capitareal GDP equal.3 2005 values for earnings were adjusted to 2010 dollars according to anannual inflation rate of approximately 2%. In the case that NAICS industrieswere different between 2005 and 2010, we estimated 2005 values basedon its share of a higher-level code.

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List of NAICS Industries for Each Opportunity

2012 NAICS Code Description

Global Engineering Village

3252 Resin, Synthetic Rubber, and Artificial SyntheticFibers and Filaments Manufacturing

3271 Clay Product and Refractory Manufacturing3272 Glass and Glass Product Manufacturing3311 Iron and Steel Mills and Ferroalloy Manufacturing3312 Steel Product Manufacturing from Purchased Steel3313 Alumina and Aluminum Production and Processing3314 Nonferrous Metal (except Aluminum) Production

and Processing3331 Agriculture, Construction, and Mining Machinery

Manufacturing3332 Industrial Machinery Manufacturing3333 Commercial and Service Industry Machinery

Manufacturing3335 Metalworking Machinery Manufacturing3336 Engine, Turbine, and Power Transmission

Equipment Manufacturing3339 Other General Purpose Machinery Manufacturing3341 Computer and Peripheral Equipment Manufacturing3344 Semiconductor and Other Electronic Component

Manufacturing3345 Navigational, Measuring, Electromedical, and

Control Instruments Manufacturing3346 Manufacturing and Reproducing Magnetic and

Optical Media3351 Electric Lighting Equipment Manufacturing3359 Other Electrical Equipment and Component

Manufacturing3361 Motor Vehicle Manufacturing3362 Motor Vehicle Body and Trailer Manufacturing3363 Motor Vehicle Parts Manufacturing3364 Aerospace Product and Parts Manufacturing3391 Medical Equipment and Supplies Manufacturing8112 Electronic and Precision Equipment Repair and

Maintenance8113 Commercial and Industrial Machinery and

Equipment (except Automotive and Electronic)Repair and Maintenance

9271 Space Research and Technology*54171 Research and Development in the Physical,

Engineering, and Life Sciences336992 Military Armored Vehicle, Tank, and Tank

Component Manufacturing541330 Engineering Services

Gateway to the Midwest

2373 Highway, Street, and Bridge Construction2379 Other Heavy and Civil Engineering Construction4811 Scheduled Air Transportation4812 Nonscheduled Air Transportation4821 Rail Transportation*4831 Deep Sea, Coastal, and Great Lakes Water

Transportation4832 Inland Water Transportation4841 General Freight Trucking4842 Specialized Freight Trucking4881 Support Activities for Air Transportation4882 Support Activities for Rail Transportation4883 Support Activities for Water Transportation4884 Support Activities for Road Transportation4885 Freight Transportation Arrangement4889 Other Support Activities for Transportation4911 Postal Service*4921 Couriers and Express Delivery Services4931 Warehousing and Storage541614 Process, Physical Distribution, and Logistics

Consulting Services

Higher Education Marketplace**

5417 Scientific Research and Development Services6112 Junior Colleges6113 Colleges, Universities, and Professional Schools6114 Business Schools and Computer and Management

Training6115 Technical and Trade Schools 6116 Other Schools and Instruction6117 Educational Support Services6243 Vocational Rehabilitation Services8132 Grantmaking and Giving Services923110 Administration of Education Programs*

Natural Resources Economy

1111 Oilseed and Grain Farming*1112 Vegetable and Melon Farming*1113 Fruit and Tree Nut Farming*1114 Greenhouse, Nursery, and Floriculture Production*1119 Other Crop Farming*1121 Cattle Ranching and Farming*1122 Hog and Pig Farming*1123 Poultry and Egg Production*1124 Sheep and Goat Farming*1125 Aquaculture*1129 Other Animal Production*1131 Timber Tract Operations1132 Forest Nurseries and Gathering of Forest Products

APPENDIX

1133 Logging1141 Fishing1142 Hunting and Trapping1151 Support Activities for Crop Production1152 Support Activities for Animal Production1153 Support Activities for Forestry2111 Oil and Gas Extraction2121 Coal Mining2122 Metal Ore Mining2123 Nonmetallic Mineral Mining and Quarrying2131 Support Activities for Mining2371 Utility System Construction3112 Grain and Oilseed Milling3253 Pesticide, Fertilizer, and Other Agricultural

Chemical Manufacturing3331 Agriculture, Construction, and Mining Machinery

Manufacturing4235 Metal and Mineral (except Petroleum) Merchant

Wholesalers 4245 Farm Product Raw Material Merchant Wholesalers 4831 Deep Sea, Coastal, and Great Lakes Water

Transportation4832 Inland Water Transportation4855 Charter Bus Industry4861 Pipeline Transportation of Crude Oil4862 Pipeline Transportation of Natural Gas4869 Other Pipeline Transportation4871 Scenic and Sightseeing Transportation, Land4872 Scenic and Sightseeing Transportation, Water4879 Scenic and Sightseeing Transportation, Other4883 Support Activities for Water Transportation5615 Travel Arrangement and Reservation Services5622 Waste Treatment and Disposal 5629 Remediation and Other Waste Management

Services 7121 Museums, Historical Sites, and Similar Institutions7139 Other Amusement and Recreation Industries7211 Traveler Accommodation7212 RV (Recreational Vehicle) Parks and Recreational

Camps9241 Administration of Environmental Quality Programs*54171 Research and Development in the Physical,

Engineering, and Life Sciences221310 Water Supply and Irrigation Systems311119 Other Animal Food Manufacturing424910 Farm Supplies Merchant Wholesalers481111 Scheduled Passenger Air Transportation541330 Engineering Services541620 Environmental Consulting Services541690 Other Scientific and Technical Consulting Services

Global Center for Mobility

2373 Highway, Street, and Bridge Construction3311 Iron and Steel Mills and Ferroalloy Manufacturing3312 Steel Product Manufacturing from Purchased Steel3313 Alumina and Aluminum Production and Processing3336 Engine, Turbine, and Power Transmission

Equipment Manufacturing3339 Other General Purpose Machinery Manufacturing3341 Computer and Peripheral Equipment

Manufacturing3344 Semiconductor and Other Electronic Component

Manufacturing3345 Navigational, Measuring, Electromedical, and

Control Instruments Manufacturing3359 Other Electrical Equipment and Component

Manufacturing3361 Motor Vehicle Manufacturing3362 Motor Vehicle Body and Trailer Manufacturing3363 Motor Vehicle Parts Manufacturing3365 Railroad Rolling Stock Manufacturing3366 Ship and Boat Building3369 Other Transportation Equipment Manufacturing4821 Rail Transportation*4851 Urban Transit Systems4852 Interurban and Rural Bus Transportation4882 Support Activities for Rail Transportation4884 Support Activities for Road Transportation5415 Computer Systems Design and Related Services9241 Administration of Environmental Quality Programs 9251 Administration of Housing Programs, Urban

Planning, and Community Development 54171 Research and Development in the Physical,

Engineering, and Life Sciences541330 Engineering Services541420 Industrial Design Services

Life Sciences Hub

3254 Pharmaceutical and Medicine Manufacturing3391 Medical Equipment and Supplies Manufacturing6215 Medical and Diagnostic Laboratories541711 Research and Development in Biotechnology

* Data for NAICS industry was unavailable and therefore not included inpresented totals.

** For employment and earnings in the “Higher Education Marketplace”opportunity, we also added data from the National Center for EducationStaistics Integrategrated Postsecondary Education Data System for publicinstitutions

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JAMES B. NICHOLSONCHAIR OF THE BOARD President & Chief Executive Officer PVS Chemicals, Inc.

TERENCE E. ADDERLEYExecutive ChairmanKelly Services, Inc.

DANIEL F. AKERSONChairman & Chief Executive OfficerGeneral Motors Company

G. MARK ALYEAPresident & Chief Operating OfficerAlro Steel Corporation

GERARD M. ANDERSON President & Chief Executive OfficerDTE Energy Company

DAVID W. BARFIELD Chief Executive OfficerThe Bartech Group, Inc.

ALBERT M. BERRIZ Chief Executive OfficerMcKinley, Inc.

MARK J. BISSELLChairman & Chief Executive OfficerBISSELL Inc.

STEPHEN K. CARLISLEVP, Global Product PlanningGeneral Motors Company

MARY SUE COLEMAN PresidentUniversity of Michigan

TIMOTHY P. COLLINSSenior Vice President, Michigan RegionComcast Cable

ROBERT S. CUBBINPresident & Chief Executive OfficerMeadowbrook Insurance Group, Inc.

WALTER P. CZARNECKIExecutive Vice President & DirectorPenske Corporation

KURT L. DARROWChairman, President & CEO La-Z-Boy Incorporated

DAVID C. DAUCH President & Chief Operating OfficerAmerican Axle & Manufacturing

RICHARD L. DeVORERegional President, Detroit & SE MichiganPNC Financial Services Group

DOUGLAS L. DeVOSPresidentAmway

J. PATRICK DOYLEPresident & Chief Executive Officer Domino’s Pizza

JAMES E. DUNLAPSenior Executive VP, Director of Regional & Commercial BankingHuntington

MATTHEW B. ELLIOTT Michigan Market President & MarketExecutive, Global Commercial BankingBank of America

JEFF M. FETTIGChairman & Chief Executive OfficerWhirlpool Corporation

WILLIAM CLAY FORD, JR. Executive ChairmanFord Motor Company

DANIEL GILBERTChairman & FounderQuicken Loans Inc.

ALLAN D. GILMOURPresidentWayne State University

ALFRED R. GLANCY III Executive ChairmanUnico Investment Group LLC

DAN GORDONChief Executive OfficerGordon Food Service, Inc.

STEPHEN E. GORMANExecutive Vice President & COODelta Air Lines, Inc.

JAMES P. HACKETTPresident & Chief Executive OfficerSteelcase Inc.

RONALD E. HALL President & Chief Executive OfficerBridgewater Interiors, LLC

RICHARD G. HAWORTHChairman EmeritusHaworth, Inc.

CHRISTOPHER ILITCH President & Chief Executive OfficerIlitch Holdings, Inc.

MICHAEL J. JANDERNOABoard of DirectorsPerrigo Company

MILES E. JONESCo-Chairman of the BoardDawn Food Products, Inc.

DAVID W. JOOS Chairman CMS Energy Corporation

HANS-WERNER KAAS Senior Director-Detroit OfficeMcKinsey & Company

ALAN JAY KAUFMANChairman, President & CEOKaufman Financial Group

JOHN C. KENNEDYPresident & Chief Executive OfficerAutocam

STEPHEN M. KIRCHERPresident & Chief Executive Officer, Boyne Eastern OperationsBoyne Resorts

BLAKE W. KRUEGERChairman of the Board, Chief Executive Officer & PresidentWolverine World Wide, Inc.

BRIAN K. LARCHEPresident & Chief Executive OfficerEngineered Machined Products, Inc.

ANDREW N. LIVERISChairman & Chief Executive OfficerDow Chemical Company

KEVIN A. LOBOPresident & Chief Executive OfficerStryker Corporation

DANIEL J. LOEPP President & Chief Executive OfficerBlue Cross Blue Shield of Michigan

EVAN D. LYALL Chief Executive OfficerRoush Enterprises, Inc.

BEN C. MAIBACH III Chairman & Chief Executive OfficerBarton Malow Company

RICHARD A. MANOOGIAN Chairman EmeritusMasco Corporation

Business Leaders for Michigan - 2013 Board of Directors

BUSINESS LEADERS FOR MICHIGAN 2013 BOARD OF DIRECTORS

KENNETH E. MARBLESTONEPresidentRBS Citizens and Charter One - Michigan & Ohio

FLORINE MARK President & Chief Executive OfficerThe WW Group, Inc.

SARAH L. McCLELLAND President, Michigan MarketChase

CHARLES G. McCLURE Chairman, President & CEOMeritor, Inc.

DAVID E. MEADORExecutive Vice President & CFODTE Energy

HANK MEIJERCo-Chairman & CEOMeijer, Inc.

MICHAEL MILLERDirector of Business & Industrial Markets & Head of Ann Arbor OfficeGoogle, Inc.

FREDERICK K. MINTURNPresident & Chief Executive OfficerMSX International

PAUL J. MUELLERPresident – Midwest RegionThe Hanover Insurance Group

MARK A. MURRAYCo-Chief Executive OfficerMeijer, Inc.

CATHLEEN H. NASHPresident & Chief Executive OfficerCitizens Republic Bancorp

THOMAS D. OGDEN President – Comerica Bank MichiganComerica Bank

JAMES O’LEARY Chairman, President & CEOKaydon Corporation

WILLIAM U. PARFETChairman & Chief Executive OfficerMPI Research

CYNTHIA J. PASKY Founder, President & CEOStrategic Staffing Solutions

ROGER S. PENSKE ChairmanPenske Corporation

WILLIAM F. PICKARD Chairman & Chief Executive OfficerGlobalAutomotiveAlliance

SANDRA E. PIERCE Vice Chairman of FirstMerit Corporation;Chairman & Chief Executive Officer ofFirstMerit Michigan

GERRY PODESTASenior Vice President, NA Polyurethanes BASF

CHARLES H. PODOWSKI President & Chief Executive OfficerThe Auto Club Group

STEPHEN R. POLK Chairman, President & Chief ExecutiveOfficerR. L. Polk & Co.

JOHN RAKOLTA, JR. Chairman & Chief Executive OfficerWalbridge

MICHAEL T. RITCHIEExecutive Vice PresidentComerica Bank

DOUG ROTHWELL President & Chief Executive OfficerBusiness Leaders for Michigan

ANDRA M. RUSHPresident & Chief Executive OfficerDakkota Integrated Systems, LLC

JOHN G. RUSSELLPresident & Chief Executive OfficerCMS Energy Corporation & Consumers Energy

RICHARD F. RUSSELL President & Chief Executive OfficerAmerisure Companies

ALAN F. SCHULTZChairmanValassis

J. DONALD SHEETSExecutive Vice President & CFO; Regional President, North AmericaDow Corning

BRAD SIMMONSDirector, Office of the Executive Chairman Ford Motor Company

LOU ANNA K. SIMON, Ph.D. PresidentMichigan State University

SAM SIMONChief Executive Officer & ChairmanAtlas Oil Company

MATTHEW J. SIMONCINIPresident & Chief Executive OfficerLear Corporation

BRIG SORBERPresident & Chief Executive OfficerTwo Men and a Truck/International, Inc.

DOUGLAS W. STOTLARPresident & Chief Executive OfficerCon-Way Inc.

ROBERT S. TAUBMAN Chairman & CEO, PresidentTaubman, Inc.

MICHAEL J. TIERNEYPresident & Chief Executive OfficerFlagstar Bank, FSB

SAMUEL VALENTI III Chairman of the BoardTriMas Corporation

STEPHEN A. VAN ANDELChairmanAmway

MICHELLE L. VAN DYKERegional President Fifth Third Bank

JAMES R. VERRIERPresident & Chief Executive OfficerBorgWarner Inc.

TIMOTHY WADHAMS President & Chief Executive OfficerMasco Corporation

BRIAN C. WALKERPresident & Chief Executive OfficerHerman Miller, Inc.

WILLIAM H. WEIDEMAN Executive Vice President & CFOThe Dow Chemical Company

WILLIAM C. YOUNG Chief Executive OfficerPlastipak Holdings, Inc.

Visteon Corporation

a new michigan: the 2013 report on michigan's progress in six opportunities

Economy & Finance