Tech-based economic development initiative lures IBM, GE and others to Michigan.
Photo: Michigan CIO Ken Theis
IBM opened a new software development facility in East Lansing, Mich., on Tuesday that's expected to generate as many as 1,500 new jobs over the next five years. IBM's decision to locate in Michigan was followed by a similar move from General Electric, which announced in June that it would build an advanced technology and training center in Wayne County that will employ 1,200 people.
Both companies were lured to Michigan by an economic development initiative led by the state's Department of Information Technology (DIT) that combines traditional tax incentives with IT expertise and custom-tailored work force development programs.
"We've been working informally for over a year to position Michigan as a high-tech leader as it relates to IT economic growth," said state CIO Ken Theis, who is director of the DIT. "This is really a collaboration of a number of different entities to focus solely on the IT sector."
Theis formally announced the program -- dubbed New Economy Partnerships -- on Thursday at the Detroit CIO Executive Summit in Dearborn. The program is a collaboration between the DIT; the Michigan Department of Energy, Labor and Economic Growth; and the Michigan Economic Development Corp.
The partnership allows the state to quickly assemble economic subsidies, college training packages and other incentives that are specifically tailored to the needs of prospective high-tech employers. Theis said Michigan is using the approach to capture IT jobs that otherwise could move out of the country.
"These are jobs that we're bringing back into the U.S.," he said. "In addition to IBM and General Electric, we have another company that will announce in two to three weeks that it's bringing another large chunk of jobs to the state. We also have a number of IT firms here in Michigan that are taking advantage of this rural sourcing and urban sourcing methodology to almost double the size of their companies."
Later this month, the DIT also expects to begin the process for building a public-private data center that would provide cloud computing services to state agencies, cities, counties and schools across the state. That facility also could offer low-cost hosting for startup companies and become a competitive substitute to offshore hosting for established companies. The state intends to break ground on the data center project in October 2010.
Kelly Rogers, manager of the Michigan Economic Development Corp.'s Targeted Initiatives Group, said combining IT expertise, targeted work force development and economic incentives can be more important than the sheer number of incentive dollars offered to a prospective employer.
"With economic development we can get kind of myopic and think it's a numbers game when we are competing with other states for projects," she said. "But IBM didn't actually use our premium tax abatement program. It was the other stuff that made the deal happen."
Amy Baumer, the DIT's director of New Economy Partnerships, said the IBM deal was the first big test for Michigan's comprehensive economic development approach. "We actually entered that competition in the 11th hour, competing against five other states for the opportunity, and we were able to land it," Baumer said. "I think a large part of it was because of the fact that we were there as a unified front."