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Michigan is back in the incentives game — in a big way

Oct 21, 2017

Credit Daniel Howes / Detroit News

Governor Rick Snyder says chasing jobs in the global economy isn’t all about pushing incentives. But that’s not entirely true.

Michigan offered Foxconn Technology Group more than $7 billion in tax breaks, savings and cash for three different projects, according to state documents detailed this week.

And the state is a partner in the regional bid to land Amazon’s second North American headquarters – a competitive interstate free-for-all certain to include whopping incentives.

What’s changed? The game.

Instead of shopping their intentions behind closed doors, Amazon, Foxconn and Toyota are going public with their private business.

Why?

Because they can. Because labor markets are changing. Because capital is more mobile today than any time in human history.

And that gives corporate decision-makers options.

Advantage business. CEOs and the realities of modern life in the global economy are dramatically upping the ante for cities, states and the philosophically squeamish.

Amazon is promising a $5 billion investment and 50,000 jobs paying an average of $100,000 a year.

Foxconn is talking 10,000 jobs, mostly in the politically important industrial Midwest.

Toyota and Mazda are breaking tradition by announcing plans to build a plant in the United States, site to be determined.        

What are relative purists like Snyder and the Republican leadership to do? Change their minds, of course. Stump for a “Good Jobs” package that offers more tools to land big economic fish. Collaborate with Detroit Mayor Mike Duggan and fly to Asia to work the Foxconn angle. Support southeast Michigan’s business and political leaders in their bid for Amazon’s HQ2.

Michigan needs the help. Only now is the state recovering from the “lost decade” that preceded Detroit’s bankruptcy and the federal bailout of two of its three automakers. Its leaders cannot afford not to play — whatever the misgivings of the governor and Republicans in the Legislature.

The cost of doing nothing is measured in slower economic growth. In weaker personal income expansion. In political bragging rights and perceptions that a state is on the move — or stuck in a last-century economy manufactured largely in Detroit. Or in just two words: falling behind.

The chance to land the world’s largest contract electronics manufacturer holds too much potential for an image boost and economic jolt to let it pass. Add a research and development center in Detroit, and it’s no wonder Snyder remains so hot for Foxconn.

It’d be a game-changer, especially if Amazon’s HQ2 ends up landing somewhere else, as so many predict. I wouldn’t be so sure – yet.

Michigan’s revival since 2010 is a story still poorly understood. Fifty years of decline and dysfunction are hard to erase in one upward cycle. A city recently out of bankruptcy cannot easily shed its hard-earned reputation. But success in a vicious battle for jobs and investment could help.

The state is back in the incentive game because that’s the way it’s played. And watching from the sidelines is for losers.

Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.