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State turns to high-tech as plant closings loom

Wednesday, November 23, 2005
By Peter Luke
Lansing Bureau

LANSING -- While acknowledging it's not a complete answer to pending auto plant closings, the state will issue grants by July in a billion-dollar plan to grow jobs in the life sciences, automotive technology and alternative fuels industries. State economic development officials said Tuesday that the jobs legislation will provide $400 million over the next two years to put Michigan on a path to economic diversity. Another $600 million will be allocated through 2011. The money comes from a portion of Michigan's annual proceeds from the 1999 national tobacco lawsuit settlement. That money has been financing life sciences research for the past five years. Using the same oversight framework from that process, a 19-member panel of university experts, investment advisers and state officials will expand the scope of the grants to other emerging high-technology sectors. Gov. Jennifer Granholm signed the bipartisan package, called the 21st Century Jobs Fund, on Monday after General Motors Corp. announced it was shutting four Michigan facilities, affecting about 2,600 workers. James Epolito, president of the Michigan Economic Development Corp., said the funding would add value to Michigan's economy but not replace auto manufacturing. "It is absolutely essential that the auto industry in Michigan get healthy, that's our base," Epolito said. "This 21st Century Jobs Fund is exactly that -- it's for the future." At a news conference, Epolito and other Granholm administration officials said applications would be accepted beginning in February with award and loan decisions announced by June 30. Epolito said the fund would focus on research and business ventures that show promise for product development and job creation. In the life sciences, Michigan's universities, research institutes and businesses have the capacity to bring products to market, but often research started in Michigan is commercialized elsewhere, said John Van Fossen, director of external affairs for the Van Andel Research Institute in Grand Rapids. When it comes to new diagnostic tools, medical devices or drugs, Van Fossen said state financing helps ensure that the development pipeline that moves a product from discovery to the marketplace stays in Michigan. Such financing is crucial, said David Zimmerman, CEO of Kalamazoo-based Kalexsyn, a biochemical research firm. Commercial banks often won't lend to new companies. And venture capitalists often pressure successful firms they've invested in to expand to California or Massachusetts, where the biomedical industry is concentrated. When Pfizer Inc. announced big cutbacks in its Kalamazoo research operations two years ago, the state kicked in $2 million to finance new research firms launched by Pfizer researchers who wanted to stay in West Michigan. Zimmerman said the state aid spurred 14 small companies now employing more than 185 workers. Zimmerman said his firm of two-dozen scientists could double with additional financing. The jobs plan contains nearly $200 million for direct loans, investments and commercial loan enhancement. State Treasurer Jay Rising said there would be "no shortage of applications for these dollars." L. Brooks Patterson, Oakland County executive, said the funding should also spur investment in new automotive technologies, industrial materials, robotics and alternative fuels. "We're going to have to nurture all of these sectors to pick up what we're losing in manufacturing," Patterson said. The manufacturing sector is the prime beneficiary of a tax package that lawmakers sought to tie to the jobs funding. After signing the jobs bills into law, Granholm told lawmakers to complete agreed-upon cuts and credits in the Single Business Tax next week. Republicans, not happy that Granholm successfully separated the issues, discounted the impact of the jobs program even though it was co-authored by GOP lawmakers like Rep. Bill Huizenga, R-Zeeland. Saul Anuzis, chairman of the Michigan Republican Party, called the jobs program a "huge political slush fund." House Speaker Craig DeRoche, R-Novi, said the fund allows Granholm to hand out checks "every day between now and Nov. 7, 2006, Election Day."