©2016 Michigan Economic Development Corporation

Michigan Cities Top Business Climate Benchmarking Study

Wednesday, March 15, 2000

Kathleen McMahon
(517) 335-4590

Saginaw and Grand Rapids Receive High Rankings

A study released by the Michigan Economic Development Corporation found that Michigan cities are attractive settings for locating service and manufacturing firms. Conducted by Anderson Economic Group, a consulting firm dealing in business climate issues, the study benchmarked the business climate of select Michigan areas against competing economic development rivals. It compared tax rates, fees, regulatory burdens, utility costs, wages, business costs and other government burdens.

"This study establishes performance benchmarks for the business climate, and measures Michigan directly against those benchmarks," said Doug Rothwell, Michigan Economic Development Corporation CEO and president. "It shows we are on the right track, especially with our efforts to phase-out the single business tax. We are capable of competing with the best."

"Michigan cities did very well against some of the toughest competitors in the eastern half of the United States," Patrick L. Anderson, managing director of Anderson Economic group said. "I was particularly impressed with how competitive cities like Saginaw and Grand Rapids can be for service sector and high-tech firms."

  • Michigan service-sector wages are lower than those in most competing areas. Given the proper workforce and proximity to needed resources, Michigan could attract service-sector businesses from other areas of the country.
  • Productivity is the single most important factor in the profitability of a firm. While not directly measured in this study, the skills of new entrants to the Michigan workforce should be of major concern to the State.
  • Electric rates for Michigan areas are near the average, but higher than the low-cost areas.

The study also offers suggestions for the Michigan Economic Development Corporation to continue attracting and maintaining Michigan businesses. Those recommendations include:

  • Workforce productivity and a skilled workforce should remain a high priority: Overall wages and labor productivity are the most important factors in determining business profits.
  • Continue business climate improvements: The state has made progress in bringing taxes and payroll burdens into line. Yet other efforts must continue for Michigan to match pace with its toughest competitors.
  • Continue to improve service business opportunities: The state must encourage the formation of technology clusters, improve the availability of skilled workers, and reduce disincentives for such businesses to thrive in large numbers in this state. Rothwell said the Michigan Economic Development Corporation plans to take these recommendations to heart.

"This study not only confirms the strategies we already have in place, like improving our high-tech image through the Smart Parks initiative, but it also gives us other useful suggestions on how to best devote our resources to highlight the strengths in our state," Rothwell said.