Michigan’s banner years under Doug Rothwell’s leadership just got a major exclamation point: General Motors (www.gm.com) has decided to invest US$1 billion to build two plants just outside Lansing that will add 2,800 jobs. And Rothwell, president and CEO of the Michigan Economic Development Corp. (MEDC at www.michigan.org), did a lot of the heavyweight deal’s heavy lifting.
GM is receiving $284.6 million in state and local incentives. Rothwell was a particularly key player in successfully securing the final plank that apparently sealed the GM deal. He made a forceful case for allowing the Michigan Economic Growth Authority (MEGA, administered through the MEDC) to extend tax credits to existing employers creating new jobs in brownfields areas. (At the time, brownfields tax credits could only be granted to new employers.)
Sufficiently persuaded, the Michigan Legislature passed an amendment on June 6 that would provide GM with a job-creation tax credit worth some $61.8 million over 20 years.
“This project wouldn’t have been possible without the support of the Michigan Legislature,” Gov. John Engler said in signing the amended law.
That certainly seemed the case. Commented GM spokesman Jim Hopson after the final incentives were assembled, “This goes a long way toward GM making the valid business case for making the investment in Delta Township (which includes Lansing). When you’re talking about spending a billion dollars of shareholders’ money, it’s critical to have state and local support.”
Later, when the deal was finalized, Hopson said, “This kind of investment would be very difficult to make in this day and age [without the incentives].”
Teamwork Drives the Deal
GM’s new facilities triggered intense competition, particularly from Canada, Indiana and Ohio, Rothwell explains. But “a strong local work force and regional cooperation” were major factors as well as the incentives package, he adds. Indeed, teamwork — something Rothwell has emphasized since his April 1993 appointment by Engler — was seemingly Michigan’s stealth weapon in landing GM.
Officials didn’t need to look far for cooperative motivation. Michigan State University’s State News (www.statenews.com) called the drive to land GM’s new investments “a crusade to save 13,000 jobs and prevent a 10-year economic setback.” GM several years ago announced that it would tear down most of its mid-Michigan plants to build newer, more modern facilities — with no guarantee that the new plants would be Michigan-based.
That triggered a major drive to strengthen Lansing-area public schools.
Local officials also stepped up big. The city of Lansing offered GM real and personal property tax abatements worth about $165 million for up to 25 years. And local and state officials combined to pledge $28 million worth of site infrastructure improvements.
MEDC Projects 25,261 Spin-Off Jobs
Predictably, the $284.6 million in incentives raised some eyebrows. But quantification has gotten major emphasis in Rothwell’s tenure, and his troops had done the math on this one. GM’s new modular plants will have an inordinately broad economic impact, paying an average of $1,213 a week and creating another 25,261 spin-off jobs, according to MEDC estimates.
A governor’s office analysis projects that the state will realize a net positive gain of some $1.74 billion — $1.8 billion in revenue over the MEGA agreement’s life, minus $62 million in state credits.
Adding a symmetry, Rothwell, shortly after the GM deal was finalized, was one of only three state officials to receive the National Governors’ Assn.’s Distinguished Service Award for Service in State Government.
“Under Doug Rothwell’s leadership, Michigan has experienced record employment and millions of dollars in new investment,” said Engler. (Michigan, in fact, has also won three consecutive Site Selection Governor’s Cups for recording the highest annual U.S. state total for new facilities and expansions.) “Whether it’s attracting new businesses to the state or convincing other employers to expand their operations here, Doug Rothwell has played a pivotal role in Michigan’ s economic success.”
