Michigan's billion-dollar experiment in diversifying state's economy yields mixed results
225 jobs in Ann Arbor expansion,” 14 October 2008 HSNW).
These and other activities were part of Michigan’s 21st Century Jobs Fund, an innovative billion-dollar program to create jobs in four industries — life sciences, advanced manufacturing, alternative energy, and homeland security and defense. The goal: help Michigan reduce its dependence on Detroit’s automakers.
“The 21st Century Jobs Fund will enable us to take a giant leap towards diversifying our economy and create thousands of high-tech, high-paying jobs,” Granholm said in January 2006.
Money for the jobs fund came from the 1998 settlement of a national lawsuit against the tobacco industry. In order to gain $1 billion upfront, Michigan sold to investors about a third of the $6.2 billion it would receive over twenty years from the settlement.
Yung writes that in 2006 the state began spending $400 million of the $1 billion. Some of the money went to the Michigan Forest Finance Authority, the Michigan Economic Development Corp. and other organizations. The biggest portion was designated for two major initiatives — a $134-million competition that awarded grants and loans to promising companies, organizations and university research projects in the four targeted industries and the $109-million Michigan 21st Century Investment Fund.
Short of targets
An examination by the Free Press found that today, four years later, the initiatives still have ways to go to fulfill their expectations.
- As of the end of September, only 1,147 direct jobs had been created from the competition, about a third of the 3,317 direct jobs expected, according to a report from the Michigan Economic Development Corp. Excluding jobs created by the research projects, most of which are temporary, only 935 direct jobs have been added.
- Of the 27 companies that borrowed $52 million, three have failed — Avidimer Therapeutics, ThreeFold Sensors and Velcura Therapeutics. All were life-science companies in Ann Arbor. Altogether, they received $7 million in loans from the jobs fund. Of the remaining companies, a handful look very promising but are still relatively small. They include Adaptive Materials, Accuri Instruments, Compendia Bioscience and Integrated Sensing Systems.
- A little more than half of the competition money, or $67.4 million, went to academic projects and nonprofit organizations instead of businesses, which sparked criticism at the time. These kinds of nonprofit recipients were not allowed to participate in the competition’s second round in 2008, when $30 million in loans was awarded. Of the $67.4 million in grants, $32.8 million was funneled to research
