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Michigan Business Climate Better Than Reported

In a January 15th Detroit Free Press article titled “Michigan’s bad business climate reputation is hard to discard,” Tom Walsh reflects on an article in the January 2012 edition of Site Selection magazine.  Site Selection reported on a survey of 12 site consultants at the Mid-America Economic Development Council (MAEDC) conference held in December 2011.  Based on that survey, Indiana, North Dakota, Nebraska, and Iowa were ranked as having the best business climates in the Midwest; Michigan ranked last.  Walsh quotes one of the consultants as saying, “Michigan’s national reputation is very poor and has been for a long time…Michigan could do a complete reversal of course, and it would still take 10 years to reverse its reputation.”

First of all, the consensus of 12 site consultants should be taken with a grain of salt.  The collective opinion of 12 individuals is a very limited survey sample from which to draw broad conclusions, even about subjective perceptions.  As Sandy Baruah poignantly noted in Walsh’s article, perception and reality often differ.

The reality of the situation in Michigan is considerably more optimistic and other Site Selection rankings and surveys confirm this.  Site Selection administered a similar business climate survey two months prior to the 12-man MAEDC survey, collecting 150 responses.  This survey, the annually published Executive Survey of Site Selectors (ESSS), ranked Michigan 21st in perception of overall business climate.

Moreover, when Site Selection paired the subjective ESSS rankings with five objective data points to compile their 2011 Top State Business Climate Rankings, Michigan’s rank improved to number 15, an honorable showing considering what our state has gone through in the past 10 years.   In contrast to the perceptions of the 12-consultant survey, only two other Midwest states ranked higher.

Furthermore, one of the five data points in the 2011 rankings considered Michigan’s 2011 tax climate.  Considering that Michigan has since replaced its Michigan Business Tax (MBT) with a new flat 6% business tax, as Walsh points out, there is a real possibility that Michigan might crack the Top 10 in 2012.  And cracking the Top 10 will not take 10 years to reverse Michigan’s reputation.

The takeaway here is obvious: the general consensus of 150 site selectors, backed by data, carries much more weight than that of 12 site selectors without data, and the latter should be paid limited or no attention in light of the former.  Michigan has had its misfortunes, but the time has come to focus on the overwhelming number of good things happening in this state, including improved rankings in Site Selection magazine and national recognition from organizations like the Brookings Institute.  A little research will refute much of the bad publicity that’s out there and open the eyes of many to the opportunities that lie in Michigan.