Tuesday, January 25, 2011

State looks to nurture local firms

Detroit Free Press Business Writer

As Bill McGivern built his piping supply business over the years, he quietly stewed over what he saw as the State of Michigan's neglect of homegrown businesses.

Trade missions to China and other distant locales left McGivern wondering, "Why not take care of our own?"

So McGivern, CEO of the Macomb Group, a Sterling Heights-based supplier of industrial piping, said Friday that he was overjoyed to learn of Gov. Rick Snyder's pledge to do some "economic gardening" in Michigan.

The concept means nurturing smaller firms in the state with a variety of new economic-development tools, instead of hunting big out-of-state firms to come to Michigan.

Snyder's economic gardening concept is not new. Agencies such as the Michigan Economic Development Corp. have been working on business-retention programs for years.

But the new emphasis Snyder, a former venture capitalist, placed on growing local firms promises to put a different face on economic-development efforts throughout the state.

Gardening approach a way to help Michigan economy over time
Gov. Rick Snyder's call for more economic gardening in his State of the State address this week may have sounded fairly innocuous. But it could represent a significant change in the way Michigan attracts and nurtures new businesses.

Put simply, the term means nurturing firms already in Michigan rather than hunting big firms elsewhere to relocate here.

"One of the criticism that has been leveled for quite some time is that economic development has paid far too much attention to chasing big projects around the country and around the world," said Mike Finney, Snyder's choice to run the Michigan Economic Development Corp.

Bill McGivern, CEO of the Macomb Group, a Sterling Heights-based piping supply company, calls hunting for out-of-state firms an "anywhere-but-here" strategy. McGivern said he was "overjoyed" to hear of Snyder's new emphasis on homegrown firms.

Economic development agencies, such as the MEDC, typically lure big outside players with a set of tools that include tax abatements, job training funds and infrastructure improvements.

But gardening requires a whole new set of tools. They include giving sophisticated market research to smaller firms that otherwise couldn't afford it. Gardening means playing matchmaker to bring together small firms in need of, say, a new chief financial officer and the people who have those skills.

A third new tool is providing short-term consulting to entrepreneurs who know a lot about their product or service, but not much about marketing or business strategy.

Don't look for Snyder to abandon the hunting approach completely. Rather, look for this former venture capitalist to try to shift the balance at MEDC and other agencies to include more gardening activities.

"MEDC has, in fact, engaged in economic gardening, but what we're going to do is enhance it and make it a much more robust effort," Finney said this week.

Advocates say the gardening approach -- paying more attention to small, growing firms than to gigantic out-of-state companies that might build a factory in Michigan -- delivers a bigger boost to the state's economy over time.

"It is where the jobs are," said Rob Fowler, president and CEO of the Small Business Association of Michigan. "And the truth is, it's always been where the jobs are. But one and three and four jobs at a time don't get much attention."

Even the size of the target firm is different in gardening. Agencies hunting out-of-state firms often go after big ones with hundreds or thousands of employees. Gardening targets much-smaller firms at what entrepreneurs call the second stage of development.

"Second stage" typically refers to young companies with 7 to 99 employees, $1 million to $50 million in sales, and a good growth potential.

Fowler said no state anywhere yet offers a comprehensive program of economic gardening, so Michigan could show the way.

"We have a chance to lead the nation for a little while," Fowler said. "We're going to have to run fast. But that window's open right now for Michigan, and I'm delighted this governor has seen it."

Contact John Gallagher: 313-222-5173 or gallagher99@freepress.com

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