CEO: One-time funds could transform Michigan

Head of Business Leaders for Michigan talks ARP, state budget surplus spending strategies.

Since becoming president and CEO of Business Leaders for Michigan partway through the pandemic, Jeff Donofrio has urged state policymakers to take the influx of money on the table and apply it toward “transformational investments” in the state’s economic future.

Donofrio recently spoke to the Business Journal about some ways he believes Gov. Gretchen Whitmer and the state Legislature could use funding from the American Rescue Plan (ARP) Act and the state budget surplus — a total he estimates to be about $10 billion — to help make Michigan a more competitive state and give its residents greater economic opportunity.

Jeff Donofrio. Courtesy Business Leaders for Michigan

“Michigan has a once-in-a-generation opportunity to invest in talent development, entrepreneurship and job creation to help us emerge from the pandemic as a stronger, more competitive state,” Donofrio said in late August, after Whitmer announced her $2.1 billion proposal for how she would like to see ARP funds allocated. “The governor’s proposed investment would help to close the skills gap, remove barriers to work, keep and attract talent, increase entrepreneurship and create jobs in Michigan. We look forward to working with the governor and legislative leadership on these and other transformational investments.”

Earlier in August, when Business Leaders for Michigan published the report on its second-quarter 2021 member survey, Donofrio noted ARP dollars could “greatly expand opportunities for Michigan workers seeking to finish their college degree or start a new technical or skills program,” and the state also could “double down on increasing the number of Michiganders that complete training programs, choose to stay after graduation and move back to Michigan from out of state.”

He said what the business roundtable means when it comments on Whitmer’s proposal and some of the other ideas and discussions happening in the Legislature is, “we want to focus on transformational investments, and you can help with these one-time dollars (to) do a few things: You could help make Michigan a more competitive state, you can help individuals and businesses close talent gaps (and) you could help individuals get better career pathways and higher-income jobs. … This is all in the realm of the possible if we invest this wisely. For instance, on talent, you’ve got a million people with some college and no degree in the state of Michigan. Could you help a certain number of them get back into four-year institutions or community colleges and achieve that college credential? Could you help additional individuals find that pathway to an apprenticeship program? …

“On entrepreneurship, certainly we can help give mentorship and guidance to new entrepreneurs or existing entrepreneurs. We could help fund and kick off incubators and accelerators that exist oftentimes at universities or with partnerships with industries.”

He referred to one such nascent partnership surrounding the future of mobility. Ford Motor Company’s Michigan Central development in Detroit’s Corktown neighborhood is partnering with a Brooklyn, New York-based company called Newlab to solve complex transportation problems related to connectivity, autonomy and electrification.

“Newlab has the potential to bring lots of entrepreneurs into Michigan to grow their companies. Helping bring in and fund more of those types of activities would be a great use of, again, one-time dollars,” Donofrio said.

Given Ford’s September announcement it will be investing $11 billion in electric vehicle and battery manufacturing in Tennessee and Kentucky over competing sites in Michigan, Donofrio said innovative partnerships and economic development investments are needed more than ever to give Michigan an edge.

“The Ford announcement should be a wake-up call for all of us on at least two fronts: One, states around the country are really competing hard for jobs. They’re putting incentives, they’re putting other credits on the table, they’re investing huge amounts of dollars in site preparation for industrial sites and commercial sites, and they’re investing in their systems to make sure they have the best local, regional and statewide economic development organizations. Investments into all of those are going to be important for Michigan to be able to compete for the next decade,” he said.

“We look at, in particular, Tennessee and Kentucky, and they had invested a lot of money into site development for years — probably five or six years, if not longer. This is a culmination of some planning that happened maybe starting a decade ago in those states. And that’s why we have to make sure Michigan is planning right now for three to four to five to 10 years (ahead) what we want to look like (and) where the auto industry is moving. 

“The other wake-up call … is that the acceleration of the transition from internal combustion engine production to electrification and electric vehicles is happening. We have 47,000 jobs here in Michigan that are directly related to producing internal combustion engines, transmissions and drive trains. … Those jobs have a multiplier effect in the community, so it probably represents something like 170,000 jobs here in Michigan that are supported through the internal combustion drive train manufacturing. We have a lot of risk. We’re probably the No. 1 state for those types of jobs, and we have to make sure that the facilities and the people who are working on the lines right now are going to be the best prepared for that new electric vehicle future.”

He added the future of mobility also means Michigan will need to invest in EV charging stations so consumers will be able to buy the vehicles of the future and be able to charge them wherever they go.

Donofrio said state leaders should not only consider investments in working adults, businesses and industry, but they should start at the beginning of life.

“Our competitiveness over the next 10 years (also) is going to depend on us making smart investments today in talent and economic development in the K-12 systems,” he said. “That’s what this I think (represents), is an opportunity with these ARP dollars and some of the surplus dollars that exist in Lansing today. … If we can do things that help increase the competitiveness of an individual and help them move along their career pathway, that’s going to benefit Michigan in our economy, and it’s going to help communities and people thrive.”

After recent meetings in Lansing, Donofrio said he is hopeful the state, regional and local policymakers are thinking wisely about all the gaps that need filling in Michigan’s economy.

“The conversation I heard in Lansing is very encouraging around the way people are trying to approach this,” he said. “There’s a lot of money on the table right now, and if we’re smart about it, we can do really great things to help put Michigan on a much better path over the next 10 years.”