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Episode 44: How Economic Developers Help Manufacturers

Bryan Powrozek
May 23, 2024
 

 

In this episode of The Sound of Automation podcast, we talk to Quentin Messer, the CEO of the Michigan Economic Development Corporation (MEDC). Bryan and Quentin discuss how economic developers like MEDC can help small and medium-sized manufacturing businesses grow. Listen in to learn about some of the ways MEDC attracts and retains business in Michigan and how you can leverage similar resources in your own market. 

Transcript:

Quentin L. Messer, Jr. 00:00

Very few places in the world that can compete with Michigan. We do hard tech well. We do deep tech very well. So that's what makes me excited. Just the talent, the ingenuity, the creativity of the manufacturing base in Michigan. That's what makes me proud to have the best job because it's just great to try to make sure that I bring more to Michigan so that these businesses can continue to grow and thrive here.

Intro/Outro Narrator 00:31

Welcome to the Sound of Automation brought to you by Wipfli, a top 20 advisory and accounting firm.

Bryan Powrozek 00:51

Hello, and welcome to The Sound of Automation. I am your host, Bryan Powrozek. As always, it's Wipfli's monthly manufacturing podcast where we're focusing on the issues that manufacturers are struggling with in today's business environment. And joining me today, kind of a special topic here, is Quentin Messer from the Michigan Economic Development Corporation. Quentin, how are you doing today?

Quentin L. Messer, Jr. 01:14

Doing well, Bryan. Thanks for affording us the opportunity to chat.

Bryan Powrozek 01:17

Yeah. And thanks for coming on. And I say it's special because obviously the firm that I belong to, Clayton McKervey, was acquired by Wipfli. Wipfli just expanding into the Michigan market. So really trying to get our name out there a bit more and connect with folks in the state of Michigan. But the topic today is going to cover really any state, but we're going to focus on Michigan in our conversation. But one thing we're always getting asked by business owners is kind of, what are the incentives out there? I think everyone thinks there's some secret playbook that they're not privy to that has all the information. So that's what we're going to focus today is kind of the role of economic development in helping attract, grow, retain businesses. So that's going to be our focus. But before we jump into that, I guess just a quick introduction from yourself, Quentin.

Quentin L. Messer, Jr. 02:08

Sure. Native Floridian, Jacksonville, Florida, lived in the Northeast and Midwest, started my economic development career actually in Louisiana, worked at the state level for Louisiana economic development, and then for six years led economic development in New Orleans with the New Orleans Business Alliance. And then for the last almost three years, I've had the great honor and privilege of having the best job in economic development, which is CEO of the Michigan Economic Development Corporation. And we work a lot with businesses of all sizes. One of the things I hope in this conversation is demystify how economic developers can help businesses of all sizes. There is no secret handshake, no secret playbook. But I think what is key and what's obvious to me as I travel around Michigan, as I think back to my time in Louisiana, that most businessmen and business women are just executing their business. They're trying to figure out how to have profitable growth, how to make sure that they can pay payroll, how can they make sure they can retain employees, how can they make sure that there's a robust pipeline of, you know, either future accounts or whatever products and services they're trying to, you know, shorten the accounts receivables and eliminate, you know, elongate the accounts of payable as much as possible, manage cash flow. So, you know, economic developers across the country are really looking to do one thing, and I think if your listeners take away one thing, is economic developers are trying to de -risk investment. And if you are a small or medium -sized business seeking to grow in your home state, your economic development organization, whether at the local, regional, or state level, is just really trying to de -risk that investment. Some of them are direct cash incentives. It to other agencies that can either streamline permitting or put you in a buyer's program where maybe your goods and services will become on the radar or larger companies. There's nothing that helps those small or medium -sized businesses grow beyond having a large paying company that can pay on time and provide some predictability. And then obviously working with the Department of Labor, workforce development agencies that can help workforce trainings and things of that nature.

Bryan Powrozek 05:00

That's fantastic. And I love the way you kind of teed that up, because in my experience, I think that's the way a lot of the business owners view the economic development. Anytime we bring it up, it's like, Oh, we don't need, we don't need a grant, or we don't need a loan or something like that. So one other their portfolio services is much, much greater beyond that. And I think to try and, you know, trying to buy things up here, at least what we had talked about in the prep is is really looking at two main main areas, right? There's the attraction side of what what the MEDC does, and then the retention side. So I guess focusing on attraction first, you know, what are some of the some of the critical resources that the MEDC offers in trying to, to bring a vision, a business to the state of Michigan.

Quentin L. Messer, Jr. 05:51

Sure. So we have two business attraction cash grants, one in the Michigan Business Development program grant that is capped at $10 million per project. And then we have for larger projects, and we know that a business that is today small or medium size may have discovered a new technology or have a new customer and can immediately be looking at a multi -billion dollar investment. And we have something called the Strategic Outreach and Attraction Reserve Fund, or SOAR Fund. It's soon going to be renamed the Make It in Michigan Fund. Those are our two cash grant tools for business attraction. But I would say that there's more than just business attraction than the cash grant. Obviously very important for derisking the investment, but there's the opportunity to connect with our sister agency, the Department of Labor, an economic opportunity for workforce training dollars. We have something in Michigan called TriShare, where for example, for early childhood and pre -care for employees, the state pays a third, the company pays a third, and the employee pays a third. So that's a unique program. It may be in other states as well, but we have that here in Michigan. We're always looking for companies to help us pilot new programs. If companies are doing things that could be innovative and beneficial without compromising their competitive position, we would like to spread it to other businesses here in Michigan. But just a summary, from the business attraction perspective is the Michigan Business Development Program Grant, and then it was formerly known as SOAR, soon to be renamed the Make It in Michigan closing fund. So those are for large projects, typically over a billion dollars in private investment, typically employing over a thousand people.

Bryan Powrozek 08:08

Yeah, and another thing that I really like that the MEDC can help with, and it's also in conjunction, I think, depending on if, for example, you were looking somewhere near Metro Detroit, the Detroit Regional Partnership might get involved and the MEDC working directly with them, is some of the, just the expertise and the knowledge that you bring to the table on, I was working with a company from Europe that was looking to expand to the US to say, hey, these are the types of employees we have in the market. If you're focused on autonomously guided vehicles or something else like that, we've got the research universities here in Michigan, we've got these different programs. And so really, the MEDC also kind of acts as that, almost that central repository where you can point to and say, here's beyond the programs and the grants and the things you talked about, but here's the strengths of why you would want to do business in Michigan. Or potentially, even as the case may be, hey, we might not be the right fit because we don't have a lot of that industry or we don't have the types of employees you're looking for. So that's, I think, another great role that the MEDC plays.

Quentin L. Messer, Jr. 09:21

No, you absolutely nailed it. You know, I'm a big sports person. And so, you know, I was trying to think of a sports analogy for the role we play at M .E .D .C. and while soccer or football, as they were saying, everywhere else besides the U .S., is it my strongest sport? I like to think of M .E .D .C. When we're operating our best, we are attacking midfielder. So the midfielder basically controls the pitch, controls the time of possession, wants to get the ball onto the foot of the strikers and make sure that the striker is in the best possible position to score. And that's what we're doing working with regional economic development organizations such as the Detroit Regional Partnership. We have some other tremendous ones across the state of Michigan, but really trying to coordinate and understand what are those what must be trues for a company to be successful? Is it, as you mentioned with the example with autonomous vehicles, are you looking for a particular type of talent expertise? Are you looking for a particular concentration of prospective clients? Are you looking for particular adjacencies, physical proximities to particular physical assets that may be required or unique for that particular business? But the thing that maybe was implied in what you said is that we believe, and this comes from Governor Whitmer to bipartisan members of the legislature, is that Michiganders are in a relationship business. We're not in a transactional business. So it may not be the right time for this particular projects, but let's try to help the company be successful, especially if the company is going to invest in America. Because at the end of the day, we're all Americans, yes, we're incredibly competitive. We want everything in Michigan. I think we are in the best possible way selfish for Michigan, but at the same point, we understand that if a company grows in America, especially in an adjacent state in the Midwest, more than likely there's gonna be positive externalities here in Michigan. So we wanna make sure that we provide that type of counsel and begin those type of relationships.

Bryan Powrozek 11:44

Yeah, and that's, you know, the, I kind of kicked the episode off talking about some of those questions I get from, from clients all the time. And from my seat as a business advisor, it's, it's hard to stay on top of all this, right? There's so many grants and programs and, you know, just looking at what manufacturing USA does here, to try and help shore up and increase the capabilities of manufacturing in the US. There's no way that one person can stay on top of all of that. And so I really liked your analogy of the, of the midfielder there that, you know, you're, you're playing that connector, right? And so when, when a business owner connects into the MEDC, with a specific question, well, you may not be able to answer it. You know, the person that can answer it, or at least the next, you know, link in the chain to connect somebody to and, and I don't think, you know, so many, especially small to medium sized business owners I work with feel like they have to solve every problem themselves. They've got to figure it all out themselves. And, and that's a mindset that we try to help them with them know that there's people already out there that have already figured out this mouse trap, mouse trap, they've solved the problem, let's get you to connected with them. And now you can shortcut your time to solve that problem. So that's, I think it's a great analogy. I like that.

Quentin L. Messer, Jr. 13:09

No, I mean, look, you know, we all we all need help. We all need support. And I think what the wisest companies, those companies that have explosive growth focus on the thing, the thing that allows them to be to be differentiated and allows for them to have differentiated profitable growth and everything else. If they can leverage and offload to someone else, they're wise to do that. And so we want to make it easy for companies. I will I will be remiss if I didn't mention our website, www .michiganbusiness .org, www .michiganbusiness .org. It's really searchable. We have a section for small business. And we know that no business is small in the mind of the owner. So, first of all, I think small business is very much kind of a unfortunate moniker that we've adopted because it's big stuff. If you're trying to figure out how to make payroll, you have taken out not only a second mortgage, but a home equity loan to try to keep the business afloat and you're preparing and dealing with uncertainty, especially when other people are counting upon you for their livelihood. That's big business. That's big stuff. And what we want to do is make sure that we provide as many resources. So we have and M .E .D .C. supports the Small Business Development Centers, which we have all over the state that are associated with our institutions of higher ed. We also work with the Edward Lowe Foundation that has done revolutionary work with goods and health companies. We're always trying to figure out how to get more programming that is appropriate for small businesses. You know, to your point, we won't be able to reach out to the almost million plus small businesses in Michigan. But we should be able to when that small business person consults with their legislator or consults with us, we should be able to not give him or her the run around, but be able to say, here is a place where you can have your questions answered. And if you questions are not answered, you can come back and we'll try to recalibrate based upon your particular need.

Bryan Powrozek 15:28

Yeah, exactly. And for the listeners outside of the state of Michigan, although we'd love you to come join us here in the state, the model is basically the same though, right? There's whether you're in Wisconsin, Illinois, Indiana, I'll pick on the Midwest here, just, you know, it's the same idea of there's state and local development, there's the statewide development, and then ultimately we've got some of the more national programs that the to the state and then, you know, local economic developers. So just because we're focusing on Michigan for this episode, you know, if you get to know your local, you know, economic development groups, they'll be able to make the same connections we're talking about here in Michigan.

Quentin L. Messer, Jr. 16:13

Yeah, absolutely. Right. Yeah, absolutely.

Bryan Powrozek 16:15

Yep. So I guess moving from, we talked about attraction for a bit, but retention, I mean, a lot of the same stuff that you were talking about there before. But I guess what are some of the critical areas that the state of Michigan is focusing on in terms of retaining businesses here? Maybe it's a couple of particular industries that are of high importance or I guess where's the focus right now for the state of Michigan?

Quentin L. Messer, Jr. 16:42

Great question. So, you know, we, we want to retain all of our businesses. Now we understand in order for them to grow, there's going to have to be some sort of geographic diversification. But we want them to really think about growing in Michigan. With regard to industry, you know, we are state of, you know, senior Senator Debbie Stabenow says it all the time, we are a state that makes things and grows things. So we want to support small and meme size businesses from agribusiness to the life sciences, to mobility, to semiconductors, to defense and aerospace, to clean tech, and professional services. One of the things that we're very keen to do is to make sure that we connect businesses in Michigan. And I think this will be applied to other states as well, to opportunities federally and a lot of what you see federally, whether it's programs from the departments of commerce, energy, defense, you know, they have particular grant funding programs or loan programs. So we have written letters of support. We have provided counsel to companies on applications. We have also wanted to make sure that we provide de -risking programs for federal industrial policy, whether it's the Infrastructure Jobs and Training Act or the Inflation Reduction Act or the CHIPS Act. So we want to make sure that federal dollars that are supporting bringing back supply chain, bringing back advanced manufacturing to the US is happening in Michigan. And there we have so many companies, you mentioned the National Association of Manufacturers earlier, we want to make sure that manufacturing that is connected to opportunity at the federal level, at the state level, and the various different agencies. And we know that businesses may not have always the waterfall, if you're especially small and medium sized, to know everything that's happening at the federal level. But that's where those regional economic development organizations come into play. And that's why they're so vitally important. And the last thing I was just, it just came to mind is that you know, a listener might be saying, well, no, I've never heard of an economic development organization. Well, you probably have heard of a Chamber of Commerce. And if you want to figure out who is the economic development organization in your particular locality, your Chamber of Commerce knows, or your business improvement group, or your business improvement district. One of those three entities will be able to connect you to either your regional economic development organization, or your state economic development corporation or Department of Commerce or Department of Economic Development. However, it may be characterized, but leverage that connectivity to the Chamber, the business improvement districts, those type of organizations that are probably more naturally known in the vernacular.

Bryan Powrozek 19:52

Yeah, and you know, I think it's interesting as well that it's not it's not always the easiest landscape to navigate, right? Like, I think that the chips act, that one's easy, right? It's focused on, you know, chip manufacturing and there's other things in there. But that's, I mean, kind of the the folks out. But so many of these other bills and programs and things like that have, you know, specific carve outs. Like, I know there's a number in the state of Michigan. You know, there's a number of programs related to companies who are trying to get up to Industry 4 .0 or get into smart manufacturing or improve their manufacturing operations. Where, you know, you may look at it and be like, OK, well, I'm not a chip manufacturer, so there's nothing out there for me. I'm a I'm a CNC, you know, mill or lathe company. And all we do is, you know, we're short order manufacturer, you know, for machine parts. It's like, well, yeah, but you could benefit from some of these Industry 4 .0 resources that are out there. And then there's, you know, I think about again here in in the state of Michigan, we've got the Michigan Manufacturing Technology Center. You know, they can come out and do those assessments. And so that's, again, a situation where you're not getting money, right, that the MMTC is funded through, you know, through other programs. But they can come out and do this Industry 4 .0 assessment and give you kind of that unbiased third party opinion of, hey, here's some areas where you could improve your operations and maybe become more efficient or, you know, reduce some of your scrap variability, whatever it might be. And then there's other programs out there to help maybe fund some of the costs to implement those technologies. So it's it's it's really, as you said, connecting with those right groups, asking the right questions of, you know, what resources are out there to help me. And then, you know, once you kind of get into the stream, we all know where to where to route you and where to point you, but it's getting that first on ramp into the into the process.

Quentin L. Messer, Jr. 21:58

You know, I think about here in Michigan, you know, the Small Business Association of Michigan, SBAM, is an incredibly important organization. And I think for anyone, regardless of whether you're a small business owner or medium sized business owner, yes, you have to focus on the most important thing and the most critical thing. But you can't operate in isolation. Everyone has to be connected to some team, very few people, I don't know anyone who's ever been successful, as a solo artist, even, you know, people who are, you know, whether it's Madonna or Eminem, and I just happened to use two Michiganders, but there was someone behind them, they had someone that was part of their team. I mean, you certainly see that in sports, you know, I think of auto racing. You know, you can't talk about Michigan without talking about Roger Penske, who owns the you know, the Indy series, and Indianapolis Super Speedway. And I've been watching auto racing much more is so intricate. Yes, you have the driver, but you have the greatest driver. But if that car isn't engineered properly, you don't have a great pit crew. You don't have someone who is engineering when you need to change the tires, what type of tires, you know, what throttle down, what tweaks to the engine, how much to show in qualifying, how much not to different surfaces. And the same thing applies to working with small and medium sized businesses. And I thought your mention of Industry 4 .0 Automation Alley here in Michigan is incredibly you know, they started primarily in southeast Michigan, but now a statewide organization. They are also connected to the US Center for Advanced Manufacturing. Shout out to Cynthia Hutchison, who does a tremendous job of elevating that partnership with the World Economic Forum, really trying to make sure that we in a way that makes that that that is not a distraction for businesses, but easy for them to access information. So that's why it's important for podcasts like yours, for organizations like SBAM for us to an M .E .D .C. to work with a small business development center. And if you're in the defense and aerospace sector, the APEX accelerators, if you're on the tax side, you know, earlier stage or smart zones, there are tremendous opportunities. And I think one way again to get connected to get into the flow, as you mentioned, is through your chamber. You know, every community has a chamber or business improvement district or state legislator, you know, everybody is represented by state legislator, who's going to be aware of at least M .E .D .C., if not the particular region, and that will be that can be your in your your entree into the flow.

Bryan Powrozek 25:07

Yeah, exactly. Well, and I think we've, I was just looking over my outline here. And our last question, I feel like we've hit a couple times here in terms of advice, you know, I have for business owners, it seems like the best piece of advice is just ask for help and get out there. So I'm curious, since we are, as a firm, Wipfli is very focused on manufacturing and manufacturers, I guess, what has you most excited about the opportunities for manufacturers here in the state of Michigan.

Quentin L. Messer, Jr. 25:38

You know what has me most excited? I mean, a lot, but the number one thing is our manufacturers are really good. It is really difficult to make stuff and to make things at scale. You know, a lot of people, a lot of places in the world can make ones or twos and threesies or fours or, you know, less than 100. But when you start talking about thousands or millions. You know, there are very few places in the world that can compete with Michigan. We do hard tech well. We do deep tech very well. So that's what makes me say just the talent, the ingenuity, the creativity of the manufacturing base in Michigan. That's what makes me proud to have the best job because it's great to try to make sure that I bring more to Michigan so that these businesses can continue to grow and thrive here.

Bryan Powrozek 26:33

Well, that's excellent. And I know I've worked with with your team for a number of years now. And I know there's a just a ton of great people who are all just looking to help. So I guess if we can plug the website in the best way for people to reach out again, just to make sure that folks know how to how to get in touch with you if they're either in Michigan looking to grow their business or maybe considering an expansion.

Quentin L. Messer, Jr. 26:58

Sure, absolutely. So the website is www.MichiganBusiness.org  www.MichiganBusiness.org. And feel free to reach out to me directly. It's Quentin, Q -U -E -N -T -I -N, last name, Messer, M -E -S -S -E -R. And my email is MesserQ@Michigan.org ... MesserQ@Michigan.org.

Bryan Powrozek 27:26

Excellent. Well, Quentin, I really appreciate you taking some time to come on with us today and look forward to crossing paths with you again here in the near future.

Intro/Outro Narrator 27:34

Thank you for tuning in. Don't forget to like us, subscribe, and share on social. To learn more about Wipfli, visit us at Wipfli .com. That's W -I -P -F -L -I dot com. Perspective changes everything.

Author(s)

Bryan Powrozek
CPA, CGMA, CGMA, Senior Manager

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