Description
Michigan Turnaround Plan A Five-Step Plan to Transform Michigans Economy & Create Good Jobs
Michigan Turnaround Plan
Michigan Turnaround Plan
A Five-Step Plan to Transform Michigan’s Economy & Create
Good Jobs
September, 2009
Business Leaders for Michigan
• Develop, advocate and support high-
impact strategies that will in the long-
term make Michigan a “top ten” state and
Mission
Michigan Turnaround Plan
Website: BusinessLeadersforMichigan.com
2
term make Michigan a “top ten” state and
in the short-term an above average state
for job and economic growth
Introduction
Two generations ago, Michigan was a Top Ten state for economic growth. For the past
generation, we have lagged the nation. We are becoming economically poorer, smaller and
less competitive. In order to stop this trend, we must do what any business facing these
conditions would do – adopt a “turnaround plan.”
We are proposing this Michigan Turnaround Plan to get our state back to being a Top Ten
economic leader. This plan is specific, action-able and based on facts.
Michigan Turnaround Plan
economic leader. This plan is specific, action-able and based on facts.
Business Leaders for Michigan companies employ over 300,000 people in Michigan, generate
nearly $1 Trillion in annual revenue and serve over 130,000 students. We live here, raise
our children here, have our businesses here and are part of our communities. We can’t
grow our businesses and employ more people without a healthy, vibrant Michigan.
The Michigan Turnaround Plan will help Michigan rediscover the role it played a generation ago
– being a leader in creating good paying jobs for its citizens and being a model for the
nation.
3
Table of Contents
CONTENTS PAGE
The Turnaround Path 5
The Case For Change 6
The Goal 23
Michigan Turnaround Plan
The Five Step Turnaround Plan 25
The Potential Results 36
The Commitment 38
Slide Notes 39
4
The Turnaround Path
THE CASE FOR
CHANGE
• Why Michigan is
in the state it is
today
THE GOAL
• Changing our
mindset by
setting a goal
THE FIVE STEP
TURNAROUND
PLAN
• A to-do list that’s
achievable and
will get results
THE POTENTIAL
RESULTS
• The difference
being a Top Ten
state can make
THE
COMMITMENT
• A serious call to
action; Tracking
results
Michigan Turnaround Plan 5
Fact: Nearly 50% of U.S. job losses
since 2000 have been in Michigan [see slide 8]
Result: The state budget has gone from
a $2 Billion surplus to a $2 Billion deficit in
10 years
A State in Crisis
Michigan has been getting
relatively poorer, smaller and
less competitive. The result is a
state with chronic budget
shortfalls & the highest
Summary: The Case for Change
Michigan Turnaround Plan
Cause: Michigan’s economic
competitiveness is below average for both
manufacturing and knowledge jobs
Need: A holistic economic growth
strategy that gets Michigan cost-
competitive and leverages Michigan’s
assets
unemployment rate in the nation.
Incremental changes to the
state’s budget, tax and economic
policies will be insufficient to
grow the state’s economy. Only
a holistic, transformative
strategy will do the job.
6
Fact: Rising Unemployment
7.0
8.0
9.0
10.0
11.0
12.0
U
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e
m
p
l
o
y
m
e
n
t
R
a
t
e
(
p
e
r
c
e
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a
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)
US Midwest Michigan
Michigan Turnaround Plan 7
2.0
3.0
4.0
5.0
6.0
7.0
Jan., 90' Jan., 91' Jan., 92' Jan., 93' Jan., 94' Jan., 95' Jan., 96' Jan., 97' Jan., 98' Jan., 99' Jan., 00' Jan., 01' Jan., 02' Jan., 03' Jan., 04' Jan., 05' Jan., 06' Jan., 07' Jan., 08' Jan., 09'
U
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e
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t
R
a
t
e
(
p
e
r
c
e
n
t
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g
e
)
Source: Bureau of Labor Statistics
Mid 1990’s: MI’s
unemployment is
lower than the US
Fact: Severe Private Sector
Employment Losses
728,000 Jobs Lost
Michigan lost more private
sector jobs since the year
2000 than any other state –
nearly half of all private sector
Total Private Sector
Employment
(Thousands) 2000 2009*
% Change
(2000-
2009)
Number of
Jobs Gained
or Lost
Michigan 3,996 3,268 -18.2% -728
Michigan Turnaround Plan
nearly half of all private sector
jobs lost in the United States
during this period. While
Michigan has been severely
impacted by the loss of
automotive jobs, the state has
under-performed the national
average in most job sectors.
8
United States 110,995 109,736 -1.1% -1,259
*2009 represented by May private sector employment
Source: Bureau of Labor Statistics; Analysis: Anderson Economic Group, LLC
Fact: Not Only State
with Manufacturing Job Losses
Others Overcame
Dislocation
Other states have
experienced
manufacturing job losses
as great or greater than
Michigan Turnaround Plan 9
as great or greater than
Michigan, but out-paced
our economic
performance.
Least Loss
2000-2007
Most Loss
2000-2007
Fact: Job Growth Has Lagged
Across Most Sectors
Michigan Is
Under-Performing
Across Sectors
Only one of 22 industry
groups had both
positive Michigan
growth, and grew ahead
Michigan Turnaround Plan 10
growth, and grew ahead
of the US average
All knowledge-based
industries trailed US
average growth with
exception of
Educational Services
Source: Bureau of Economic Analysis; McKinsey
Result: Relatively Smaller
-4
-2
0
1980 1990 2000 2008
ANNUAL % POPULATION GROWTH vs. US AVG
Michigan Is
Getting Smaller
Relative to US
Michigan has been
growing at a slower rate
than the average US state
for nearly 40 years. This
Michigan Turnaround Plan
-12
-10
-8
-6
11
Source: U.S. Census Bureau Population Estimates Program
for nearly 40 years. This
has resulted in Michigan
becoming less desirable
for business investment
as its share of the
consumer market
declines.
Result: Relatively Poorer
Michigan Is
Getting Poorer
Relative to US
Michigan’s per capita
income has been growing
below the US average for
nearly 30 years. The rate
Michigan Turnaround Plan 12
Source: U.S. Bureau of Economic Analysis
nearly 30 years. The rate
of decline has accelerated
dramatically in the past
decade.
Result: Relatively Poorer
Michigan Ranks
Last in GDP Growth
? Michigan’s GDP is $382
Billion as of June 2009
2
? Since 2000, if Michigan’s
economy had grown at the
average rate of the Top 10
Michigan Turnaround Plan 13
average rate of the Top 10
states, Michigan would
produce $118B (31%) more
GDP
2
? The difference translates
to $12,000 more income
per Michigan citizen
2
1 Top 10 states in per capita GDP growth, 00-08: ND, OR, SD, NY, VT, IA, MT, WY, NE, MD
2 In June 2009 dollars
States listed above from McKinsey benchmarking report: Traditional & knowledge competitors
Source: Bureau of Labor Statistics; Bureau of Economic Analysis; Moody’s Economy.com
Result:
Declining or Flat Tax Revenue
Revenues Slump
During the 1990’s, state tax
revenues grew, especially
from personal income and
sales/use taxes, as the
economy and per capita
income grew. But since
$6
$7
$8
$9
Michigan Tax Revenue: Personal Income Tax, SBT/MBT, and
Sales and Use Tax, 1994-2008
Personal Income SBT/MBT Sales and Use
Michigan Turnaround Plan
income grew. But since
2000, state tax revenue
from personal income and
business taxes has
declined and sales/use tax
revenue has been flat. Tax
increases to the MBT and
personal income in 2007
resulted in short-term
revenue increases.
14
Source: Michigan Senate Fiscal Agency, “Major Sources of Tax Revenue”
B
i
l
l
i
o
n
s
$-
$1
$2
$3
$4
$5
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
TAX INCREASES
Result:
Further Revenue Shortfalls Projected
No Let Up In Sight
Even with the MBT surcharge
and personal income tax
increases, state tax revenues
are expected to decline by at
least 11.5% between FY 2008
and FY 2010. Tax revenue
FY 2008 FY 2010
%
Change
Total Tax
Revenue $27,700 $24,518 -11.5%
Change in State Tax Revenue FY08-10
($ in Millions)
Michigan Turnaround Plan
and FY 2010. Tax revenue
sources for the School Aid
Fund (sales/use taxes) are
more stable compared to the
General Fund (GF/GP).
Starting in FY10 either
expenditures must be cut
and/or new revenue sources
must be found to balance the
budget.
15
Source: Michigan Senate Fiscal Agency; AEG Projections for FY 2010
(see source notes)
Revenue $27,700 $24,518 -11.5%
GF/GP $8,986 $6,950 -22.7%
SAF $10,773 $10,563 -1.9%
Result:
State Spending > Revenues
No More One-Time
Fixes Available
Since the 2001 recession, state
General Fund spending has
exceeded revenues in most
years due to the use of mostly
one-time budget fixes, such as
$44
$46
$48
$50
State of Michigan Total Revenue
and Total Expenditures, 1999-2010
($Billions)
Total Revenue
Total Expenditures
Michigan Turnaround Plan
one-time budget fixes, such as
tapping into the Rainy Day Fund,
selling assets, using the federal
stimulus, liquidating other fund
reserves or other measures.
The severity of projected
revenue declines in FY09 and
FY10 will preclude the use of
these practices any further.
16
Source: Michigan Senate Fiscal Agency; Anderson Economic Group projections for FY
2010 (see source notes)
$30
$32
$34
$36
$38
$40
$42
$44
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Result:
State Spending > Inflation
State Spending
Has Out-Paced
Inflation
By using one-time budget
fixes during the past
decade, the state has out-
spent inflation in most
Michigan Turnaround Plan 17
Source: State of Michigan Executive Budget FY 2009, “Historical Expenditures/Appropriations Gross”
& U.S. Inflation Calculator.com
spent inflation in most
budget categories.
Further, the state has
spent the least in areas
that would most drive
economic growth – higher
education and
transportation.
Fact: State Spending > “Pop-flation”
Before 2009
State Spending
Outpaced “Pop-
flation” Since 2001
Nominal state expenditures grew
at or above the rate of inflation
and population growth from
$35
$40
$45
$50
State of Michigan Expenditures: Actual Total
Expenditures, and Expenditures Grown by Inflation &
Population Growth, 1999-2010 ($Billions)
Actual Total Nominal Expenditures
Total Expenditures Increased by Inflation & Population Growth
Michigan Turnaround Plan
and population growth from
FY99 to FY08. However, the
projected drop in revenues
starting in FY09 will cause
spending to be below the rate of
inflation and population growth
for the first time in over a
decade.
18
$0
$5
$10
$15
$20
$25
$30
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Michigan Senate Fiscal Agency for actual expenditures;
Anderson Economic Group estimates (see source notes) for “pop-flation” growth
Cause: Costs Matter
Top 10 States for Job &
Income Growth: 1996-2007
2 X BETTER BUSINESS COST RANKING
Michigan Turnaround Plan
Bottom 10 States for
Job & Income Growth:
1996-2007
19
Source: Forbes & ALEC
Cause:
Uncompetitive Business Climate
Higher Tax
Environment Than
Competitors
Companies pay on average
3-4% more on state & local
taxes in Michigan than the
Michigan Turnaround Plan
taxes in Michigan than the
states we most often
compete against for
manufacturing or knowledge
jobs. In today’s global
economy, that is the
difference between making a
profit or not to many
businesses.
20
Source: Tax Foundation 2009 Business Tax Climate Report;
Anderson Economic Group “A Comparison of State Business Taxes” (2008)
Cause:
Uncompetitive Business Climate
Weaker Value
Proposition vs.
Competitors
Companies assess the “total
cost of doing business”
when evaluating site location
Michigan Turnaround Plan
when evaluating site location
decisions. In Michigan,
business taxes and most
other costs are higher than
competitor states with not
enough distinct advantages
to offset the higher cost
premium.
21
Source: Area Development annual company and site selection survey (2008);
BLS; ACCRA; NCES; Tax Foundation; Census; NSF; Site consultant interviews
Cause:
Uncompetitive Business Climate
Business Decision-
Makers Rank
Michigan Low as
Site Location
Michigan Turnaround Plan
Business CEO’s and site
location consultants view
Michigan’s business climate
as among the worst of all
states. These perceptions
are driven by their views on
the cost and ease of doing
business in Michigan.
22
Source North American Business Cost Review 2006, Moody's Economy.com; Chief Executive
Magazine; Site Selection magazine
Defining a State Goal
Being “competitive” is imperative in the
global economy
Good jobs are the only way to retain our
young people, grow our incomes and build
the quality of life we desire
Currently, Michigan is average to below
average in nearly every measure of
economic performance and
Setting A Goal Will
Drive Results
Business sets goals to drive
results for shareholders.
Government should be no
different. Setting a goal of
Michigan Turnaround Plan
economic performance and
competitiveness*
Only the most competitive states will be
able to achieve high levels of economic
performance in the future
Even being a “Top Ten” state is no
guarantee of economic success – In a
global economy, we must ultimately strive
to be “Top Ten” in the global market
different. Setting a goal of
becoming a “Top Ten” state for
job & economic growth can instill
a new philosophy and culture in
Michigan that renews our sense
of hope and provides a path to
prosperity for all.
23
* McKinsey 2009 Michigan Benchmarking Study
Michigan’s New Goal
• Michigan will be a top ten state for job &
economic growth
Long-Term
Michigan Turnaround Plan 24
• Michigan will be an above average state for
job & economic growth
Short-Term
Michigan Turnaround Plan:
Five Steps To “Top Ten” Status
STEP 1
•Changing the Way We
Manage Our Finances
STEP 2
•Right-sizing & Enacting
Structural Budget Reforms
STEP 3
•Getting Michigan
STEP 4
Getting Fiscally &
Economically “Fit”
A vibrant economy and sound
fiscal management are mutually
dependent upon each other.
Stronger financial management
practices and right-sizing
Michigan Turnaround Plan
•Getting Michigan
Competitive To Attract &
Retain Jobs
•Making Investments That
Create A Great Job
Environment
STEP 5
•Accelerating Job Growth
Through Innovation &
Entrepreneurship
practices and right-sizing
spending through structural
budget reforms will get Michigan
fiscally fit. Reducing the cost of
doing business and making
investments that leverage our
assets will grow jobs for the
future. Innovation and
entrepreneurism will help
Michigan out-pace competitor
locations.
25
Step 1: Changing the Way
We Manage Our Finances
WHERE WE ARE
For the past three fiscal years,
Michigan has over-projected
revenues, in part due to the lack of
sufficient input from a broad
spectrum of economic advisors,
resulting in chronic budget crises
A PATH FORWARD
Form an independent council of
respected public and private sector
economists to complete quarterly
revenue and spending estimates
Conduct a quarterly survey of a
cross-section of Michigan businesses
Michigan Turnaround Plan
resulting in chronic budget crises
State spending has out-paced “pop-
flation” and revenues for most of the
decade in part due to an over-
reliance on one-time budget fixes
cross-section of Michigan businesses
to identify sales & hiring trends
Change the law to require the adoption
of two-year budgets to more
accurately project the on-going cost of
programs
Adopt no new programs unless
eliminating others or revenues grow
26
Step 2a: Right-Size Spending Now
WHERE WE ARE
Budget right-sizing is needed in the
short-term because most structural
reforms have long-term payoffs
Like most organizations, labor & benefits
are the state’s largest cost-driver;
Average total compensation for state
employees was almost $17,000 more
A PATH FORWARD
Reduce state employee
compensation to the average
compensation of state workers in the
US or the average of MI private sector
workers (Potential savings: $287 -
$1,383M as of FY 2007-08)*
Michigan Turnaround Plan
employees was almost $17,000 more
than the private sector average in
Michigan in 2007
[Source: BEA Regional Economic Information System]
State employees pay 5% of their health
premium costs, compared to 17.8%
national average for state workers
[Source: National Council of State Legislators]
The state employed over 52,769 workers
as of March 2009; The state classified
payroll was $4.73B as of FY 2007-08
[Source: Michigan Civil Service Commission]
Reduce the state workforce by 5-10%
(Potential savings: $236 - $473M as of
FY 2007-08)*
Adjust state employee premium
contributions to the national public
sector average (Potential savings:
$74M)*
27
* Estimates: Anderson Economic Group (see source notes)
Step 2b: Structural Reforms To Ensure
Sustainability
WHERE WE ARE
Michigan is a relatively smaller economy
today than it was in past decades and
cannot support the same level of state
spending it once did
Michigan has 1,800 units of local
government and over 500 local school
districts
A PATH FORWARD
Encourage & enable local government
service sharing (Minimum estimated
savings: $250M) [source: Center for Michigan]
Encourage & enable local school district
service sharing (Minimum estimated
savings: $300M) [source: Center for Michigan]
Enact corrections management and
Michigan Turnaround Plan
districts
Michigan has many programs and services
that exceed or duplicate federal standards
Michigan’s incarceration rate is 489 per
100,000 residents; 45% higher than the
Great Lakes average of 338. Our prisoners
stay on average 44.4 months, 48% higher
than the Great Lakes average of 30 months.
[Source: CRC, cited by Public Sector Consultants]
Enact corrections management and
sentencing reforms (Estimated savings:
$400M) [AEG Estimate; see source notes]
Eliminate optional services that exceed
federal standards (e.g. optional Medicaid
services)
Eliminate duplicate state programs (e.g.
MIOSHA vs. OSHA)
Eliminate binding arbitration for municipal
police & fire workers
Transition teachers to a defined
contribution retirement system
28
Step 3a: Getting Michigan Competitive –
Short-term
WHERE WE ARE
Michigan ranks between 27
th
and
35
th
worst in overall business tax
burden*
Michigan businesses pay on
average 3-4% more of their profits
in taxes than the average of the “ten
A PATH FORWARD
Make Michigan’s business tax
system competitive
• Reduce the MBT to move Michigan
significantly toward becoming a “Top
Ten” state in lowest tax burden
• Provide a more predictable & stable
Michigan Turnaround Plan
in taxes than the average of the “ten
best” business tax and many peer
states*
Michigan ranks average to below
average on other indicators
comparing business tax burden
against states we compete with for
knowledge and manufacturing jobs
• Provide a more predictable & stable
tax environment for businesses
• Change the tax structure to more
closely match the changing
composition of the economy
• Ensure any tax changes do not
exacerbate the structural budget
deficit
29
* Source: Anderson Economic Group, “2009 State Business Tax Climate Index”
Step 3b: Getting Michigan Competitive –
Long-term
WHERE WE ARE
Michigan’s competitive position
further deteriorates when analyzing
total business costs, including
wages, benefits, utility, regulatory
compliance and other costs
A PATH FORWARD
Make the overall cost of doing
business in Michigan competitive
• Eliminate the personal property tax
• Require fiscal notes that identify the
compliance costs for all new
regulations
Michigan Turnaround Plan
regulations
• Create a regulatory report card that
tracks responsiveness
• Prohibit state regulations that exceed
federal standards, such as state-based
ergonomic standards
• Require regulations to demonstrate
cost/benefit analysis and basis in
sound science
• Annually benchmark Michigan costs
30
Step 4: Investing In Our Future
WHERE WE ARE
After Michigan gets its fiscal house
in order and improves its
competitiveness, it must focus
where it will invest its budget
resources
When Michigan was a wealthy
state it could afford not to set
A PATH FORWARD
The state should make investments
that will have the greatest long-term
economic impact
Investments should leverage key
state assets that build on existing
strengths to give Michigan distinctive
advantages in the global economy
Michigan Turnaround Plan
state it could afford not to set
priorities; in today’s economy it
cannot
Other states, like North Carolina,
prioritized investments in higher
education and transportation
infrastructure as a path to
economic growth
advantages in the global economy
Investments should focus on:
• Higher education – to ensure a strong
talent pool
• Infrastructure – for airports &
freeways that connect our peninsulas
to the global economy
• The Great Lakes and cities - which
make Michigan a desirable place to live
31
Step 4a: Investing In Our Future –
Education
WHERE WE ARE
Average K-12 performance must
improve to match per capita
spending (Spending: 8
th;
Performance: 34
th
)*
Higher education investment should
increase from current status of 38
th
*
A PATH FORWARD
Improve K-12 performance:
• Consolidate administration of Michigan’s
500+ school districts by reducing per pupil
state funding for districts that fail to share
services
• Retain demanding graduation standards
• Allow an unlimited number of charter
Michigan Turnaround Plan
increase from current status of 38 *
to “Top Ten”
• Allow an unlimited number of charter
schools to stimulate competition,
especially in under-performing districts
Ensure “Top Ten” higher education:
• Rationalize the number of colleges &
universities to a number the state can
support long-term
• Increase funding to remaining community
colleges & universities to achieve “Top Ten”
status
32
*Source: ALEC (NAEP Scores) & Center for the Study of
Education Policy, Illinois State University (2009)
Step 4b: Investing In Our Future -
Infrastructure
WHERE WE ARE
Michigan has a “Top Ten” airport
hub that is under-leveraged as an
economic development engine
Michigan scores below average in
the condition of its highways – a
critical need for a peninsula state
A PATH FORWARD
Advocate for incentives and provide
support for the Detroit Aerotropolis and
other airport-related development
Adopt new funding formulas to
ensure Michigan has adequate
revenues to support a “Top Ten”
Michigan Turnaround Plan
critical need for a peninsula state revenues to support a “Top Ten”
transportation infrastructure
• Improve to “Top Ten” road condition
• Expand freeway connectivity to
adjoining states
• Expand passenger air service
throughout Michigan
• Support mass transit in dense
population corridors
33
Step 4c: Investing In Our Future -
Great Lakes & Cities
WHERE WE ARE
The Great Lakes provide Michigan
a defining “place” to attract and
retain talent in a global
marketplace, yet Michigan lacks a
holistic strategy to leverage this
unique asset
Michigan needs an “urban strategy”
A PATH FORWARD
Develop a comprehensive Great Lakes
strategy that includes incentives, policies
and funding that:
• Partners with other states on a global
marketing program
• Supports the growth of tourism amenities
• Responsibly utilizes the lakes as an
Michigan Turnaround Plan
Michigan needs an “urban strategy”
- a critical need for retaining and
attracting talent and improving
Michigan’s image
• Responsibly utilizes the lakes as an
economic asset (e.g.: energy production)
• Supports the development of residential &
retirement destinations that leverage a
Great Lakes location
Develop an urban agenda that includes
incentives, policies and funding that:
• Attracts people to live downtown
• Attracts business investments
• Develops mass transit along densely
populated corridors
34
Step 5: Accelerating Growth
WHERE WE ARE
Michigan does not operate cohesively
in areas such as:
• Regional collaboration
• Labor-management relations
• Partisan politics
Michigan’s economic development
strategy emphasizes:
A PATH FORWARD
Support collaborative regional growth
strategies by prioritizing incentives & grants
to those areas
Accelerate growth by supporting innovation
and entrepreneurship across all sectors
• Increase entrepreneurial education
• Create a distinctive university-
business partnership
Michigan Turnaround Plan
strategy emphasizes:
• Making direct investments in individual
companies vs. building a healthy
business climate that benefits all
businesses
• Incentivizing site location decisions to
overcome an uncompetitive cost
structure
• Targeting narrow business sectors in a
dynamic, ever-changing economy that
is unpredictable
business partnership focused on
attracting business, growing sectors
and retaining talent
• Grow the pool of venture capital in
Michigan
• Expand business incubation &
acceleration services
Develop strategies to grow broad business
sectors that leverage Michigan’s key
assets (e.g.: energy, engineering)
35
• Efficient & cost-effective service
delivery
• Stable and predictable fiscal
environment
Efficient, Stable
Government
• Efficient & competitive tax system
• Competitive business costs
Competitive
Business
Environment
Playing “Offense”
A “Top Ten” Michigan would look
like a very different state than the
path we are currently following.
Rather than playing “defense” by
focusing on how to allocate
shrinking resources or retain
Top Ten State: Characteristics
Michigan Turnaround Plan
Environment
• Highly educated students
• World-class higher education
• Good highways & airports
• Attraction of the Great Lakes & cities
Strategic Assets
• “One Michigan” style of doing
business
• Support for all businesses
Cohesive
36
shrinking resources or retain
young people and jobs, Michigan
would play “offense” by growing
strategic assets and attracting
new investments that grow
incomes.
Top Ten: Where We Could Be
• $34,423
• Rank: 33rd
Per Capita
Income
2007 (BEFORE CURRENT
RECESSION)
IF WE HAD BEEN IN TOP TEN (in 2007)
• $41,203
• $6,780 more per
person
Per Capita
Income
Michigan Turnaround Plan
• -1.3%
• Rank: 50th
Job Growth
(Private,
2006-2007)
• 7.1%
• Rank: 50th
Unemployment
37
• 2.4%
• 883,000 more jobs
between 2000-2007
Job Growth
(Private, 2006-
2007)
• 3.4%
• 186,447 fewer
unemployed people
Unemployment
Note: Rankings do not include the District of Columbia; See source notes
A Commitment & A Promise
• We commit to serving as a catalyst, advocate and
champion of transforming Michigan
• Michigan is our home and a healthy, vibrant Michigan helps grow
jobs for Michigan residents
• We will do our part to implement this plan
Michigan Turnaround Plan
• We promise to sustain our focus, grow public
awareness and call for concrete actions to transform
our state
• A failure to act is unacceptable and continues Michigan’s
trajectory towards getting poorer and smaller
38
Slide Notes and Sources
Page 6 Source: Private sector employment data from the BLS’s Current Employment Statistics Program.
Page 7 Source: Unemployment data from the Bureau of Labor Statistics (BLS) Local Area Unemployment Statistics
Program and Current Population Survey.
Page 8 Source: Private sector employment data from the BLS’s Current Employment Statistics Program.
Page 9 Source: US Bureau of Economic Analysis, Average annual private manufacturing sector growth by NAICS sector
Page 10 Source: US Bureau of Economic Analysis/McKinsey Analytics
Michigan Turnaround Plan
Page 11 Source: Population growth data from U.S. Census Bureau Population Estimates Program.
Page 12 Source: Per capita income growth data from the U.S. Bureau of Economic Analysis (BEA).
Page 13 Source: US Bureau of Labor Statistics; US Bureau of Economic Analysis; Moody’s Economy.com
Page 14 Source: Tax revenue data from the Senate Fiscal Agency, “Major Sources of State Revenue.”
39
Slide Notes and Sources
Page 15 Source: GF, SAF, and Total Tax Revenue in FY 2008 is from the Michigan Senate Fiscal Agency. FY 2010
projections for GF and SAF tax revenue are from Michigan Senate Fiscal Agency, “Year End Balance Estimates.”
Projections for total tax revenue in FY 2010 are by Anderson Economic Group and assume that GF and SAF tax
revenue will remain the same proportion of total tax revenue the State receives.
Page 16 Source: Total state revenue and expenditure data from FY 1999-2008 are from the Michigan Senate Fiscal Agency,
“Total State Government Revenues and Expenditures.” Projections for total revenue for FY 2009 and FY 2010 are
by Anderson Economic Group using projections from the Senate Fiscal Agency’s “School Aid Fund Budget
History” and “General Fund/General Purpose Revenue History.” AEG assumes that in FY 2009 and FY 2010, GF
and SAF revenue will be the same proportion of total revenue as in FY 2005.
Page 17 Source: State gross expenditure data is from the State of Michigan, Executive Budget Fiscal Year 2009, “Historical
Expenditures/Appropriations Gross” on page C-32 & US inflation calculator.com
Michigan Turnaround Plan
Page 18 Source: Actual nominal expenditure data are from the Senate Fiscal Agency. Inflation rate through 2008 is based
on Detroit CPI data from the BLS’s Consumer Price Index Program. Population growth data through 2008 are from
the U.S. Census Bureau Population Estimates Program. AEG projected population growth (based on the average
from 2005-2008, or -0.3% annually) and inflation (assumed to be 0.9% annually for 2009 and 2010 based on low
inflation nationally and difficult economic conditions in the Detroit metro area). AEG projected expenditure growth
based on these population and inflation projections. Nominal expenditures would have increased 27% if
expenditures had been tied to population and inflation between FY 1999 and FY 2008. Actual expenditures
increased 40% during this time period.
Page 19 Source: Forbes.com for business cost rankings and ALEC Rich States/Poor States report for job and income
growth data.
40
Slide Notes and Sources
Page 20 Source: see Joseph Barro, 2009 State Business Tax Climate Index (October 2008), available at
www.taxfoundation.org, concerning the business tax climate index. See Caroline M. Sallee and Patrick L.
Anderson, 2008 State Business Tax Burden Rankings (March 2009), available at
www.AndersonEconomicGroup.com, concerning taxes as a percent of corporate profits.
Page 21 Source: Economic performance and competitiveness findings are from the Detroit Renaissance, Assessing the
Regional Competitiveness of Southeast Michigan, completed by McKinsey & Company (August 2008).
Page 22 Source: Economic performance and competitiveness findings are from the Detroit Renaissance, Assessing the
Regional Competitiveness of Southeast Michigan, completed by McKinsey & Company (August 2008).
Page 23 Source: Economic performance and competitiveness findings are from the Detroit Renaissance, Assessing the
Regional Competitiveness of Southeast Michigan, completed by McKinsey & Company (August 2008).
Michigan Turnaround Plan
Page 27 Notes:
Savings from adjusting state employee premium contributions to public sector average:
Using data from the Civil Service Commission's annual workforce report for FY 2007-08 and the national council of
state legislatures, we estimate that the state paid for 95% of the $581M in total health insurance premiums for state
classified workers in Michigan in FY 2007-08. Switching from 5% employee contribution to 17.8% (the 2009
national average for state workers according to State Employee Health Benefits - Monthly Premium Costs (Family
Coverage) by the NCSL (July 2009), the state could have saved $74M in FY 2007-08.
Savings from reducing state workforce :
The Michigan Civil Service Commission's Twenty-Ninth Annual Workforce Report for FY 2007-08 states a total
"certified payroll" for the state of $4.73 billion in FY 2007-08 (graph 2-1). $236M and $473M are 5% and 10% of
this number, respectively. The report also cites 48,893 full time employees (53,454.5 total employees, including
contract, seasonal, and a few [200] part time employees) (Table 1-1), and average annual salary ($53,495) and
benefits ($31,107) that sum to $84,602 (summary info on page i).
41
Slide Notes and Sources
Page 27 Notes: (continued)
Savings from state employee compensation reduction:
AEG estimates (using BEA data) that the national average for total compensation of state workers is 6% lower than for
State of Michigan workers ($54,279/$57,788-1 = -6.1%). The Michigan Civil Service Commission's Twenty-
Ninth Annual Workforce Report for FY 2007-08 reports a total "certified payroll" for the state of $4.73 billion
(graph 2-1). $4.73B * -6.1% = $287M
Using the same BEA dataset, the total compensation of MI private sector workers is 29.2% lower than the national
average for state workers ($40,886/$57,788-1 = -29.2%).
$4.73B * -29.2% = $1,383M
Further detail :
1) The BEA estimate of total compensation uses a broad definition of "state government employment," stating that there were 170,099 such workers
in Michigan in 2007. This is much larger than the just over 50,000 "classified“ workforce under the Michigan Civil Service Commission. The $287m in
savings assumes that the higher-than-national-average compensation of the broader class of state workers cited by the BEA is indicative of the
compensation of the state classified workforce.
Michigan Turnaround Plan
compensation of the state classified workforce.
2) The $287M in savings uses FY 2007-08 data. Any cuts in state workforce compensation that have occurred since that time may reduce the scope
for additional savings. Also, we do not know how the national average of total compensation has changed since then; a comparison made with 2009
data may increase or decrease the apparent potential savings.
Sources: State workers and payroll data from the Michigan Civil Service Commission Reports: Twenty-Ninth Annual Workforce Report Fiscal Year
2007-08, and Annual Workforce Report Second Quarter Fiscal Year 2008-09. Base data for total compensation of state workers from the BEA; data
for savings estimates from the National Council of State Legislators, State Employee Health Benefits (July 2009).
Page 28 Notes:
Savings from local government and local school district service sharing:
The estimate for local government is from the Center for Michigan in their description of "Efficiency Reform
Choice #6" of their Issue Guide (May 2009). It was provided to the Center for Michigan in May 2009 by Kevin
Prokop, co-chair of the Michigan Legislative Commission on Government Efficiency.
42
Slide Notes and Sources
Page 28 Notes: (continued)
Savings from local school district service sharing
The estimate of 300M in savings from school service sharing is from the Center for Michigan in their description of
"Efficiency Reform Choice #1" of their Issue Guide (May 2009). It is a very rough estimate based on a Deloitte
Consulting estimate of 2.5% administrative savings possible nation wide through school service sharing. $300m is
about 2.5% of spending on schools in Michigan. It is reasonable to believe that the national average or higher level of
savings is possible since we have a large number of school districts.
Savings from corrections reform:
$400m is a rough estimate based on three sources of savings indentified by Public Sector Consultants (PSC) in their
September 2008 Budget Action Plan report. AEG estimated that each potential source of cost savings would
produce "some" savings that is a fraction of the potential total.
Michigan Turnaround Plan
PSC-cited savings are as follows:
Reducing sentences: PSC report says reducing average prison stay by 1 year would save $403m (p. 7); we currently
spend $340m annually having non-violent criminals in our prisons (p. 7).
Federal early release guidelines: currently 31% of MI prisoners serving beyond early release date. All being let out
would save $459m. Practical limits would mean many fewer releases and lower savings (p. 7).
Operational changes: PSC report says Auditor General estimates $38m in annual savings by reducing food costs (p. 7).
Sources: Michigan incarceration data from the Citizens Research Council (CRC) of Michigan’s May 2008 Report
#349. Data for savings estimates from The Center For Michigan Issue Guide (May 13, 2009) . Estimates by Anderson
Economic Group and Public Sector Consultants.
43
Slide Notes and Sources
Page 29 Source: Caroline M. Sallee and Patrick L. Anderson, 2008 State Business Tax Burden Rankings (March 2009),
available at www.AndersonEconomicGroup.com, concerning Michigan business tax burden relative to ten best
states.
Page 32 Source: ALEC (NAEP Scores) & Center for the Study of Education Policy, Illinois State University (2009)
Page 37 Source: Per capita income data from the Bureau of Economic Analysis Regional Economic Information System.
Private sector employment data from the BLS’ s Current Employment Statistics Program. Unemployment rate data
from the BLS’s Local Area Unemployment Statistics Program.
Michigan Turnaround Plan 44
Business Leaders for Michigan: Board of Directors
DAVID A. BRANDON
CHAIRMAN OF THE BOARD
Domino’s Pizza
JOSÉ MARIA ALAPONT
Federal Mogul Corporation
THOMAS A. AMATO
Metaldyne Corporation
GERARD M. ANDERSON
DTE Energy Company
RICHARD H. ANDERSON
Delta Air Lines, Inc.
JON E. BARFIELD
The Bartech Group, Inc.
ALBERT M. BERRIZ
McKinley, Inc.
DAVID P. BOYLE
WILLIAM CLAY FORD, JR.
Ford Motor Company
RODERICK D. GILLUM
General Motors Corporation
DAVID F. GIRODAT
Fifth Third Bank
ALFRED R. GLANCY III
Unico Investment Company
JAMES P. HACKETT
Steelcase Inc.
RONALD E. HALL
Bridgewater Interiors, LLC
KOUHALIA G. HAMMER
Ghafari Associates, LLC
RICHARD G. HAWORTH
Haworth
KIRK J. LEWIS
The Bing Group
ANDREW N. LIVERIS
Dow Chemical Company
DANIEL J. LOEPP
Blue Cross Blue Shield of
Michigan
BEN C. MAIBACH III
Barton Malow Company
RICHARD A. MANOOGIAN
Masco Corporation
FLORINE MARK
The WW Group
CHAUNCEY C. MAYFIELD
MayfieldGentry Realty Advisors,
LLC
JAMES B. NICHOLSON
PVS Chemicals, Inc.
JERRY JAY NOREN
Wayne State University
THOMAS D. OGDEN
Comerica, Inc.
JAMES O’LEARY
Kaydon Corporation
WILLIAM U. PARFET
MPI Research
CYNTHIA J. PASKY
Strategic Staffing Solutions
ROGER S. PENSKE
Penske Corporation
WILLIAM F. PICKARD
Global Automotive Alliance
RICHARD F. RUSSELL
Amerisure Mutual Insurance Company
GARY D. RUSSI
Oakland University
ALAN E. SCHWARTZ
HONIGMAN
LOU ANNA K. SIMON, Ph.D.
Michigan State University
REBECCA R. SMITH
Huntington National Bank
DONALD J. STEBBINS
Visteon Corporation
ROBERT S. TAUBMAN
The Taubman Company
SAMUEL VALENTI III
TriMas Corporation
Michigan Turnaround Plan
DAVID P. BOYLE
PNC Bank
KIETH COCKRELL
Bank of America
MARY SUE COLEMAN
University of Michigan
DAVID C. DAUCH
American Axle & Manufacturing
DOUG L. DeVOS
Amway
ANTHONY F. EARLEY, JR.
DTE Energy Company
JEFF M. FETTIG
Whirlpool Corporation
45
Haworth
CHRISTOPHER ILITCH
Ilitch Holdings, Inc.
MICHAEL J. JANDERNOA
Perrigo Company
DAVID W. JOOS
CMS Energy Corporation
HANS-WERNER KAAS
McKinsey & Company
PETER KARMANOS, JR.
Compuware Corporation
JOHN C. KENNEDY
Autocam
TIMOTHY D. LEULIETTE
Dura Automotive Systems, Inc.
SARAH L. McCLELLAND
Chase
CHARLES G. McCLURE
ArvinMeritor, Inc.
HANK MEIJER
Meijer, Inc.
MICHAEL MILLER
Google, Inc
MARK D. MORELLI
Energy Conversion Devices, Inc.
MARK A. MURRAY
Meijer, Inc.
MICHAEL G. NEFKENS
EDS, an HP Company
Global Automotive Alliance
SANDRA E. PIERCE
Charter One Bank
GERRY PODESTA
BASF
CHARLES H. PODOWSKI
The Auto Club Group
STEPHEN R. POLK
R. L. Polk & Co.
JOHN RAKOLTA, JR.
Walbridge
CARL D. ROEHLING
SmithGroup
DOUG ROTHWELL
Business Leaders for Michigan
TriMas Corporation
STEVE A. VAN ANDEL
Amway
JAMES G. VELLA
Ford Motor Company
TIMOTHY WADHAMS
Masco Corporation
BRIAN C. WALKER
Herman Miller, Inc
WILLIAM C. YOUNG
Plastipak Holdings, Inc.
CHRYSLER LLC
doc_937415599.pdf
Michigan Turnaround Plan A Five-Step Plan to Transform Michigans Economy & Create Good Jobs
Michigan Turnaround Plan
Michigan Turnaround Plan
A Five-Step Plan to Transform Michigan’s Economy & Create
Good Jobs
September, 2009
Business Leaders for Michigan
• Develop, advocate and support high-
impact strategies that will in the long-
term make Michigan a “top ten” state and
Mission
Michigan Turnaround Plan
Website: BusinessLeadersforMichigan.com
2
term make Michigan a “top ten” state and
in the short-term an above average state
for job and economic growth
Introduction
Two generations ago, Michigan was a Top Ten state for economic growth. For the past
generation, we have lagged the nation. We are becoming economically poorer, smaller and
less competitive. In order to stop this trend, we must do what any business facing these
conditions would do – adopt a “turnaround plan.”
We are proposing this Michigan Turnaround Plan to get our state back to being a Top Ten
economic leader. This plan is specific, action-able and based on facts.
Michigan Turnaround Plan
economic leader. This plan is specific, action-able and based on facts.
Business Leaders for Michigan companies employ over 300,000 people in Michigan, generate
nearly $1 Trillion in annual revenue and serve over 130,000 students. We live here, raise
our children here, have our businesses here and are part of our communities. We can’t
grow our businesses and employ more people without a healthy, vibrant Michigan.
The Michigan Turnaround Plan will help Michigan rediscover the role it played a generation ago
– being a leader in creating good paying jobs for its citizens and being a model for the
nation.
3
Table of Contents
CONTENTS PAGE
The Turnaround Path 5
The Case For Change 6
The Goal 23
Michigan Turnaround Plan
The Five Step Turnaround Plan 25
The Potential Results 36
The Commitment 38
Slide Notes 39
4
The Turnaround Path
THE CASE FOR
CHANGE
• Why Michigan is
in the state it is
today
THE GOAL
• Changing our
mindset by
setting a goal
THE FIVE STEP
TURNAROUND
PLAN
• A to-do list that’s
achievable and
will get results
THE POTENTIAL
RESULTS
• The difference
being a Top Ten
state can make
THE
COMMITMENT
• A serious call to
action; Tracking
results
Michigan Turnaround Plan 5
Fact: Nearly 50% of U.S. job losses
since 2000 have been in Michigan [see slide 8]
Result: The state budget has gone from
a $2 Billion surplus to a $2 Billion deficit in
10 years
A State in Crisis
Michigan has been getting
relatively poorer, smaller and
less competitive. The result is a
state with chronic budget
shortfalls & the highest
Summary: The Case for Change
Michigan Turnaround Plan
Cause: Michigan’s economic
competitiveness is below average for both
manufacturing and knowledge jobs
Need: A holistic economic growth
strategy that gets Michigan cost-
competitive and leverages Michigan’s
assets
unemployment rate in the nation.
Incremental changes to the
state’s budget, tax and economic
policies will be insufficient to
grow the state’s economy. Only
a holistic, transformative
strategy will do the job.
6
Fact: Rising Unemployment
7.0
8.0
9.0
10.0
11.0
12.0
U
n
e
m
p
l
o
y
m
e
n
t
R
a
t
e
(
p
e
r
c
e
n
t
a
g
e
)
US Midwest Michigan
Michigan Turnaround Plan 7
2.0
3.0
4.0
5.0
6.0
7.0
Jan., 90' Jan., 91' Jan., 92' Jan., 93' Jan., 94' Jan., 95' Jan., 96' Jan., 97' Jan., 98' Jan., 99' Jan., 00' Jan., 01' Jan., 02' Jan., 03' Jan., 04' Jan., 05' Jan., 06' Jan., 07' Jan., 08' Jan., 09'
U
n
e
m
p
l
o
y
m
e
n
t
R
a
t
e
(
p
e
r
c
e
n
t
a
g
e
)
Source: Bureau of Labor Statistics
Mid 1990’s: MI’s
unemployment is
lower than the US
Fact: Severe Private Sector
Employment Losses
728,000 Jobs Lost
Michigan lost more private
sector jobs since the year
2000 than any other state –
nearly half of all private sector
Total Private Sector
Employment
(Thousands) 2000 2009*
% Change
(2000-
2009)
Number of
Jobs Gained
or Lost
Michigan 3,996 3,268 -18.2% -728
Michigan Turnaround Plan
nearly half of all private sector
jobs lost in the United States
during this period. While
Michigan has been severely
impacted by the loss of
automotive jobs, the state has
under-performed the national
average in most job sectors.
8
United States 110,995 109,736 -1.1% -1,259
*2009 represented by May private sector employment
Source: Bureau of Labor Statistics; Analysis: Anderson Economic Group, LLC
Fact: Not Only State
with Manufacturing Job Losses
Others Overcame
Dislocation
Other states have
experienced
manufacturing job losses
as great or greater than
Michigan Turnaround Plan 9
as great or greater than
Michigan, but out-paced
our economic
performance.
Least Loss
2000-2007
Most Loss
2000-2007
Fact: Job Growth Has Lagged
Across Most Sectors
Michigan Is
Under-Performing
Across Sectors
Only one of 22 industry
groups had both
positive Michigan
growth, and grew ahead
Michigan Turnaround Plan 10
growth, and grew ahead
of the US average
All knowledge-based
industries trailed US
average growth with
exception of
Educational Services
Source: Bureau of Economic Analysis; McKinsey
Result: Relatively Smaller
-4
-2
0
1980 1990 2000 2008
ANNUAL % POPULATION GROWTH vs. US AVG
Michigan Is
Getting Smaller
Relative to US
Michigan has been
growing at a slower rate
than the average US state
for nearly 40 years. This
Michigan Turnaround Plan
-12
-10
-8
-6
11
Source: U.S. Census Bureau Population Estimates Program
for nearly 40 years. This
has resulted in Michigan
becoming less desirable
for business investment
as its share of the
consumer market
declines.
Result: Relatively Poorer
Michigan Is
Getting Poorer
Relative to US
Michigan’s per capita
income has been growing
below the US average for
nearly 30 years. The rate
Michigan Turnaround Plan 12
Source: U.S. Bureau of Economic Analysis
nearly 30 years. The rate
of decline has accelerated
dramatically in the past
decade.
Result: Relatively Poorer
Michigan Ranks
Last in GDP Growth
? Michigan’s GDP is $382
Billion as of June 2009
2
? Since 2000, if Michigan’s
economy had grown at the
average rate of the Top 10
Michigan Turnaround Plan 13
average rate of the Top 10
states, Michigan would
produce $118B (31%) more
GDP
2
? The difference translates
to $12,000 more income
per Michigan citizen
2
1 Top 10 states in per capita GDP growth, 00-08: ND, OR, SD, NY, VT, IA, MT, WY, NE, MD
2 In June 2009 dollars
States listed above from McKinsey benchmarking report: Traditional & knowledge competitors
Source: Bureau of Labor Statistics; Bureau of Economic Analysis; Moody’s Economy.com
Result:
Declining or Flat Tax Revenue
Revenues Slump
During the 1990’s, state tax
revenues grew, especially
from personal income and
sales/use taxes, as the
economy and per capita
income grew. But since
$6
$7
$8
$9
Michigan Tax Revenue: Personal Income Tax, SBT/MBT, and
Sales and Use Tax, 1994-2008
Personal Income SBT/MBT Sales and Use
Michigan Turnaround Plan
income grew. But since
2000, state tax revenue
from personal income and
business taxes has
declined and sales/use tax
revenue has been flat. Tax
increases to the MBT and
personal income in 2007
resulted in short-term
revenue increases.
14
Source: Michigan Senate Fiscal Agency, “Major Sources of Tax Revenue”
B
i
l
l
i
o
n
s
$-
$1
$2
$3
$4
$5
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
TAX INCREASES
Result:
Further Revenue Shortfalls Projected
No Let Up In Sight
Even with the MBT surcharge
and personal income tax
increases, state tax revenues
are expected to decline by at
least 11.5% between FY 2008
and FY 2010. Tax revenue
FY 2008 FY 2010
%
Change
Total Tax
Revenue $27,700 $24,518 -11.5%
Change in State Tax Revenue FY08-10
($ in Millions)
Michigan Turnaround Plan
and FY 2010. Tax revenue
sources for the School Aid
Fund (sales/use taxes) are
more stable compared to the
General Fund (GF/GP).
Starting in FY10 either
expenditures must be cut
and/or new revenue sources
must be found to balance the
budget.
15
Source: Michigan Senate Fiscal Agency; AEG Projections for FY 2010
(see source notes)
Revenue $27,700 $24,518 -11.5%
GF/GP $8,986 $6,950 -22.7%
SAF $10,773 $10,563 -1.9%
Result:
State Spending > Revenues
No More One-Time
Fixes Available
Since the 2001 recession, state
General Fund spending has
exceeded revenues in most
years due to the use of mostly
one-time budget fixes, such as
$44
$46
$48
$50
State of Michigan Total Revenue
and Total Expenditures, 1999-2010
($Billions)
Total Revenue
Total Expenditures
Michigan Turnaround Plan
one-time budget fixes, such as
tapping into the Rainy Day Fund,
selling assets, using the federal
stimulus, liquidating other fund
reserves or other measures.
The severity of projected
revenue declines in FY09 and
FY10 will preclude the use of
these practices any further.
16
Source: Michigan Senate Fiscal Agency; Anderson Economic Group projections for FY
2010 (see source notes)
$30
$32
$34
$36
$38
$40
$42
$44
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Result:
State Spending > Inflation
State Spending
Has Out-Paced
Inflation
By using one-time budget
fixes during the past
decade, the state has out-
spent inflation in most
Michigan Turnaround Plan 17
Source: State of Michigan Executive Budget FY 2009, “Historical Expenditures/Appropriations Gross”
& U.S. Inflation Calculator.com
spent inflation in most
budget categories.
Further, the state has
spent the least in areas
that would most drive
economic growth – higher
education and
transportation.
Fact: State Spending > “Pop-flation”
Before 2009
State Spending
Outpaced “Pop-
flation” Since 2001
Nominal state expenditures grew
at or above the rate of inflation
and population growth from
$35
$40
$45
$50
State of Michigan Expenditures: Actual Total
Expenditures, and Expenditures Grown by Inflation &
Population Growth, 1999-2010 ($Billions)
Actual Total Nominal Expenditures
Total Expenditures Increased by Inflation & Population Growth
Michigan Turnaround Plan
and population growth from
FY99 to FY08. However, the
projected drop in revenues
starting in FY09 will cause
spending to be below the rate of
inflation and population growth
for the first time in over a
decade.
18
$0
$5
$10
$15
$20
$25
$30
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Michigan Senate Fiscal Agency for actual expenditures;
Anderson Economic Group estimates (see source notes) for “pop-flation” growth
Cause: Costs Matter
Top 10 States for Job &
Income Growth: 1996-2007
2 X BETTER BUSINESS COST RANKING
Michigan Turnaround Plan
Bottom 10 States for
Job & Income Growth:
1996-2007
19
Source: Forbes & ALEC
Cause:
Uncompetitive Business Climate
Higher Tax
Environment Than
Competitors
Companies pay on average
3-4% more on state & local
taxes in Michigan than the
Michigan Turnaround Plan
taxes in Michigan than the
states we most often
compete against for
manufacturing or knowledge
jobs. In today’s global
economy, that is the
difference between making a
profit or not to many
businesses.
20
Source: Tax Foundation 2009 Business Tax Climate Report;
Anderson Economic Group “A Comparison of State Business Taxes” (2008)
Cause:
Uncompetitive Business Climate
Weaker Value
Proposition vs.
Competitors
Companies assess the “total
cost of doing business”
when evaluating site location
Michigan Turnaround Plan
when evaluating site location
decisions. In Michigan,
business taxes and most
other costs are higher than
competitor states with not
enough distinct advantages
to offset the higher cost
premium.
21
Source: Area Development annual company and site selection survey (2008);
BLS; ACCRA; NCES; Tax Foundation; Census; NSF; Site consultant interviews
Cause:
Uncompetitive Business Climate
Business Decision-
Makers Rank
Michigan Low as
Site Location
Michigan Turnaround Plan
Business CEO’s and site
location consultants view
Michigan’s business climate
as among the worst of all
states. These perceptions
are driven by their views on
the cost and ease of doing
business in Michigan.
22
Source North American Business Cost Review 2006, Moody's Economy.com; Chief Executive
Magazine; Site Selection magazine
Defining a State Goal
Being “competitive” is imperative in the
global economy
Good jobs are the only way to retain our
young people, grow our incomes and build
the quality of life we desire
Currently, Michigan is average to below
average in nearly every measure of
economic performance and
Setting A Goal Will
Drive Results
Business sets goals to drive
results for shareholders.
Government should be no
different. Setting a goal of
Michigan Turnaround Plan
economic performance and
competitiveness*
Only the most competitive states will be
able to achieve high levels of economic
performance in the future
Even being a “Top Ten” state is no
guarantee of economic success – In a
global economy, we must ultimately strive
to be “Top Ten” in the global market
different. Setting a goal of
becoming a “Top Ten” state for
job & economic growth can instill
a new philosophy and culture in
Michigan that renews our sense
of hope and provides a path to
prosperity for all.
23
* McKinsey 2009 Michigan Benchmarking Study
Michigan’s New Goal
• Michigan will be a top ten state for job &
economic growth
Long-Term
Michigan Turnaround Plan 24
• Michigan will be an above average state for
job & economic growth
Short-Term
Michigan Turnaround Plan:
Five Steps To “Top Ten” Status
STEP 1
•Changing the Way We
Manage Our Finances
STEP 2
•Right-sizing & Enacting
Structural Budget Reforms
STEP 3
•Getting Michigan
STEP 4
Getting Fiscally &
Economically “Fit”
A vibrant economy and sound
fiscal management are mutually
dependent upon each other.
Stronger financial management
practices and right-sizing
Michigan Turnaround Plan
•Getting Michigan
Competitive To Attract &
Retain Jobs
•Making Investments That
Create A Great Job
Environment
STEP 5
•Accelerating Job Growth
Through Innovation &
Entrepreneurship
practices and right-sizing
spending through structural
budget reforms will get Michigan
fiscally fit. Reducing the cost of
doing business and making
investments that leverage our
assets will grow jobs for the
future. Innovation and
entrepreneurism will help
Michigan out-pace competitor
locations.
25
Step 1: Changing the Way
We Manage Our Finances
WHERE WE ARE
For the past three fiscal years,
Michigan has over-projected
revenues, in part due to the lack of
sufficient input from a broad
spectrum of economic advisors,
resulting in chronic budget crises
A PATH FORWARD
Form an independent council of
respected public and private sector
economists to complete quarterly
revenue and spending estimates
Conduct a quarterly survey of a
cross-section of Michigan businesses
Michigan Turnaround Plan
resulting in chronic budget crises
State spending has out-paced “pop-
flation” and revenues for most of the
decade in part due to an over-
reliance on one-time budget fixes
cross-section of Michigan businesses
to identify sales & hiring trends
Change the law to require the adoption
of two-year budgets to more
accurately project the on-going cost of
programs
Adopt no new programs unless
eliminating others or revenues grow
26
Step 2a: Right-Size Spending Now
WHERE WE ARE
Budget right-sizing is needed in the
short-term because most structural
reforms have long-term payoffs
Like most organizations, labor & benefits
are the state’s largest cost-driver;
Average total compensation for state
employees was almost $17,000 more
A PATH FORWARD
Reduce state employee
compensation to the average
compensation of state workers in the
US or the average of MI private sector
workers (Potential savings: $287 -
$1,383M as of FY 2007-08)*
Michigan Turnaround Plan
employees was almost $17,000 more
than the private sector average in
Michigan in 2007
[Source: BEA Regional Economic Information System]
State employees pay 5% of their health
premium costs, compared to 17.8%
national average for state workers
[Source: National Council of State Legislators]
The state employed over 52,769 workers
as of March 2009; The state classified
payroll was $4.73B as of FY 2007-08
[Source: Michigan Civil Service Commission]
Reduce the state workforce by 5-10%
(Potential savings: $236 - $473M as of
FY 2007-08)*
Adjust state employee premium
contributions to the national public
sector average (Potential savings:
$74M)*
27
* Estimates: Anderson Economic Group (see source notes)
Step 2b: Structural Reforms To Ensure
Sustainability
WHERE WE ARE
Michigan is a relatively smaller economy
today than it was in past decades and
cannot support the same level of state
spending it once did
Michigan has 1,800 units of local
government and over 500 local school
districts
A PATH FORWARD
Encourage & enable local government
service sharing (Minimum estimated
savings: $250M) [source: Center for Michigan]
Encourage & enable local school district
service sharing (Minimum estimated
savings: $300M) [source: Center for Michigan]
Enact corrections management and
Michigan Turnaround Plan
districts
Michigan has many programs and services
that exceed or duplicate federal standards
Michigan’s incarceration rate is 489 per
100,000 residents; 45% higher than the
Great Lakes average of 338. Our prisoners
stay on average 44.4 months, 48% higher
than the Great Lakes average of 30 months.
[Source: CRC, cited by Public Sector Consultants]
Enact corrections management and
sentencing reforms (Estimated savings:
$400M) [AEG Estimate; see source notes]
Eliminate optional services that exceed
federal standards (e.g. optional Medicaid
services)
Eliminate duplicate state programs (e.g.
MIOSHA vs. OSHA)
Eliminate binding arbitration for municipal
police & fire workers
Transition teachers to a defined
contribution retirement system
28
Step 3a: Getting Michigan Competitive –
Short-term
WHERE WE ARE
Michigan ranks between 27
th
and
35
th
worst in overall business tax
burden*
Michigan businesses pay on
average 3-4% more of their profits
in taxes than the average of the “ten
A PATH FORWARD
Make Michigan’s business tax
system competitive
• Reduce the MBT to move Michigan
significantly toward becoming a “Top
Ten” state in lowest tax burden
• Provide a more predictable & stable
Michigan Turnaround Plan
in taxes than the average of the “ten
best” business tax and many peer
states*
Michigan ranks average to below
average on other indicators
comparing business tax burden
against states we compete with for
knowledge and manufacturing jobs
• Provide a more predictable & stable
tax environment for businesses
• Change the tax structure to more
closely match the changing
composition of the economy
• Ensure any tax changes do not
exacerbate the structural budget
deficit
29
* Source: Anderson Economic Group, “2009 State Business Tax Climate Index”
Step 3b: Getting Michigan Competitive –
Long-term
WHERE WE ARE
Michigan’s competitive position
further deteriorates when analyzing
total business costs, including
wages, benefits, utility, regulatory
compliance and other costs
A PATH FORWARD
Make the overall cost of doing
business in Michigan competitive
• Eliminate the personal property tax
• Require fiscal notes that identify the
compliance costs for all new
regulations
Michigan Turnaround Plan
regulations
• Create a regulatory report card that
tracks responsiveness
• Prohibit state regulations that exceed
federal standards, such as state-based
ergonomic standards
• Require regulations to demonstrate
cost/benefit analysis and basis in
sound science
• Annually benchmark Michigan costs
30
Step 4: Investing In Our Future
WHERE WE ARE
After Michigan gets its fiscal house
in order and improves its
competitiveness, it must focus
where it will invest its budget
resources
When Michigan was a wealthy
state it could afford not to set
A PATH FORWARD
The state should make investments
that will have the greatest long-term
economic impact
Investments should leverage key
state assets that build on existing
strengths to give Michigan distinctive
advantages in the global economy
Michigan Turnaround Plan
state it could afford not to set
priorities; in today’s economy it
cannot
Other states, like North Carolina,
prioritized investments in higher
education and transportation
infrastructure as a path to
economic growth
advantages in the global economy
Investments should focus on:
• Higher education – to ensure a strong
talent pool
• Infrastructure – for airports &
freeways that connect our peninsulas
to the global economy
• The Great Lakes and cities - which
make Michigan a desirable place to live
31
Step 4a: Investing In Our Future –
Education
WHERE WE ARE
Average K-12 performance must
improve to match per capita
spending (Spending: 8
th;
Performance: 34
th
)*
Higher education investment should
increase from current status of 38
th
*
A PATH FORWARD
Improve K-12 performance:
• Consolidate administration of Michigan’s
500+ school districts by reducing per pupil
state funding for districts that fail to share
services
• Retain demanding graduation standards
• Allow an unlimited number of charter
Michigan Turnaround Plan
increase from current status of 38 *
to “Top Ten”
• Allow an unlimited number of charter
schools to stimulate competition,
especially in under-performing districts
Ensure “Top Ten” higher education:
• Rationalize the number of colleges &
universities to a number the state can
support long-term
• Increase funding to remaining community
colleges & universities to achieve “Top Ten”
status
32
*Source: ALEC (NAEP Scores) & Center for the Study of
Education Policy, Illinois State University (2009)
Step 4b: Investing In Our Future -
Infrastructure
WHERE WE ARE
Michigan has a “Top Ten” airport
hub that is under-leveraged as an
economic development engine
Michigan scores below average in
the condition of its highways – a
critical need for a peninsula state
A PATH FORWARD
Advocate for incentives and provide
support for the Detroit Aerotropolis and
other airport-related development
Adopt new funding formulas to
ensure Michigan has adequate
revenues to support a “Top Ten”
Michigan Turnaround Plan
critical need for a peninsula state revenues to support a “Top Ten”
transportation infrastructure
• Improve to “Top Ten” road condition
• Expand freeway connectivity to
adjoining states
• Expand passenger air service
throughout Michigan
• Support mass transit in dense
population corridors
33
Step 4c: Investing In Our Future -
Great Lakes & Cities
WHERE WE ARE
The Great Lakes provide Michigan
a defining “place” to attract and
retain talent in a global
marketplace, yet Michigan lacks a
holistic strategy to leverage this
unique asset
Michigan needs an “urban strategy”
A PATH FORWARD
Develop a comprehensive Great Lakes
strategy that includes incentives, policies
and funding that:
• Partners with other states on a global
marketing program
• Supports the growth of tourism amenities
• Responsibly utilizes the lakes as an
Michigan Turnaround Plan
Michigan needs an “urban strategy”
- a critical need for retaining and
attracting talent and improving
Michigan’s image
• Responsibly utilizes the lakes as an
economic asset (e.g.: energy production)
• Supports the development of residential &
retirement destinations that leverage a
Great Lakes location
Develop an urban agenda that includes
incentives, policies and funding that:
• Attracts people to live downtown
• Attracts business investments
• Develops mass transit along densely
populated corridors
34
Step 5: Accelerating Growth
WHERE WE ARE
Michigan does not operate cohesively
in areas such as:
• Regional collaboration
• Labor-management relations
• Partisan politics
Michigan’s economic development
strategy emphasizes:
A PATH FORWARD
Support collaborative regional growth
strategies by prioritizing incentives & grants
to those areas
Accelerate growth by supporting innovation
and entrepreneurship across all sectors
• Increase entrepreneurial education
• Create a distinctive university-
business partnership
Michigan Turnaround Plan
strategy emphasizes:
• Making direct investments in individual
companies vs. building a healthy
business climate that benefits all
businesses
• Incentivizing site location decisions to
overcome an uncompetitive cost
structure
• Targeting narrow business sectors in a
dynamic, ever-changing economy that
is unpredictable
business partnership focused on
attracting business, growing sectors
and retaining talent
• Grow the pool of venture capital in
Michigan
• Expand business incubation &
acceleration services
Develop strategies to grow broad business
sectors that leverage Michigan’s key
assets (e.g.: energy, engineering)
35
• Efficient & cost-effective service
delivery
• Stable and predictable fiscal
environment
Efficient, Stable
Government
• Efficient & competitive tax system
• Competitive business costs
Competitive
Business
Environment
Playing “Offense”
A “Top Ten” Michigan would look
like a very different state than the
path we are currently following.
Rather than playing “defense” by
focusing on how to allocate
shrinking resources or retain
Top Ten State: Characteristics
Michigan Turnaround Plan
Environment
• Highly educated students
• World-class higher education
• Good highways & airports
• Attraction of the Great Lakes & cities
Strategic Assets
• “One Michigan” style of doing
business
• Support for all businesses
Cohesive
36
shrinking resources or retain
young people and jobs, Michigan
would play “offense” by growing
strategic assets and attracting
new investments that grow
incomes.
Top Ten: Where We Could Be
• $34,423
• Rank: 33rd
Per Capita
Income
2007 (BEFORE CURRENT
RECESSION)
IF WE HAD BEEN IN TOP TEN (in 2007)
• $41,203
• $6,780 more per
person
Per Capita
Income
Michigan Turnaround Plan
• -1.3%
• Rank: 50th
Job Growth
(Private,
2006-2007)
• 7.1%
• Rank: 50th
Unemployment
37
• 2.4%
• 883,000 more jobs
between 2000-2007
Job Growth
(Private, 2006-
2007)
• 3.4%
• 186,447 fewer
unemployed people
Unemployment
Note: Rankings do not include the District of Columbia; See source notes
A Commitment & A Promise
• We commit to serving as a catalyst, advocate and
champion of transforming Michigan
• Michigan is our home and a healthy, vibrant Michigan helps grow
jobs for Michigan residents
• We will do our part to implement this plan
Michigan Turnaround Plan
• We promise to sustain our focus, grow public
awareness and call for concrete actions to transform
our state
• A failure to act is unacceptable and continues Michigan’s
trajectory towards getting poorer and smaller
38
Slide Notes and Sources
Page 6 Source: Private sector employment data from the BLS’s Current Employment Statistics Program.
Page 7 Source: Unemployment data from the Bureau of Labor Statistics (BLS) Local Area Unemployment Statistics
Program and Current Population Survey.
Page 8 Source: Private sector employment data from the BLS’s Current Employment Statistics Program.
Page 9 Source: US Bureau of Economic Analysis, Average annual private manufacturing sector growth by NAICS sector
Page 10 Source: US Bureau of Economic Analysis/McKinsey Analytics
Michigan Turnaround Plan
Page 11 Source: Population growth data from U.S. Census Bureau Population Estimates Program.
Page 12 Source: Per capita income growth data from the U.S. Bureau of Economic Analysis (BEA).
Page 13 Source: US Bureau of Labor Statistics; US Bureau of Economic Analysis; Moody’s Economy.com
Page 14 Source: Tax revenue data from the Senate Fiscal Agency, “Major Sources of State Revenue.”
39
Slide Notes and Sources
Page 15 Source: GF, SAF, and Total Tax Revenue in FY 2008 is from the Michigan Senate Fiscal Agency. FY 2010
projections for GF and SAF tax revenue are from Michigan Senate Fiscal Agency, “Year End Balance Estimates.”
Projections for total tax revenue in FY 2010 are by Anderson Economic Group and assume that GF and SAF tax
revenue will remain the same proportion of total tax revenue the State receives.
Page 16 Source: Total state revenue and expenditure data from FY 1999-2008 are from the Michigan Senate Fiscal Agency,
“Total State Government Revenues and Expenditures.” Projections for total revenue for FY 2009 and FY 2010 are
by Anderson Economic Group using projections from the Senate Fiscal Agency’s “School Aid Fund Budget
History” and “General Fund/General Purpose Revenue History.” AEG assumes that in FY 2009 and FY 2010, GF
and SAF revenue will be the same proportion of total revenue as in FY 2005.
Page 17 Source: State gross expenditure data is from the State of Michigan, Executive Budget Fiscal Year 2009, “Historical
Expenditures/Appropriations Gross” on page C-32 & US inflation calculator.com
Michigan Turnaround Plan
Page 18 Source: Actual nominal expenditure data are from the Senate Fiscal Agency. Inflation rate through 2008 is based
on Detroit CPI data from the BLS’s Consumer Price Index Program. Population growth data through 2008 are from
the U.S. Census Bureau Population Estimates Program. AEG projected population growth (based on the average
from 2005-2008, or -0.3% annually) and inflation (assumed to be 0.9% annually for 2009 and 2010 based on low
inflation nationally and difficult economic conditions in the Detroit metro area). AEG projected expenditure growth
based on these population and inflation projections. Nominal expenditures would have increased 27% if
expenditures had been tied to population and inflation between FY 1999 and FY 2008. Actual expenditures
increased 40% during this time period.
Page 19 Source: Forbes.com for business cost rankings and ALEC Rich States/Poor States report for job and income
growth data.
40
Slide Notes and Sources
Page 20 Source: see Joseph Barro, 2009 State Business Tax Climate Index (October 2008), available at
www.taxfoundation.org, concerning the business tax climate index. See Caroline M. Sallee and Patrick L.
Anderson, 2008 State Business Tax Burden Rankings (March 2009), available at
www.AndersonEconomicGroup.com, concerning taxes as a percent of corporate profits.
Page 21 Source: Economic performance and competitiveness findings are from the Detroit Renaissance, Assessing the
Regional Competitiveness of Southeast Michigan, completed by McKinsey & Company (August 2008).
Page 22 Source: Economic performance and competitiveness findings are from the Detroit Renaissance, Assessing the
Regional Competitiveness of Southeast Michigan, completed by McKinsey & Company (August 2008).
Page 23 Source: Economic performance and competitiveness findings are from the Detroit Renaissance, Assessing the
Regional Competitiveness of Southeast Michigan, completed by McKinsey & Company (August 2008).
Michigan Turnaround Plan
Page 27 Notes:
Savings from adjusting state employee premium contributions to public sector average:
Using data from the Civil Service Commission's annual workforce report for FY 2007-08 and the national council of
state legislatures, we estimate that the state paid for 95% of the $581M in total health insurance premiums for state
classified workers in Michigan in FY 2007-08. Switching from 5% employee contribution to 17.8% (the 2009
national average for state workers according to State Employee Health Benefits - Monthly Premium Costs (Family
Coverage) by the NCSL (July 2009), the state could have saved $74M in FY 2007-08.
Savings from reducing state workforce :
The Michigan Civil Service Commission's Twenty-Ninth Annual Workforce Report for FY 2007-08 states a total
"certified payroll" for the state of $4.73 billion in FY 2007-08 (graph 2-1). $236M and $473M are 5% and 10% of
this number, respectively. The report also cites 48,893 full time employees (53,454.5 total employees, including
contract, seasonal, and a few [200] part time employees) (Table 1-1), and average annual salary ($53,495) and
benefits ($31,107) that sum to $84,602 (summary info on page i).
41
Slide Notes and Sources
Page 27 Notes: (continued)
Savings from state employee compensation reduction:
AEG estimates (using BEA data) that the national average for total compensation of state workers is 6% lower than for
State of Michigan workers ($54,279/$57,788-1 = -6.1%). The Michigan Civil Service Commission's Twenty-
Ninth Annual Workforce Report for FY 2007-08 reports a total "certified payroll" for the state of $4.73 billion
(graph 2-1). $4.73B * -6.1% = $287M
Using the same BEA dataset, the total compensation of MI private sector workers is 29.2% lower than the national
average for state workers ($40,886/$57,788-1 = -29.2%).
$4.73B * -29.2% = $1,383M
Further detail :
1) The BEA estimate of total compensation uses a broad definition of "state government employment," stating that there were 170,099 such workers
in Michigan in 2007. This is much larger than the just over 50,000 "classified“ workforce under the Michigan Civil Service Commission. The $287m in
savings assumes that the higher-than-national-average compensation of the broader class of state workers cited by the BEA is indicative of the
compensation of the state classified workforce.
Michigan Turnaround Plan
compensation of the state classified workforce.
2) The $287M in savings uses FY 2007-08 data. Any cuts in state workforce compensation that have occurred since that time may reduce the scope
for additional savings. Also, we do not know how the national average of total compensation has changed since then; a comparison made with 2009
data may increase or decrease the apparent potential savings.
Sources: State workers and payroll data from the Michigan Civil Service Commission Reports: Twenty-Ninth Annual Workforce Report Fiscal Year
2007-08, and Annual Workforce Report Second Quarter Fiscal Year 2008-09. Base data for total compensation of state workers from the BEA; data
for savings estimates from the National Council of State Legislators, State Employee Health Benefits (July 2009).
Page 28 Notes:
Savings from local government and local school district service sharing:
The estimate for local government is from the Center for Michigan in their description of "Efficiency Reform
Choice #6" of their Issue Guide (May 2009). It was provided to the Center for Michigan in May 2009 by Kevin
Prokop, co-chair of the Michigan Legislative Commission on Government Efficiency.
42
Slide Notes and Sources
Page 28 Notes: (continued)
Savings from local school district service sharing
The estimate of 300M in savings from school service sharing is from the Center for Michigan in their description of
"Efficiency Reform Choice #1" of their Issue Guide (May 2009). It is a very rough estimate based on a Deloitte
Consulting estimate of 2.5% administrative savings possible nation wide through school service sharing. $300m is
about 2.5% of spending on schools in Michigan. It is reasonable to believe that the national average or higher level of
savings is possible since we have a large number of school districts.
Savings from corrections reform:
$400m is a rough estimate based on three sources of savings indentified by Public Sector Consultants (PSC) in their
September 2008 Budget Action Plan report. AEG estimated that each potential source of cost savings would
produce "some" savings that is a fraction of the potential total.
Michigan Turnaround Plan
PSC-cited savings are as follows:
Reducing sentences: PSC report says reducing average prison stay by 1 year would save $403m (p. 7); we currently
spend $340m annually having non-violent criminals in our prisons (p. 7).
Federal early release guidelines: currently 31% of MI prisoners serving beyond early release date. All being let out
would save $459m. Practical limits would mean many fewer releases and lower savings (p. 7).
Operational changes: PSC report says Auditor General estimates $38m in annual savings by reducing food costs (p. 7).
Sources: Michigan incarceration data from the Citizens Research Council (CRC) of Michigan’s May 2008 Report
#349. Data for savings estimates from The Center For Michigan Issue Guide (May 13, 2009) . Estimates by Anderson
Economic Group and Public Sector Consultants.
43
Slide Notes and Sources
Page 29 Source: Caroline M. Sallee and Patrick L. Anderson, 2008 State Business Tax Burden Rankings (March 2009),
available at www.AndersonEconomicGroup.com, concerning Michigan business tax burden relative to ten best
states.
Page 32 Source: ALEC (NAEP Scores) & Center for the Study of Education Policy, Illinois State University (2009)
Page 37 Source: Per capita income data from the Bureau of Economic Analysis Regional Economic Information System.
Private sector employment data from the BLS’ s Current Employment Statistics Program. Unemployment rate data
from the BLS’s Local Area Unemployment Statistics Program.
Michigan Turnaround Plan 44
Business Leaders for Michigan: Board of Directors
DAVID A. BRANDON
CHAIRMAN OF THE BOARD
Domino’s Pizza
JOSÉ MARIA ALAPONT
Federal Mogul Corporation
THOMAS A. AMATO
Metaldyne Corporation
GERARD M. ANDERSON
DTE Energy Company
RICHARD H. ANDERSON
Delta Air Lines, Inc.
JON E. BARFIELD
The Bartech Group, Inc.
ALBERT M. BERRIZ
McKinley, Inc.
DAVID P. BOYLE
WILLIAM CLAY FORD, JR.
Ford Motor Company
RODERICK D. GILLUM
General Motors Corporation
DAVID F. GIRODAT
Fifth Third Bank
ALFRED R. GLANCY III
Unico Investment Company
JAMES P. HACKETT
Steelcase Inc.
RONALD E. HALL
Bridgewater Interiors, LLC
KOUHALIA G. HAMMER
Ghafari Associates, LLC
RICHARD G. HAWORTH
Haworth
KIRK J. LEWIS
The Bing Group
ANDREW N. LIVERIS
Dow Chemical Company
DANIEL J. LOEPP
Blue Cross Blue Shield of
Michigan
BEN C. MAIBACH III
Barton Malow Company
RICHARD A. MANOOGIAN
Masco Corporation
FLORINE MARK
The WW Group
CHAUNCEY C. MAYFIELD
MayfieldGentry Realty Advisors,
LLC
JAMES B. NICHOLSON
PVS Chemicals, Inc.
JERRY JAY NOREN
Wayne State University
THOMAS D. OGDEN
Comerica, Inc.
JAMES O’LEARY
Kaydon Corporation
WILLIAM U. PARFET
MPI Research
CYNTHIA J. PASKY
Strategic Staffing Solutions
ROGER S. PENSKE
Penske Corporation
WILLIAM F. PICKARD
Global Automotive Alliance
RICHARD F. RUSSELL
Amerisure Mutual Insurance Company
GARY D. RUSSI
Oakland University
ALAN E. SCHWARTZ
HONIGMAN
LOU ANNA K. SIMON, Ph.D.
Michigan State University
REBECCA R. SMITH
Huntington National Bank
DONALD J. STEBBINS
Visteon Corporation
ROBERT S. TAUBMAN
The Taubman Company
SAMUEL VALENTI III
TriMas Corporation
Michigan Turnaround Plan
DAVID P. BOYLE
PNC Bank
KIETH COCKRELL
Bank of America
MARY SUE COLEMAN
University of Michigan
DAVID C. DAUCH
American Axle & Manufacturing
DOUG L. DeVOS
Amway
ANTHONY F. EARLEY, JR.
DTE Energy Company
JEFF M. FETTIG
Whirlpool Corporation
45
Haworth
CHRISTOPHER ILITCH
Ilitch Holdings, Inc.
MICHAEL J. JANDERNOA
Perrigo Company
DAVID W. JOOS
CMS Energy Corporation
HANS-WERNER KAAS
McKinsey & Company
PETER KARMANOS, JR.
Compuware Corporation
JOHN C. KENNEDY
Autocam
TIMOTHY D. LEULIETTE
Dura Automotive Systems, Inc.
SARAH L. McCLELLAND
Chase
CHARLES G. McCLURE
ArvinMeritor, Inc.
HANK MEIJER
Meijer, Inc.
MICHAEL MILLER
Google, Inc
MARK D. MORELLI
Energy Conversion Devices, Inc.
MARK A. MURRAY
Meijer, Inc.
MICHAEL G. NEFKENS
EDS, an HP Company
Global Automotive Alliance
SANDRA E. PIERCE
Charter One Bank
GERRY PODESTA
BASF
CHARLES H. PODOWSKI
The Auto Club Group
STEPHEN R. POLK
R. L. Polk & Co.
JOHN RAKOLTA, JR.
Walbridge
CARL D. ROEHLING
SmithGroup
DOUG ROTHWELL
Business Leaders for Michigan
TriMas Corporation
STEVE A. VAN ANDEL
Amway
JAMES G. VELLA
Ford Motor Company
TIMOTHY WADHAMS
Masco Corporation
BRIAN C. WALKER
Herman Miller, Inc
WILLIAM C. YOUNG
Plastipak Holdings, Inc.
CHRYSLER LLC
doc_937415599.pdf