Saginaw Valley State University Symposium

September 10, 2007
Saginaw, MI

Thank you, Dean Williams, it is a real pleasure to be here at Saginaw Valley State University for this exciting event.  President Gilbertson, thank you for inviting me to participate today and congratulations on the completion of what I’m sure was years of planning and hard work.

Today’s events are specifically about the renovation and re-opening of Pioneer Hall, but they also mark the strengthening and expansion of the College of Science, Engineering, and Technology.  This is an important development both for the University and for the Mid-Michigan region because now, more than ever, our economic success depends on science, technology, and engineering and the innovations that come from those fields.

As this region knows all too well, globalization has fundamentally altered the American economic landscape.  Jobs and industries that many of us took for granted as American institutions are now facing stiff competition from overseas.  Whether it is the Big Three in Michigan, the textile mills in the Carolinas, or thousands of small manufacturers in towns all across the country, each is having to transform their business to increase productivity and efficiency in order to compete.

The most immediate impact of this transformation is felt by our workforce.  For generations, an individual could finish high school and find a job at the local plant or mill earning enough to support a family, afford a mortgage, and save for retirement.  Today, those jobs have all but disappeared.

In their place come new opportunities, ones focused on design, systems integration, and computer engineering.  These are high value, high wage jobs that drive innovation, creating new products, product features, and services that push the marketplace and provide opportunity and growth.  But to access these opportunities, individuals must have greater education and more specialized skills than ever before.

Statistics from the Labor Department prove this point.  Last year, individuals with a Bachelor’s Degree saw five times the job growth, twice the earnings, and half the unemployment as individuals with just a high school diploma.  Innovation is truly where the American economic advantage rests and education is the gateway to those opportunities.

In fact, education is at such a premium that we have begun to see a shift in the power structure between companies, individuals, and locations when it comes to economic development.

For years, economic development consisted primarily of incentive packages.  Companies would locate in regions that gave them the greatest tax breaks, the most free land, or the best new infrastructure.  Those incentives are still elements of economic development, but in the last five years, surveys of corporations now show that the availability of a skilled workforce is the number one factor in determining where companies will locate operations.

The implications of this are enormous.  Individuals with skills and education are now the most sought after commodity, with locations and corporations chasing them rather than the other way around.  Given this relationship, if an area is going to prosper, they need a lot of skilled individuals.  There are two obvious ways to make this happen.  The first is through attracting smart people to your region. 

Most areas have decided that improving quality of life is the best way to do this.  That is why so many places are revitalizing downtowns, building arts centers, adding sports teams, and investing millions of dollars in amenities.  Richard Florida, the professor from George Mason University and the author of Rise of the Creative Class, has been the leading voice in improving quality of life as a major economic development asset.

There are only a handful of areas in the country though that can survive simply by attracting talent.  For most areas, they must produce and retain it themselves.  It is that realization which has had such a profound impact on education and workforce development programs.  No longer do we simply have to react to market conditions, but we can actually begin to shape our local economy based on the quality of the workforce.  In fact, our local economic success depends upon our ability to do so.

My agency, the Employment & Training Administration, invests over $10 billion a year in workforce development programs.  In the past, we have rarely viewed ourselves as an economic development tool or even as a partner with economic development.  In an effort to change that and integrate our activities into the larger economy, we created the Workforce Innovation in Regional Economic Development Initiative or WIRED. 

WIRED began at the beginning of last year with the selection of thirteen regions from around the country, each receiving a $15 million investment over three years.  Michigan was the star of that competition receiving awards in both the thirteen county Mid-Michigan area and the seven county West Michigan area.  The interest and excitement that was generated at the start of WIRED led us to add a 2nd and 3rd generation, bringing the total to 39 regions in which we have invested over $325 million. 

WIRED is not a typical federal grant program.  In fact, I don’t call it a grant at all.  Instead, I prefer to think of WIRED as a force, with the $325 million acting as seed capital to catalyze both actions and additional investments.

There are several pillars upon which WIRED is based.  One is regionalism.  The brightest economic minds recognize that today’s optimal geographic area for economic development and prosperity is a multi-county region.  Economic activity tends to cluster not in political jurisdictions, but instead in labor sheds with common infrastructure, assets, and commuting patterns. 

Many people intuitively think about a central city with its suburbs and collar counties making up a region.  That is the classic definition, but it is too narrow to explain today’s economic activity.  A better definition recognizes not only commuting patterns and labor sheds, but a more complete economic interdependence.  It is here where Mid-Michigan clearly becomes a region.

To cite just one example, Mid-Michigan is pursuing the development of the bio-fuels and bio-refining industries.  To be successful requires the sugar beet growers in the Thumb Area, the bio-refining training facility near Lansing, the advanced chemicals and biomaterials laboratory here at Saginaw, and the bio-refineries that can be found across the region.  No single county or city can bring that wealth of resources together, but a multi-county region can.

Another pillar is partnerships.  In order for an area to begin thinking and acting like a region, the key assets, organizations, and leaders must form a partnership that leads to an agreed upon action plan.  This isn’t simply for all the partners to get along, but instead because each brings unique talents and fills specific needs.

The list of partners participating across WIRED regions is extensive and includes:  economic and workforce development organizations, businesses, K-12 education, community colleges, angel capital funds, industry associations, foundations – as exemplified by the work of the Mott Foundation here in Mid-Michigan, and finally a host of federal agencies beyond just the Department of Labor.  Each is contributing resources and expertise in support of regional strategies.

But the reason we are here today is that colleges and universities are now critical partners in a regional economy and represent one of the most valuable assets that a region can possess.  In addition to the economic benefit they bring by employing hundreds of individuals in the region, they perform several critical functions

The first and most obvious is to educate the next generation.  If we agree that education is the critical factor in an individual’s future success, then having an institution of higher education in the region is certainly an asset.  And while many people like to focus on top-20 schools or the big names, institutions like Saginaw Valley State, where the large majority of students are from the region and remain here when they graduate, are arguably of greater value to a regional economy.

The second critical function is that of regional leadership.  Universities bring a great amount of prestige to any partnership organization and often have not been a part of the turf battles and other local politics that often make leadership a challenge. 

There is no better example in our WIRED regions of universities providing leadership than right here in Mid-Michigan.  In addition to transforming one of the hardest hit economies in the country, the Mid-Michigan WIRED team has had to build a regional identity and gain the acceptance and support of individuals from across the region who had neither worked together before nor believed that their fates were linked.  And a tremendous amount of the credit must go to the chairman of the Mid-Michigan Innovation Team, Saginaw Valley State’s Dr. George Puia.

I know we haven’t made your job any easier, George, and I appreciate the hard work and commitment that you have shown to the WIRED Initiative and the Mid-Michigan region.  And President Gilbertson, thank you for letting us borrow George for the last year and half.  I hope you don’t mind if we keep him for another year or so.

Even though we are at Saginaw Valley State, I would be remiss if I didn’t recognize the efforts of another university in this region, Michigan State.  Dr. Paul Hunt has managed and coordinated the WIRED effort from the beginning and without his leadership and support, you certainly wouldn’t have achieved the progress and success that you have thus far.

To have two universities working together and providing leadership to a region is unique in our WIRED Initiative and it says a great deal about the commitment of these institutions to the economic success of the region.

Both universities are also key to the third critical function, and that is research and development.  Michigan State is major research university and the breakthroughs that they achieve there will hopefully be part of the long-term growth and development of the region’s economy. 

In the shorter-term, it is the applied research at Saginaw Valley State and in particular the new facilities that we are here to celebrate that can provide economic benefit.  From educating and training students on state-of-the-art equipment to pushing the envelope of performance and searching for better and improved processes, these labs can increase the innovation capacity of the region and become an engine to attract and create innovative companies.

The focus on applied research will certainly make graduates from the program appealing to the larger companies in the area such as Dow Chemical and Hemlock Semiconductor, but in combination with the Accelerated Entrepreneurship program of the university, it will also give individuals the opportunity to start new businesses – creating and contributing to an entrepreneurial culture that is vital to the success of any region.

Research and development and the application of its results are the beginning of a larger chain of events that allow regions to build a self-sustaining economy.  New companies are formed or spin out from such research, creating new jobs which lead to new innovations as the process starts again.

Mid-Michigan has never been dependent on this type of innovation process to fuel its economy, but as the world changes, this region is changing as well.  With new and improved facilities and a commitment to leading the transformation of this region, Saginaw Valley State is going to be a critical part of the success of this region, this state, and our nation.

Thank you very much for the opportunity to join you today to celebrate the opening of Pioneer Hall and congratulations to everyone who made it possible.