The Michigan Economic Development Deal That Will Help An Ohio Company

Ohio-based Export Now will help sell MIchigan-made products on China's TMall.com. Credit: screenshot from TMall.com

China, as you’ve often heard, is the world’s fastest growing economy, and not just for its low-cost manufacturing. It’s also home to a rapidly growing consumer market. Big American companies like GM, Harley Davidson and Amway have made big bucks selling to Chinese consumers.

But for smaller American companies, breaking into the Chinese market can be difficult, confusing and expensive.

This week, the Michigan Economic Development Corporation announced a new program to help small businesses make that leap. It’s the first program of its kind in the country.

“The program will offer Michigan companies the opportunity to test their products in the China consumer market with limited risk,” MEDC President and CEO Michael A. Finney said in a release.

As part of the program, the MEDC is partnering with Export Now, a private company that specializes in helping businesses export their products to China. A hundred small Michigan companies will get a chance to take part. For them, the program could be a transformative opportunity.

But it’s also a sweet deal for Export Now, which is based in Ohio. And the owner of a Michigan-based export services company hopes he won’t be left behind.

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Where Have The Effects Of Trade With China Hit Hardest? Not In The Midwest

From "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," an MIT working paper. Click for a larger view

The surge Chinese manufacturing over the past two decades has gotten a lot of attention – and a lot of concern – in the industrial Midwest.

It’s easy enough to see what the effects have been here. We’ve seen it in the empty factories that no longer make things. We’ve seen the increase in products made in China. And it’s easy to think that the Midwest has suffered more than any other region from trade with China.

But a working paper released last year by MIT shows that isn’t true.

The researchers who wrote the paper looked at how increased Chinese imports have affected workers in different metropolitan areas (or “commuter zones” as they preferred to call them).

The paper itself is filled with complicated equations that may be difficult to confront on a Friday afternoon. But the MIT News service posted a story about the paper this week, including comments from economist David Autor, one of the study’s authors.

Here’s a Friday-friendly explanation of what they found:

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U.S. Workers Rank 14th On List That Measures Hourly Compensation For Manufacturing Employees

How much do employees in the U.S. manufacturing industry make compared to their counterparts in other countries?

A new study released by the U.S. Labor Department says Americans receive an average of $34.74 per hour, the 14th highest hourly compensation among countries measured. Norway topped the chart at $57.53 per hour, followed by Switzerland and Belgium.

Canada ranked one spot ahead of the United States, averaging $35.67 per hour. Mexico ranked 33rd among the 34 countries measured at $6.23.

China and India were notably absent from the list. The Bureau of Labor Statistics said there were data gaps and deviations from international standards that made it difficult to forge accurate measures of manufacturing wages and overall compensation.

Midwest Memo: Michigan Mining Company Lays Off 600, Chinese Students Wisconsin Bound, Iconic Cleveland Building Sold

Three stories making news across the Midwest today:

1. Mining company lays off 600 workers. A mining company in Michigan’s Upper Peninsula will temporarily shut down part of its operations and lay off approximately 600 employees. Cliffs Natural Resources, which operates the Empire Mine in Marquette County, said production is expected to drop from 4.6 million tons in 2011 to 2.7 million tons in 2012, according to the Marquette Mining Journal. The drop comes because steel producer ArcelorMittal will take a blast furnace down for maintenance in the second quarter. A company spokesperson said the layoffs will last “several months” until the furnace goes online again.

2. Historic Cleveland property has new owner. One of Cleveland’s historic downtown landmarks was purchased today by a Canadian hotel and resort company during a foreclosure auction. Skyline International Development Inc. was the sole bidder for the Arcade, and purchased it for $7.7 million – the minimum bid, according to The Plain Dealer. The current site was renovated a decade ago for $60 million, but went into foreclosure in April 2009 when its Chicago-based owner defaulted on a $33.3 million mortgage. An attorney for the new owners said this is Skyline’s first U.S. real estate holding, but did not comment on the firm’s plans for the Arcade. With the property selling for the minimum, its creditors, including Bank of America, the city of Cleveland and Cuyahoga County, will not recoup any of their investments.

3. Chinese students Milwaukee bound. Hundreds of Chinese students could attend the University of Wisconsin-Milwaukee in coming years thanks to a recruiting agreement the school’s chancellor signed today in Beijing. An agreement with a Chinese education network will boost the university’s international profile and help lure Chinese companies to Milwaukee, according to the Milwaukee Journal Sentinel. It would also boost the school’s out-of-state tuition coffers. China is the city’s third-largest trading partner, according to the newspaper. The agreement runs for five years. “You could think of myriad ways these students could connect to help Milwaukee employers in China,” said Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce.

Midwest Memo: Detroit Mayor Dave Bing Defiant, Milwaukee Courts Chinese Investment, U.K. Investigates Groupon

Three stories making news across the Midwest today:

1. Bing defiant over looming Detroit takeover. A state takeover of Detroit and its ruinous financial situation has seemed imminent for weeks, if not months. On Thursday, Michigan Gov. Rick Snyder told Mayor Dave Bing he would initiate a 30-day review of the city’s finances, a precursor to the appointment of an emergency manager. Bing then gathered the city council and other leaders and declared his opposition. “We are Detroit,” he told the Detroit Free Press. “Detroit needs to be run by Detroiters.” Free Press columnist Rochelle Riley wonders whether the unified front is too little, too late. She asks, “Why does it always take a crisis?” before city leaders finally work together.

2. Milwaukee mayor China bound. Milwaukee Mayor Tom Barrett leaves Sunday for his second trade mission to China. He’ll spend a week visiting Beijing and the growing port of Ningbo, which already has an informal sister-city relationship with Milwaukee, according to the Milwaukee Journal Sentinel. Barrett tells the newspaper he’ll pitch the city’s strengths in manufacturing and industries related to water, food and beverages in hopes of luring more jobs and investment. He’ll also talk to Ningbo police commanders about purchasing Harley-Davidson motorcycles for officers. The Metropolitan Milwaukee Association of Commerce’s China Council will pay for the trip. In a related item, Chinese officials tell the Associated Press they want to convert some of the country’s U.S. government debt into investment in renovating American roads and subways.

3. U.K. investigates Groupon practices. Chicago-based Groupon Inc. is being investigated by Britain’s Office of Fair Trading over concerns about unfair promotions and exaggerated savings, Bloomberg reports today. The investigation commenced in July and expanded after receiving a complaint. “Given Groupon’s track record, we have serious concerns about its ability to adhere to the advertising code,” the U.K.’s Advertising Standards Authority said in a statement. In a written response, Groupon said it is “constantly evolving business process” and cooperating with the probe.

Midwest Memo: Chicago Budget Should Easily Pass, Toledo Gains 1,100 Jobs, Cleveland Eyes China Medical Markets

Three stories making news across the Midwest today:

1. Chicago budget vote tonight. Chicago Mayor Rahm Emanuel’s first city budget will be voted upon by the city council tonight. It is expected to be easily approved. The budget addresses a $635 million deficit through a series of layoffs, library and mental-health clinic cuts and fee increases. Our partner station WBEZ says the only question now is how the city’s 50 aldermen will vote, citing minimal opposition. “It could be six or it could be a unanimous vote,” Ald. Bob Fioretti tells the station. He said he worried Emanuel’s plan to nearly double fees for water and sewer service over four years will hasten an exodus of residents. But, “My yes or no vote isn’t going to mean anything,” he said. “I believe it’s already decided.”

2. Chrysler brings 1,100 jobs to Toledo. Chrysler announced today that it would invest $500 million at a Toledo assembly plant to build its next-generation Jeep SUV. The investment is expected to create more than 1,100 new jobs by 2013, according to the Detroit Free Press. The Toledo North plant will add a second shift. The plant, which opened in 1997, was the only Chrysler plant in North America operating only one shift, according to the newspaper.The investment comes as part of a $1.7 billion move centered around the Jeep SUV. Remaining funds will be invested at other Chrysler plants.

3. Cleveland biomedical companies eye China markets. There’s growing opportunity for Cleveland-area biomedical companies to meet China’s growing demand for advanced health care. The Chinese government has pledged $100 billion to upgrade its healthcare infrastructure, and “it would be insane not to take advantage of that immense growth,” Eddie Zai, founder of the Cleveland International Group, a business investment consulting firm, tells our partner station Ideastream. Zai’s new venture, the Cleveland Bio-Fund, is partnering with Newsummit Pharmaceuticals in Shanghai, to bring $100 million to U.S. medical device companies. The Plain Dealer endorses the developments, calling it, “an example of the kind of commerce that is the path to jobs and wealth.”

Midwest Memo: Obama Chides China, New Detroit Dock Boosts Michigan Tourism, New Owners For Gary Casinos

Three stories making news across the Midwest today:

1. Obama chides China. Using uncharacteristic blunt language, President Obama said America had enough of China’s currency manipulation and encouraged the global power to abide by “the same rules as everybody else.” At the closing news conference of the Asia-Pacific Economic Cooperation summit, Obama told reporters, “Enough’s enough,” and that “we don’t want them taking advantage of the United States.” The comments came one day after Obama held face-to-face talks with President Hu Jintao, according to Reuters. Obama and other U.S. leaders have grown weary of China keeping its currency value artificially low, thus hurting American companies and jobs.

2. Detroit dock brings tourist upswing. When a $21.5 million dock opened in Detroit earlier this summer, critics doubted the facility would see much use. Although only two cruise ships visited the port this past summer, according to the Detroit Free Press, cruise-ship operators have scheduled 23 visits in 2012. The uptick is expected to bring 2,500 new visitors and an increase in Michigan tourism dollars. Calling it a “significant win” for the region, W. Steven Olinek, deputy director of the Wayne County Port Authority, told the newspaper, “in future years we hope to play an even greater role in the re-emerging Great Lakes cruise industry.”

3. Gary casinos have new owner. New Mayor-elect Karen Freeman-Wilson says new ownership for two bankrupt casinos in Gary, Ind. is good for both the casinos and the city. “Investment in their structure will attract more gamers,” she said. Freeman-Wilson tells our partner station WBEZ that money is needed for infrastructure improvements, especially fixing city streets. Attendance has dropped at Northwest Indiana casinos, according to recent numbers, a falloff that comes even before a proposed Chicago casino heightens competition. Wayzata Investment Partners in Minnesota has taken over at the Majestic Star Casinos, which owe the city up to $15 million.

Ford Seeks Recovery From Slow Start, Expanded Sales In China

With 1.3 billion people within its borders, China holds the largest car market in the world. Ford would like to build its market share there.

Ford only ranks as the ninth-largest company there, in terms of auto sales. The company is formulating a new strategy to make up for what they see as a slow start in China.

In the first of a three-part series that reviews Michigan Gov. Rick Snyder’s trade mission to Asia, our partner station Michigan Radio examines the possibilities for Detroit’s Big Three in potential Chinese auto sales, even as car sales have slowed.

For Ford, that means bringing 15 new models to market in the next five years, and investing hundreds of millions in plans and dealerships.

Here’s the first part of the Michigan Radio series. Keep an eye out for part two tomorrow.

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Looking At The Global Economy With Here And Now’s Robin Young

From the automobile industry to agricultural products, Michigan and the global economy are inextricably intertwined. On Wednesday night, Robin Young, the host of Here and Now, joined Changing Gears and our partner Michigan Radio in Ann Arbor for a town hall meeting to look at issues facing the state and the world.

Robin Young of Here and Now with Michigan Radio listeners. Photo by Micki Maynard

The topics ranged from Chinese investment in the United States to whether Right to Work laws would make Michigan and other Midwest states more attractive to international investment.

Panelists included Linda Y.C. Lim, professor of strategy at the Ross School of Business at the University of Michigan, and Changing Gears senior editor Micki Maynard, a frequent guest on Here and Now.

Young also dropped by Michigan Radio this morning to meet listeners and speak with newsroom staff. Here and Now airs daily on Michigan Radio at 1 pm ET.

Here’s a link to video from the panel discussion from Wednesday evening, courtesy of the Ross School of Business.

Midwest Memo: Michigan Governor Off to Asia on Trade Mission, Wisconsin may Ease Mining Laws

Three stories making news across the Midwest today:

1. Michigan governor’s trade mission. Gov. Rick Snyder and an entourage of administration and business officials head to Asia this weekend as part of his first trade mission while in office. Snyder will spend two days in Tokyo, one day in Beijing, one day in China and one in Seoul, according to our partner station Michigan Radio. He will emphasize the state’s business tax structure and workforce in his attempts to entice overseas leaders to invest in Michigan, though downplays any expectation of immediate results. “I don’t have high expectations there,” he said. “This is more about starting the relationships and then looking six months, a year out.”

2. Manufacturing’s one key trait. In a short essay for Bloomberg Business Week, General Motors CEO Daniel Akerson writes the key to saving the American manufacturing industry is adaptability. In the wake of bankruptcy, he points toward an agreement the United Auto Workers made to lower wages at a plant in Lake Orion, Mich., as one that hailed the arrival of a more flexible cost structure. “If you don’t prize adaptability, whether it’s industrial relations or it’s in how you view, perceive, and react to your competition, you’re going to be a dinosaur,” he said.

3. Wisconsin could ease mining laws. A special legislative committee in Wisconsin will examine proposals to minimize state laws that regulate the mining industry, according to the Milwaukee Journal Sentinel. “We need to focus, one, on the environment and, two, on job creation,” Republican State Sen. Neal Kedzie told the newspaper. Regulation became an issue recently when Gogebic Taconite announced it would delay plans for an iron-ore mine near Hurley until state laws eased. Gogebic said the mine would employ 700 workers.