2015 Regional Report: The Midwest

MINNESOTA | #31 | SHINING ON

Despite some slowing down in the manufacturing sector and diminishing energy production in the Bakken, the North Star State’s economy shines on.

Minnesota’s unemployment rate rolls along at 3.7%, well below the national average. Business investment “remains strong, with plenty of commercial construction underway” says Michael T. Wolf, a senior economist at Wells Fargo. Singling out the state’s burgeoning medical equipment manufacturing business, he declares: “Minnesota’s economy remains a real standout.” Those considering expanding or relocating to the state may find that “Minnesota nice” applies, but not “Minnesota speedy.” Government services are “very slow and bureaucratic,” assesses site selector Burkard.

The Tax Foundation ranks Minnesota’s state and local tax burden 6th highest out of 50 states and 47th in business tax climate. Minnesota spends over $239 million a year on incentive programs.


MICHIGAN | #43 | STILL UNDER PRESSURE

Is Michigan’s economy back on track? The economic glass, says Michigan State University economics professor Charles Ballard, is both half full and half empty. While the state added half a million jobs since its economy bottomed out in the winter of 2010, it was only this spring that the unemployment rate caught up with the national figure. Michigan still lags its centennial peak by 400,000 jobs, and in the ensuing years income inequality has expanded.

“Looking back at how far Michigan has come economically over the past five years, it’s easy to breathe a sigh of relief and think, ‘good, now that’s behind us,’” says Doug Rothwell, CEO of Business Leaders for Michigan. “The alarming truth is it’s not behind us at all. We’re still very much in a come-from-behind position as we build jobs, income and productivity.”

That couldn’t start too soon. As measured by economic performance, Michigan finished 50th—dead last—in this year’s American Legislative Exchange Council’s (ALEC) rankings. Energy costs rankle. “Michigan electric rates are higher than the national average,” observes Greg Burkart, managing director of Duff & Phelps, a site selector based in Southfield, Michigan. The Tax Foundation ranks Michigan’s state and local tax burden 21st-highest out of 50 states and ranks it 13th in business tax climate. Michigan spends over $6.65 billion a year on incentive programs.


WHY WE’RE HERE / MICHIGAN

Andra RushWHO Andra Rush, CEO, The Rush Group Family of Companies

WHERE Detroit, Michigan

SITE HISTORY Andra Rush founded Rush Trucking in 1984, and formed the Rush Group in 2001. The Rush Group moved into its present headquarters, a 482,000-square-foot facility in the Gateway Industrial Center in Detroit’s Brightmoor neighborhood, in 2012.

WHY MICHIGAN “In Michigan, we can move any raw material by water, by train or by truck, and move finished goods in a multi-modal situation. By adding the international gateway Detroit Metro Airport, we cover every mode of transportation to move products across the world very efficiently.”

BOTTOM LINE “Detroit endured a steep decline for 50 years and then filed for Chapter 9 protection, the largest municipal bankruptcy in U.S. history. Instead of viewing the situation as the end, I saw it as the beginning. To be part of shaping a major city and creating what you would hope or imagine it to be is exciting, not only for me but also for our team members. How often do you get that chance to have a significant, dramatic, positive impact?”


ILLINOIS | #48 | NOT NEIGHBORLY

He’s mad. Boy, is Illinois Gov. Bruce Rauner mad. So mad, he told the Chicago Tribune in April, he wants to “rip the economic guts out of Indiana” and will target Hoosier employers to rebuild the Prairie State’s languishing economy. Bad feeling between the Midwestern neighbors goes back at least to 2011. That year the Indiana Development Corp plastered billboards with posters asking residents if they felt “Ill-innoyed by higher prices.” The campaign prompted—or reflected, depends who you ask—a steady stream of corporate migrations across state lines.

The exodus continues. In March, Caterpillar announced 230 layoffs in Joliet as production of a line of oil pumps and valves was moved to Monterrey, Mexico. Over the summer such manufacturers as Hoist Liftruck, DESTA-CO, General Mills and Mitsubishi announced they were either closing their Illinois plants or relocating to lower-cost states.

Indiana is not the only state to welcome Ill-annoyed CEOs and business owners; Missouri, Iowa and Wisconsin attract disgruntled employers too. The Tax Foundation ranks Illinois’s state and local tax burden 13th highest out of 50 states and 31st in business tax climate. Illinois spends over $1.5 billion a year on incentive programs.