General Session:Conversation with the GovernorLive on WWJ Newsradio 950

Session Sponsor

Jennifer M. GranholmGovernorState of Michigan

The Honorable:

Michigan’s Economic ChallengeMichigan Manufacturing Employment

Since June 2000: 333,200 Jobs Lost; 36% Decline

June 2000913,700

Jan 1992771,800

Mar 2008580,500

500

600

700

800

900

1,000

1990 1994 1998 2002 2006

Source: Michigan Department of Labor and Economic Growth Non-seasonally adjusted data

Mo

nth

ly E

mp

loym

ent

(100

0s)

Michigan’s Economic ChallengeBig 3 Market Share

US Sales of Cars and Light Trucks

59%

63%

69%70%

45%March 2008

40%

50%

60%

70%

80%

1990 1995 2000 2005

Sources: Automotive News, Detroit Free Press

Next Steps For Progress That Unites Us

Create a Skilled, Educated Workforce

Diversify Our Economy to Create Jobs

Lower the Cost of Government

1. Education and Training for AllCherry Commission - Strategic Plan to Double College Grads

All High School Students Must Now Meet Tough High School Graduation Requirements (Rated in Top 3 in US)

All High School Students Take College Entrance Exam

All High School Students Have Access to a $4,000 Michigan Promise Scholarship

More MI Students Going to College Than Ever Before

No Worker Left Behind Overhauled job training to meet employer needs

Goal – Train 100,000 workers for jobs in demand

Next Step for Creating a Skilled, Educated WorkforceReplace Large High Schools that Fail with Small High Schools that Work

Small, rigorous, relevant, relationships

School prepares kids for jobs

Site-based management, labor-management cooperation

Already 6 in Michigan

21st Century School Fund could create 100 more

No new tax dollars

2. Economic Diversification: New Tools to Attract, Grow Jobs

21st Century Jobs Fund−$2 Billion, Most Aggressive in Country

New Tax Incentive Tools−MEGA expanded to be more flexible and cover

more businesses −Alternative Energy and Agricultural

Renaissance Zones−Anchor Company Tax Credits

2. Economic Diversification: New Tools to Attract, Grow Jobs

Venture Capital and Private Equity Programs−Venture Michigan Fund - $95 M −21st Century Investment Fund - $109 M −Angel Investor Tax Incentive− Invest Michigan Fund - $300 M

Overseas Investment Missions−37 companies & 9,000 jobs

Alternative EnergyHemlock Semiconductor, 1,152 jobs , $1.1 billion invested in Thomas

Twp

United Solar Ovonic, 563 jobs, $120 million invested in Greenville

Adaptive Materials, 187 jobs, $2.8 million invested in Pittsfield Twp

Compact Power, 298 jobs, $18 million invested in Troy

Ricardo, 48 jobs, $2 million invested in Van Buren Twp

Sakti3, 230 jobs, $1 million invested in Ann Arbor

Thunder Bay Development, 368 jobs, $15 million invested in Alpena

Dowding Machining, 358 jobs, $7 million invested in Eaton Rapids

Danotek Motion Technologies, 313 jobs, $7.8 million invested in Pittsfield Twp

Cobasys, 122 jobs , $1.5 million invested in Orion Twp

Hybrid Development Center, 437 jobs, $344 million invested in Troy

Marysville Ethanol plant, 35 jobs, $95 million invested in Marysville

US Bio Energy Ethanol plant, 37 jobs, $57 million invested in Woodland Twp

Andersons Ethanol plant, 55 jobs, $95 million invested in Sheridan Twp

Great Lakes Ethanol, 62 jobs $94 million invested in Riga

Michigan Ethanol, LLC, 41 jobs, $52 million invested in Caro

Dow Chemical (Building Integrated Photovoltaic), 22 jobs, $50 million invested in Midland

Tesla Motors, 76 jobs, $48 million invested in Rochester Hills

Edgewater Automation, 97 jobs, $1 million in St Joseph

Tellurex Corporation, 20 jobs, $1.7 million invested in Traverse City

Integrated Sensing Systems, 738 jobs, $1 million invested in Ypsilanti

Life Sciences

MPI Research, 6,600 jobs, $330 million invested in Kalamazoo

Xoran Technologies, 386 jobs, $3.7 million invested in Ann Arbor

Cayman Chemical Company, 525 jobs, $9.7 million invested in Pittsfield Twp

Caraco Pharmaceutical Laboratories, 1,648 jobs, $15 million invested in Detroit

HandyLab, 138 jobs, $3 million invested in Pittsfield Twp

Emergent BioSolutions, 952 jobs, $73 million invested in Lansing

Pureflex, 366 jobs, $7.3 million invested in Kentwood

The Tech Group, 164 jobs, $13 million invested in Walker

Stryker, 165 jobs, $20 million invested in Kalamazoo

NSF, 100 jobs, $23 million invested in Ann Arbor Twp

Kalexsyn, 54 jobs, $4.5 million invested in Kalamazoo

AAPharmaSyn, 20 jobs, $2.4 million invested in Ann Arbor

Avidimer Therapeutics, 13 jobs, $5.4 million invested in Ann Arbor

Biodiscovery, 10 jobs, $2 million invested invested in Ann Arbor

Compendia Bioscience, 64 jobs, $1.9 million invested in Novi

Genetics Squared, 10 jobs, $1.6 million invested invested in Ann Arbor

Meditrina Pharmaceuticals, 18 jobs, $3.8 million invested in Ann Arbor

NanoBio Corporation, 15 jobs, $15 million invested in Ann Arbor

ProNAi Therapeutics, 20 jobs, $12.5 million invested in Kalamazoo

Solidica, 20 jobs, $2.5 million invested in Ann Arbor

Lycera, 34 jobs, $700,000 invested in Ann Arbor

Accuri Instruments, 4 jobs, $10 million invested in Ann Arbor

Afid Therapeutics, 8 jobs, $1.7 million invested in Lansing

IA/Three Fold Sensors, 6 jobs, $2.6 million invested in Ann Arbor

Molecular Imaging Research, 6 jobs, $1.2 million invested in Ann Arbor

Advanced Manufacturing

Chrysler, over $1 billion invested in various locations

Ford Motor Company, over $1 billion invested in various locations

General Motors, over $1 billion invested in various locations

Global Engine Alliance, 1,978 jobs, $375 million invested in Dundee

American Mitsuba, 90 jobs, $11 million invested in Brighton

Dow Corning, 164 jobs, $22 million invested in Williams Twp

Mitsubishi Heavy Industries, 115 jobs, $7.5 million invested in Sterling Heights

Infineon Technologies, 73 jobs, $5 million invested in Livonia

Assay Designs, 238 jobs, $18 million invested in Pittsfield Twp

Toyota Technical Center, 677 jobs, $150 million invested in York Twp

Hyundai America Tech Center, 1,765 jobs, $94 million invested in Superior Twp

AVL Powertrain Engineering, 157 jobs, $4.9 million invested in Plymouth Twp

Gestamp US HardTech, 348 jobs, $74 million invested in Mason

Visteon Regional Assembly, 353 jobs, $35 million invested in Highland Park

BASF Corporation, 648 jobs, $150 million invested in Wyandotte

Siemens VDO, 2,851 jobs, $50 million invested in Auburn Hills

Siemens Water Technologies, 127 jobs, $3 million invested in Holland Twp

FEV Engine Technology, 178 jobs, $4.3 million invested in Auburn Hills

IAV Automotive Engineering, 198 jobs, $18 million invested in Ann Arbor

Hitachi Automotive Products, 205 jobs, $16 million invested in Farmington Hills

LMS North America, 106 jobs, $600,000 invested in Troy

Karl Schmidt Unisia, 353 jobs, $11 million invested in Auburn Hills

Aernnova Engineering US, 1,206 jobs, $10 million invested in Pittsfield Twp

Dearborn Group, 145 jobs, $1.1 million invested in Farmington Hills

Behr-Hella Thermocontrol, 159 jobs, $7.9 million invested in Wixom

Homeland SecuritySmiths Aerospace, 214 jobs, $5.4 million invested in Cascade Twp

Sensicore, 338 jobs, $4.7 million invested in Ann Arbor

General Dynamics Land Systems, 1,649 jobs, $17 million invested in Sterling Heights

Ceradyne, 69 jobs, $2.7 million invested in Wixom

American Systems Technology, 176 jobs, $3.7 million invested in Troy

Second Chance Armor, 160 jobs, $1 million invested in Central Lake Twp

BAE Systems, 1,019 jobs, $58 million invested in Sterling Heights

Patriot Antenna, 56 jobs, $3.5 million invested in Albion

Veridian, 366 jobs, $39 million invested in Ypsilanti

Evigia Systems, 9 jobs, $9 million invested in Ann Arbor

Burtek, 30 jobs, $1.8 million invested in Chesterfield Twp

Ace Electronics, 60 jobs, $1.2 million in Troy

Advanced Photonix, 105 jobs, $2.2 million invested in Ann Arbor

Solidica, 5 jobs, $2.5 million invested in Ann Arbor

Spartan Chassis, 1,056 jobs, $7.3 million invested in Charlotte

Lapeer Industries, 36 jobs, $2.3 million invested in Lapeer

Demmer, 300 jobs, $12 million invested in Lansing

Parker Hannifin, 100 jobs, $3 million invested in Richland/Otsego

Overseas Investment Missions

Karmann USA Inc., 251 jobs, $22 million invested from Germany

Eberspacher Group, 40 jobs, $10 million invested from Germany

Robert Bosch Co., 475 jobs, $66 million invested from Germany

Facton Incorporated, 93 jobs, $1 million invested from Germany

Kostal of America Inc., 203 jobs, $14 million invested from Germany

MBTech Autodie, LLC, 422 jobs, $5 million invested from Germany

MS Automotive LLC, 106 jobs , $23 million invested from Germany

EDAG, 140 jobs, $9.5 million invested from Germany

FT Techno of America LLC, 56 jobs, $30 million invested from Japan

Denso, 250 jobs, $36 million invested from Japan

Tokai Rika, 230 jobs, $50 million invested from Japan

Stanley Company Inc., 720 jobs, $32 million invested from Japan

Hitachi Automotive, 100 jobs, $16 million invested from Japan

Nippon Piston Ring, 40 jobs, $13 million invested from Japan

A&D Incorporated, 100 jobs, $20 million invested from Japan

Hi-Lex, 208 jobs, $68 million invested from Japan

Konica Minolta Holdings, 262 jobs, $35 million invested from Japan

SECO Tools, 25 jobs, $19 million from Sweden

Atlas Copco, 30 jobs from Sweden

Economic Diversification: New Tools to Attract, Grow Jobs

Rebranding Our State – Travel, Business Ads−$60 Million Investment, Biggest Ever

Film Incentives−Most Aggressive in Country

Next Step for Diversifying Our Economy to Create JobsPass Comprehensive Energy Reform

Energy regulatory reform

Renewable portfolio standard

Energy efficiency standard

Create a new energy sector of Michigan’s economy

Create tens of thousands of jobs

Ensure adequate energy supply

Reduce reliance on out-of-state fossil fuels

America’s Energy Problem is Michigan’s Economic Opportunity

Michigan Uniquely Positioned to Capitalize on the Coming Green Industrial Revolution

Wind

Wood

Water

Wheels…and batteries

Waste

Workforce

W…Solar

Economic Diversification: Michigan Needs an RPS

Wind Manufacturing Facilities Follow Wind Installations

National Renewable Energy Lab

Total Cumulative Manufacturing Jobs Created by Scenariothat Meets 20% of U.S. Electricity Needs from Wind (2007 – 2030)

With the Right Policies . . .We Can Create Thousands of New Jobs

3. Government Reform – Making Government Cost Less

Cut more out of state government than any Governor in Michigan history

Fewer state employees than any time since 1973

Michigan ranks 46th among all states in government employees per capita

Government Reform –Making Government Cost Less

Just last year, we enacted 26 reform measures, including:

Public School Employee Benefit Reform− School districts can shop competitive health insurance

plans

− Tightened vesting requirements

− Increased teacher contributions

State Employee Benefit Reform − 2003 - $300 million in pay concessions

− 2007 - $300 million over 3 years in health benefit concessions

− Eliminated benefit loopholes – no double dipping

Government Reform –Making Government Cost Less

Permitting Reform – Cutting Through Red Tape

−60% reduction in air quality permitting times

−Over 200 permits available online

−Online tax registrations – 6-8 week process now takes less than 5 days.

−Center for Digital Government: MI #1 in state government IT since 2004

−Next Step - One-stop permitting shop for businesses - One web portal, One number - piloting late this summer

Government Reform –Making Government Cost Less

Contracting Reform−Ended no bid contracting−State contract savings total $671 million since

2003−Buy Michigan First - 92% of contract dollars to

Michigan companies.

Pew Center on States 2008−Michigan is 4th Best Managed State in the Nation

Prison Population Has Increased 60% Since 1990

Source: State Budget Office

…while the population of the State of Michigan has increased by less than 10%.

50,20051,500

49,40049,500

45,800

40,200

35,100

31,200

38,100

43,800

48,60048,900

30,000

35,000

40,000

45,000

50,000

55,000

1990 1992 1994 1996 1998 2000 2002 2003 2004 2005 2006 2007

Corrections Staffing Has Increased While Overall State Employment has Declined

Corrections staff up three-fold while overall staffing down 14%.

56,400 37,200

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1982 2007

62,080

53,600

5,6805,68016,40016,400

Source: State Budget Office

3 Out of Every 10 State Employees Now Works for the Department of Corrections 2007

Total State Employees: 62,082Corrections Employees: 5,677

Total State Employees: 53,596Corrections Employees: 16,418… compared to less than one in ten 25 years ago.

Source: State Budget Office

1982

91% 9% 69% 31%

Corrections Spending has Grown from 5% of All Discretionary Spending to 20%

Total GF/GP:$4,457,300,000Corrections GF/GP: $215,800,000Corrections spending is almost 9X the 1982 level

Total GF/GP:$9,186,200,000Corrections GF/GP: $1,866,400,000

20071982

Source: State Budget Office

95% 5% 80% 20%

Michigan’s Prison Rate Out of Sync with Midwestern Neighbors

Prison Rates - 2006

250

300

350

400

450

500

550

Michigan MidwestAverage

Illinois Ohio Pennsylvania New York

Source: US Census Bureau, US Bureau of Justice Statistics

Per

100,0

00 R

esi

den

ts

511

395

353

429

358

328

Next Step for Lowering the Cost of Government

Pass Sensible Corrections Reform

Already reduced corrections spending by $560 million through belt-tightening since 2002

Keep citizens safe and lower the cost of government through further corrections reform

Distribute the savings in three ways– 1/3 Higher Education– 1/3 Law Enforcement– 1/3 MBT Surcharge Reduction

Recap: Next Steps to Move Michigan Forward

Create a Skilled, Educated Workforce Pass 21st Century Schools Fund

Diversify Our Economy, Create Jobs Pass Comprehensive Energy Package

Lower the Cost of Government Pass Safe, Cost Saving Corrections Reform

“People know we are in a jam. A large part of the problem is a cynicism, fatalism and negativity – a toxic mix -- shared by people in leadership positions.”

Phil PowerCenter for Michigan

Gone Fishin’

A Simple Sunrise

General Session:Conversation with the GovernorLive on WWJ Newsradio 950

Session Sponsor

Daniel J. LoeppPresident & CEOBlue Cross Blue Shield of Michigan

ChairmanDetroit Regional Chamber Board of Directors

Moderator: