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Posted on Tue, May 25, 2010 : 3:51 p.m.

MEDC says 'unwarranted criticism' threatens economic development efforts

By Nathan Bomey

The Michigan Economic Development Corp. sought to counteract its critics this afternoon by asserting that the agency plays an effective role in boosting Michigan's economy.

"We are deeply concerned that the recent surge of unwarranted criticism leveled against the MEDC will undermine Michigan’s efforts and ability to attract business investment," MEDC's executive committee said in a statement issued to the Michigan Legislature and the media. "All states are in fierce competition for stable, well-paying jobs - across all sectors and industries. Political in-fighting is a clear warning to business that a state lacks a cohesive climate for economic development and a clear signal to invest elsewhere."

The statement, signed by the organization's 17 members, comes a month after the MEDC approved tax credits for a Flint company led by a convicted fraud artist. The tax credits were given because the firm, RASCO Corp., agreed to hire 765 workers over the next several years. The incentives were later rescinded after the executive's criminal background was revealed.

MEDC CEO Greg Main offered to quit because of the situation, but Gov. Jennifer Granholm declined to accept his resignation.

MEDC Executive Committee

Here's a list of the MEDC Executive Committee members who signed the letter:

  • Matthew P. Cullen (chair), president and COO of Rock Ventures
  • Phil Power, president of Ann Arbor-based Center for Michigan
  • David Cole, chairman of Ann Arbor-based Center for Automotive Research
  • John W. Brown, chairman of Stryker Corp.
  • JoAnn Crary, president of Saginaw Future Inc.
  • Haifa Fakhouri, CEO of Arab American and Chaldean Council
  • Steven Hamp, founder of Hamp Advisors
  • Paul Hillegonds, senior vice president for corporate affairs of DTE Energy
  • George W. Jackson Jr., CEO of Detroit Economic Growth Corp.
  • Birgit Klohs, president of The Right Place Inc.
  • F. Thomas Lewand, partner at Bodman LLP
  • Jeff Metts, president of Dowding Industries
  • Skip Pruss, director of the Michigan Department of Energy, Labor and Economic Growth
  • Irvin Reid, president emeritus of Wayne State University
  • Sandy Ring, vice president and general counsel of Hino Motors Manufacturing USA Inc.
  • Michael Staebler, partner at Pepper Hamilton LLP
  • Todd Wyett, CEO of Versa Development

"MEDC is not flawless, but it constantly strives to improve its programs, processes and economic development tools," the committee said in its letter today.

The MEDC is also facing criticism from Republican gubernatorial candidates who say the state's tax incentives strategy has been ineffective and costly to taxpayers.

For example, Republican gubernatorial candidate and Ann Arbor venture capitalist Rick Snyder, a former executive chairman of MEDC, has called for the agency to be reconfigured.

Groups like the Mackinac Center for Public Policy, a conservative research group based in Midland, have suggested the MEDC's Michigan Economic Growth Authority (MEGA) tax credits are not effective.

But another organization, the Upjohn Institute, issued a study asserting the MEGA credits had created some 18,000 jobs from 1996 to 2007.

MEDC's executive committee said the MEGA credits had been "particularly effective in enabling us to compete successfully against other states and countries," calling it "a performance-based incentive that a company cannot collect unless provably creating a required number of jobs."

For the Ann Arbor region, the MEGA tax credits have produced an uneven impact.

Companies like information technology security firm Barracuda Networks and medical devices firm Terumo have thus far surpassed hiring expectations since receiving MEGA credits tied to plans to expand in the Ann Arbor area.

By contrast, Google, which promised in 2006 to hire 1,000 workers by 2011, has "more than 250" employees at its Ann Arbor and Birmingham offices, Google's Mike Miller told today.

The fact that Google is behind the hiring pace it promised was the subject of a story published last week by Michigan Capitol Confidential, an affiliate of the Mackinac Center.

MEDC's executive committee said the state's economic development efforts are producing results.

"We have been through a devastating economic period for nearly a decade, which has taken a significant toll across the board.  At the same time, Michigan - partially as a direct result of

Greg Main.jpg

MEDC CEO Greg Main

programs and policies developed and implemented by the MEDC-has been among the national leaders in high-tech, high-skilled, cutting edge, research and development driven job creation," the executive committee wrote. "These new jobs have not replaced lost jobs on a one to one basis, but they are setting the framework for substantial growth going forward."

Contact's Nathan Bomey at (734) 623-2587 or You can also follow him on Twitter or subscribe to's newsletters.


Sam Adems

Wed, May 26, 2010 : 4:41 p.m.

I think the following three stories are quite amusing and interesting and very relevant to this topic: 1. Detroit Free Press: Bold Experiment Produces Few Jobs 2. A2Politico: The Politics of the One-Two Bitch Slap: Obamas Economic Advisor Dr. Lawrence Summers Raps Ned Staeblers Knuckles and Calls MEDC Crony Capitalism 3. The New Yorker: Inside the Crisis: Larry Summers and the White House Economic Team The MEDC is very cosy capitalism!

Stephen Lange Ranzini

Wed, May 26, 2010 : 3:42 p.m.

One of the bigger mistakes the MEDC made was to discontinue the BIDCO program started by Governor Blanchard. With $3 million, my team's BIDCO (Michigan BIDCO) created 725 jobs, or over 4% versus the MEDC's MEGA total. We also made a profit for our shareholders with an annual return over the seven years we did the program of 24% per year. The state made over 20 to 1 on their $3 million investment through higher taxes and lower social welfare costs. We funded 27 companies with $16,596,800 from our $6,500,000 of capital. The total investment our capital attracted to Michigan businesses was $275,311,800. At that rate of cost per job ($3,000,000 of state money got 725 jobs or $4,138 per job) that we had in the BIDCO program, they could have spent $75mm on us and given the other several billion dollars back to the taxpayers and gotten 18,000 jobs. Instead the MEDC replaced the funding that should have gone to the BIDCO program with the MEGA program. Oops!


Wed, May 26, 2010 : 8:18 a.m.

The question is what is the opportunity cost of the MEGA money. Would it be better spent as part of a restructuring of the business tax, lowering the tax rates for all companies, not just those the committee picks as "winners"? Even throwing out the RASCO fiasco, the actions and overall evaluation of any committee throwing taxpayer money at specific businesses is ABSOLUTELY NECESSARY. Whining about any criticism that bubbles up in this process is just pathetic.

Vivienne Armentrout

Wed, May 26, 2010 : 5:46 a.m.

An interesting followup to this story would be to interview two MEDC staffers who are running for office in Ann Arbor - Ned Staebler and Carsten Hohnke. What perspective do they bring?

Somewhat Concerned

Wed, May 26, 2010 : 5:37 a.m.

I supported MEDC until I saw its response to the criticism. Criticism of an agency that spends money taken from taxpayers should be respected and it should be answered on the merits. Responding by saying "if you criticize us, you are hurting the state" is a cheap shot, and it's what is unwarranted - not the criticism. Respond like an adult, show a little respect for the people whose money you spend, discuss the merits. Perhaps it is time for new leadership at MEDC. Perhaps it is time for MEDC to be accountable to taxpayers, not just to people appointed by a politician. Perhaps MEDC has been good for most of us despite its defensive arrogance.


Tue, May 25, 2010 : 10:07 p.m.

I love it. Government agencies are failing the tazpayer at an astounding rate. The SEC and Madoff, The Banking Regulatory agencies and the mortagqage crisis, The FDA and drug approvals, The regulators for the mining industry, the Gulf oil crisis and its failing government agency monitoring, and now we have another agency who "feels" its critisizm is unwarranted. Give me a break! A tax break and get rid of all these useless pimples.


Tue, May 25, 2010 : 9:40 p.m.

Any citizen should be able to criticize a public institution. Get a thicker skin and perform.