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New-model economy emerges in Michigan

By Ruth WalkerStaff writer of The Christian Science Monitor / August 13, 1984



Ann Arbor, Mich.

There really is a new economy in Michigan, but not everyone knows it yet. Especially everyone in Michigan. People here still say simply ''the Big Three,'' instead of ''the Big Three automakers,'' as they say in the rest of the country. But there is a new awareness that the automobile industry, while still important, is not the whole of the Michigan economy.

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Higher education and abundant natural resources (especially forests) seem important to the state's future. And across the state are found entrepreneurial sparks that business, academic, and government leaders are fanning.

''People here are either excited about the progress or frustrated that it's not happening faster,'' says George Gamota, director of the Institute for Science and Technology (IST) at the University of Michigan campus here.

He speaks of ''tremendous changes'' in people's attitudes toward the ''new economy'' over just the past few years: ''Three years ago, there was a tremendous glum. We had our annual conference - and it was like a wake.'' That has changed as the state has snapped back economically, largely due to the dramatic turnaround in autos.

The recovery in autos is important for a number of reasons, not least of which is that this industry is likely to be the principal market for many of Michigan's new technology-based companies. But a cyclical upturn in traditional manufacturing industries does not obviate the need for long-term structural change, which, economists say, hasn't happened yet.

Dr. David E. Birch, director of the Massachusetts Institute of Technology program on neighborhood and regional change, notes that Michigan unemployment remains high, 11.5 percent in July, seasonally adjusted (''And that's with autos back,'' he notes). Recovering businesses have sprung back with more automation and overtime and less new hiring.

Dr. Birch, who studies the process of job creation, predicts that ''in five or six years Michigan will be back to or below national unemployment rates.'' He adds, however, that ''the auto industry will not return to the employment levels of 1980.''

G. William Ince, president of the Michigan Technology Council in Ann Arbor, echoes: ''It's clear that new jobs are not going to come from the Big Three - or big companies in general.'' Dr. Birch sees a trend of ''young growth companies coming out of the universities.''

Ah, yes. The universities. Across the country, local officials eager to see their states develop the next Silicon Prairie or Silicon Swamp have been awaking with amazement to the realization that the universities in their backyards are more than just excuses for football games. Michigan has gone through a similar process of discovery - and has had some battles to fight with ivory towerism.

The state's big universities are all public institutions, unlike Stanford, for example, or MIT, and they have restricted their faculty members' involvement in consulting and in launching new business. Many observers across the state cite this as a damper on Michigan entrepreneurship - although these rules are changing.

John Shingleton, director of placement services at Michigan State University (MSU), notes that Michigan is doing better at retaining its university graduates nowadays. Some 51 percent of the engineering graduates of the class of 1984 have found jobs in-state, whereas only 39 percent of the class of '82 did, he reports.

But he wishes there were greater awareness in the academic community that, as he puts it, ''people have to go to work when they finish school.''

He adds, ''Keeping education apart from the business world was a mistake.'' Likewise, he chides business leaders for not making better use of the academic resources around them.

What's needed, one hears, is a mechanism for disseminating engineering advances among the business community, just as agricultural extension services (with their ''county agents'') have disseminated information to farmers - and have helped make the United States the world leader in agriculture. What's needed, some contend, is an industrial extension service.