State Life Sciences Pump It Up

March 6, 2006
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GRAND RAPIDS — A survey of new economy business executives in five states suggests that if Michigan wants to be a real player in the life sciences it should, first and foremost, place more emphasis on building a well-educated work force.

Although survey respondents felt a favorable business tax policy was a driving force in a state’s success in the life sciences sector, a well educated work force trumped taxes as a leading indicator that a state’s business climate is conducive to new economy success.

The overall refrain was that Michigan needs to boost its initiatives in the life sciences if it intends to participate in the new economy, and education is a major means to that end.

The survey was the second commissioned by WesternMichiganUniversity and the WMU Research Foundation as part of the university’s New Economy Progress Report. EPIC-MRA of Lansing conducted the study in January on WMU’s behalf. WMU President Judith Bailey will present the survey findings tomorrow at a meeting of the West Michigan chapter of Inforum.

The survey asked 1,200 executives working in new economy businesses to assess Michigan’s potential in the life sciences and to identify the best strategy the state could adopt to become successful in that arena. The survey involved executives from the Midwestern states of Michigan, Illinois and Ohio and two coastal states where new economy businesses are thriving — California and Massachusetts. Respondents included executives in engineering, information technology, life sciences and scientific testing, telecommunications, medical, dental and optical equipment, as well as health care and new economy manufacturing.

According to the New Economy Index, foundations for growth in the new economy include the pace of transition into a digital economy, business and government investment in technology, and progress in the development of the work force’s education and skills.

Among respondents from all five states, 72 percent said a well-educated work force was “above average” in importance or “very important” to success, while 68 percent said favorable tax law was “above average” or “very important.”

It appears that in Michigan, a well-educated work force isn’t necessarily a top priority. Michigan ranked fourth out of the five states in “being known for having a well-educated work force” and ranked dead last in valuing a well-educated work force.

Ironically, 69 percent of all those polled said Michigan was “better than average” or “one of the best” in terms of the overall quality of its state universities.

Some 34 percent of Michigan respondents felt an educated work force was “very important” to the state’s success in new economy sectors. In contrast, the two states that have already achieved a level of success in the new economy place greater value on an educated work force; 58 percent of respondents from California and 65 percent from Massachusetts felt an educated work force was “very important” in that regard.

Similarly, in Michigan 52 percent of respondents put an educated work force in either the “above average” or “very important” categories, while in California 80 percent of respondents and in Massachusetts 82 percent of respondents put an educated work force into one of those two categories.

“The overall take for me is the major policy question of how do we focus our investments to move forward, and, clearly, we want a very welcoming tax environment,” WMU’s President Bailey said. “But the top two states with knowledge-based economies in the nation said the most important thing to them was an educated talent pool. That should be factored in a major way into the policy conversation. While we are perceived by our competitors as having a quality educational environment, we are not producing a large enough work force with the set of skills needed. Those are all pieces of that policy conversation.”

Bailey said she was surprised most by Michigan’s own negative perception of itself. The other states’ tallies of Michigan’s tax environment and the quality of its universities was higher than what Michigan credits itself with having, she said.

“The other thing that surprised me was that 28 percent of Michigan respondents felt that we could become a major player in the life sciences, and that’s about where it was with the first survey. Yet 14 percent of non-Michigan respondents felt that we could become a major player. I’m wondering what, in addition to education, those other drivers are.”

As stated in the executive summary of the results: “While tax policy is seen as very important, strength in other areas allows new economy businesses to thrive in states where taxes are high. Despite their onerous business tax structures, California and Massachusetts are rated as the states most conducive to nurturing new economy businesses among all five states studied.

“Despite a seeming edge on the tax issue, Michigan does not have enough strength in other areas to boost it as an attractive place to new economy businesses to locate and thrive.”

A total of 12 percent, or one in eight, of Michigan respondents saw life sciences as one of the most important focuses of university research in this state. According to the report, executives working in the “life sciences” area comprised only 2 percent of the Michigan pool of respondents. But that percentage is a bit deceiving, said Ed Sarpolus, president of EPIC-MRA, because some life sciences companies identify themselves differently, say, as engineering or consulting rather than as “life sciences” firms. He said the same pattern held true in last year’s survey for WMU.    

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