Investment Opportunities Merit Cooperative Approach, Keen Global Perspectives

April 28, 2008
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An annual commercial real estate forecast for 2008 by Grubb & Ellis|Paramount Commerce noted the two primary drivers of continued growth in West Michigan would be health care developments and out-state investment. CQ notes that in this flat world, such investment is also likely from off U.S. shores, and is already in evidence in the Grand Rapids housing market.

Last month representatives from five Chinese companies arrived in Michigan to research potential investment opportunities (primarily in auto-related businesses), co-hosted by The Right Place Inc. as part of a state-wide economic development initiative. It was one of six Michigan Economic Development Corp. missions in the last three years. Generally speaking, Chinese investment in the United States is expected to become a commonplace headline. As Clark Hill attorney D. Kerry Crenshaw told Grand Rapids Business Journal reporter Anne Bond Emrich in March, Chinese investors are holding substantial foreign currency reserves, have cash, and the current U.S. trade account balance with China continues to grow.

Gov. Jennifer Granholm, perhaps half-heartedly, believes international investment is a job creation strategy, and has led several missions to Japan and Europe. The New York Times recently reported the uneasy balance of Michigan’s economy and recovery with foreign investments — a story of contrast between the debacle of Electrolux in Greenville and the success of German-owned Siemens in Holland.

And it obviously is not just a Michigan story. The Times reported that foreign companies paid more than $1.7 trillion to set up operations in the U.S. or for major stakes in American firms between 1998 and 2007. More than two-thirds of that, it reported, came from Europe. Area businesses also are finding that merger or acquisition with foreign-owned firms provides the capital necessary for growth and development, as investors are still lacking in this area.

Even while the world is knocking, another study gaining notoriety is that of regional unification, which for the Grand Rapids metro area would provide some of the “critical mass” now lacking when compared to major urban areas. The point was made in mid-April when the World Affairs Council of Western Michigan hosted two-time Pulitzer Prize finalist and journalist Richard Longworth, who recently penned “Caught in the Middle: America’s Heartland in the Age of Globalism.”

Given the all-out economic development wars in which tax incentives are weapons, one is hard-pressed to imagine economic development officers as chums across state lines. Indiana recently took a shot across the state line with an invitation to Michigan companies to find their success south of the border. Still, in an area building on partnerships (in some cases for lack of critical mass), it would seem an idea whose time has come.

Longworth suggests Grand Rapids, Kansas City and Cleveland — all building on life sciences, health care and research in similar fashion — should exchange ideas often and become a cluster of such expertise. He also told the Business Journal that Grand Rapids has direct connections to Indiana, Chicago and Southern Wisconsin, a “megalopolis that runs around the lake.” He suggests the University of Chicago is as much or more an asset to West Michigan as universities located in Eastern Michigan. And he notes, “Once new ideas are cultivated, lack of capital in the Midwest will make it difficult to keep those ideas in the area.”

It would seem the Grubb & Ellis|Paramount Commerce report is already seeded with evidence of Longworth’s conclusions. CQX

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