Business leaders rely on a standard set of indicators when deciding where they will locate or expand their operations:

  • Cost indicators like taxes, fees, and utilities allow site selectors to determine the expenses associated with locating in a particular region.
  • Value indicators such as talent and infrastructure help site selectors know what kinds of unique assets a region can offer in exchange for the business costs to be paid.

Locations that offer more value for equal or lower costs are more attractive to businesses. States that are not competitive on costs are not seriously considered by site selectors. When cost indicators are favorable, however, it is value indicators that are capable of helping keep a location competitive. When comparing two or more regions with similar cost structures, the region with better infrastructure, talent and innovation capabilities will often win.

Ultimately, business site selection decisions have a major impact on job creation, income levels, and economic productivity. That is why Michigan must monitor its own cost/value input indicators to ensure the best possible balance for business attraction, retention and expansion.

Progress to Date 

In 2016, Michigan continued to hold steady with respect to most cost inputs; the state has done well in terms of making it affordable for employers to locate and expand here. As other states and nations continue to improve their own cost structures, however, Michigan must continue to drive forward efforts to remain competitive from a cost standpoint.

The state’s value inputs remain mixed, with talent and infrastructure gaps continuing in 2016. Michigan’s educational results lag those of most other states and, with a population that continues to age out of the workforce, the state is likely to face a critical shortage of skilled workers to help attract the business opportunities Michigan needs. Michigan’s infrastructure also continues to lag most other states. While key strength areas—innovation, R&D and exports— remain solid, they are not enough to drive site selection decisions in Michigan’s favor without improvements in other core value inputs.