A    S I T E    S E L E C T I O N    S P E C I A L    F E A T U R E    F R O M    S E P T E M B E R    1 9 9 9

---

b y     T R A C Y    H E A T H

Continued Infrastructure upgrades and major business climate changes
buff the Great Lakes' once 'rusty' economy to high shine.

Although the Great Lakes region consists of more than just the Rust Belt states, all of the region was hit hard by the downturn of the steel industry -- and manufacturing in general. Michigan alone saw more than 18,000 manufacturing jobs leave the state per year in the early '90s. But, in the words of one Minnesota native son, "The times they are a-changin'." Michigan has turned itself around and is now creating some 12,000 manufacturing jobs a year. And the Great Lakes region as a whole has become one of the hottest, most sought-after locations for new and expanding facilities.

In fact, according to Site Selection's 1998 Governor's Cup awards (see the SS March 1999 issue), five of the top 10 winners are located within the region. Michigan led the way in new facilities and expansions in 1998, with 1,722 announcements. Ohio (No. 3) and New York (No. 5) both ranked in the top five, while Illinois (No. 8) and Minnesota (No. 10) rounded out the top 10.

"The Midwest has always been one of the strongest, if not the strongest, regions in the country," says consultant Bob Hess, with Deloitte & Touche Fantus Consulting. "It is certainly competitive with the South, which has been one of the major destinations for businesses."

Part of the success among the Great Lake states is due to new business attitudes adopted by the governments. "Some of the states have re-engineered their business climates and have become pro-business states," says Hess. "Michigan certainly wasn't in that position several years ago, but Gov. [John] Engler came in and made changes, and the state has some great incentive programs now."

Recently, Illinois, which is often considered by site consultants as lacking in incentives, leveled the playing field in the competition for new and expanding business with the Economic Development for a Growing Economy (EDGE) Tax Credit Act. EDGE is a targeted tax incentive program that provides tax credits for businesses that create new jobs and make capital investments in Illinois. Under the new program, businesses that create new jobs will be able to claim a state income tax credit equal to a portion of the incremental tax generated from new jobs created.

In Pennsylvania, Gov. Tom Ridge launched a new "tax-free zones" initiative, known as Keystone Opportunity Zones. The 12 newly defined zones waive corporate net income, capital stock and franchise, and personal income taxes for employers and residents within the designated areas.

New York hopes to entice businesses into the state with its recently passed Build Now-NY program, a US$1.8 million initiative that provides pre-approved sites for industries looking to locate within the state. Thirty locations are now designated as Build Now sites.