Birgit Klohs, President of The Right Place, Inc., interviewed by Catherine Ettinger of Grand Rapids Insight (formerly Inside Grand Rapids) 2007-11-05
Announcer: Welcome to Grand Rapids Insight, a weekly show featuring interviews with community leaders, business leaders and individuals who are committed to building a stronger future and now, here is your host for Grand Rapids Insight, Catherine Ettinger.
Catherine Ettinger: Welcome to Inside Grand Rapids. This week we are joined in the Foxbright Podcast Studio by Birgit Klohs. Birgit Klohs is the President of the Right Place, a regional Economic Development Organization focused on promoting economic growth. Welcome Birgit, it's a pleasure to have you on our show.
Birgit Klohs: Thank you very much for having me.
Catherine Ettinger: Could you give us a brief history of the Right Place, why it was formed, how it has evolved over the last 22 years or so?
Birgit Klohs: Sure, actually, in the early 80's the economy in Michigan was probably worse than it is now, if that's maybe hard to believe for some people, but in all seriousness in the early 1980's and for those of us old enough to remember, the unemployment rate in Michigan in 1982 was 17.5%. now, you juxtapose that was about and 7.8% today and the unemployment rate in Kent County today is about 5.8% and back in the mid 80s it was over 10%.
So, a group of dedicated local CEOs, the names were probably still ring familiar Jay Van Andel, Bob Pew and others sat down in 83-84 to discuss the creation of a more focused economic development organization that would be the first private public partnership for economic development in the region.
In fact, private-public partnerships for economic development 20 some years ago was really a new notion. In most areas of the country and to some degree, still today, but changing rapidly, economic development was always embedded in a chamber of commerce or in a city or state or country government. And there are still versions of that, but the private, public partnership version of an economic development organization has really become the predominant form of an organization like Right Place. We were created very simply to create, retain and attract jobs.
Now, that sounds pretty simply, it's a tall order, but that's really the economic development goal of almost -- of any economic development organization of our variety. Now, there are different forms of economic development in terms of downtown development or neighborhood development, that's not us. We are about the economic base. 22 years ago, the economic base in West Michigan was definitely manufacturing and to a large degree even though people may not believe that, it is still today.
Now, I should also mention that we are privately or private publicly funded, that is we go on raise our own money every five years and we leverage those dollars locally raised into some federal grants i.e. wiret (ph) and we can talk about that sometime. But our base business is really about the retention, expansion and attraction of jobs. We have five strategic priorities that get reviewed every few years and the first one is to work with our existing customers and that we are still largely manufacturers, advanced manufacturers to keep them here from going elsewhere. We still have in the region which of course, is seven counties over 2000 manufacturing companies and many of those are still doing very, very well.
Catherine Ettinger: When you talk about advanced manufacturing, what...
Birgit Klohs: I don't mean necessarily yeah. It means much more technology embedded in the manufacturing process. If you think about how products used to be made much more mechanically today it has lot of electronics embedded in it, all the machinery is driven by computers. The employee managing those machines is much more of a technician so the manufacturing environment for those who are surviving today, in this country, in this region, have to be extremely good at what they do and have to be extremely technology savvy.
So, when people say manufacturing is dead, it is not dead, it is different. So, we work with over 300 of those companies a year. We call on them in person, we find out what their needs are and at any one time we have between 15 and 20 expansion projects on our plates.
So, and we are working on about 21 right now, which to a lot of people is like I don't read about that in the paper, oh. What has changed over the 22 years is the number of jobs that it created today has changed, it is usually less, simply because the technology embedded in those manufactures today is much higher.
Catherine Ettinger: Is the overall payroll less or does fewer people make more money?
Birgit Klohs: No the overall payroll is actually different because you have higher paying jobs because they are much more - today's manufacturer looks for a very different employee then you did even five or ten years ago and you need more technical talent ,in some cases engineering talent and 5.8 % unemployment is not that bad. 5% is considered full employment.
So, anyway we do that, we also are the marketing organization for the region and that is we have worked with lots and lots of companies who are new to the area, whom relocated here, we have been internationally marketing this community for the 20 years I have been in this job, in Europe, now also in Japan, Korea and in China, and in other places around the world. So, and today we are not just looking for new jobs and new companies but also talent that might want to move here and work here and also technology that could be potentially transferred.
So, that's one. The second one is a clearly taken advantage of the health sciences that are growing so strongly here and all you need to do is look on Michigan Street Hill.
Catherine Ettinger: Or try to drive it
Birgit Klohs: Or try to drive it well. We need to understand that when we are investing almost a billion dollars in a very small area there is going to be some detours.
Catherine Ettinger: It takes space.
Birgit Klohs: It takes space. So, but it is all came about with the advent of the Van Andel Research Institute of course, 11 years ago and at that time people were wondering, what is this all going to mean. Well, it means a lot. The infrastructure we are building is huge, the jobs that are being created are huge and the research that's coming out of that and that eventually will lead to new businesses is really a tremendous opportunity for this community and this region truly and I mean that; It is our Van Andel, it is our hospital spectrum, St. Mary's, Mary Free Bed, the Metro, they are all collaborating together.
We are doing clinical trials here now in town, all of those things that to the average person you don't see that are going on and then you are at the medical school, Michigan States Medical School with it and you really now have a critical mass of health science, life science, bioscience, whatever you want to call it, infrastructure and that's something that we are marketing all over the world. Where we used to say this is a manufacturing area for all the suppliers, it is now Vat plus medical devises plus something else. It is all very - it has given us a totally different marketing platform.
The other alternating strategic priority is to really bring new innovations to our manufacturers so they can add new products or services or to their current product line and to that end, we have been the recipient of a regional grant through the West Michigan strategic alliance and the Right Places is a sub-grant recipient for something we call innovation works.
Clearly a play on words looking at intellectual property, both existing and in the lab, our corporate labs as well as inventor's labs as well as university labs to see what fits our manufacturers here or how can we get people started in a new business and we are just literally beginning to put the meat on the bones of that new idea and it is really around three issues. It is around advanced manufacturing, advanced production, alternative energies/sustainable products.
I sometimes in a flip into I refer to it as your trash is my treasure and what can we make out of it and there is an awful lot of that kind of research going all across the world and what we are trying to do is connect ourselves into that research and how it can be transferred and clearly, to collaborate with others in the region around life sciences, medical devices, diagnostics and etcetera. Another strategic priority is clearly still our urban core. It used to be when I started in this business Catherine that you know you founded a new business somewhere and somebody got transferred and be happy where you are.
German company coming from Stuttgart saying you know we are building a plan in West Michigan and five of you or ten of you are moving. Well, the world has changed a lot and today when you are attracting talent and I think you know that since you are a growing technology company, people want to know what it looks like where I have move to, where are there are like minded people like me, how diverse is the community, what is there to do after 5' O clock? Is it wireless, is it, how accepting is the community of new people?
So, the whole idea of Urban Centre of Redevelopment is something that's been our plate for a long time and in collaboration with the city and now, other communities, but people really do look at quality of life today and where I am going as much as what the drive is like.
Catherine Ettinger: Right, because there is often something, some other place to go or...
Birgit Klohs: There are a lot of other communities that are very successful particularly, in the kind of areas that we are talking about, in advanced manufacturing, alternative energies. Everybody wants talent and one of my staff members attended a conference last week around, Brilliant is an economic development conference and we have been going to this particular conference for many years and it has always been about business attraction in the form of a new business. How do you attract from overseas? What do you do with them, dealing with real estate people? Actually, this time almost the entire conference was on talent interaction and we are all fighting for their talent.
Catherine Ettinger: Right.
Birgit Klohs: So, we are looking at Michigan and we say, "Oh, there is a lot of talent here." And there is, we have huge talent in the state but it is also going to retire, right?
Catherine Ettinger: When there is a shortage of talent, right?
Birgit Klohs: Exactly.
Catherine Ettinger: I mean there are open positions, there is open engineering...
Birgit Klohs: Precisely, and so when people say to me well, we have this high end employment rate but I can tell you a dozen companies right now that have engineering positions, IT positions, technical positions going begging.
Catherine Ettinger: Yeah.
Birgit Klohs: And so, we need to first of all keep what we have coming out of our universities but then we also have to make sure that we have a product i.e. West Michigan that people are attracted to coming to.
Catherine Ettinger: And is there, are there enough foreigners coming into the country as well as coming out of the -- the students coming out of the universities? Do we have enough people?
Birgit Klohs: Oh, now there is a really big question. That is a superb question. We the United States, we now, has changed this immigration policy so drastically since 9/11 that we are getting not enough of the student talents to come to our universities because of problems with issuing a student visa and so, if you don't get that student in the first place and then if you are a south east Asian, you are as likely to go to Toronto, Canada or Melbourne and Sydney, Australia than the Unites States.
Catherine Ettinger: Right.
Birgit Klohs: So, if you don't get the student, you don't the graduate and in some cases we are so stupid that we get the student and we tell the student, "We will give you this visa." By the way this is a real story, "We will give you your visa with the caveat, the minute you are graduating from U of M, Michigan State, MIT or name it, you have to go home." Now, let us look at Silicon Valley and other areas in the country that have done extremely well in venture capital and new business dug ups and often times, they were immigrants. Whether you look at anything in Silicon Valley or Boston and do we really care where that talent comes from?
Catherine Ettinger: And nurtured through the university system in some fashion?
Birgit Klohs: Exactly, now the other half of this problem is so we don't get the student visas issued, we also have a severe cut in what are called H1B visas. It used to be a 190,000 for a country the size of the United States; we are back down to a little more than 60,000 and in fact, I have a problem right now getting one, an extension of one for a German national running a small company here in West Michigan. So, when an institute is trying to attract talent from all over the globe, hospitals, medical schools…
Catherine Ettinger: And research dollars follow the primary...
Birgit Klohs: Research dollar follow the talent. Talent brings intellectual capital which is today as important as hard capital because that intellectual capital will create hard capital with a new business, an innovation, an idea, an invention that gets commercialized.
So, we have yet to figure out in this country how to separate in the immigration debate, the idea of illegal immigrants which is one problem or one issue and talent attraction which is - both of them have become part of one immigration bill and it is stuck because of the illegal immigrant issue. I am not saying anything about an illegal immigrant who wants to come and make a living in the United States.
What I am trying to say is we have to separate the two issues because if we can not, then we are going to face a severe talent shortage and if talent is were to drive success, long term we will hurt ourselves as a country and in turn as a region.
So the last strategic priority is really entire idea I keep talking about the region and that is when you competing globally for talent and intellectual capital or talent and hard capital, you must think regionally. Our region is made up of about seven counties I think our region includes Kalamazoo and we collaborate a lot with Kalamazoo. In that it should not matter if that talent, lands in Holland Muskegon Grand Rapids or Kalamazoo so long as it up here because it is will purchase homes, it well start business, it will bring investment. So we have to start thinking as a region without internal borders if you will.
Catherine Ettinger: Because the workers have already erased many of those borders.
Birgit Klohs: We have a 13-15 county labor market in West Michigan. So if you are standing, if you are driving west in the morning to Holland there would be as many cars going west as they are coming east. If when I comminuted to western for many years for Board meetings at the university you know you go 01:31 it is a 50 minute drive and in Los Angeles that is about 10 miles right. So we have…
Catherine Ettinger: As close are you will get.
Birgit Klohs: Precisely, hopefully you get there so we really do have to think as ourselves as a region and say success and Newaygo, mean success Grand Rapids. Success in Ionia means success and Grand Rapids or failure in Barry County means failure in Grand Rapids.
So because we really are in this together and the region has; the seven counties of about 1.3 million people, if you look at the super region including Kalamazoo, it has a little more than two. Stretch it to Lansing about 2.2 and you know you got to China with a billion-and-a-half population and a region of two million is like a village. So, yeah it is all in your perspective, but absolutely it is critical that we enjoy each others success and make sure that we succeed together.
Catherine Ettinger: What role does the overall health of the State play in regional economy?
Birgit Klohs: Well it plays a huge role because no matter where I go or my colleagues in Michigan go to market, Grand Rapids, Kalamazoo or I should say West Michigan or Kalamazoo area or the Lansing area or Traverse City, we all still in a boat called Michigan and that boat needs fixing. So the difficulties recently in getting the budget passed and the difficulties in fixing, inequities in our tax structure, they all play out on the global stage now because of the medium you and I are conversing in; okay.
It used to be things like that would hit the local paper and maybe one or two regional papers, but now through the medium of the computer internet, blogs, MySpace, Facebook, your name it, you can have a conversation about what the heck are they doing up there.
Catherine Ettinger: And why
Birgit Klohs: And why all over and so it is critical that we get our collective act together because Michigan has some real serious, fabulous resources. First of all we sit in 20% of the world's fresh water so for those of you out there who are complaining when is it going to snow be glad because there is drought in most of the rest of the country. Twenty percent of the world's fresh water is a serious water supply and it will become a key driver of our future success in the state and in the region and I mean region of the Great Lakes.
Cannot drink oil, there have been governors to the southwest who already think we ought to be shipping our water, to their drought stricken states of Arizona, New Mexico, Georgia, you name it and so we have huge natural resource.
As much as people say we need to get out of the auto industry, I think that is really silly particularly since every emerging country on the face of the planet wants an auto industry.
Catherine Ettinger: Everybody drives a car everybody buys a new car.
Birgit Klohs: Well that, it is also the most sophisticated consumer product on the face of the planet if you look into supply chain. India is starting to build it is own cars TATA is You have an emerging auto industry in China and so when we say Oh, we need to diversify out of auto, I do not at all disagree that we need diversification. But, the auto industry has enormous technical capabilities, in engineering and in design and electronics, so that is a resource and clearly we have some of the best Universities in the world in the State.
So, we need to leverage that, but we need Lansing to also be a partner in terms of making the State reasonably business friendly.
Catherine Ettinger: What is the current state of our regional economy? I talked to you and different folks, I get some really positive reports, business is booming, they are growing, they are expanding. I talk to other folks and it is very-very scary?
Birgit Klohs: All of the above; truly because that is one thing that our work, obviously entails, is to talk to all ends of the continual and we have companies that are doing extremely well, in the manufacturing industry I will tell you, who have positioned themselves well in the supply chain and for a variety of industries have understood the changing times and are doing fine.
Of course, you never hear about them. They are quietly toiling away and having done a very good job and innovating themselves around processes and new products. Then you have companies that did not do that and in some cases they may not have been able to do that. So, the states or the region economy -- first of all, we are totally under-transitioned in the state and by extension in our region.
You do not go through what Michigan has been going through for four or five years now. It is not a recession, it is not a depression, it is a total, total redoing of our State's business infrastructure. That is painful. I mean that change is very, very painful. What I hope that in West Michigan and what I see is that people understand it, the new kinds of investments that are being made around the life and health sciences are clearly drivers of that change. We understand the importance of keeping our communities competitive. We have a very Pro-Business climate over here.
So, I have my job entail some triage in the morning and/or really good new thing in the afternoon and vice versa; while we want to help obviously those that need help and do, we look at five and ten years out and say where can we take this region from an economic development perspective. Where are the success stories, how can we grow them?
So, it is not all doom and gloom is what I am telling you. But, I do realize that there are some companies who are struggling, but the positive stories when we go talk to people, outweigh the negatives.
Catherine Ettinger: How do you see Grand Rapids and the overall region evolving over the next several years? This is a transition period, not quite sure, how long that is going to last and evolve over, but what do you see happening through that era....
Birgit Klohs: It will be a five to ten year transition period. This is the new it; because people keep wondering when are we there. It is not a destination, it is really a journey. I always think back into 1996 when Mr. and Mrs. Van Andel and their children announced the creation of something called The Van Andel Research Institute and I remember sitting in my office and I am having one of these moments where I am saying, 'Yes, here is a new opportunity for West Michigan to reposition itself."
And reporters and others said "What! We do not even know what they are going to do and how long is this going to take and what does it really mean?" I said "Listen, we do not have a Research University in West Michigan. We have a very fine University and Colleges, Grand Valley and others; but we do not have Research University going on here. We surely do not have Biomedical Research going on here.
So, this is an enormous gift from a very generous family. Now, we need to use it as a region and community to figure out how we can leverage it. Really, that is exactly what is happening. They put that institute next to the hospital for a very good reason and close by other hospitals. The hospital is obviously now growing.
Michigan State looked West for their medical School because you have a large medical community here and Something called the Van Andel Research Institute and that is what is happening on the hill, but that also features into our manufacturing sector because people are saying, so, are you abandoning us? No, because when you are thinking of commercializing anything, if you commercialize a new medical device it requires somebody makes something...
Catherine Ettinger: You have to build it.
Birgit Klohs: So, what I see is a couple of things, one the emergence of a much more sophisticated community and we have to become more sophisticated and culturally adaptive because the talent we talked about earlier, we are trying to attract, does not all come from here and organizations like a medical school and hospitals and research institutes, by their very nature recruit from very different parts of the world then you would have normally found.
So I think this, in a very, very positive way is going to be a very, very good journey for West Michigan in terms of repositioning ourselves in a flat world. In a really, very, very flat world and if I look back and I am not from here and I look at how Grand Rapids in West Michigan have always managed to get through changes from being furniture capital USA to being office furniture capital globally to all these new kinds of industries that we are trying to create and are encouraging, I think we will be fine.
We do have to become embracing though of truly people from other parts of the globe, that want to contribute to this community.
Catherine Ettinger: The diversity of not just the population and also...
Birgit Klohs: No, it is not just the diversity of population, I am calling it cultural competency. To embrace somebody who is going to research cancer who comes from Malaysia or the IT person who comes from South Africa or the CEO who comes from Germany.
All of whom come with a different cultural backgrounds, different intellects, different religions, different ideas of how to make something happen and we need to as a community embrace folks from different parts of the country and the globe to add to the richness of our experience because if that talent does not come here or when it comes does not stay here, we will not make the turn.
That is my concern, we will have the money, but not the talent and then money without the talent does not get you anywhere, that is a real, real, real key issue.
Catherine Ettinger: Any other thoughts Birgit?
Birgit Klohs: Well, yes, it is the Right Place's job to market this region and we do I think for 22 years I have done a very, very good job or we would not be here any more, but it is everybody's job to market this region. So, when somebody says I am trying to be -- somebody is trying to recruit me in West Michigan and I have never heard of Hudsonville or Grand Rapids or say positive things and do not complain about the weather.
This is a dynamic growing community and I think we have really done great things in our communities over the last ten years, whether it is Holland, what Muskegon is trying to do downtown, obviously downtown Grand Rapids, but also all the smaller ones, if you say negative things about this region to anybody out there and I am not asking you to be this Pollyanna, but I am asking you to say, I can contribute to the marketing of this community and I convince somebody this is a good place to be, because it can not just be the job of a single organization, it is really up to all of us to make this region what it can be.
Catherine Ettinger: Reinforce the positive, promote...
Birgit Klohs: Exactly, it is not; nowhere is perfect, okay, Atlanta is rationing water, we have snow, it blows in Chicago, Boston has a nasty weather, everybody has weather. Everybody has some -- Massachusetts is outrageously expensive. We have very affordable housing, good schools, access to Lake Michigan, that's beaches are second to none. We need to reinforce in our own minds what we have and why we are here and then spread the word.
Catherine Ettinger: Excellent, Birgit I want to thank you for taking the time to be with us today and for sharing more information about the right place and economic development activity in the region, you can find out more information on the Right Place website at www.rightplace.org. Until next week, this is Catherine Ettinger of Inside Grand Rapids.
Birgit Klohs: Thanks a lot Catherine.
Announcer: This has been the Grand Rapids Insight podcast. Comments are welcomed to our website http://www.grandrapidsinsight.com or email your feedback via our contact form. We hope you've enjoyed the show.