Buffalo Ponders Potential of Innovation Economy

Even as the auto workers struggle to resurrect the spirit of Jimmy Hoffa, the conversation about competitiveness in the Great Lakes region is slowly - ever so slowly - turning from talk about rescuing the industrial economy to dreams of building something much more profitable in the 21st century.

The latest indication of that comes from Buffalo, where, amidst the headlines of the UAW strike, the local newspaper recently ran a story telling how local leaders believe their region can be a real force in the knowledge economy.

“In 10 years, we’re all going to be buying solar panels, electric cars, energy-saving refrigerators and turbines," Paul Dyster, chairman of the citizen’s board advising the Niagara River Greenway Commission, told reporter James Heaney. "We can make them ourselves, or we can buy them from China.”

“We’re at the starting line all over the country," said Jeff Jones, state coordinator for the Apollo Alliance. "Buffalo has as good a chance of any region in the country to take the lead [in the innovation economy].”

Indeed, the creative destruction of the Great Lakes economy marches on. New and radical ideas and businesses are rising - as they have throughout history - that will transform the very nature of the marketplace and leave behind entire industries. And even the longest picket lines the union can muster ain't gonna stop it.

Michigan Must Pay to Play

Manufacturing workers in Michigan earn $14,000 a year more than the rest of the nation, according to Dr. Stephen Forrest, an entrepreneur and vice president of research at the University of Michigan.

Still, members of the UAW launched a strike against GM yesterday in search of fair compensation, benefits and, ironically, job security. The move is perhaps the clearest indication yet that a significant portion of the Michigan workforce is aging and anchored to the obsolete business models of a past generation. It's telling how a vast majority of the people walking the picket lines appear to be 50- and 60-years-old.

Young knowledge workers, by sharp contrast, widely regarded as the future of the state's economy, earn approximately $7,000 less than their counterparts across the nation, according to Dr. Forrest. These are the people in growing economic sectors like biotech, finance, design, and alternative energy. And civic leaders in Michigan wonder why the talent base is compelled to graduate college and leave the state for opportunities in Chicago, Portland, or San Francisco.

Cleveland's Waterfront Might Not Takeoff, But Planes Will

With estimates as high as $1 billion, civic leaders in Cleveland argue the city can't afford to shut down Burke Lakefront Airport, which sits on the southern shore of Lake Erie, and redirect plane traffic to the region's existing airports. (There's reportedly three in the immediate area.)

But, as a growing movement of Great Lakes cities set in motion aggressive plans to make their industrial waterfronts cleaner, greener, and more accessible, the pressing question for Cleveland is whether the city can afford NOT to move the busy transportation hub.

Because right now it's blocking the city's ability to fully leverage one of its greatest and most unique assets: Lake Erie.

The broader context that Cleveland now operates in is best described as nothing less than a waterfront revolution. Across America, cities are redeveloping lake- and river-fronts to boost the quality of life, attract new residents and businesses, and compete in the 21st century.

The movement has begun to take hold in the greater Great Lakes region as well. Fresh off persuading BP to rethink its pollution plans for Lake Michigan, residents in Northern Indiana continue to push for investment in the Marquette Greenway Plan, which would consolidate the steel industry's land holdings and bring new parks, trails, and redevelopment to struggling central cities like Gary.

Detroit recently opened the first phase of its ambitious riverfront boardwalk.

And it's no secret what's happening to the Lake Michigan waterfront in Chicago, the most popular and competitive urban metropolis in the Midwest.

Cleveland has a visionary lakefront revitalization plan, too. But the plan for storefronts and condos likely will struggle to takeoff if 380 acres of waterfront property remain dedicated to runways and airplanes. Along with landfills, highways, and nuclear reactors, airports tend not to be ideal and inviting neighbors.

Heads Up America, Michigan's Wobbling

With the economies to the east and west motoring right along, Michigan tends to feel like the lone soldier in the U.S. fighting against the wave of job losses, factory closings, and other wrenching trends linked to deindustrialization.

But Stephen Forrest, one of the state's more accomplished entrepreneurs, says it's in the country's best interest for national leaders to understand and respond effectively to the economic transition underway in America's Heartland.

“Michigan’s problem is not local," Dr. Forrest said in a recent presentation to a group of venture capitalists in Holland, MI. "It’s not even a regional problem. It’s a national problem. The federal government needs to understand the importance of this region to the entire country.”

Despite the upheaval, the greater Great Lakes region - with Michigan at its center - remains one of the most influential economic centers in the United States of America. But the Mega Midwest remains deeply invested in the Industrial Era as the global economy is driven more and more by information and new ideas.

Without an immediate "all hands on deck" approach to accelerate the transition, generate new jobs, and reverse the decline, “Michigan could become a millstone around the nation’s neck," according to Dr. Forrest. The U.S., he said, simply cannot compete globaly if it writes off the 2/3 of its population which exists in the center of the country and says we can do it all on the coasts.

“Michigan is the leading indicator of large regional trends," said Dr. Forrest, who serves as vice president of research at the University of Michigan. "The reason we’re getting pummeled by this economic change is simply because we’re so invested in and been so successful in the past at manufacturing."

"So it’s natural that we would be hit the hardest the earliest," Forrest continued. "But it’s coming all around us. We know that. Ohio is the next one down. Indian is having trouble. So if we fix Michigan we actually fix the whole region. And if we fix the region we fix the U.S.”

Waukegan Tests Popular Support For Harbor Cleanup

Changing course in their ongoing strategy to rehab Waukegan Harbor, elevate quality of life, and boost competitiveness in the knowledge economy, civic leaders in Waukegan, IL recently launched a lawsuit to force several long-standing waterfront industries to pay for pollution cleanup in the harbor.

The move comes after local and federal officials failed to reach agreement on a $36 million plan to remove contaminated sediments from the harbor bottom. But so far the new tact, which is based on bedrock environmental law, appears out of step with public opinion. The Lake County News-Sun organized an online poll asking readers whether the city should have filed the lawsuit and the overwhelming response is 'No.'

At this point, more than 11,200 people have cast a vote and a convincing 92 percent - 10, 435 online voters - think the lawsuit is a bad idea.

Clean Tech Big Money

Fuel cells. Energy efficient light bulbs. Waterless urinals. Recycled construction materials. Smart chemicals. Water filtration and desalination equipment.

Lauren Bigelow says so-called clean technologies just may be the biggest jobs and wealth generation opportunity of the 21st century.

As the director of programs for the Cleantech Network, an organization working to build the market for new technologies and services that simultaneously help sustain the planet and turn profits, Ms. Bigelow is watching investors plow a ton of money into the cleantech industry.

In fact, Ms. Bigelow says, clean tech is now the world's 3rd largest venture capital category, receiving 11 percent of global VC.

What does that mean in real dollars? About $8.5 billion in North American investment in energy innovation, waste reduction, and other sectors since 2003. The U.S. market has grown 253 percent since 2001 compared to 67 percent for electronics, 53 percent for medical devices, and 29 percent for biotech. Public offerings and mergers and acquisitions are brisk business too.

Despite infantile public policies to help advance the industry, the American Midwest ranks 6th in a 2006 listing of the Top Ten Cleantech Regions with $293 million in economic activity. The West Coast led the way with $1.9 billion followed by the Northeastern U.S. ($777 million) and Eastern China ($420 million).

"We're seeing a lot of comfort right now with VC investment in clean technologies," Ms. Bigelow says, "particulary in the energy generation sector."

MI Republicans Land, Then Pigeonhole, Presidential Debate

If you're a resident of Michigan, or any Great Lakes state for that matter, you gotta be amped that the Michigan Republican Party recently announced it will sponsor a debate for their party's presidential candidates on October 9 in the Detroit suburb of Dearborn. These guys have basically ignored the plight of Middle America for years. Now they're coming to ground zero of the Rust Belt to help decide who's best suited to lead the nation into the Digital Age.

The debate, cosponsored by the Wall Street Journal and CNBC, represents a tremendous opportunity for state residents and civic leaders from around the region to probe which candidate is best prepared to respond to the historic economic, technological, environmental, social, and political trends reshaping America's Heartland.

As state party chairman Saul Anuzis puts it in his YouTube video announcing the news, "Michigan is going to be the center of attention for the next couple of months."

The question is what are these guys going to talk about? What issues will party leaders choose to elevate to national attention? Will the forum come off as a thoughtful discussion about what action the Upper Midwest really needs to take to get its groove back in the modern era? Or a superficial conversation about how Michigan can prosper again if we just fix NAFTA?

Will the candidates bring fresh ideas for leveraging globally unique regional assets like unmatched research universities and Great Lakes to reverse decades of decline?

Or will they brownnose the party loyalists with the increasingly tired and empty rhetoric about tax cuts and 9/11?

Will they seize on the power of inclusiveness and openness to new people and ideas as a way to rekindle a dormant entrepreneurial spirit and boost competitiveness in a global economy?

Or will the debate be two hours of pandering to gay haters, abortion foes, and militant gun rights advocates?

Will they talk about innovative strategies to unite business, academia, philanthropy, and government in a common movement to modernize impotent cities, rebuild community, and pursue a 21st century development strategy for the new economy?

Or will they target the gatekeepers for the obsolete economic development ideas of the 20th century and offer ill-fated ways to rescue the old economy?

Chairman Anuzis provides a glimpse of what direction the forum will take in a recent post on the state party blog:

"This debate on economic issues will give Republican presidential candidates a chance to talk about the issue that affects Michigan families most - jobs," Mr. Anuzis writes. "The automotive industry and manufacturing helped create the Middle Class, and this debate will allow voters to hear how the next president of the United States will deal effectively with the one of the most important sectors of our national economy."

There's no denying or even minimizing the significance of the role manufacturing played in regional - and national - growth, prosperity, and security over the past century. Even after years of factory closings and job losses, industry remains a crucial and evolving dimension of the economy. Initiatives to strengthen the sector deserve rigorous debate.

But they shouldn't dominate and headline. This is 2007. And a growing number of the state's brightest minds agree that manufacturing is no longer driving economic growth. The marketplace is undergoing an intense transition away from heavy and dirty industry toward a knowledge economy where design, alternative energy, info tech, and life sciences represent the new frontiers of opportunity. That is where the growth is happening. And that is what Michigan and its bordering swing states must figure out.

Overall, the greater Great Lakes region of the U.S. has yet to articulate a coherent and comprehensive vision and strategy to accelerate the transition to the knowledge economy. That's where leadership is needed. And that's why the GOP debate in metro Detroit later this fall will help reveal which, if any, of the Republicans are best prepared to strenghten Michigan and, by extension, America.

Grand Rapids, MI Aims for 100 Percent Green Power

Emboldened by his city's remarkably swift progress toward satisfying 20 percent of its municipal power demand with clean renewable energy sources, Mayor George Heartwell today publicly wondered why the City of Grand Rapids shouldn't pursue a strategy to completely end its dependence on coal and other irreplaceable fuel sources in an effort to advance more sustainable development, spur new jobs, and modernize the local economy for the 21st century.

"Why shouldn't the [green energy] goal for the second largest city in the State of Michigan be 100 percent," Mayor Heartwell told more than 300 attendees at a wind power convention on the campus of Michigan State University. "If municipal government demands increasing levels of renewable power for the sake of all our citizens, then won't residential consumers and industry follow. And won't that demand drive both public policy and innovation."

Ben Larson, a field organizer for the Union of Concerned Scientist's Clean Energy Program, said such an ambitious goal is "certainly possible" through a combination of strategies that would include purchasing renewable energy credits.

But Mr. Larson was not immediately aware of any elected official or U.S. state setting the bar so high in the push to promote green energy. Several states have enacted or are considering policies that call for 15, 20, or maybe 25 percent green power generation.

He also said Mayor Heartwell's bold stance ultimately could help elevate popular support for energy innovation and help move a more modern energy policy forward in both Michigan and Washington, D.C., where a limited number of members from the Michigan delegation support a proposal to increase energy efficiency and innovation standards.

Efforts to promote energy policy innovation in Michigan continue to progress slower than a Beverly Hillbillies brainstorming session, too. Critics argue, among other things, that mandates to promote green power will drive up electricity costs for consumers, weaken the power grid, and kill jobs.

But a growing number of proponents contend that energy innovation is essential to the economic, environmental, and well-being of cities, states, and the nation as a whole. Mayor Heartwell has consistenly stood on the cutting edge of this emerging movement.

In his 2005 State of the City Address, Mayor Heartwell announced his administration would begin to wean Grand Rapids off dirty, nonrenewable fuel sources like coal and begin to demand and purchase energy from landfills, wind mills, and other alternatives. By 2008, the mayor promised, 20 percent of the city's energy would come from green power.

"We will meet this goal almost one year ahead of schedule," Mayor Heartwell said today.

Hence the new and much more ambitious goal of 100 percent green power. Mayor Heartwell said little about how he intends to achieve the goal. He also stopped short of putting a timeframe on when he'd like to meet the new challenge.

But he made it clear that he believes the very pursuit of the goal will ultimately help his city and state protect the environment, generate high tech jobs in a knowledge economy, and spur new wealth in the modern era.

"The greatest fortunes that America has ever known were made in energy," the mayor said, reminding the crowd of industrialist John D. Rockefeller, who revolutionized the pertroleum business. "The geniuses who invent the formulas to more efficiently capture the energy of the wind, the water, and the sunlight will not only provide enormous good for the world. They will be rewarded handsomely for having done it."

Even In His Backyard, Obama Hesitates on Great Lakes

Barack Obama, locked in a fierce competition to claim the Democratic nomination for President of the United States, today dispatched an environmental advisor to share with advocates for America's Great Lakes how deeply the senator supports protecting and restoring one of the nation's most important freshwater ecosystems.

By doing so, Obama became the first presidential candidate on either side of the aisle to directly address the environmental and economic importance of sustaining Great Lakes waterways. All of the candidates were invited to attend the Third Annual Great Lakes Restoration conference in Chicago. Organizers, in fact, scheduled time for an in-depth panel discussion.

But the campaigns are focused intensely these days on early primaries in Iowa and New Hampshire. Not so much on the 78 of 270 electoral votes - including key battleground states like Michigan, Wisconsin, and Ohio - in the greater Great Lakes region. So, for twenty minutes at least, Senator Obama had the Great Lakes stage all to himself.

But even the man from Illinois was a no show. Deborah Shore served as his representative. She detailed the senator's impeccable record on the environment. How he introduced legislation to reduce mercury pollution. How he called for hearings into a plan by British Petroleum to increase pollution in Lake Michigan. How he promotes energy innovation and supports more modern fuel efficiency standards for cars and trucks.

Ms. Shore explained to the 250 plus business leaders, activists, and local officials gathered for the event that Sen. Obama, who hails from Chicago, lives just minutes from the Lake Michigan shore. She reminded folks how the senator worked in bipartisan fashion to slow the introduction of exotic species into the Great Lakes and how, "as president, Barack Obama will push for passage of the Great Lakes [restoration act]."

Indeed, Sen. Obama is one of only two presidential candidates signed on in support of the federal legislation to launch a $26 billion cleanup of Great Lakes waterways. But when pressed to help elevate Great Lakes issues to the national stage, and back the talk with real money, the Obama campaign seemed surprisingly unsure.

"Is the Senator going to mention Great Lakes restoration specifically when he talks about the environment, particularly in presidential debates?" asked Grenetta Thomassey, policy director for Tip of the Mitt Watershed Council.

"I can't say for sure. But we will relay the interest of this group and so many others that he do so," said Ms. Shore, a commissioner of the Metropolitan Water Reclamation District in Chicago.

"Fast forward one year," said Andy Buchsbaum, director of the National Wildlife Federation's Great Lakes office. "President Obama has been able to shepherd through the Great Lakes [restoration act], and now it's time for him to unroll his budget. Will he, in his budget, commit to funding the act fully."

"I don’t know," Ms. Shore said. "But let's see if we can get there."

"We have to make sure that every presidential candidate that comes through the region takes a position on Great Lakes restoration," said Illinois Lt. Gov. Pat Quinn. "And not just a rhetorical position. George Bush talked about Great Lakes restoration. But he never really showed us the money."

"We need to see action," Quinn added. "We need to see strong support for real investment in our Great Lakes."

Restoring America's Great Lakes Key to Competitiveness

The cost of fully funding a comprehensive plan to restore America's Great Lakes is pegged at $26 billion. But the long-term return on that investment could easily exceed $50 billion, according to a new report by the Brookings Institution, as the region becomes a more attractive place to live, work, and visit.

The report also projects a short-term economic benefit of as much as an additional $50 billion.

The report, scheduled to be released today, represents the most thorough and credible analysis yet on the economic advantages that could accrue to Michigan, Ohio, Wisconsin, and other Great Lakes states now struggling to transition from the Industrial Era to the Digital Age.

The report comes as a growing coalition of scientists, environmentalists, business leaders, and elected officials prepare to kickoff the third annual Great Lakes Restoration conference in Chicago tomorrow.

The report signals a momentus shift in strategy for the public campaign to fully fund the proposed Strategy to Restore and Protect the Great Lakes. Until now, proponents of the restoration strategy, which was officially released in December 2005, framed the urgent need for Great Lakes restoration as primarily an environmental issue. Investing in restoration, they said, is urgently needed to stop outdated sewers from polluting waterways, prevent invasive species from ruining the fishery, and cleanup toxic contamination in harbors and rivers.

Those issues still stand. But the federal legislation to implement the public works project continues to languish in Congress.

With the release of this new report campaign organizers are broadening the restoration debate from a one-dimensional environmental program to include a compelling economic angle. Specifically, the report reveals that fully funding the restoration will:

  • Leverage $6.5-$11.5 billion in increaesed recreation spending as cleaner waterways make swimming, fishing, and other tourism activities more inviting.

  • Raise coastal property values $12-$19 billion as rehabbed waterfronts become more attractive to private investors.

  • Slash municipal costs by $50 to $125 million as reduced erosion and sedimentation makes water treatment less expensive.

  • Generate "unquantifiable but significant economic activity" by improving the regional quality of life and making the region more attractive to new high tech businesses and top-flight talent.
"For the past half century," the report states, "the Great Lakes region has struggled to find its niche in a changing global economy. The Great Lakes themselves can be a key asset in this process - serving as a platform for sustainable economic growth, a crucible for freshwater protection and technology development, and the foundation for this region to thrive anew as a magnet for skilled workers."

"Federal, state, local, and tribal leaders must recognize that the benefits of renewal exceed the costs and work together to commit the resources needed to restore the lakes," the report concludes.