Kalamazoo's Economic Revitalization (cont.)

The action plan

Kalamazoo's new economic model. Click for a larger image.

To begin, community leaders formed Southwest Michigan First (SMF) in 1998, a nonprofit organization that would serve as Kalamazoo County’s lead economic development agency. SMF was commissioned to create a long-term economic strategy that would build on existing strengths and create a sustainable foundation for growth. That strategy initially included four key elements:

• Maintain a proactive economic development effort that thinks regionally and is not tied to traditional economic models.

• Establish a strategic economic model to move the community away from dependence upon industry and toward a community-wide collaborative relationship with higher education at the center.

• Build on the life-sciences strengths of the community.

• Establish a venture capitalfriendly environment that seeds new companies for longterm sustainable business development.

In fulfilling its mission, William Johnston, chairman of the SMF board of directors, said the agency’s first challenge was to change perceptions about how economic development should occur.

“The perspective of economic development in this region prior to Southwest Michigan First was that it was the responsibility of local government,” Johnston says. “The natural result was that there wasn’t much sharing of information beyond the microcosm of local government. Economic development doesn’t happen that way. It happens when we cross political boundaries.”

This challenge was evident for SMF almost immediately after the agency’s formation, when private developers in Kalamazoo County’s Charleston Township sought to create a landfill along Interstate 94. Neighboring Eaton Corporation, whose Heavy Truck Component Research and Engineering Headquarters employed 600 highly skilled workers, threatened to relocate due to the landfill plan. To keep Eaton from leaving, SMF purchased the land and prevented the landfill plan from moving forward.

The agency then earmarked the property for a new commercial facility and entered into a contest with three other states for Target Corporation’s proposed 1.35 million-squarefoot regional distribution center. Collaborating with public and private entities in Kalamazoo County and the state of Michigan, SMF developed an incentive package and provided comprehensive development services for Charleston Township, including the remediation of 10 acres of wetlands. In the fall of 2000, Target awarded the $100 million project to Charleston Township, and the facility’s 650-person staff is projected to grow to more than 900 in the next few years.

With this early win, SMF achieved its initial goal of introducing innovative regional economic development to southwest Michigan. But as the young agency struggled to proactively direct the region’s economy, it was also forced to respond to the ongoing challenges of economic change. The recession’s impact was gathering momentum and joblessness continued to grow.

Greater challenges – and responses – still ahead

By the end of the recession, Michigan would lose more than 200,000 manufacturing jobs alone, and as a state it has yet to emerge from recession. In southwest Michigan, consolidation in the paper and pharmaceutical industries dealt lasting blows. In 2000, a series of closings rocked the community – five paper facilities in a few months. New owners couldn’t be convinced to invest in old plants when more modern and less costly facilities could be renovated or constructed elsewhere. Though SMF was successful in keeping a division of American Greetings in the community, and even managed to persuade the company to expand its local operations, the other plants could not be saved.

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