Michigan Better Place to Do Business, Governor Says

TRAVERSE CITY, MI – Michigan Gov. Rick Snyder describes himself as both a businessman who got into politics and a nerd.

The Republican, who is running for a second 4-year term, spoke Wednesday at the Management Briefing Seminars here. After his address, he sat down with WardsAuto.

WardsAuto: Every business has a 5-year plan. What’s yours as it relates to the auto industry?

Snyder: You’ve heard some of it in my discussion, talking about the end of the Michigan business tax, the property tax, regulatory reform. I’m working on the transportation and energy sides. The big one I’m going to emphasize more is this talent issue.

Rather than a 5-year plan, you could describe it as an 8-year plan, if I win re-election and serve two terms. It’s a systematic approach to make us more competitive and create jobs.

WardsAuto: There has been a lot of talk at this conference about recruiting and retaining young engineers and people at that educational level. Yet you talk of the need for vocational training.

Snyder: We’re doing both.

WardsAuto: But you are the first person at this conference to mention skilled trades as opposed to someone like college-educated engineers.

Snyder: In the auto industry, a lot of people are struggling on the skilled-trades side.

WardsAuto: Struggling in what way?

Snyder: In terms of finding talent. In many cases, they do one job posting, but they’d hire a number of people if they were available.

WardsAuto: The Detroit Three are obviously here, but is there any chance to get a Honda or a Toyota or a Hyundai to locate a plant in this state?

Snyder: I don’t know why there wouldn’t be. There is an opportunity for that. A big part of the picture is the perception issue. Factually, we’re the place to be in terms of cost structures, productivity, environment, infrastructure, resources. We’re checking all those boxes.

We had a period where there were all those issues. A lot of people are remembering the Michigan of 2009. A lot of what we’re doing is communicating the Michigan of today and how exciting it is and how in the next few years it is only going to get better.

WardsAuto: One of the speakers here yesterday spoke of the U.S. auto industry as continuing to move to the South. Charting it out geographically, he estimates the industry is moving southward 14 miles (22 km) a year.

Snyder: I’m not sure that’s an accurate statement anymore.

WardsAuto: Well, he’s talking about auto plants, not so much research and technical centers that some foreign automakers do have in Michigan.

Snyder: He’s talking about assembly plants, but what about the supply base in manufacturing? I think it is starting to walk back this way. And when you are talking about research and development and engineering, it has moved a lot back this way. Much more front-end work is being done in Michigan.

WardsAuto: A lot of automakers want their suppliers to have facilities right near the assembly plant itself. That could preclude the chances of a supplier plant in Michigan supplying parts to an assembly plant in a Southern state.

Snyder: Some of that will continue to cluster to where those plants are. But we are seeing, for example, people bringing parts from Mexico to Michigan as part of the supply base. Again, the cost equations and productivity are such that we can be very competitive.

WardsAuto: The right-to-work legislation passed in Michigan last year. That was a divisive issue. Are there any signs today that it’s actually attracting business to Michigan?

Snyder: Yes, the pipeline has filled up quite a bit. It got people’s attention. Right-to-work shows there has really been a major cultural change in our state.

Previously, a lot of companies sort of screened Michigan off. They wouldn’t even look at Michigan. Now, we’re often in the competitive front to be the place they want to locate or to grow.

WardsAuto: What did they not like about Michigan?

Snyder: There were a number of issues. The Michigan business tax was the dumbest tax in the country, and we got rid of that. We’ve cleared away a number of impediments to make us extremely attractive. We’re a top-10 state to do business in, but how many people know that?

WardsAuto: What was fundamentally egregious about the state’s business tax?

Snyder: It was unfair. You could have two companies with the same amount of income, and one could pay four times more in taxes depending on its supply chain or how much it bought from the outside or how much it had in labor content.

It was fundamentally unfair, if you assume income is a basis to start with.

WardsAuto: Tesla has opted to not sell cars through the traditional franchised dealership network. They are fighting with many state dealership associations who invoke franchise laws. Are state dealer-franchise laws out of date?

Snyder: They’ve worked in Michigan a long time. It’s not a priority on my list to change that. The dealer system works well in Michigan. They take good care of customers, and they have good relationships with the people making the cars.

WardsAuto: So do you think Tesla should not be selling cars on its own?

Snyder: I’m not going to say that. It’s not my role to make that decision. That’s their business. I don’t have a strong interest in changing how it’s done in Michigan.

WardsAuto: What car do you drive?

Snyder: Actually, they won’t let me drive.

WardsAuto: Well, what’s the limo you’re driven around in?

Snyder: It’s not a limo. The long-standing tradition for the state of Michigan is to (use Detroit-Three vehicles to transport the governor). Basically, we use a Chevrolet Suburban, Ford Expedition and a Dodge Durango. We rotate. I get to try all three.

WardsAuto: I won’t ask you which one you like best.

Snyder: Good.

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