By Tom Walsh
LONG before The Great Recession would rock the nation in 2008, the state of Michigan’s economy was already in a frightening free fall. From 2000 to 2007, Michigan lost 391,000 jobs, while the nation as a whole gained 7.6 million. In February 2006, under the headline “The Tragedy of General Motors,” Fortune magazine declared that evidence pointed “with increasing certitude, to bankruptcy” for the giant automaker. A month later, appliance maker Electrolux shut down what was once America’s largest refrigerator plant, eliminating the last of its 2,700 jobs in the mid-Michigan town of Greenville. Electrolux moved the work to Mexico, spurning state offers of 20-year tax-free status and a new plant to stay. Ford Motor lost a record $12.7 billion in 2006.
Amid this distress, in October 2006 the presidents of Michigan’s three major public research universities – Michigan State, Wayne State and the University of Michigan – announced an alliance they called the University Research Corridor (URC). Their aim, simply stated at the time, was “to work jointly to transform, strengthen and diversify Michigan’s economy.” Six months later, at the Detroit Regional Chamber’s 2007 Mackinac Policy Conference, they released the URC’s first report – from the independent Anderson Economic Group – comparing Michigan’s URC threesome to respected research clusters in Massachusetts, Pennsylvania and North Carolina’s Research Triangle.
Today, 10 years later, Michigan’s economy is clearly in better shape than during the days of what became known as its “lost decade.” And the URC is still around. Did the alliance make a difference? What’s been its impact on the Michigan economy? How does it stack up against a growing group of competing innovation clusters across the United States and beyond? And what does the future hold?
This article explores those questions, through data from a host of benchmarking and sector-specific economic reports; and interviews with presidents, officers and researchers at all three universities, and with Michigan business leaders and experts from think tanks and other innovation clusters.
Several clear conclusions emerge:
To tell the story of how all this evolved, we start at the beginning – in the first few years of the 21st century. Jobs and people were leaving the state in droves. Public university leaders were smarting from state budget cuts of more than 10% to higher education, while spending for prisons and other services was rising. Meanwhile, politicians were scolding the universities for raising tuition.
Not long after presidents Mary Sue Coleman of U-M, Lou Anna Simon of MSU and Irvin Reid of WSU had joined Michigan Gov. Jennifer Granholm on a 2005 trade mission to Japan, they began talking about an alliance. They thought it could help improve the Michigan economy – and show lawmakers and the public that their institutions were important assets that needed to be supported.
“We felt like the bottom was dropping out. There was a very, very dire forecast for the future, and I think we all worried that if the state went down, the universities would just be dragged down, because it would be too overwhelming,” Coleman said in a recent interview. She retired as U-M president in 2014 and is currently president of the Association of American Universities (AAU).
“Michigan was already losing jobs and our economy was really struggling when I became president in 2005,” recalled MSU’s Simon. “Mary Sue and I would go to national meetings where other schools were touting their intellectual prowess and research and talent and saying, ‘gee whiz, look at California and the rise of Texas, and isn’t Austin a great place?’ Back then everybody was doing well except for Michigan.”
UM, MSU and WSU already had partnered on some research – along with the Van Andel Institute in Grand Rapids – a few years earlier, when Gov. John Engler used tobacco settlement money to fund research in one sector, biotechnology. But after launching in 1999 as the Michigan Life Sciences Corridor, its mission was broadened in 2002 by Granholm to add more participants and include homeland security and automotive research under the umbrella of the Michigan Technology Tri-Corridor.
“Prior to the launch of the Life Sciences Corridor in 1999, there was very little collaboration happening between the schools,” shared Michael Jandernoa, former Perrigo CEO and a board member for the Life Sciences Corridor and the Michigan Economic Development Corporation. “The availability of funding was a great incentive to work together. This collaborative approach enabled them to get better research projects, to win contracts with the NIH and with leading pharma companies, it made them competitive in that landscape.”
Those early collaborations helped lay the foundation for the October 2006 announcement when U-M, MSU and WSU launched the URC, officially uniting the universities and establishing a new research cluster focused on talent creation, academic research and economic revitalization.
Benchmarking for credibility
At that time, research clusters in North Carolina, Silicon Valley, Boston and elsewhere were gaining prominence as hubs for innovation and venture capital.
“We wanted to get real collaborations going in Michigan, but it was also to reassure ourselves that we were stronger together than we were apart,” Coleman said, “and also show the rest of the world.”
But to gain recognition as a peer group with places that had the likes of Harvard, MIT, Duke, Stanford, Berkeley and Carnegie Mellon among their research schools, the URC members knew they needed an independent analyst to compare them with other clusters.
“In order to be credible around the country as a magnet for innovation, for talent, we needed to have a third party that would not be viewed as just an extension of our universities,” said MSU’s Simon.
They hired the Anderson Economic Group to design a benchmark study that initially compared the URC with three other clusters: Research Triangle Park partners in North Carolina; Harvard-MIT-Tufts in Massachusetts; and a Pennsylvania trio.
Comparing the clusters on measures such as degrees awarded, research spending, technology commercialization, patents, royalty income and business startups, Anderson – a consulting and research firm with offices in Michigan, New York, Chicago and Istanbul – has conducted the annual benchmark studies for the past 10 years. Its list of research cluster comparisons has also grown to include Texas, Illinois and two in California.
Patrick Anderson, the firm’s CEO, said the URC founders “absolutely insisted that they benchmark, compare themselves against the best. They didn’t want to waste money on a glorified P.R. exercise,” he said. “Even if the numbers in the first few years don’t look as good as you’d like, the fact that you are benchmarking yourself creates an ethic of performance.”
The Michigan URC’s data hasn’t always outshone the other clusters, but has consistently been in the ballpark with the best. In recent years, the URC has topped the seven other clusters in the number of science and technology graduates, while finishing middle-of-the-pack in research spending and lower on technology commercialization.
“We started doing strict benchmarking with research clusters around the country because we wanted to show people, ‘Look don’t count us out.’ We’re a powerhouse here. And we’re going to help the state as much as we can, but also to show the rest of the world that this place ranks in the top few in the nation,” said Coleman.
M. Roy Wilson, named president of Wayne State in 2013, was immediately a fan of the URC alliance, but found the multiple criteria for benchmarking challenging to communicate, so he suggested creating a composite measure – which Anderson created and called the Innovation Power Ranking.
“I had no idea where we were going to rank when we did that, and we actually came in second,” Wilson said. Indeed, the URC has finished second for the past four years on that composite measure, powered by its top rank on talent as a producer of medical and scientific degrees.
Wilson, a doctor and medical researcher by training, became a believer in research as an economic development engine in 2001, when he was at Creighton University. He helped convince the Nebraska legislature to back creation of a $106-million medical research fund, which later spawned nearly $1 billion in research and creation of 1,800 jobs, according to an Omaha World Herald assessment 10 years later.
Wilson also said the URC’s focus on collaboration among the big Michigan universities meshes well with today’s trends. “The way research is done these days, as opposed to 20 years ago, is more collaborative and inter-disciplinary. The amount of dollars being placed in that direction are growing and individual awards are becoming much smaller,” he said.
Business on Board
The URC got early, and influential, buy-in from Michigan’s top corporate leaders.
Detroit Renaissance, the powerful group of CEOs from across Michigan, transformed itself in 2009 into Business Leaders for Michigan (BLM), taking a wider geographic focus and setting a bold goal of transforming much-maligned Michigan into a Top Ten state for business.
BLM joined with the URC and the foundation-backed New Economy Initiative in sponsoring the annual Accelerate Michigan innovation competition, now in its eighth year, offering a grand prize of $500,000 to a winning startup company.
BLM also invited the presidents of the three URC schools to join its board, which had previously included only CEOs of major corporations. Investment officials from the universities are also active in BLM’s Renaissance Venture Capital Fund.
“I think certainly there has been an uptick in entrepreneurship in the state, and I think a lot of that is owed to the URC getting more involved in economic development in the last 10 years. That’s a big change from what occurred previously,” said Doug Rothwell, BLM president and the state’s former economic development chief under Engler.
Mark Schlissel, who succeeded Coleman as U-M president in 2014, was surprised – and impressed – to find a strong model of collaboration between Michigan’s top research universities and major businesses in the state. “That’s unique in my experience, said Schlissel, who was a provost at Brown University and a department dean at University of California at Berkeley before coming to U-M.
In fact, Rothwell spoke to the AAU on that topic a couple years ago. “The reaction,” Rothwell said, “was that most (of the university leaders) regretted not having a similar business partner, and wanted to replicate what we have in their states.”
Collaboration Projects: When 1 + 1 + 1 = (more than) 3
Each of the URC schools has a distinct mission and a long, proud history of accomplishment.
Each leads huge national research projects with global impact: MSU with its Facility for Rare Isotope Beams; WSU hosts the Perinatology Research Branch on infant mortality for the National Institutes of Health; and U-M is testing driverless cars at its 32-acre MCity proving ground.
But in addition to those, the URC universities have received hundreds of awards to support collaborative projects teaming researchers from the three schools with one another, which the URC highlights in their annual sector reports. For example:
Water: In its 2014 report on the “Blue Economy,” the URC said its members received nearly $300 million in 2,100 awards for water-related projects in areas from invasive species to water quality. Michigan ranked fourth in the U.S. in jobs associated with water-related industries, with 718,700 and the URC schools produce more than 3,400 graduates each year in water-related fields.
“Interestingly, some of the strongest collaborations between the three schools have been in water,” said Schlissel. “There’s a new project in the offing on water infrastructure for cities, that’s enormously timely because of Flint.”
Life Sciences: BLEEP, the Michigan Bloodspot Environmental Epidemiology Project, supported with early seed funding from the URC, uses Michigan’s newborn blood spot repository to probe for genetic information. That in turn led to a $4.8-million NIH grant the for Environmental Influences on Child Health Outcomes (ECHO) project, involving all three URC schools and researchers from Henry Ford Health System.
Nigel Paneth, MSU professor of epidemiology and pediatrics, said the URC “was instrumental in nudging things along to make it feasible for us to get a really good project to the big funders. And we had researchers who complemented each other from different places, so whenever we needed something, there was someone in the coalition.”
Autos/Mobility: URC universities spend $60 million a year in auto-related R&D. U-M is most visible with MCity, but MSU scientists, working with sensors on a project called CANVAS – Connected and Autonomous Networked Vehicles for Active Safety – are focusing on recognition and tracking of pedestrians or other vehicles. And WSU has specialists on urban planning in this space.
“I’m hoping with MCity up and running, and with the American Center for Mobility gearing up at Willow Run, that the role of URC will be more visible because this is right up their alley. All three of these universities are knee-deep in this next-generation mobility,” said Sandy Baruah, president of the Detroit Regional Chamber.
But for the URC?
In the 10 years since the URC was formed, Michigan is in demonstrably stronger shape, economically.
The state’s jobless rate has dropped by half and now hovers around the U.S. average. General Motors and Chrysler, after trips through bankruptcy, have rebounded strongly along with Ford and the rest of the auto industry. The city of Detroit, after its own bankruptcy journey, is on the rise, with an encouraging resurgence of activity in the city center.
The University Research Corridor, by virtue of growing collaboration among its three universities – and strong partnership with Michigan’s business community and state government – has played a meaningful role in the state’s rebound.
This September (2017), the Washington, D.C., based nonprofit University Industry Demonstration Partnership (UIDP), will hold its annual national conference in Detroit. UIDP’s mission is to develop innovative approaches to partnership and collaboration between industry and universities.
And Dan Berglund, CEO of SSTI, an Ohio-based think tank focused on science, technology, innovation and entrepreneurship, is impressed by what he’s seen from the URC in his neighboring state.
“There are lots of states that have three good research universities,” Berglund said, “but there aren’t lots of states where those three research universities actually want to talk with each other and work with each other – and also collaborate with business and really understand that they have a strong economic development role.”
Schlissel, the U-M president who arrived in 2014, put it this way. “The really impressive thing I didn’t appreciate as an outsider is when you put the three universities together, the scale is really enormous – faculty, research dollars, the number of students that get educated.
“People, when they think of Michigan, think of autos, but I think they should think of public research universities as one of our leading industries. It’s important for the state to look for advantages. We have abundant supplies of water that many states don’t have; we have all this expertise in manufacturing; and you have three major research universities within an hour of one another and that’s a very unusual thing to take advantage of.”
Anderson, whose firm crunches the benchmarking data for the URC and its competing U.S. innovation clusters, attributes its strength to the timing of an economic crisis – and the actions of several key leaders.
“It took the combination of an economic decline in Michigan – the lost decade – and it took Mary Sue Coleman and Lou Anna Simon who were able to talk their institutions into setting aside some deeply imbedded prejudices about each other,” he said. “And give Doug Rothwell a lot of credit. The BLM did careful benchmarking for their Turnaround Plan” (which aims to make Michigan a Top Ten state for business), “showing the numbers even when they don’t look good.”
It’s clear after 10 years that the three URC universities, while retaining their own distinct identities and missions, do contribute a great deal to the image and the reality of Michigan as a place for high-tech companies and for educated people and for forward-looking businesses.
As for the future, Simon says, “I don’t know what next great frontier is. You wouldn’t have predicted autonomous vehicles 10 years ago. I think that value of the URC is that it’s forward-leaning.”
Tom Walsh worked at the Detroit Free Press from 1982 to 2015 as a reporter, bureau chief, suburban editor, business editor, projects editor and columnist. He previously was city editor at the Oakland Press in Pontiac, and a reporter and editor at Fairchild Publications in Chicago, New York and London, England. He has received awards for writing and editing from the Overseas Press Club, Michigan Press Association, SABEW, Detroit Press Club Foundation, Society of Professional Journalists (SPJ) and the Gerald Loeb Awards. He was honored with the SPJ Detroit Lifetime Achievement Award in 2016.