Could Google be engine for Mich. rebound?
Web search site's jobs are type that state's ailing economy needs.
Louis Aguilar and Gary Heinlein / The Detroit News
LANSING -- Is Google the search engine that can rev up Michigan's old-school economy?
A jubilant Gov. Jennifer Granholm -- proclaiming "Michigan has been Googled!" -- on Tuesday announced the world's most popular Internet search engine will bring 1,000 high-paying jobs and build a facility in the Ann Arbor area, giving the state the kind of knowledge-based employment that it sorely needs to replace disappearing auto industry jobs.
A ready supply of graduates from the University of Michigan was a prime attraction, Google officials said.
Luring a high-profile, cutting-edge Internet company could go a long way in convincing other high-tech companies that Michigan -- at least the Ann Arbor area -- has the chops to be a major player in a new economy, several economists and analysts said.
"It's a very good one-shot. The question is does it have legs beyond that?" said Charles Ballard, head of the economics faculty at Michigan State University.
"It probably has some legs. The economy of the future is going to be driven more by companies like Google than by companies like General Motors."
Comerica Inc. chief economist Dana Johnson said Google's arrival has "symbolic significance" for Michigan. "If it goes well, we demonstrate that we have the work ethic and skill to attract knowledge-intensive businesses. When you can show things have gone well, it's easier to recruit the next company. Do that a few times, all of a sudden you have a different kind of reputation."
'Smart' jobs a hard sell
The state's loss of manufacturing jobs in the past decade, particularly in the auto industry, has been well-documented. From 1990 to 2005, 158,000 manufacturing jobs disappeared, a 19 percent decline, according to Michigan Future Inc., an Ann Arbor think tank that studies state job and economic trends.
And that doesn't count plans by General Motors Corp., Ford Motor Co. and Delphi Corp. to cut 73,000 jobs nationwide in the next few years.
Replacing manufacturing employment with the kind of "smart" jobs that have been shaping the global economy has been a hard sell for Michigan.
Roughly defined as good-paying work that requires a college degree, knowledge-based jobs in Michigan grew 17 percent from 1990 to 2005; compared to 31.6 percent nationally, according to Michigan Future.
If the state had matched the national rate, Michigan would have 220,000 more jobs than it does today, said Louis Glazer, executive director of Michigan Future.
"It's not the loss of manufacturing jobs; nationally, manufacturing jobs are on the decline," he said. "We have fallen behind because we have not replaced those jobs."
Jobs: Key election issue
The issue of job creation has been in the forefront as Granholm and her Republican challenger Dick DeVos battle it out for the state's top job this November.
On Tuesday, Granholm talked about the state's transition to a new economy.
"We know we have been transitioning from the image of being a manufacturing-only economy," she said at the news conference. "But we also know the manufacturing industry is a technology business. The more we can add additional technology firms to Michigan, it furthers our image as a 21st century state."
DeVos congratulated U-M and welcomed Google.
"The promise of more high-tech, high-paying jobs are a reaffirmation that one of Michigan's strongest assets remains full of promise for a complete state turnaround. With this partnership, one of Michigan's strongest assets -- its diverse network of universities and colleges -- is demonstrating that they are an integral part of turning Michigan's economy around."
The Google jobs, paying an average of about $47,000 a year, will be in the company's AdWords division, its chief revenue source. Those jobs could spin off another 1,250 jobs, according to a business model developed by University of Michigan economists, Granholm said.
The state beat out potential sites in Boston, Boulder, Colo., and Phoenix. Negotiations began last year and were top-secret, at Google's request, and intensified in the past month, said Michigan Economic Development Corporation spokesman Mike Shore.
State offers tax breaks
Tuesday's announcement had the air of a pep rally as Granholm was surrounded by state economic development officials, young Google executives and college students in Google T-shirts.
Google was drawn to Michigan and Ann Arbor because the office would be close to U-M and its top college graduates, as well as those from other state universities, said David Fischer, director of Google's online sales.
He said Google officials aren't leery of Michigan's struggles and Rust Belt image, adding his company usually doesn't follow "conventional wisdom."
Michigan offered Google $38 million in tax breaks over 20 years, should its employment reach 2,000, said Jim Epolito, chief executive of the Michigan Economic Development Corporation.
The tax breaks will be well worth it, Michigan boosters said.
The facility "will help us attract great students" and expand Michigan's growing technology base, much of which is located in a southern Michigan corridor running through Ann Arbor, said U-M President Mary Sue Coleman.
"Google is the coolest company in the country," she said. "Young people know it. They all want to work at Google."
Coleman said Google co-founder Larry Page, a 33-year-old East Lansing native who earned an engineering degree from U-M, "has talked to us about this dream of his, and wanting it to happen."
In a written statement, Page said the company's goal "is to have many Michiganians call themselves Googlers."
"We're delighted to open a new office in the Ann Arbor area. We hope to establish as wonderful a home in Michigan for Google as I enjoyed while growing up."
AdWords is 'cutting edge'
Google's AdWords is the company's flagship product in an online advertising market the company easily leads. Thousands of advertisers use AdWords to promote their products and services on the Web through pay-per-click advertising and site-targeted advertising for text and banner ads.
AdWords is "a cutting edge part of the advertising world," said Patrick Anderson, a Lansing economist whose consulting group uses the services.
Anderson praised the jobs, but criticized the tax incentives needed to get Google to Michigan. So did Trisha Kinley, director of tax policy and economic development for the Michigan Chamber of Commerce.
"It's not surprising that it took substantial tax credits to lure a company like Google here -- that's an unfortunate reality," Kinley said. "It's another example that points to the fact that we need to make our business and tax environment more attractive."
Google posted its Michigan job openings online Tuesday afternoon. The company still is looking for an office site, which it plans to open no later than this fall.
The office will be headed by U-M alumnus and Michigan native Grady Burnett. He will relocate from Google's home office in Mountain View, Calif.
Web search site's jobs are type that state's ailing economy needs.
Louis Aguilar and Gary Heinlein / The Detroit News
LANSING -- Is Google the search engine that can rev up Michigan's old-school economy?
A jubilant Gov. Jennifer Granholm -- proclaiming "Michigan has been Googled!" -- on Tuesday announced the world's most popular Internet search engine will bring 1,000 high-paying jobs and build a facility in the Ann Arbor area, giving the state the kind of knowledge-based employment that it sorely needs to replace disappearing auto industry jobs.
A ready supply of graduates from the University of Michigan was a prime attraction, Google officials said.
Luring a high-profile, cutting-edge Internet company could go a long way in convincing other high-tech companies that Michigan -- at least the Ann Arbor area -- has the chops to be a major player in a new economy, several economists and analysts said.
"It's a very good one-shot. The question is does it have legs beyond that?" said Charles Ballard, head of the economics faculty at Michigan State University.
"It probably has some legs. The economy of the future is going to be driven more by companies like Google than by companies like General Motors."
Comerica Inc. chief economist Dana Johnson said Google's arrival has "symbolic significance" for Michigan. "If it goes well, we demonstrate that we have the work ethic and skill to attract knowledge-intensive businesses. When you can show things have gone well, it's easier to recruit the next company. Do that a few times, all of a sudden you have a different kind of reputation."
'Smart' jobs a hard sell
The state's loss of manufacturing jobs in the past decade, particularly in the auto industry, has been well-documented. From 1990 to 2005, 158,000 manufacturing jobs disappeared, a 19 percent decline, according to Michigan Future Inc., an Ann Arbor think tank that studies state job and economic trends.
And that doesn't count plans by General Motors Corp., Ford Motor Co. and Delphi Corp. to cut 73,000 jobs nationwide in the next few years.
Replacing manufacturing employment with the kind of "smart" jobs that have been shaping the global economy has been a hard sell for Michigan.
Roughly defined as good-paying work that requires a college degree, knowledge-based jobs in Michigan grew 17 percent from 1990 to 2005; compared to 31.6 percent nationally, according to Michigan Future.
If the state had matched the national rate, Michigan would have 220,000 more jobs than it does today, said Louis Glazer, executive director of Michigan Future.
"It's not the loss of manufacturing jobs; nationally, manufacturing jobs are on the decline," he said. "We have fallen behind because we have not replaced those jobs."
Jobs: Key election issue
The issue of job creation has been in the forefront as Granholm and her Republican challenger Dick DeVos battle it out for the state's top job this November.
On Tuesday, Granholm talked about the state's transition to a new economy.
"We know we have been transitioning from the image of being a manufacturing-only economy," she said at the news conference. "But we also know the manufacturing industry is a technology business. The more we can add additional technology firms to Michigan, it furthers our image as a 21st century state."
DeVos congratulated U-M and welcomed Google.
"The promise of more high-tech, high-paying jobs are a reaffirmation that one of Michigan's strongest assets remains full of promise for a complete state turnaround. With this partnership, one of Michigan's strongest assets -- its diverse network of universities and colleges -- is demonstrating that they are an integral part of turning Michigan's economy around."
The Google jobs, paying an average of about $47,000 a year, will be in the company's AdWords division, its chief revenue source. Those jobs could spin off another 1,250 jobs, according to a business model developed by University of Michigan economists, Granholm said.
The state beat out potential sites in Boston, Boulder, Colo., and Phoenix. Negotiations began last year and were top-secret, at Google's request, and intensified in the past month, said Michigan Economic Development Corporation spokesman Mike Shore.
State offers tax breaks
Tuesday's announcement had the air of a pep rally as Granholm was surrounded by state economic development officials, young Google executives and college students in Google T-shirts.
Google was drawn to Michigan and Ann Arbor because the office would be close to U-M and its top college graduates, as well as those from other state universities, said David Fischer, director of Google's online sales.
He said Google officials aren't leery of Michigan's struggles and Rust Belt image, adding his company usually doesn't follow "conventional wisdom."
Michigan offered Google $38 million in tax breaks over 20 years, should its employment reach 2,000, said Jim Epolito, chief executive of the Michigan Economic Development Corporation.
The tax breaks will be well worth it, Michigan boosters said.
The facility "will help us attract great students" and expand Michigan's growing technology base, much of which is located in a southern Michigan corridor running through Ann Arbor, said U-M President Mary Sue Coleman.
"Google is the coolest company in the country," she said. "Young people know it. They all want to work at Google."
Coleman said Google co-founder Larry Page, a 33-year-old East Lansing native who earned an engineering degree from U-M, "has talked to us about this dream of his, and wanting it to happen."
In a written statement, Page said the company's goal "is to have many Michiganians call themselves Googlers."
"We're delighted to open a new office in the Ann Arbor area. We hope to establish as wonderful a home in Michigan for Google as I enjoyed while growing up."
AdWords is 'cutting edge'
Google's AdWords is the company's flagship product in an online advertising market the company easily leads. Thousands of advertisers use AdWords to promote their products and services on the Web through pay-per-click advertising and site-targeted advertising for text and banner ads.
AdWords is "a cutting edge part of the advertising world," said Patrick Anderson, a Lansing economist whose consulting group uses the services.
Anderson praised the jobs, but criticized the tax incentives needed to get Google to Michigan. So did Trisha Kinley, director of tax policy and economic development for the Michigan Chamber of Commerce.
"It's not surprising that it took substantial tax credits to lure a company like Google here -- that's an unfortunate reality," Kinley said. "It's another example that points to the fact that we need to make our business and tax environment more attractive."
Google posted its Michigan job openings online Tuesday afternoon. The company still is looking for an office site, which it plans to open no later than this fall.
The office will be headed by U-M alumnus and Michigan native Grady Burnett. He will relocate from Google's home office in Mountain View, Calif.
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