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Musser talks of local economic growth

March 19, 2012
By GARRETT NEESE , Houghton Daily Mining Gazette

HANCOCK - From a post-mining trough, the Keweenaw's economy has prospered and diversified, Keweenaw Economic Development Alliance Executive Director Phil Musser said at last week's KEDA meeting.

Musser gave a presentation on the past three decades of economic development in the Keweenaw.

When Musser arrived in 1985 to head the restarted KEDA, the Keweenaw's economy was still pulling itself out of the crater left by the collapse of mining in 1968. Several factors discouraged growth; companies were afraid of taking on debt to expand, and banks were skittish about making loans.

That 1985 was an annus horribilis of sorts for the Keweenaw. The Louisiana Pacific sawmill shut down, taking 60 to 70 jobs with it. Copper Country Dairy closed. Calumet Electronics burned down.

One of Musser's first tasks upon becoming executive director of KEDA was visiting the Chicago-based 21st Century Tool & Die at their Copper Country facility near the airport.

"I wasn't in there three minutes before I was informed they were moving to South Dakota, because of better tax breaks - and, oh, by the way, the building was for sale," Musser said.

The prolonged downturn provided five lessons, Musser said: Don't depend on one industry. Don't assume successful companies will stay in the area. Outside companies with no roots might not stay either.

KEDA must continually help fuel economic growth through local entrepreneurs starting up companies. And the economy is driven by base industries.

One of KEDA's most successful programs has been the creation of revolving loan funds. There have been 47 loans totaling about $2.375 million, leading to the creation of 367 jobs and the retention of 204 more, Musser said.

"If you look at the kinds of companies we give them to, and what's happened ... most of them have become much larger entities," he said.

Other developments included tax-free renaissance zones in Calumet and near the airport, improving industrial parks and helping to create the Michigan Tech Enterprise Corporation SmartZone.

In submitting the proposal, Musser said, in some ways the Keweenaw had an advantage. While other cities reworked existing plans, the MTEC crew had to prepare one from scratch.

"We didn't have anything on the shelf," he said. "I don't even think we had a shelf."

The 1990s and 2000s saw increased competitiveness and diversity, with entities such as the Keweenaw Research Center, which has spun off companies such as GS Engineering, contributing to a burgeoning technology sector.

There have still been some negatives, such as the moves of Terex Handlers and the Blizzard Corporation, and the regional economy's reliance on original equipment manufacturing and metal fabrication.

That area was one of the hardest hit in the 2008 downturn, the suddenness of which left businesses unprepared. The result was an immediate dropoff in orders and the loss of much of the engineering expertise in these companies.

"To see that step backwards was a big loss to the community," Musser said.

However, Musser said, many companies are rebounding from those lows. As the U.S. involvement in Iraq and Afghanistan winds down, companies are diversifying away from military spending; GS Engineering spun off a sister company for commercial ventures, and ThermoAnalytics is working on sports clothing.

Other promising ventures include the Superior Suppliers Network in Baraga County and the Greenforces Initiative, which develops green technologies for the military.

In the future, Musser said they're working on creating a bigger pipeline for manufacturing, technology and service start-ups and better transitioning of startups into stage 2 companies. From 2000 to 2009, employment in Stage 1 companies increased by 12.4 percent in Houghton and Baraga counties; for stage 2 companies, it decreased by 13.1 percent.

"Stage 2 is where you really grow your economy," Musser said.

 
 

 

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