Birgit Klohs reflects on her more than four decades as an economic development agent.

Featuring BIRGIT KLOHS

Birgit KlohsOur guest for the inaugural episode of our podcast is Birgit Klohs. Klohs has nearly 45 years of experience as an economic development agent. She spent over 30 of these years as the President and CEO of The Right Place, a regional economic development organization in West Michigan. She joined the organization when it was formed in 1987 and retired from her role in 2021.

In a wide-ranging and detailed interview, Birgit talks about the origins and evolution of The Right Place, dives into the details of the Medical Mile Program in Grand Rapids, and shares her thoughts on addressing systemic inequities in her role as an economic development agent.

"We don't control anything...when a company needs something, whether it's a tax abatement or a referral for labor training or something from the state of Michigan... what an economic development organization does is bring all those resources to bear for that company. But we don't own them. We don't control them. We have to bring them to the party because they trust us, and they want to see the company and the community succeed. "


 

Hosted by

Rohan Sandhu

This episode is available on Apple Podcasts, Spotify, and wherever you get your podcasts.

Note: This transcript was automatically generated and contains errors.

Rohan: Birgit Klohs. Welcome to Policy Works

Birgit: Thank you very much for having me.

Rohan: Well Birgit your career is so closely intertwined with the history of The Right Place, an organization that you led for almost three and a half decades. So, let's start from its origins. Tell me about the founding of The Right Place. What were you doing then? What role was this anticipated to play and how do you come to get involved with?

Birgit: Well back in 1983, I was in economic development already in west Michigan. And The Right Place started as an idea of a group of local business leaders in gun rapids . So, I have to take people back to the [00:01:00] history of the economy back in the early eighties in the United States, which was at the time in very bad shape. And in much of the Midwest, the unemployment rate was very high. And in Michigan, the unemployment rate was 17% and in the greater Grand Rapids area, which includes Kent County, of course, it was 11%, which was very high compared to today when it's around 3%.

So, a group of local business leaders, not municipal leaders, but business leaders, the owners and CEOs of some of the largest businesses in the region convened in 1983 to talk about what can we do as the job providers and job creators to help this community do a better job of getting back into a growth mode. And of course, part of that reason was that people don't want to move to a community [00:02:00] that is not economically successful. When you change jobs or you take a job, you winna go to a community that where you have other opportunities, right?

And so, a group was formed in 1983 and the chairman of that group was Jay Van Andel, who is one of the two founders of the Amway corporation. Both founders, Mr. DeVos, and Mr. Van Andel have since passed away. But he convened between himself and about another 12 folks. And they sat down with the facilitator to discuss, what does this community have to offer? What do we want to be in terms of growth? If we don't provide jobs for locals, they will go where there are jobs. So, they raised for the first time. This was an effort at getting private philanthropy to fund economic development. There wasn't an economic development organization in the community at the time because of the big recession, a small economic development [00:03:00] group had folded. A lot of smaller communities did a little bit here and there, but there was no coordinated effort to help a company locally grow and expand. There was no coordinated effort if somebody wanted to locate here from elsewhere. There Just wasn't, it was a blank sheet of paper. And so a lot of potential new jobs would probably be lost during that time.

So they came together as a committee first and raised their own money. This was unique. It had never really happened before that private citizens, private business leaders, private corporations would invest in a new economic development organization. Now, today that's different. But back then, almost 40 years ago, it was very new. Over a two year period they created the first strategic plan and what eventually became known as The Right Place Program, and today is called The Right Place Inc. They raised over a five year period, three and a half [00:04:00] million dollars. 80% of that funding came from the private sector, the companies at the table already, as well as others who were not at the table, but who were very interested in helping the community grow and prosper again.

And 20% came from municipalities. Think about it, when you create jobs and the company expands and grows or locates newly, there they are. They located in a municipality, they located a township or a village or a city. And so, it's in the best self-interest of these municipalities to support this effort.

And so this is now it went into operation in 1985. It became operational in '85 and the funding mechanism of 80% private and 20% public has never changed, which is also highly unusual in that a lot of economic development organizations go through iterations, they come, they go. But we've always stayed in business and we've had many of the same companies, of course, under new [00:05:00] management, new leadership, still involved and engaged in the organization. It started off as a one county organization. When I retired from the organization in 21, it was six counties. Today it covers eight counties.

How did I get involved? I was watching this new private public partnership for economic development, with great anticipation and interest. I was working in economic development for grand valley state university. At the time I had worked in a county prior to this, I'd worked for the state of Michigan. I've also worked in private industry, but this new model of a private public partnership, of the private sector driving both the funding and the strategy was of great interest to me. The first executive director of the organization was a friend of mine by the name of Mel RO, who eventually became the president of our chamber of commerce. This is in beginning of '87. And so the organization was looking for a new leader. I [00:06:00] did not apply for this job because I was not sure that they would be giving this to a woman to be quite candid. But I made a lot of recommendations of potential economic development professionals that I knew from my years in the profession might be interested in this very unique and really well organized organization for economic development.

And they did make the offer to someone who had eventually declined. And then one of the leaders came to me and said, would you be interested in this job? And I said, absolutely. And so on November 30th, 1987, I became the CEO of The Right Place and I stayed for 33 years. It's a long story, but I think it's important to really frame how Right Place came about as, at least in Michigan, one of the first private public partnerships for economic development, and it continues to exist in that same form.

Rohan: Thank you so much Birgit. That's such an incredibly rich history and thank you for walking us through [00:07:00] it. There's a lot I want to touch on based on what you said there but let me start with the public private partnership angle that you've talked about so much in your opening answer. Obviously, the institutional landscape has changed a lot from what it was back in 1987. In today's landscape, how do you see the role of a public private entity, a primarily private entity based and funding? What role do you see for something like The Right Place in today's institutional architecture?

Birgit: Actually, the organization and others that are similar to right place continues to play a very strong role. As I said, in my opening comments, the funding structure has not changed. It's still continuing to be 80-20, which to me says that the community, its leadership, private and public leadership continues to be intensely interested in a good one-stop for economic development, at least for the kind of economic development they, The Right Place provides in their region. [00:08:00] And the board is a, a board of strong leadership, strong CEOs from across the spectrum of businesses that we have. So I don't see that changing at all. In fact, the organization has become strengthened through the years and in the, in the strong role that it is playing in the economic health of the area.

 It's continuing to make great connections, build great partnerships is a leader in economic development, not just regionally, but also in the state and in the, in the greater Midwest and beyond. So I don't see that changing at all. And I think the model, the model of a private public partnership continues to resonate with people.

Rohan: Yeah. And one of the things you've said in the past is that one of the reasons that The Right Place has been successful is that we've built long lasting relationships, both in the local, the state, the national and the international level. So I guess, let me phrase this question in a different way, does being a [00:09:00] primarily private funded entity allow you to do things that public entities are unable to.

Birgit: , there are multiple kinds of economic development organizations. And for your listeners. There is the private public partnership model like we are. There is the economic development entity within a chamber of commerce. There are quite a few of those. There are the economic development departments of cities. And by the way, the city of Grand Rapids has an economic development department that is a very strong partner off The Right Place. And then of course there are county models. There are regional models. So there are models that depend often on the culture of the community in which they operate. And that's a very important thing to understand.

In our community the private sector gets involved in a lot of things, and we are very fortunate that we continue to have private public partnerships, not just like The Right Place, but there is a sister organization called Grand Action 2.0 where I'm on the [00:10:00] executive committee that has done huge place-making over the last 30 years in this community, that has let the construction in collaboration with our municipality of an arena, a new convention center, the renovation of our music hall, a new market public market and we are currently in the process of developing an amphitheater. So this model can work in a community where there is interest and commitment from the private sector to collaborate with a public sector to drive an agenda forward. And we are very fortunate. I was extremely fortunate to have a private sector leadership community that is intensely interested in creating jobs in making sure this community succeeds so that they can retain and attract talent that's a key driver of any economic development strategy today and, and that collaborates with our [00:11:00] public sector, our county, our city, and our townships to really make this a premier business location and a premier location for new talent. So I think this is a model that I personally loved because I had partners in the private sector that I could call on to help me.

 I have partners in the public sector and our municipalities that could make things happen. It's really about collaboration between both.

Rohan: That's super helpful. And that's an incredibly important point that before regions look to replicate what other regions have done, it's important to keep in mind what those specific cultures and norms are that drive those regions.

Anyway, let's go back to some of the work The Right Place has been doing. Post founding you soon had successes in bringing new firms to the region. In 1990, The Right Place brings in better industries, a German auto supplier to Grand Rapids, its first major success with FDI. But you've also said, and I quote, we spent probably 75% of [00:12:00] our time making sure that the people who have already made a commitment to our region, stay here. Tell me what this entails. What does business retention really require? And what are the type of ways in which an organization like The Right Place supports a firm that's already in the region.

Birgit: That's a very good question. And it's absolutely true. It's probably between 75 and 80% of the time that we spend on our local companies. Now I have to preface that by saying this has been a region that has been very successful over many decades. We've had our ups and downs, but we've always had a very strong, robust, advanced manufacturing sector. We have a strong agricultural sector that also then leads to food processing. So we've had companies here for many decades that have grown up here, that are multi-generational. In fact, 60% of our companies in the wealth creating sector are family owned businesses, which is a very high percentage. It's beginning to change, but it's still a very high [00:13:00] percentage. And we want to make sure that those companies get the same kind of help as the new ones as you mentioned. Because 80% of all new jobs, if you have a good business base, 80% of all new jobs come from the companies you already have.

So you need to make sure as the economic development professional and the economic development organization, that you reach out to those companies for a number of reasons. They're the job providers they've made that commitment. But also when a new company comes to your community, they often, in most cases that I've ever seen want to talk to a local company. You want that local company to say, this is a great place to do business, and you want them to become part of your sales team.

If they say this is a terrible place, I've not seen these people in years, the new company that is eventually going to become an old company in your community, or hopefully a successful location are going to say, if I'm going to be here for the next 10, 15, 20, 30 [00:14:00] years, I need a partner and in growing my business over time. So we have and had, and continue to have at The Right Place, a very strong retention strategy. The team calls on companies all over the region. They make over several hundred calls a year. We sit down with the owner or the CEO, the CFO, whatever the team is to say, we are here to help you. What do you need? It could be anything from an expansion, hey, we're planning, we're thinking, we're growing. How can you help us with local government with state government? But also it could be a question of I'm looking for new talent, connect me to Hello West Michigan, or can you come and help me out with, with a program that is through the federal government that we manage the Michigan manufacturing technology extension programs on making their layout better.

We've done everything from bringing expertise to handling a [00:15:00] new company that needed layout assistance on how to layout the plant and safe space, to referrals to immigration attorneys to helping them with the tax abatement, to helping them with an issue in a community, whether it's signage or whatever, whatever they need. The point is as the economic development agency organization, you need to have good connections to all the resources in your community so that when that company says I could use this. You don't have to have all the answers you can't, but you need to know where to find them for this company. And that way they'll continue to grow believe in you and become potential investors in the organization and collaborate also with you, as you're trying to attract new business.

There are different states however, where business attraction is the number one economic development strategy, because they don't have much industry. We have a lot of industry. We don't want them to say, well, you only care about that new company from [00:16:00] Germany or France or Japan. And I've been here for 50 years. That is not a good way to do this. And over the years, we've seen that that strategy has paid off many, many times.

Rohan: Thank you. That's obviously, a range of things you're trying to help companies with, or , where you're trying to pay that coordination role. To enable this, tell me a little bit about what your team looks like, or , what your team in the past looked like and how has that evolved over time?

Birgit: When I became the CEO in 87, I had a team of three when I retired, I had a team of 33 and now they have a team of over 40. And there is, so it's a team of business development experts. Yeah. They're economic developers with many years of experience. Some of them, we, we developed ourselves from young folks who came out of college and had an interest in the business. Some I hired who already had expertise and had [00:17:00] worked at other economic development organizations in other states and wanted to come back to Michigan, which happened to be their home state. And then we have to really take them under our wings because every state and every community has different rules and regulations and programs for economic development. And so the team has been there for many years. We pride ourselves on being a phenomenal team. The community knows the team. They're economic development experts. They have terrific relationships beyond my relationships in the community with our municipalities the mayors of various township supervisors, the state of Michigan to really understand what a company needs. And it's built on a lot of trust, by the way, when you are doing this work.

We don't control anything. This is what sometimes is hard to understand when a company needs something, whether it's a tax abatement or a, a referral for labor training or [00:18:00] something from the state of Michigan in an incentive package or whatever, it may be, what an economic development organization does is bring all those resources to bear for that company. But we don't own them. We don't control them. We have to bring them to the party because they trust us, and they want to see the company and the community succeed. So that's what the staff is trained to do is to figure out what that company needs go in and help them. And if we can't do it, who can? So that you don't leave there and say I can't help you. There always has to be - let me check who else can do this for you?

So the team is now, like I said, over 40, but it's also a team that is now in active in eight counties. One very urbanized county, which is Kent County and the other seven are rural communities. And as I said at the beginning, the culture in a rural community and the business infrastructure in a rural community is vastly different than in an urbanized, county. So there are [00:19:00] there, the team leaders in those counties are from those communities. They understand those, those counties. They understand how a rural community has different needs. That may be the economic development is more place based. It has more smaller businesses than a larger business, and that you have to really then modulate the kind of assistance and programming that you bring to those various smaller communities.

But to me, I've always felt that, and a friend of mine in economic development once said that. Grand Rapids is my front porch and I'm your backyard. So this issue sometimes that urban versus rural, I never saw it that way. I saw it as complimentary. That in fact, if you have a beautiful rural community with small commune towns that people can enjoy to living and travel to the bigger community to work or vice versa, that was complimentary and not detrimental.

Rohan: Now you've talked about bringing all those [00:20:00] resources to bear. I think one of the greatest examples of all of these resources coming together is in 1996 when Van Andel Institute, a medical research Institute, opens in Grand Rapids and becomes one of the cornerstones of the Grand Rapids Medical Mile. How was the Medical Mile program conceived? And tell me about the range of resources that needed to be brought together where you played an orchestrator role, bringing these different things together, to build a broader strategy around them.

Birgit: Well, it's really not the Medical Mile program because, so let me dial back for a moment. The van andel Institute was announced in the summer of 1996. So 26 years ago, it was a gift from the Van Andel family. And you call that Mr. Van Andel, senior Jay was the founder of my organization of The Right Place. I should say The Right Place. It's no longer my organization. And he and his family decided that they wanted to endow [00:21:00] a research Institute called Van Andel research Institute for the research of Parkinson's, cancer and Alzheimer's. It was a gift.

Every community that I know of or many anyway, want to have a diversified basket of businesses. Right. But you also have to have a catalyst. In Austin, Texas, the catalyst was Dell computers. It until Dell came along, Austin was a nice community capital with a fabulous university, but it wasn't a hub for high tech, but it is today. And we weren't a hub for life sciences, but we are today. And the Institute was the impetus when the Institute was created and it went in, it opened its doors, at first phase, in May of 2000. And it attracted an immense range of talent. So that was the [00:22:00] first impact the Institute, to attract talent that before we could have never attracted. And it's located right next to our major hospital. And we have other several hospital systems in town, but this one spectrum health was right across the street and the Institute located there by design. In fact when Mr. Van Andel announced it, he had people from the life science community tell him he should be putting this on the campus of the university of Michigan, which of course, big 10 school, huge research. And he said, I'm not from Ann Arbor, I'm from Grand Rapids. I'm doing it right here.

And of course it's become very successful. Having gone through a second expansion, what we as a community did in right place, we saw the opportunity of creating a whole new industry cluster. This was a gift that truly keeps on giving. It's actually worth a book. So , a [00:23:00] little bit later after the institution was announced, then governor created something called smart zones in Michigan, and there are a number of them across the state and he wanted to stimulate innovation in these smart zones. And by using what I know as tax increment finance districts. So myself, the city of Grand Rapids, the new Institute that wasn't even actually in business yet, the University, Grand Valley State and our community college, we formed a group back then over 20 years ago to form our smart zone.

And we decided that we would build our smart zone and delineate our smart zone around the Institute. And we actually received a grant from the state of Michigan to put an incubator lab together which we were told we need, if we have such an Institute it's right across the street, it was in the new building from grand valley state.[00:24:00]

So we did, we then started thinking about, okay, if we get this Institute, what else do we need and how do we need to collaborate? Well, shortly thereafter, then spectrum health, which is now the largest employer in Michigan, started building a new heart hospital, a new cancer center and then not far after that, a new children's hospital.

So that part of the care of quality world class care started to grow. The Institute started to grow, and The Right Place decided to retain Ernst and Young to figure out, okay, we've got the Institute going, we have spectrum health growing, what are we missing? Okay. And Grand Valley State university built its first beautiful building for training in the healthcare industry, nurses, et cetera.

And it came back very clearly - you need a medical school. And at the same time when we were having these conversations [00:25:00] and the strategy with Ernst and Young, a local philanthropist, a very successful businessman and a former ambassador to Italy from the United States. Mr. SEIA, who is this big, big Spartan had been having conversations with Michigan state university who were looking for let's just say to revamp their medical school, MSU college of human medicine. So a group was, was created of 20 business leaders, including the healthcare folks, Van Andel Institute, The Right Place, Grand Valley State University and other stakeholders. There were about 20 of us. We met for quite a long time to determine how would we attract this medical school called Michigan State University.

And we did. And about 15 years ago the med school decided that they would have their medical school. They still have a programming on Michigan state's campus by the way, but it's a very dispersed system. But the Dean [00:26:00] is located here on Grand Rapids and there's a beautiful medical school now that's been in business now for 12 years.

So that was the third leg of that two-legged stool. And it has been enormously successful here. They have lots of applicants for coming here to Grand Rapids, many, many, many more applicants than they have slots. And of course the location of the medical school, literally across the street from the Institute, literally across the street from spectrum health has been a boon because they all work together. Right? So you you're training folks over here. You're teaching them to be physicians. You can go into residency, hopefully across the street. There's also innovation and research collaborative going on between all three organizations. And in the meantime now Grand Valley State University has built several other buildings on Medical Mile. Michigan state university has several new buildings on Medical Mile, including a research center that collaborates with VAI and spectrum and [00:27:00] GVSU. And we have the new Doug Meyer innovation center that now house houses a really cool new business and another building. So you have research healthcare and medical education. And then in the last two years, we added the fourth leg of the stool. The goal always was to also attract businesses. One of the businesses was actually a spinoff - it's called Grand River aseptic manufacturing. They they are bottling the Moderna COVID vaccine. They were a spinoff between Vai and GBSU, and they've just built another building just south of town. And they're now going to bottle the next batch of vaccines. So very successful. Then along came a company that is created by and started by one of the former researchers at VAI, a gentleman from Taiwan who started bam [00:28:00] health. And he's collaborating with a German physician who does nuclear medicine, and they're treating their first patients for prostate cancer. And then last year, we actually we opened the building for Pergo, which is the world's largest selfcare and generic drug maker in downtown Grand Rapids is the north American headquarters. So the plans that we made through the smart zone over all these years have come to fruition and continue to grow. So you have, again, healthcare, health, education research, and now private industry on medical.

Rohan: That's an incredible story. You mentioned that this is something that a book could be written about given that you've retired and I, I don't quite think you have any time, but , given that you've retired, I hope you get down to writing that book.

Birgit: Yeah, it's been, but it is truly an amazing story. The investment it has taken place there. The collaboration between the 4, 5, [00:29:00] 6, 7, 8 institutions that are on Medical Mile. Spectrum health has recently merged with Beaumont health in Detroit. It's now the largest employer, as I said, in the state of Michigan, they're going to build their own innovation center now going north on the mile, which is now becoming more like a square mile. We have Trinity health to the south of here, university of Michigan now has a healthcare presence in west Michigan. It's been quite remarkable of what has happened in 24 years, 25 years.

Rohan: Let me ask you this question though. So one of the big lessons from this is how, what could what may have just been one institution actually ended up becoming a much larger industry, thanks to thinking around a much larger framework and thinking about creating a grand strategy around that one Institute. I know you're not a fortune teller but in the [00:30:00] counterfactual, had The Right Place or an entity like yours not existed, would there have been, have been another entity that could have brought together different stakeholders to think about this larger strategy around just this one Institute?

Birgit: I really can't answer that. Like I said, the Van Andel Institute was a gift and I remember clearly as day. When David Van Andel, the son of Jay Van Andel called me on a July afternoon in 1996 and said we are going to endow a medical research Institute. This is pre all of these. I sat on my desk and my desk in my office, and my first thought was a new industry is being born. And there will be spinoffs and it will attract researchers. It will attract talent. And that's when we started [00:31:00] baking into our strategic plan at The Right Place. And by the way, we've always operated at The Right Place, in five year strategic plans. Recently now they're three years and my successor is in the middle of creating the next one for the next three years. And we looked at the incident and said, what can we make out of this? And who do we need to collaborate with?

Remember, I, as I said, this is always a team sport. You have to collaborate with many others, and we just took the bull by the horn and ran with it. That's really all I can say. Now obviously we were also ,very very fortunate to have had the gift in the first place, to have a growing healthcare system that had a board that was looking at what else kind of quality care do we need, including a new heart center, including a new cancer treatment center, including a fabulous new children's hospital.

So that and again, but this also goes back to what I said at the very beginning. Much of this [00:32:00] was driven by not only The Right Place, but philanthropy. The children's hospital is a 300 million children's hospital. I think it's been open now for 10 years. I could be off by a year or two. 200 million was funded by the hospital system itself. And a hundred million was philanthropy. The Meyer heart center was 115 million building if I remember correctly and the Meyer family, which is a very successful retail family in seven states donated a very large chunk of money. So there is a huge philanthropy in this community that has driven a lot of what you see in Grand Rapids, including The Right Place. And so from that standpoint, this has been a community that has been truly fortunate in having these legacy companies, large and small, that are willing to invest. The Michigan state medical school of the college of human medicine [00:33:00] is the proper name is called the Secchia center because Mr. Secchia, as I mentioned, the former ambassador to Italy and a very successful entrepreneur and a very big Spartan, his family donated 20 million to that early building. It's that kind of collaboration and passion for this community that has really allowed so much of this to happen. I happen to be fortunate enough to lead the lead economic development organization, but it was made possible because these people are as passionate about this community as I am.

Rohan: Right. While you talk about this immense passion among the private sector and among private citizens, where from the perspective of an economic development officer, do you see the role of public investment, whether from the federal government or the state government, and how is that complimented all of the efforts?

Birgit: I mean, it's not just federal and state. It's also local and our local communities. [00:34:00] I'm taking a sidebar here. We as economic developers obviously we entertain a lot of companies that want to come here. We entertain. We bring people to town to show them this community and to bring site consultants to the community. And site consultants are very, very critical in business attraction. We host them and they always ask when people talk about collaboration and I would host them with my board and they'd say, well, is this really happening? Or is she just telling me a nice story? And they said, oh no, we work together. And they would walk away and say a lot of communities talk about collaboration but this one really does it. So when I talk private public partnerships, I really mean private public partnerships. We never leave out our municipal partners. It doesn't work that way because a company, a business or the Institute locates in a municipality.

And so whether [00:35:00] that's zoning that is required or whatever has to do with taxes or business, any kind of permit that you need, we all work together to make it happen together. So while it's philanthropy and business, investment and engagement on one hand, it is very close collaboration with our municipal partners on the other hand, or this doesn't work. Because you need, you may need a road replaced. You may need a sign, you may need whatever, it doesn't work without our partnerships. So I always stress private public partnerships, always.

Rohan: I now want to move over the conversation a little to economic resilience. We see that west Michigan has been resilient to shocks that have affected. Much with the rest of the state, according to economist Charlie Ballard at the Michigan state university and I quote "west Michigan has been able to grow in ways that Southeast Michigan hasn't because west Michigan wasn't hampered [00:36:00] as much by the shrinking of the auto industry." Now, others similarly note that this is a combination of both chance but also strategy, as firms have reduced their reliance on the auto industry over time. Now, you talked earlier about these three and five year strategic plans that The Right Place is governed by. How much of this has been deliberate from an economic planning perspective. How much of economic diversification was a part of this strategy work that you did?

Birgit: Well it was quite a bit of the strategy, but, but we've also had If you look at Southeast Michigan, it is dominated by the auto industry. And that's been really good for the state. if you look at the auto industry, it's now growing all over the United States, particularly in the Southeast. So I'm always get a little nervous when people say, well, the auto industry. It is a very important industry in Michigan. It has a huge supply chain. What we had the good fortune in west Michigan, we were never reliant on one industry.

Rohan: [00:37:00] Was that deliberate or was that chance?

Birgit: In some cases, in the early days it was chance and then it became deliberate. Because when you looked at the makeup of our industries, yes, they were maybe auto suppliers, but west Michigan is also home to the world's largest office furniture companies. So we have our own big three. Steelcase. Now it's Herman. Now it's Miller. No, it used to be Herman Miller and Hayworth and they're supply chain.

So a company may be supplying the auto industry, but also furniture. And those were countercyclical in a lot of ways. But we also have, as I said earlier, a very strong food processing industry in the area. Michigan is the second, most diverse agricultural state in the United States. People always look at me like really? And we have over 300 specialty crops. We are the number one state for blueberries in the country. Cherries and apples, [00:38:00] number two and number two. And many other crops then also get processed here. So west Michigan has over 200 food processing companies, which is again, a very different industry than auto. And many of those are not as big.

So it's much more, as we say, in German, the middle stunt kind of companies that are generational. And so, but then we put together what is called a manufacturers council back in 1989 to very deliberately look at how do we help these companies grow into other areas.

And so it's automotive suppliers. It is furniture suppliers. And then came along the nascent medical device industry. Many of the companies figured out, well, if I can do this kind of a part, then maybe I can do also this. And so a number of years ago, we looked at the whole environment for med device and created something called the Michigan device consortium, which [00:39:00] The Right Place manages. There's a terrific young man there, Eric who manages a consortium it's beginning to grow. And we started to not only look at how to grow other traditional, more traditional companies, but how do we grow the medical device companies? And it really became important during COVID because a number of them became serious suppliers to the whole supply chain for, for COVID.

So some of it in the early days was chance, of course the Van Andel Institute was the gift.

And then some of it was very much deliberate and we had a nascent IT industry that 10, 15 years ago, we didn't have, which is now very strong. We started an IT council, which is being led by a team member at Right Place. And my successor just rolled out a phenomenal IT strategy, tech sector strategy for the next 10 years. So when that nascent [00:40:00] industry from IT started to grow, we grabbed a hold of. We noticed that it was beginning to grow, created this council a number of years ago, put resources behind it to help it grow, created it so they actually are doing work together to attract talent together, and then see what other kind of industry, what other kind of companies they can attract. So some of it was chance. Some of it was luck. We can take luck and then it became a strategy. So today, when you look at the four, probably the four sectors, it's still advanced manufacturing, it's health and life sciences, it's med device and it's IT. And it's the Ag business.

Rohan: So we talked about west Michigan being particularly resilient to shocks. And that's obviously a space where you receive praise for. But on the other hand, there's also some criticism that by [00:41:00] 2015-16, while jobs in west Michigan were growing and much faster than the rest of the state, wages were still at 2010 levels. As an economic development leader how do you walk that trope of ensuring greater investments, more jobs, but also safeguarding the interests of labor. Broadly, how does this fit into your larger strategy?

Birgit: Well, you're absolutely right. And , but today at 2022, I can tell you from experience and from talking to employers, and I sit on a board of a very large employer here, wages have gone up considerably and when we created the last strategic plan that I responsible for, we set us our goal, that the medium wage of companies that we would help grow here and assist, grow to grow here, and to locate here, the medium wage would be in the $24 range. And we are beginning to see that happening. So when you see signs today, it's [00:42:00] $18, $20, $22.

And I totally agree. You have to have a living wage. And we're seeing that beginning to happen. We worked with the, we engaged with the Brookings institution at Right Place. The, unfortunately, just before the pandemic hit, but we did the work with the Brookings institution for almost two years to look at labor participation. Who is participating? Who's not participating? What do we need to do as a community? We pulled together a group of folks With higher ed, with the workforce development agencies, with other human resource agencies, what do we need to do to make this happen and to engage more people in the success of the community?

And that report came out just after when I left and it's been implemented and worked on with that same group of people to make sure that over time, we really do engage and there is a strong case [00:43:00] for better pay.

Rohan: Let's continue on that theme of economic inclusion. In terms of educational inequality, on the one hand west, Michigan is home to some of the most advanced healthcare research, manufacturing and education facilities in the Midwest. But on the other hand, there are also vast inequalities in terms of educational attainment. 35% of residents in Grand Rapids and 40% in west Michigan have at the highest level a high school diploma or less. When you work on developing the local economy, how have you tried to address the needs of this segment?

Birgit: Well, as I said, we worked with Brookings to identify, first of all, some of those disparities. But sometimes an economic development organization leads the thought process. And sometimes you become part of a group that leads the thought process, right? So we have always been part of the, not, not just the conversation, but the strategy with our [00:44:00] workforce development agency, and with higher ed, with the community college, et cetera. And how do we drive more people to college? However as , there's also a drive now to say maybe an apprenticeship program is also not a bad way to get to a good wage job. If you think of an electrician, the building trades, et cetera, etcetera. , I come from Germany where we're having an apprentice program for three, for three year training and then becoming a journeyman and eventually a master takes as long as getting a higher education.

So it's, it's not necessarily anymore all four year degrees, although I understand that's still an important milestone. Now what Michigan has done in this latest ┬┤budget for the state, and I nothing to do with it directly, but it's something that economic developers, workforce development [00:45:00] people, as well as the private sector have been pushing for. And that is more investment from them into our high schools and into our school systems and our local school systems back into higher education to make it more affordable. And the state of Michigan in this latest budget has money allocated for something called Michigan reconnect. And it is free tuition at every community college in the state.

So if you're living in Grand Rapids, we have a phenomenal community college here called Grand Rapids community college. Anybody 25 years and older, who's either still in the college or wants to get back into college can get free tuition at our community colleges. So it's a great program. It's being funded.

Of course, there's a lot of federal money that came our way to the state. And so they're using it very wisely and it was a bipartisan agreement to invest into education. Because everybody realizes it's the only [00:46:00] way to make a better life, right? There's also at Leo. Leo is the lab department of labor and economic growth at the state, which collaborates with the Michigan economic development corporation. Something called going pro. It's federal funds that come - some federal funds and state funds - that come through the Michigan state to the budget. And when you are working, when we talked about business retention and expansion and attraction, and a company says, I want to create 20 to 30 new jobs, this is money that can be used for training and retraining and upskilling of your existing labor force. And it's the economic development organizations and the workforce development organizations that work with our companies to get that money to them, to upskill, upgrade and retrain existing or new labor force. So there, there are lots of really positive things happening around that issue.

Rohan: I'm [00:47:00] also intrigued by two programs that I see that the The Right Place runs. The first is the careers pathway program and the other is Hello West Michigan. How do these engage with the larger workforce development side. And sitting at The Right Place, what engagement did you have with workforce development?

Birgit: First of all, sometimes people think that economic developers and workforce developers don't get along but we are actually tied at the hip because one can't happen without the other. And so we have always closely collaborated with our workforce development agency and that happens to be west Michigan works. They cover almost the same counties that economic development covers and a Right Place team member always sits on that board. So there's very close collaboration. Now, specifically to hello west Michigan, it came about in a very interesting way. About, I'm probably losing track of the years, came about [00:48:00] 14 or 15 years ago when I was asked by a human resource leader in the community who convened the HR leadership of many of our companies around here, from larger to smaller. And they wanted to meet with me to talk about, when you attract a company what do you tell that company that makes this a good place to do business? Because they wanted to learn how you then translate that strategy into attracting talent. And we met a number of times, and then they went and and really put their head around it. How do we market our companies to talent and at the same time market the community? Because remember, when you attract someone from Chicago or Philadelphia or Germany, to a job, they also got to live here. So how do you then tell the story that this is a good [00:49:00] community in which to live, work, play, have fun? That there are things that are really good about coming here and that you can have a good work life balance?

Well the long and the short of that was this group of human resource, a senior leadership created Hello West Michigan. And again, it's a private public partnership. They're funded by dues from the member companies and they're housed at The Right Place for the last six plus years. And they have programming around attracting of talent, sharing resumes. When resumes come over, they gather resumes and then distribute them to our local companies and say, here are folks that are looking. They host a phenomenal event the night before Thanksgiving, I call it speed dating over a beer. When folks come back home for it's called reconnect west Michigan. And when folks come home for Thanksgiving, [00:50:00] oftentimes they it's actually the biggest holiday and they come home, they give the children to the grandparents and then go party with their friends. Well, we decided to use that party to actually tell them to come home and many have come back. So they do this the Wednesday before Thanksgiving.

And so Hello West Michigan is a huge partner. They do a phenomenal job. The other thing they do really well are internships. , we found that when you host interns at your company you find your talent, they get to know you and they often stay and become sticky. They host a phenomenal event in the summertime for over 600 interns. So the interns can get to know each other and, and maybe want to stay at the companies that gave them the internship. And so, the two - workforce development, economic development - have to work hand in hand and there are different facets to it. , some of it is the attraction or retention of that temp, is the training of that temp. But one doesn't work out the other [00:51:00]

Rohan: Let's move on to a different aspect of economic inclusion. Around 2015, a Michigan department of civil rights report on the economic impacts of racial disparities listed Grand Rapids as one of the worst places economically for African Americans in the US. Subsequently Grand Rapids developed a citywide effort to improve racial equality. And then this also became a big agenda item for the mayoral election. Let me start with this, when such a report comes out, what are the day to day conversations in your office and among the partner organizations you work with?

Birgit: Well, the day to day, I remember the day when it came out and it's now seven years ago and a lot of things have happened since and a lot of positive things. It, we're not perfect trust me, but a lot of positive efforts are underway. We immediately got together and said, this is really terrible. And it basically says that that a rising tide doesn't [00:52:00] necessarily lift all boats. , they may be boats left behind. And where do we interact? Where do we connect into the whole idea that we created all these many thousands of jobs, all these billions of investments and yet we have parts of our community where the unemployment rate is entirely different than in other parts. And started collaborating, like you said, with the mayor. The mayor and the former president of our community college started a deep dive into our whole diversity, equity and inclusion. The chamber of commerce is doing the same.

And out of those conversations came something almost four years ago that I started while still at The Right Place and I think,  about that. My idea, my take on all of this was - okay, so we are economic developers. We are not the police department. We are not the health department. We are not healthcare. What do we do? [00:53:00] What is our job and what is missing in the ecosystem that is not getting at some of this.

And so my idea was to create a venture capital fund for specifically community of color. Not just African American, we have a very large Hispanic community, we have a very large Asian community. We have folks from over a hundred countries in this community. Okay. So how do we do that? And so I talked to a good friend of mine, Scott Welsh, and we met somebody else in California, who was the first black angel fund owner in the United States. And we came up with an idea to create a venture fund. The fund was announced in 2020.

Rohan: And this is a new community transition fund?

Birgit: The new community transformation fund. I'm the executive chair of the board. We raised over 10 million. We in [00:54:00] fact, hired a young Harvard grad to run it in the community. And so that was my way of looking at disparities. What can I do as an economic developer to fill a void and what is missing in the ecosystem? And we have partners now in Denver who are rolling out their own fund. There are other communities around the country that are asking me, how did you do this? How can I do this?

Now the fund is a standalone fund. It has its board. It has an investment committee. As I said, I'm the executive chair. But it's connected into the ecosystem of the community to help entrepreneurs, right? And in this case, particularly entrepreneurs of color. And there's also a small private public partnership called Amplify Grand Rapids that is specifically aimed at a part of our community that has not seen a lot of investment. And that is beginning to see investment in a very particular zip [00:55:00] code.

So people took it very seriously. People were. Unhappy about it, shocked about it. And on the other hand, it was a wake up call that we needed to have, and we are starting to we are starting to move in better directions. It's a journey though. I mean, it's a journey and I hope that somebody else in another two or three years takes another look at this statistic and sees how it has changed because it became a metric that everybody is still mentioning seven years later. And I would sure like to know, have we made any progress because there's a lot of activity going on around that issue.

Rohan: And just speaking of the new community transformation fund, how do you think about the success of this fund and , the impact it's been able to have so far?

Birgit: Well, the fund, like I said, was announced in 2020, we raised money. We, we put the fund together legally during 2020, we started raising money during the end of 2020. Of course this is now in the middle [00:56:00] of the pandemic. We raised 10 plus million dollars on zoom calls which says a lot. The people that we talked about that we talked to literally three of us, sometimes two of us, sometimes one of us got on a call and said, here's what we are doing. Here's why it's important. And one gentleman was a phenomenal entrepreneur in town with a super successful business, said, I know what you mean. Here's a million dollars. What else can I do for you? So people got it.

And my intention is, my hope is, my dream is, my goal is, that this fund changes the business ownership complexion, literally, of business ownership in west Michigan. Right now a lot of the wealth is concentrated in businesses, owned by white founders. And there is plenty of room. It wasn't [00:57:00] meant to cut up the pie into smaller pieces. The fund's intention is to grow the pie by giving entrepreneurs of color the opportunity to have a business, scale that business, hire folks, maybe sell it eventually, become a unicorn if you will, but that the community really has a robust business sector that is owned by people of color.

Now we have a lot of small companies, small businesses, lifestyle businesses that are in fact owned by minority entrepreneurs. The fund is really a venture capital fund. It's truly a venture capital fund. It's not a grant making fund. It's an investment and the investors expect a return and we want to scale. We want scalable wealth creating companies. At least 20 to 25, we're [00:58:00] still fundraising. We would like to get this fund to 25 million. Like I said, we're a little over 10. So I had three fundraising calls last week. That's the goal is to really diversify the business ownership.

Rohan: And yeah. And it seems like based on the kind of responses you're getting from prospective funders that this at least is beginning to change the conversation or make people more cognizant of the need.

Birgit: Absolutely yeah.

Rohan: , we've talked in the past about safeguarding the interests of labor and safeguarding the interests of workers, whether on wages and so on. A question to you given a larger conversation - are unions an answer? And I ask you this specifically because reports suggests that the region has one of the lowest rates of participation in organized labor in Michigan. About 5% of private industry workers in the grand rapid region are union members compared with [00:59:00] 11% in Metro Detroit and statewide. So are unions an answer or are unions a part of a larger mix? What is your stance in that?

Birgit: We like to compare Detroit and west Michigan. But just like Massachusetts is Boston and the rest of the state, and Illinois is Chicago and the rest of the state, they're very different business cultures on both sides of the state. The Southeast side of the state, as you mentioned earlier, is heavily dominated by very large industry automotive and their supply chain. And that's terrific. But industry over here we have, if you look at the composition of our companies, we have maybe a dozen or so what you would call larger big businesses companies in excess of a billion dollars in sales. Some of them are manufacturers. One of them is a very large retailer and then the majority of our businesses, [01:00:00] and I mean, wealth creating businesses are really relatively small. If you look at the 2200 plus manufacturers, and that includes food processors, med device, et cetera, they have less than a hundred employees. It's not a unionizable company size. It has never really been an issue. And that's why unions have never been particularly strong over here is we don't have those very large companies that people unionized in years past.

I also believe that if you need a union, you are not treating your employees the way you should. If you have a good labor relation with your team and you pay them well and you treat them well, then is there really a need for a union? It's a question, right? I'm not making a value statement. But  that has always been. It's much more family owned here than it is on the [01:01:00] Southeast side. And that's not again saying it's us versus them, or it's good or it's bad. Right. But it's two very different business cultures.

Rohan: So point is very well taken that we can't use the same broad criteria to judge all regions by not being cognizant of their specifics and their own realities. But to go to the other point you mentioned, what is the relationship between employers and employees? And on that front, what kind of role does an economic development agency like yours play in ensuring the interests of labor are safeguarded?

Birgit: Well that's not really an economic developer's role. At least I never looked at it that way. When we work with a company, any economic development organization works with a company that let's say, wants to expand. It's a local business that says I'm planning on a 10 million expansion. How can you help me? I want to [01:02:00] create 50 jobs. And then we go to work and bring all the resources to bear that can create the 50 jobs and then help them connect to the workforce development agencies so they can find the workforce that they need, to help them get the training money that they need. But we don't get involved in the internal workings of the company. Now, with hello west Michigan, they sometimes go on these calls together. When somebody says, I may not be able to find the right labor or what can I do, and really talk them through about, have you thought about upskilling? Have you thought about these kind of issues? But as far as labor relations go, that's really not part of an economic developer's role. At least not in my world and I can't speak for others.

Rohan: Got it. On that note Birgit, I'm going to close with the final rapid fire of questions that we ask all our guests. Number one, what's top of your policy wishlist?[01:03:00]

Birgit: What's top of my policy wishlist is that that the federal funds that flow to states and communities, particularly for workforce development gets more localized versus run by tap down from the feds because every community is different and every community has their, their own set of needs. And they're often buried in big, large bureaucracy.

Rohan: One piece of advice you have for someone trying to work in economic development.

Birgit: Find a good mentor and have passion for the work. It's the best job you could ever have.

Rohan: And speaking of good mentors, how do they reach out to you now? I'm joking.

Birgit: Yeah, I already have half a dozen. I can't add anymore!

Rohan: And finally, what is one article or book or a place or even a movie that has influenced how you think about economic development?

Birgit: Well, it hasn't been any of those, but it has been a mentor who got me interested in this [01:04:00] many years ago, in economic development. His passion for it, and my colleagues that I've had over the years whom I've admired and learned from. I had this job for 33 years and that's a big number and because I had role models and mentors in this profession that I admired.

Rohan: That's incredible. Well, Birgit, thank you so much for your time. I do hope you have the time and the chance to write that book, not just about the Medical Mile, but about so many of your experiences. It's been great talking to you and thank you so much for your time.

Birgit: Thank you very much for the opportunity. It's deeply appreciated.

Rohan: Thank you, Birgit.[01:05:00]