Ann Arbor: Economy

Ann Arbor: Economy

Major Industries and Commercial Activity

The University of Michigan is Ann Arbor's largest employer, accounting for nearly 10 percent of the work force. The majority of remaining jobs are split between manufacturing, health care, automotive, information technology, and biomedical research fields.

Ann Arbor is now the western anchor of high-technology corridors extending from Detroit along I-94 and M-14. Aiding the increase in firms involved in research, development, or testing is the proximity of the University of Michigan and Eastern Michigan University in Ypsilanti, which provide technical resources and an educated workforce. In 2003 the Ann Arbor/Ypsilanti region of Washtenaw County was named a SmartZone by the State of Michigan as one of ten high technology centers with the potential to create jobs of the future. This builds upon the 1999 designation of the Ann Arbor IT Zone. Together these organizations support the area's historically strong industries of information technology, networking and high-speed internet services, life sciences, nanotechnologies, and MEMS. Other high-technology industries include business services, computer and data processing, and instrument development. Ann Arbor's numerous software companies supply a significant amount of the computer programming and devices used in the auto industry.

Trade and information publishing are also strong industries in the region. The Borders Group began as a campus bookstore owned by two University of Michigan graduates and is now a worldwide chain and Fortune 500 company with its headquarters in Ann Arbor. The region is also strong in book printing and manufacturing.

Items and goods produced: books, software, computer technology and precision instruments, ball bearings, springs, baling presses, drill heads, tapping and reaming machinery, awnings

Incentive Programs—New and Existing Businesses

Local programs

The Washtenaw Development Council (WDC) is a centralized, free information source for expanding industrial, technological, and major commercial businesses. A public and private partnership, the WDC provides a one-stop source of information and services for new, existing, and relocating businesses in Washtenaw County. Services include company location as well as providing information on location space, financing, and workforce issues. The WDC also works with several industry groups in the county such as the Washtenaw County Manufacturers Council, the Ann Arbor IT Zone, the FastTrack Awards Program, and the Washtenaw Work/Life Consortium. Other areas of service include foreign initiatives, the Business Services Directory and the existing business call program. The WDC also provides community tours and introduction to key business leaders; listing of key resources for start-ups and expanding businesses; tax and financial incentives counseling; access to business, educational and community resources; and provision of business cost, demographic, and other statistical data.

State programs

Incentives on the state level include tax abatements, tax-exempt revenue bonds, public loans, and grants. The Michigan Economic Development Corporation provides a one-stop business assistance resource for any company already in Michigan or considering a location in the state. Professional account managers work with consultants, utilities, associations and local economic development agencies to match businesses with the best opportunities in Michigan. Free services include new business recruitment, business retention, information on the state and its industries, site location and selection, business incentives and financial assistance, employee recruitment and training, permit assistance, and other resources and services.

Job training programs

Michigan offers a coordinated job training system using federal, state, and local resources to provide a highly productive and trained workforce. Grants can provide funding for activities that increase worker productivity. The training itself is done through the institution of the company's choice. Free recruitment and screening services are available for new and expanding employers through the Michigan Employment Security Administration's job service and also through several local school districts. State-sponsored job training programs offered through the Michigan Adult Education Training Initiative include the Job Training Partnership Act, summer youth employment programs, and pre-college programs in engineering and sciences. The Michigan Economic Development Corp. administers a $1.2 million Training Incentive Fund, which provides assistance to employers wishing to upgrade the skills of their current work force. Other programs include Targeted Jobs Tax Credits, and adult and vocational education.

Economic Development Information: Washtenaw Development Council, 3135 South State Street, Suite 205, Ann Arbor, MI 48108; telephone (734)761-9317; fax (734)761-9062

Development Projects

While high-paying automotive manufacturing jobs seem to be disappearing from Ann Arbor as they are throughout the region and, to a lesser extent, from the United States, several automakers continue to invest heavily in new research and development facilities in the area. In 2004 Korean automaker Hyundai broke ground on a new 190,000 square foot Hyundai America Technical Center in nearby Superior Township, a facility that will eventually employ 400. The world's largest pharmaceutical firm, Pfizer, purchased several acres of land in the early 2000s as part of an $800 million expansion and consolidation of its facilities in Ann Arbor. In 2004 Pro Quest, an information publisher, announced plans to sign a 15-year, $35 million lease with a southern Ann Arbor office complex, with plans to build an additional 110,000 square foot facility on the same site. The firm employs 900 workers in the Ann Arbor area.

Commercial Shipping

Air cargo service is available locally at Willow Run Airport, the nation's largest on-demand air charter freight airport. Detroit Metropolitan Airport is a 15-minute drive to the east off I-94. Conrail and three other railroads provide rail freight shipping, and the city is served by six trucking companies. Within a 50-minute drive are the international port facilities of Detroit and Monroe.

Labor Force and Employment Outlook

Ann Arbor employers draw on a pool of well-educated, highly skilled workers. These workers include University of Michigan graduates reluctant to leave the city after graduation and willing to work for less money in exchange for the high quality of life in a small-town setting experienced there.

Still, the number one problem faced by Ann Arbor businesses is the inability to find qualified employees. The city's labor market boasts unemployment rates well below national and state averages, quashing any hopes businesses have of expanding. This problem is coupled with a shortage of land for business. Manufacturing jobs have been on a steady decline that is expected to continue. Additionally, Ann Arbor businesses must increasingly compete with firms located in Detroit and its western suburbs, which have become attractive to Ann Arbor residents willing to commute for higher-paying jobs.

The following is a summary of data regarding the Ann Arbor metropolitan area labor force, 2004 annual average:

Size of non-agricultural labor force: 201,900

Number of workers employed in . . .

mining and construction: 5,700

manufacturing: 23,100

trade, transportation and utilities: 27,400

information: 3,800

financial activities: 5,800

professional and business services: 26,900

educational and health services: 22,400

leisure and hospitality: 14,400

other services: 6,200

government: 66,000

Average hourly earnings of production workers employed in manufacturing: $25.64 (Detroit metropolitan area)

Unemployment rate: 4.7% (February 2005)

Largest county employers	Number of employees
University of Michigan	30,574
University of Michigan Health Centers	7,645
Visteon	5,581
General Motors Corp./Powertrain Division	4,394
Pfizer Global Research and Development	3,400
St. Joseph Mercy Hospital	3,300
Eastern Michigan University	2,200
Borders Group	1,295

Cost of Living

Ann Arbor residents enjoy the relative quiet and sophistication of a college town while being afforded tremendous cultural amenities (both in town and within an hour's drive in Detroit)—but all of that does come at a price. A 2004 study placed Ann Arbor housing at $40,000 above the national average. With little available land left within the city limits, homebuyers are increasingly looking to the nearby communities of Chelsea, Dexter, Pinckney, and Superior Township, where construction of new homes boomed throughout the late 1990s and early 2000s. Health care costs in Ann Arbor are above the national norm, a reflection of the high-cost, high-technology care available at the University of Michigan Medical Center.

The following is a summary of data regarding several key cost of living factors in the Ann Arbor area.

2004 (3rd Quarter) ACCRA Average House Price: Not reported

2004 ACCRA Cost of Living Index: Not reported

State income tax rate: 3.9% (2005)

State sales tax rate: 6.0%

Local income tax rate: None

Local sales tax rate: None

Property tax rate: $47.36 per $1,000 of assessed value (2004)

Economic Information: Washtenaw Development Council, 3135 South State Street, Suite 205, Ann Arbor, MI 48108; telephone (734)761-9317; fax (734)761-9062