What does Superior Trade Zone designation mean for the U.P.?

In 2012, community leaders from Marquette and Escanaba met together to discuss how to improve cooperation between the U.P.'s two largest cities and the communities that surround them. Though the attendees discussed homegrown initiatives like an improved shipping corridor between Marquette and Escanaba, they kept coming back to the same theme: to truly reach its full potential, the central U.P. needed more love from Lansing. It was no secret that locals felt as if their beautiful home region was little more than an afterthought for downstate policymakers--to the extent that they thought about the U.P. at all.

That perception was reinforced by what some Marquette and Escanaba political and business leaders felt was a highly public snub: The state government"s creation of regional economic development zones, called Next Michigan Development Corporations (NMDCs), conspicuously left out the U.P. Most of the original NMDCs were located far downstate; the only NMDC in the northern half of the state was centered around Traverse City.

A long-awaited victory for the Upper Peninsula's economy

But there's new hope that the U.P.'s prosperity is creeping higher on Lansing-based policymakers' collective to-do list. Earlier this year, the state legislature amended the 2011 act that created the first five NMDCs to allow for a sixth: The Superior Trade Zone, which encompasses Marquette and Delta counties. Last month, STZ received official approval from the Michigan Strategic Fund, which signs off on new NMDCs.

According to Peter Anastor, managing director for logistics, supply chain and manufacturing for MEDC (and a key overseer of the NMDC program), this victory was due in no small part to tireless lobbying by the U.P.'s business community, local politicians, and regional representatives in the state legislature.

"The Upper Peninsula's state representatives and local political leaders are well-connected in state government," says Anastor. "They've done a good job of conveying that, because the U.P. is a unique place, what works for the rest of Michigan doesn't necessarily work there."

These folks made a compelling case for the Superior Trade Zone from the very beginning, attracting high-profile support. "Policymakers in Lansing have been receptive of the Superior Trade Zone concept all along," says Escanaba city manager Jim O'Toole, who coordinated much of the pre-approval work on Superior Trade Zone and has long been a major booster for economic cooperation in the central U.P.

"A Senate committee meeting on the subject was held in Escanaba, with senators traveling here from downstate, and Governor Rick Snyder testified before the committee in support of...Superior Trade Zone," he adds.

"It's important for Michigan"s leaders and policymakers to listen to voices from every corner of our state," concurs Anastor.

Getting down to work

Now that the initial glow of the announcement has faded, though, city managers, business owners and other central U.P. stakeholders are beginning the tough work of harnessing the power of the NMDC designation.

According to the Michigan Economic Development Corporation, the Superior Trade Zone is an interlocal partnership agreement among Delta and Marquette counties; the cities of Escanaba, Gladstone, and Marquette; and the townships of Bark River, Chocolay, Ely, Ford River, Forsyth, Garden, Ishpeming, Maple Ridge, Nahma, Richmond, and Wells.

However, this somewhat understates STZ"s reach: In addition to the 16 jurisdictions that have formally signed on, 16 others have submitted resolutions of support, meaning they intend to cooperate with formal signees where possible, says O'Toole.

The Superior Trade Zone "will leverage and promote business development actions that focus on the assets and logistics infrastructure unique to the region, including land located near the Delta County Airport Industrial Park and the Telkite Industrial Park located at the former Air Force base in Marquette County," according to the MEDC release. Other goals include exploring trade opportunities with the rest of Michigan, neighboring states and Canada in a bid to bolster key area industries of natural resources, agricultural, mining and tourism.

As a development corporation, STZ is a mechanism for the efficient allocation of property tax abatements, tax increment financing, Renaissance Zones and other economic incentives across the covered area. These incentives already exist, notes O'Toole, but STZ allows for full local control over their approval and disbursement. Once STZ's governing board and bylaws are in place, which O'Toole estimates will be complete by the end of the year, "we will be able to react quickly when called upon" to deliver incentives, he says--without the typical delays associated with state-level red tape.

The elimination of bureaucratic hurdles to business development is especially helpful for the smaller jurisdictions within the trade zone. With limited expertise and manpower, they often struggle to attract investment. "Many small, rural municipalities in our region have native manufacturers" that would be more likely to expand if they had incentives to do so, says Vicki Schwab, director of the Delta County Economic Development Authority. "[Superior Trade Zone] levels the playing field for these municipalities and companies."

Learning from yesterday's successes

If all goes according to plan, STZ could have a major impact on the central U.P.'s economy: O'Toole estimates STZ is capable of creating 2,500 new jobs and retaining more than 1,000 existing jobs between 2015 and the late 2030s. That's equivalent to 5 to 10 percent of the existing employment base in Delta and Marquette counties.

Boosters have good reason to be hopeful. Other NMDCs, notably the I-69 International Trade Corridor that covers 36 downstate jurisdictions, have been wildly successful tools for business attraction and expansion. One of the biggest I-69 successes: The expansion of Vlasic brand owner Pinnacle Foods' pickle factory in Imlay City, a move that created about 30 full-time positions and more than 500 seasonal jobs.

The I-69 NMDC also spurred the construction of a major new intermodal facility in the city of Perry, where trucks and trains on the way to and from the Canada border crossing at Port Huron can stop for tuneups, logistical support and goods transfer. Though estimates vary as to the facility's indirect economic benefit for the trucking and logistics industries, it's indisputable that the facility directly supports dozens of construction and full-time jobs.

Similar victories would vindicate the Marquette- and Escanaba-area leaders who laid the groundwork for the Superior Trade Zone. And unlike most of the other NMDCs, STZ was created with the understanding that it would expand in the future. That would complement other recent steps toward the long-held goal of U.P.-wide economic cooperation, development and outreach, such as Travel Michigan's planned branding campaign.

"The concept of the Superior Trade Zone was created with the intent to expand east and west in the U.P. as the organization grows and prospers," says O'Toole. Community leaders in population centers like Houghton-Hancock, Iron Mountain-Kingsford and the Sault Ste. Marie area have already informally expressed interest in participating.

Thanks to that ambitious vision, the STZ designation "will have a long term impact in how we will make efficient use of existing resources and our ability to promote the use of regional assets," he adds. In turn, that "will support our efforts to stabilize, diversify and strengthen not only the regional economy in the central U.P. but the economy of the U.P. in general."

With a reputation for economic dynamism and business growth, the region might find it easier to tackle other long-standing issues, like population decline. "Superior Trade Zone sends a powerful message to local businesses and those looking to relocate to the Upper Peninsula," says Schwab, "that we work together to support local employers."

"When we work together, we're stronger," she says.