KALAMAZOO, MI — Thirty-three organizations + $690 million of investments announced in 2018 = 1,883 new jobs in Southwest Michigan.
A simple equation, right?
There’s much more happening behind the scenes to make it a reality, said Southwest Michigan First CEO Ron Kitchens, who leads the nonprofit that provides economic development services across the region, based out of offices in downtown Kalamazoo.
The organization offers a variety of consulting services meant to help businesses find the right fit in Southwest Michigan. Those include pitching the region to business leaders, assisting with site selection, coordinating with utilities and local governments and helping companies obtain incentives. Add to the list leadership development, networking events, helping students find career paths, attracting national attention to the region and more to understand what Southwest Michigan First does on a daily basis.
For Kitchens, the pathways and techniques are numerous, but the end goal is the same.
“All we care about is jobs," Kitchens said.
Now that the region has an unemployment rate trending downward, even more emphasis is placed on the quality of the jobs being created, he said.
The number of people employed in the Kalamazoo-Portage metropolitan statistical area last year grew from 158,661 to 163,013 between January and November, according to the most recent data from the U.S. Bureau of Labor Statistics. During the same period, the area’s unemployment rate fell from 5 percent to 3.1 percent.
Southwest Michigan First pointed to 33 key economic development projects occurring in the region in 2018. Altogether, those projects encompassed 1,883 job announcements and more than $690 million in business investment.
Some notable projects from that list of 33 included:
- Pfizer’s investment of $465 million in Portage, expected to bring 450 new jobs
- Stryker’s $110 million investment in Portage, expected to bring 260 new jobs
- Newell Brands’ $7.3 million expansion in Kalamazoo that added an estimated 50 to 60 jobs
- American Axle & Manufacturing skilled trades funds resulting in 120 new jobs
- Michigan Milk Producers Association in Constantine investing $24 million, creating 24 jobs
- Kalamazoo Outdoor Gourmet’s $3.1 million investment in Comstock Township, bringing 31 new jobs
- Walther Farms $8.3 million investment bringing 12 new jobs to Mottville Township
- All That Jazz in Sturgis, a $3 million investment and 20 new jobs
- Select Products Limited in Oshtemo Township, a $3.5 million investment and four new jobs
- Chem Link in Schoolcraft, a $5 million investment and 15 new jobs
- Mendon Seed Growers/Premier Seed Group in Sturgis, a $3 million investment and six new jobs
Some of the deals were in the works for several years, such as the Stryker and Pfizer developments, and are examples of investments happening today that will benefit future generations, Kitchens said.
Those developments and others focused on design, such as Newell’s continuing expansion, are important for the region’s future, he said.
“None of us will live long enough to see how incredible the impact is,” Kitchens said.
Making deals happen
His job is bringing people to the table to make deals happen that result in good things for Kalamazoo and the surrounding area. It usually happens in private meetings with different parties to facilitate an arrangement, Kitchens said.
He explained the different ways Southwest Michigan First is involved in the process, often acting as a facilitator to help businesses locate, expand and find success in the region.
Kitchens, who has built relationships with power brokers throughout the region, and his staff offer knowledge about the local markets, along with the strengths and limitations of available development properties. They help companies arrange meetings with local governments.
“Generally, everybody is not in the room at once because you want to take care of bite-sized problems,” Kitchens said.
The organization works with the businesses to address its individual needs, wants and desires.
The city of Portage was brought in very early on the Pfizer project, Kitchens said, because the pharmaceutical giant is such a large utility customer and because of traffic concerns. The Stryker development required coordination with Portage also, as new roads were needed for the development, and local government officials had to approve items like a new traffic light to accommodate the plans.
Southwest Michigan First also helps to facilitate government incentives for qualifying businesses coming to the region or existing companies who plan to expand.
In the vast majority of the cases, Kitchens said, the process of seeking incentives begins with a company saying something like, “We’ve got to shave 3 percent off this cost before we can take it to our board of directors to get it approved," and asking “How can we make this work?”
17,000 jobs in a decade
Over the past decade, the organization has tracked 429 economic development projects that have been announced in the region, with more than 17,000 total jobs tied to those announcements.
Federal data shows the unemployment rate for the Kalamazoo-Portage metropolitan statistical area dropped from over 10 percent in 2009 to 3.1 percent in November 2018, nearly a decade later. A similar downward trend can be seen in statewide and nationwide unemployment statistics. The national unemployment rate was 3.8 percent as of February 2019, compared to 8.3 percent in February 2009, according to U.S. Bureau of Labor Statistics data.
For Kalamazoo Outdoor Gourmet, a manufacturer of high-end grills sold for luxury homes and outdoor kitchens worldwide, a $3.1 million investment in 2018 means 31 new jobs at its Comstock Township facility, Southwest Michigan First said.
The expansion is under construction now and slated for completion this summer, Kalamazoo Outdoor Gourmet VP of Operations Scott Kohler said. The business has begun the initial hiring phase, Kohler said, with plans to create the 31 additional jobs within the next couple of years.
Newell Brands opened a new design center in Kalamazoo in 2014 and expanded its presence in 2018. The company owns well-known brands including Sharpie, Coleman, Yankee Candle, Mr. Coffee, Sunbeam, Rubbermaid and others.
Southwest Michigan First assisted with recruiting Newell Brands to locate in Kalamazoo in 2013 and was instrumental during negotiations in 2016 and 2017 to make the current expansion possible, said Nate Young, senior vice president of design and innovation for Newell Brands.
“The Kalamazoo region is strategically located between Chicago and Detroit, and has multiple industries that, like us, need access to great design talent – from automotive to boating, furniture, publishing, technology and software,” Young said. “Being here in Kalamazoo has worked out very well for us at Newell Brands from a recruiting standpoint — we’re even witnessing some healthy competition between businesses."
The company sees benefits for the quality of life for its designers in an area friendly to families that also provides easy access to large cities, culture and entertainment.
Newell Brands is looking forward to the completion of its design center expansion this August, Young said.
New focus on design industry
Southwest Michigan First has identified the design industry as a niche area for the region, in part because of the high number of designers living here. It is working to get that message out to companies.
As part of that focus, the organization also hosts events to get creative people together from throughout the region. The latest, dubbed Mix Southwest Michigan, brought people together on Feb. 27, at The Foundry in Kalamazoo.
“It’s for every imaginable area of creative design, and just getting together to hang out and learn together," Kitchens said.
Attracting quality employers can lead to other, similar employers locating here, Kitchens said. The Newell expansion, he said, has brought many of its workers in from outside the state.
“Essentially everyone who came in to work there came from somewhere else," he said, adding that influx of residents can raise the quality of the community by bringing new creative, dynamic and highly paid workers.
Kitchens, who is also an author who writes books about his personal experiences and on how to be a successful leader, said cultivating success at Southwest Michigan First will bring further success. In 2018, the organization was recognized by Outside Magazine among the nation’s best places to work.
Southwest Michigan First receives a small percentage of its funding from governments, Kitchens said during a March interview with MLive at his brick-and-glass office overlooking cranes and ongoing construction in downtown Kalamazoo.
In view down the street from the current office at 261 E. Kalamazoo Ave. is a new, 290,000-square-foot building currently under construction. It’s the future home of Southwest Michigan First’s offices and other tenants, Kitchens said. The Kalamazoo Promise, Communities In Schools and law firm Warner Norcross and Judd also plan to relocate their local headquarters to the building, being constructed on a former parking lot on the corner of Water and Edwards streets.
Southwest Michigan First also works with Western Michigan University and other educational institutions to help create better pathways from schools to jobs, Kitchens said. That work involves sharing information between employers and schools to better align the needs of the job market with skills students have when they graduate.
Kitchens also serves on the Western Michigan University Board of Trustees, a post to which Gov. Rick Snyder appointed him in 2016.
Organization’s structure
WMU President Edward Montgomery is one of the 64 members of the Southwest Michigan First board, which also includes billionaire and Greenleaf Trust President William Johnston, U.S. Rep. Fred Upton, WWMT TV General Manager Fred Corbus, Dan Jaqua of Jaqua Realtors, Stryker Corp CEO Kevin Lobo and businessman and UpJohn Co. heir William Parfet. Many other well-known businesses are represented on the board.
The organization will have 28 full-time employees as of April, Southwest Michigan First Managing Partner Heather Smith Baker said.
Southwest Michigan First’s Form 990 from 2017 lists the organization’s total revenue as $4,966,246. As a private development corporation, Southwest Michigan First does not disclose individual contributor levels, the organization said. The organization’s funding sources include private donors, chamber, grants and contracts, leadership programming, consulting and other miscellaneous sources.
The organization receives funding from partners across the region, Kitchens said, including businesses and organizations spanning several industries as well as some government entities.
Of the organization’s total budget, 2 percent is attributed to public sources, he said. That model is very different from many other economic development organizations in the state and nationwide, which often receive between 50-100 percent of their funding from government sources.
Southwest Michigan First has performance-based service contracts with the city of Portage to assist with their economic development and growth services in the amount of $25,000, and a $75,000 contract with Kalamazoo County for the purpose of marketing the county to new and expanding job creators. Southwest Michigan First also provides economic development services to St. Joseph County through St. Joseph County Edge for an annual fee of $130,000, half of which is funded through the county government there, Kitchens said.
“We are indeed blessed in Kalamazoo that philanthropy (foundational and business) has always stepped forward since the founding of the community to support economic vitality, civic growth and cultural capacity,” Kitchens said in an email message.