The University of Michigan is playing an increasingly complex role in the economic development of the state of Michigan, and in ways so varied and widespread that it is impossible to freeze-frame it long enough to total it numerically. The series of stories that follow look at a few interactions-incubation, consultation, technology transfer, service, educational outreach-that are ongoing in just one unit of the Business School, the Business and Industrial Assistance Division (BIAD).

"The School of Business Administration established BIAD in 1987," says Marian Krzyzowski, director of the Division, "to provide management and technical assistance to small businesses and to assist communities in economic development.

"BIAD programs are driven by faculty, staff and students who factor in an array of social factors in computing what goes below the bottom line. BIAD is involved with more than 65 businesses or civic organizations in more than 40 Michigan cities; dozens of other firms and nonprofit agencies are now carrying on with activities that were successfully shaped through their ties with BIAD. The following are examples of the range of BIAD programs.

Saving Jobs in Grand Haven
The Challenge Machinery Company (CMC) in Grand Haven, on the southern shore of Lake Michigan, is the only remaining domestic manufacturer of paper cutters and paper drills for the graphics arts industry. The 125-year-old firm has operated at its present site since 1903, but in the early 1990s, economic recession and foreign competition had it on the ropes. There were layoffs and even talks of a sale.

The firm was certified as "trade-impacted," which qualified it for 50-50 federal funding through the U-M Business School's Great Lakes Trade Adjustment Assistance Center (TAAC), a BIAD unit directed by Maureen A. Burns. TAAC's mandate is to provide technical and management assistance to manufacturers in Michigan, Indiana and Ohio that are hurt by imports and cutbacks in military contracts. So far, TAAC has helped more than 100 companies turn their businesses around, saving or creating thousands of industrial jobs. Burn's predecessor assigned TAAC senior researcher Sam Swaminathan to manage the project in 1993.

Challenge Machinery, a family run business, was undergoing leadership problems, so Swaminathan temporarily relocated to Grand Haven and made many executive decisions while coming up with·a TAAC Adjustment Plan. After several months, Larry J. Ritsema, a non-family member who had headed a Challenge division, took over the helm.

Ritsema and Swaminathan implemented a TAAC plan that reduced the product line by half, improved plant layout, cut ties with unprofitable foreign manufacturers, trained employees in quality-improvement practices and reorganized the board.

The Challenge-TAAC project won first place from the National Association of Management and Technical Assistance Centers' rating of national programs that focus on the transference of academic-based information and knowledge to communities and businesses with the goal of furthering economic development. The citation credited TAAC with saving 169 jobs at Challenge and $5.3 million in employee wages and benefits, and preserving an additional 340 jobs for Michigan firms that rely on Challenge for their business. That was another $10.2 million for the state's economy.

"From a business standpoint," Challenge President and CEO Ritsema told Michigan Today, "Challenge continues to improve, both from the help TAAC gave us and things we've implemented here on our own."

What Will Replace a U.P. Air Base?
BIAD's University Center for Economic Development, directed by Lawrence A. Molnar and funded in part by the Department of Commerce's Economic Development Administration, helps companies and communities meet global economic challenges. Developing reuse strategies for closed industrial and military facilities is one of the Center's activities.

This summer, Molnar and summer intern Allen White '89 of Detroit, a graduate student in architecture and urban planning, are on a team working with the Sawyer Redevlopment Authority in Marquette to develop an economic reuse strategy for the Upper Peninsula's Sawyer Air Force Base, which the Pentagon is shutting down. "I'm also working on BIAD's statewide analysis of economic growth patterns, White adds. "We hope to identify growing companies in various regions and analyze contributing factors for that growth."

An Incubator in Niles
Another BIAD-linked unit studying the Sawyer Air Force facilities is the Office of Research on Industrial Facilities (ORIF). ORIF is an interdisciplinary team from Business, Engineering, Architecture and Urban Planning schools and the Institute of Science and Technology. With private sector support, ORIF investigates the extent to which old buildings can be rehabilitated for manufacturing or community service.

One ORIF project, in Niles, Michigan, in the state's economically stressed southwestern corner, celebrated its 10th anniversary this spring. When the Kawneer company decided to move its aluminum manufacturing business from Niles to Georgia in the mid-'80s, the City of Niles bought the 90-year-old old brick plant for a dollar. The Greater Niles Economic Development Foundation leased the building from the city and asked an ORIF team to help the city decide whether the building was a good site for southwestern Michigan's first small-business incubator. (Business incubators generally offer fledgling businesses reduced rent, shared supplies and equipment, and consultation services for a limited number of years.)

"We assessed the market for the Niles incubator, told them what it would cost to convert the building, told them what their cash flow would have to be to keep it going, and helped complete the real estate deal," Molnar recalls.

Armed with that information, the Niles groups established the incubator as the Center for Business Development (CBD) in March 1985 and, assisted by the local Hunter Foundation, made a 25-year commitment to the project.

"We've had 89 tenants," CBD manager Deanna Wolford says, "and 27 have 'hatched' into ongoing businesses that have already created at least 100 local jobs; 14 of the firms are still in business, and we have 31 tenants now. Our tenants share machines, ideas and referrals. The camaraderie is great; even after they graduate, they keep in touch with us and other tenants."

Helping Entrepreneurs in DetroitTwo Business School students, Cordell Hines of Chicago and Mario Stein of Miami, are deeply involved in small-business incubator projects in Detroit. They are interns in BIAD's Michigan Business Assistance Domestic Corps, a program that places MBA students interns with nonprofit agencies for approximately 14 weeks in the summer between their first and second year.

BIAD Director Krzyzowski, who heads the program, said the Corps began in 1993 with seed money from private donors and Business School Dean B.Joseph White, who emphasizes that School's duty to help students learn that "strong economies and healthy communities are in the best interest of business."

When it began in 1993, nine students participated, Krzyzowski says. The number grew to 12 in '94, and this year 20 MBA students are honing their management and business skills through contributing to city government, community economic development programs and incubators that stimulate entrepreneurship.

"These are MBAs with a conscience, but also with bottom-line skills," Krzyzowski says. "The organizations they help have low funds and they need to be highly accountable for them. To help them do that, we have this incredible pool of young, talented people, and a pool of organizations that never had access to them before.

Hines's internship is with the Michigan Neighborhood Partnership (MNP) incubator project. The incubator is a collaborative effort between the U-M, Wayne State University and local businesses including Ford Health Systems, General Motors and UNISYS.

In addition to shared services and reduced rent, the facility will seek financing for tenants through a venture capital fund.

"The incubator will allow many Detroit-area entrepreneurs the opportunity to start businesses without economic burdens due to under-capitalization," Hines says. "This will ultimately result in a stronger local economy as new jobs are created by these firms. My role involves coordinating the efforts of the research team in writing the business plan, as well as taking an active role in preparing the financial projections. I'm also responsible for obtaining commitments from various financiers and educating the neighborhood member organizations about the business planning process. This is a dress rehearsal for the kind of work I want to do when I graduate.

Stein is managing the Mercado of Mexicantown in Detroit, an 11-week open-air market that offers produce, prepared foods, arts and crafts and entertainment, and also serves as a microbusiness incubator. The Mercado is the key retail component of a new international Welcome Center at the US-Canadian border. A joint project of the Mexicantown Community Development Center (MCDC) and Ambassador Bridge Corp., it will be the first privately owned welcome center in the country, as well as the first bilingual one. Groundbreaking for the center is scheduled for late 1995.

MCDC Director Sally Rendon says she and Stein "are putting economic development together that reflects Hispanic culture but is international. One of the pieces is to train people in the incubator. Then they can fly away from the nest and we hope go anywhere in the state and be successful.

Stein, whose wages are paid by the federal Americorps program and a Business School stipend, is conducting customer satisfaction surveys and vendor surveys "to try to statistically determine what are the priority areas to focus on. I'm interested in management consulting, and this job gives me the experience in advising people in how to improve business processes. It's a chance to prove myself." MT