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Wednesday, March 11, 2009 - The Michigan Daily 5B
An ivory tower's
protection
Tp he University's central
role in the city's pros-
perity is undeniable.
"I don't think the University
would be what it is without Ann
Arbor, and I don't think Ann
Arbor would be the same with-
out the University," said Jesse
Bernstein, president and CEO
of the Ann Arbor Chamber.of
Commerce.
But when asked if the city
was too dependent on the Uni-
versity, Bernstein answered
with a confident "no."
"There's an automatic flow of
commerce that'sbeen symbiotic
and self-perpetuating," he said.
The University functions in
two key ways in the region's
economy. First, the University
directly employs thousands and
brings in a student population.
of more than 41,000 to the city.
The University provides a
stable job base for the region,
said Lou Glazer, president of
MichiganFutureanAnnArbor-
based think tank that conducts
research on Michigan's tran-
sition to a knowledge-based
economy. A knowledge-based
economy is one that is centered
on high-skill jobs like those in
the technology sector rather
than manufacturing.
"For Washtenaw County, it's
a huge employment safety net,"
Glazer said.
But secondly - and perhaps
more importantly, according to
Glazer - universities generate
spin-off industries, businesses
and investments.
With this in mind, the Uni-
versity has recently formed
new centers and partnerships
with the city that are focused
on encouraging offshoot start-
ups, particularly in science and
technology.
These organizations include
MPowered Entrepreneurship, a
joint venture between the Ross
School of Business, the College
of Engineering, which supports
student entrepreneurs, and the
University's Office of Tech-
nology Transfer, which helps
University faculty and students
market their science and tech-
nology-related product ideas
According to a new national
report released March 3 by the
Land Policy institute at Michi-
gan State University, every new
patent in a metro county leads
on average to the creation of
nearly 500 new jobs. In addi-
tion, it raises the county's aver-
age income by approximately
$3, said Yohannes Hailu, an
associate director for land poli-
cy at the institute and co-author
of the study.
If this statistic holds true
for Ann Arbor, then University
programs like the Tech Trans-
fer Office could have a sizable
impact in bolstering the city's
economy. In the 2008 fiscal
year, the office had a hand in
13 new start-ups and 75 new
patents, according to its annual
report.
The key to Ann Arbor's suc-
cess isn't solely the presence of
'a college because this reasoning
fails to explain why Ann Arbor
is seemingly more prosperous
than its Michigan counterparts.
In December the unemploy-
ment rate in East Lansing and
Mount Pleasant was 8.6 and 7.1,
respectively.
Ann Arborites and econo-
mists alike tend to point to some
indefinite and elusive 'X' factor
that "makes Ann Arbor Ann
Arbor", but they disagree about
what that factor is.
The University's renowned
international reputation, the
health care industry, qual-
ity of life, green space, proxim-
ity to Detroit and easy access to
Detroit Metropolitan Airport
are all named as important fac-
tors to Ann Arbor's prosperity.
Glazer said it is the size of
the University's research opera-
tions and Ann Arbor's central
location in Southeast Michigan
that distinguishes Ann Arbor
from other college towns.
This combination is what
gives the University more
spin-off potential than other
schools, he said, adding that if
Ann Arbor was located a hun-
dred miles north or south, the
University would have a much
smaller impact on economic
development.
The University of Illinois at
Urbana-Champaign, another
flagship research school, is an
example of academia's irrel-
evance if the school isn't in a
prime location, Glazer said.
"The University of Illinois in
Champaignhas almost no effect
because it's out in the middle of
a corn field," he said.
Glazer said the University's
growth should be a top concern
not only for the region but the
entire state as it tries to move
away from the auto manufac-
turing industry and toward a
high-tech economy.
"Our belief is that the asset
that the state has that can have
the greatest impact on Michi-
gan's transition to a knowledge
economy is the research uni-
versities, with the University of
Michigan being the mostimpor-
tant," he said.
It was precisely the impor-
tance of Michigan's research
universities that University
President Mary Sue Coleman
tried to impress upon the Mich-
igan House Appropriations
Subcommittee on Higher Edu-
cation during her testimony in
Lansing last week.
Coleman appeared with
Michigan State University
President Lou Anna Simon and
Wayne State University Presi-
dent Jay Noren to lobby for
more state funding for higher
education.
In her remarks, Coleman
stressed the University's recent
efforts to encourage students
and faculty to be entrepreneurs
and start businesses in the pri-
vate sector.
"We want to encourage and
reward professors who move
inventions and innovations into
the marketplace," Coleman said
during her subcommittee testi-
mony.
Together, the three presi-
dents represent the University
Research Corridor, an alliance
formed in 2006 with the state's
three largest research univer-
sities with the goal of guiding
Michigan toward a knowledge-
based economy.
In its 2008 report, the URC
credited the three schools with
the creation of nearly 70,000
jobs in the state. The report also
estimated that the URC was
directly andindirectlyresponsi-
ble for $13.3 billion of the state's
economy in 2007. This figure
includes both the earnings of
people directly employed by a
URC school and the earnings of
URC alumni in the state in addi-
tion to state tax revenue from
these earnings.
The day the bubble
nearly burst
A lthough the Univer-
sity provides the region
some comfort, the city
is by no means immune to eco-
nomic strife.
Margaret Dewar, a professor
of urban and regional planning
in the Ford School of Public Pol-
icy, said economic downturns
tends to be more gradual in
economies based in education
and health care.
"We're experiencing a reces-
sion, it is just not as extreme,"
she said.
Announcements like the Uni-
versity Health System's hiring
freeze for all non-patient care
jobs and layoffs at Borders Inc.'s
Ann Arbor headquarters stand
as examples of the recession's
eroding effect.
In the past month, the book-
seller has announced it is cut-
ting hundreds of jobs, including
92 corporate positions at its
headquarters.
But the single biggest bubble-
shattering blow to Ann Arbor
came on Jan. 22, 2007, when
pharmaceutical giant Pfizer,
Inc., suddenly announced it was
closing its research and devel-
opment facility near North
Campus.
The city lost 2,100 jobs that
day.
"Nobody expected that to
happen," said Bernstein, add-
ing that construction crews
were in the middle of remodel-
ing the facility on the day of the
announcement.
Not only was Pfizer the city's
largest employer outside of the
University, but it was also the
city's largest taxpayer (account-
ing for about five percent of its
tax base) and one of the city's
largest charitable contributors.
At the time, Ann Arbor mayor
John Hieftje was frank about
the shock the plant's closing
gave the city.
"This is certainly a blow to
the city, but it is not one from
which we cannot recover," he
said at the press conference the
day of the announcement.
Bernstein said that the bright
side of Pfizer's closing was that
it mobilized the city to find a
buyer for the property and new
sources of tax revenue to fill the
void.
For nearly two years, who
would take over the 174-acre
research complex was a topic
of nervous speculation around
the city until the University
announced last December that
it would purchase the Pfizer
campus..
After the president of the Bill
& Melinda Gates Foundation's
Global Health Program,
Tadataka Yamada, casually
referenced the Pfizer labs in a
presentation on global health
last April, the buzz was that the
Bill and Melinda Gates Foun-
dation was eyeing the site. A
local magazine, the Ann Arbor
Observer, even reported that
Bill Gates had been seen dining
at a nearby greasy spoon.
But in the end, it was the Uni-
versity thatshelled out $108 mil-
lion and reinforced the school's
role as Ann Arbor's economic
security blanket.
The University plans to use
the labs to expand life science
research and create 2,000 new
jobs over the next decade.
The deal is a trade-off for the
See TOWN-GOWN, Page 8B