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Swift Biosciences launches new technology out of Ann Arbor

It's been a busy year for Swift Biosciences. The Ann Arbor-based life sciences firm has launched its first product, readied a handful of new products to hit the market within the next 12 months and nearly doubled its staff.

Swift Biosciences
now employs 11 people after adding five in the last year, and plans to hire another four more soon. Most of those jobs are in research & development with a sprinkling of sales and marketing. Of the five most recently hired, Swift Biosciences was able to recruit three from out of state.

"The quality of life here in Ann Arbor is a significant feature for us," says David Olson, CEO of Swift Biosciences.

The 2-year-old start-up is developing molecular biology reagents for research and diagnostic applications that provide new ways to examine disease-related genes. This technology is expected to help researchers analyze samples faster, at a higher volume, and at a lower price-per-sample. It's first piece of technology, launched early this year, is a consumable product for genetic analysis that helps detect mutations in things like cancer with high sensitivity.

The venture-backed start-up, Houston-based DFJ Mercury has led its latest round of fundraising, is also working to release 2-3 more products over the next 12 months. Those include some variations of its current platform and new technology.

"It's focused on genetic sequencing," Olson says. "It's in the same general space as our first product."

Source: David Olson, CEO of Swift Biosciences
Writer: Jon Zemke

Lakeside Software grows Ann Arbor office to 12 employees

Lakeside Software has been steadily building out its new Ann Arbor office, hiring a dozen new workers there since last winter.

"Ann Arbor has been great for us," says Mike Schumacher, president of the Bloomfield Hills-based IT/software firm. "One of the challenges in Bloomfield Hills is finding high-end software developers. One of the things we found is Ann Arbor has a huge talent pool that we have really been able to tap into."

Lakeside Software
plans to hire 195 people in Ann Arbor over five years, starting last fall. The 12-year-old firm decided to open a research-and-development facility here instead of other tech hotspots, such a Silicon Valley. The company received a $731,000 incentive from the state of Michigan to open the facility in Michigan.

The Ann Arbor office will specializes in product design and development of the company's management software solutions for the Windows operating system. Its SysTrack software combines comprehensive system monitoring capabilities with sophisticated analysis for applications and users to create a total management solution.

Source: Mike Schumacher, president of Lakeside Software
Writer: Jon Zemke

U-M lands I-Corps designation to help researchers become entrepreneurial

The University of Michigan continues to establish itself as a major hub for researchers with entrepreneurial ambitions across the country now that it has been selected to become one of a handful of nodes for the National Science Foundation's Innovation Corps.

The Innovation Corps, I-Corps for short, is designed to fast-track more research from the lab to the real world. The 1-year-old program trains National Science Foundation-funded scientists and engineers on how to extend their focus beyond basic research and toward practical applications that have value in the marketplace. I-Corps got its start at Stanford in Silicon Valley.

"This is the first time it has been taught outside of Stanford," says Doug Neal, executive director of the Center for Entrepreneurship at the University of Michigan. "U-M is one of three nodes that will be open across the country."

U-M joins Stanford and Georgia Tech in offering the I-Corps workshops for research scientists and professors at top universities across North America. U-M will receive a $1.5 million federal grant to get the program off the ground over the next two years. Those two years have the potential to attract top entrepreneurial innovators at research universities across the country to Ann Arbor to take advantage of this program and the area's other entrepreneurial resources.

"We're not just teaching U-M researchers about entrepreneurship," Neal says. "We're teaching researchers from across the country."

Source: Doug Neal, executive director of the Center for Entrepreneurship at the University of Michigan
Writer: Jon Zemke

How place impacts entrepreneurship

We set out with a few simple questions: how are business startups going from the idea phase to real action and implementation? How does place -- the physical location of this conversion of ideas into action -- have an impact on entrepreneurship? And where can we track this relatively new phenomena as it happens?

For this special report we picked Detroit, Ann Arbor and Grand Rapids and asked our writers to dig into these questions.

In Detroit, social entrepreurship is spreading like wildfire, but nowhere is it more visible than at downtown's M@dison building, a property developed by Dan Gilbert, founder of Quicken Loans, majority owner of the Cleveland Cavaliers basketball franchise and, perhaps most important to this story, a principal in Detroit Venture Partners, a venture capital firm that funds start-up and early-stage technology companies in the city.

In Ann Arbor, we tightened the focus on where entrepreneurs really get social, and found it was at places like Cafe Zola and Tech Brewery. This in vivid contrast to where traditional dealmakers have met -- and still do in many places -- private country clubs. We were looking for inclusivity not exclusivity, and we found it.

In Grand Rapids, our search led to developer Sam Cummings, a pioneer in historic renovation and adaptive re-use of underperforming properties.

All three are examples of how entrepreneurial innovation is helping change the urban fabric of Michigan cities.
Our partner on this project is the Michigan State Housing Development Authority, or MSHDA.

Writer: Jon Zemke

U-M TechTransfer looks to grow C-Level talent with new mentors

Executive leadership in business, commonly referred to as C-level talent, has proven to be one of the more significant bottlenecks in growing Ann Arbor's entrepreneurial ecosystem.

The University of Michigan's Office of Tech Transfer is helping loosen the neck on that bottle by adding two new serial entrepreneurs to its mentor-in-residence program. The goal is to have them help close the C-level gap with long-term solutions like building more tech start-ups and coaching the entrepreneurs who capitalize on them.

"What we're bringing in is seasoned C-level talent to develop our opportunities," says Ken Nisbet, executive director of University of Michigan Office of Tech Transfer. "They are basically creating new venture with our projects."

Bill Brinkerhoff, a U-M alum, and former naval aviator Ken Spenser have become the newest mentors in residence, serving in that capacity for at least the next 12-18 months. The pair will work on a part-time basis with U-M Tech Transfer staff at the university's Venture Accelerator, helping evaluate new start-up opportunities and putting together teams to commercialize them.

Brinkerhoff is a former vice president at pharmaceutical firm Esperion, which was acquired by Pfizer in 2004 for $1.3 billion. He also co-founded Cerenis Therapeutics, an Ann Arbor company that created a drug that mimics good cholesterol to treat atherosclerosis. Spenser is a veteran venture capital fundraiser and co-founder of Better Rehab in Ann Arbor. He led the development and sale of the company's first product to Johnson & Johnson.

"There are some great people out there, we just don't have the numbers like they have in boston or Palo Alto," says Ken Nisbet, executive director of University of Michigan Office of Tech Transfer.

Nisbet acknowledges there isn't a quick fix to tilling the C-level talent gap, but it's work like this that will close it over the next generation with homegrown talent.

Source: Ken Nisbet, executive director of University of Michigan Office of Tech Transfer
Writer: Jon Zemke

Local VCs work to bring investment capital back home

Michigan doesn't lack for money. It's one of the wealthiest states in the union, but much of its investment capital ends up being deployed out of state.

"There is a lot of money in Michigan that is available for investing but it goes to the coasts mostly," says Merrill Guerra, executive director of the Michigan Venture Capital Association. "Our challenge is to get it to stay here."

The Michigan Venture Capital Association's Annual Research Report shows that dynamic is starting to shift in Michigan's favor. Capital under management by Michigan-based VCs is up 64 percent over the last five years. That $3 billion under management also has nine figures worth of dry powder, coming to nearly $370 million available for new investments, the report states.

The report adds that four Michigan venture capital firms successfully closed funds last year, raising $348 million. Ann Arbor-based Arboretum Ventures and Plymouth Venture Partners led the way. Michigan-based VCs are also trending toward raising bigger funds. The Great Lakes State now has six funds worth more than $100 million, eight more funds with a value between $50 million and $100 million and another 13 funds smaller than $50 million.

"One of the great things about putting your money into Michigan venture capital firms is the higher return on investment," Guerra says. "The companies here are more capital efficient and can be bought at a lower price but when they exit it's on a national scale."

Source: Merrill Guerra, executive director of the Michigan Venture Capital Association
Writer: Jon Zemke

Menlo Innovations moves to new office by TechArb with 6 new hires

TechArb, the business incubator for students at the University of Michigan, is getting a new neighbor this week when Menlo Innovations begins moving its growing operation next door.

TechArb moved into a basement office the 505 E Liberty building next to the Michigan Theatre last year. Menlo Innovations will be moving in to a 17,000-square-foot space in the same building, close enough to literally reach out and touch the incubator.

"They will be on the other side of the glass from us," says Rich Sheridan, CEO of Menlo Innovations. "Sharing that entrepreneurial spirit is very exciting."

Almost since its founding a decade ago, Menlo Innovations has been synonymous with its quirky Kerrytown office. However, the company outgrew its 6,000-square-foot space and not only needed room for future growth but wanted to maintain a presence in downtown Ann Arbor.

"It's not without a large amount of sadness that we're leaving here," Sheridan says. "We loved being here."

Menlo Innovations has just enjoyed its best revenue year ever. That growth is largely thanks to the software firm cashing in on the acquisition of Accuri Cytometers, of which Menlo Innovations owned a stake. Menlo has hired six people over the last year, including one in April. Those new jobs include programmers, project managers and Menlo Innovations' registered trademark position, high-tech anthropologists.

"There is software in everything these days," Sheridan says. "(Our customers) really have to build a software team from scratch or look to an established team like us. That is compelling."

Source: Rich Sheridan, CEO of Menlo Innovations
Writer: Jon Zemke

Mobiata adds 18 people to payroll, takes over mobile operations for Expedia

Almost two years ago, Expedia took over mobile app start-up Mobiata. Today the Ann Arbor-based venture is returning the favor by taking over Expedia's mobile operations.

"Mobile has become strategically important to Expedia," says Ben Kazez, founder & general manager of Mobiata and senior director of mobile products for Expedia. "It's now extremely critical to Expedia's success in the next 3-5 years. It could become half of its revenue."

That has meant some fast growth for Mobiata. The division of Expedia has gone from 20 people last year to 38 employees and a couple of interns today, the bulk of which work from Mobiata's offices at Nickel's Arcade in downtown Ann Arbor.

Kazez expects those numbers to grow as Expedia doubles down on its mobile marketing and app development. Mobiata's signature travel apps like FlightTrack have become Expedia's mobile mainstays. Kazez only sees that correlation growing, along with Mobiata's ranks. For now, he plans to keep Mobiata's office's in Nickels Arcade where Mobiata's worker enjoy a high quality of work life.

"I just love to be downtown," Kazez says. "A lot of us do."

Source: Ben Kazez, founder & general manager of Mobiata
Writer: Jon Zemke

Brio Device preps to begin generating revenue in next year

The evolution of Brio Device is gaining momentum as the University of Michigan bio-tech spin-out grows and prepares to commercialize its technology.

The company's team of four people are working to bring to market the SmartAirway, a new tool that improves the efficacy and safety of emergency intubation. The start-up spent its first year working on product development and creating prototypes. That work will start to come to fruition later this year.

"We believe we will have a product on the market in less than a year," says Hannah Hensel, CEO of Brio Device.

Brio Device won the Best of Bootcamp at the Ann Arbor SPARK Entrepreneurs Boot Camp last summer. It is also looking to graduate from the TechArb, a business incubator for U-M students, this year and move onto another business accelerator in Michigan. One year from now, the start-ups expects to be generating revenue, have its own office and begin hiring.

"We expect to double our employee base," Hensel says.

Source: Hannah Hensel, CEO of Brio Device
Writer: Jon Zemke

LLamasoft expands staff by 50 in downtown Ann Arbor

The co-founders of LLamasoft built the logistics company to scale, and that's just what the downtown Ann Arbor-based company is doing these days.

The 10-year-old firm has really hit its stride in the last year, hiring 50 people thanks to 80 percent growth in its revenue. The company now employs 110 people and plans to bring to bring on two new interns this summer.

Toby Brzoznowksi, executive vice president and co-founder of LLamasoft, says a lot of big customers have flocked to LLamasoft over the last year thanks its "technical superiority." Often those companies are looking for logistics software and expertise that allows the react and respond fast to both problems and opportunities, a valuable tool in an industry that has become accustomed to change in recent years.

"The more things change, the better for us," Brzoznowski says.

Brzoznowski and his partner, Don Hicks, built LLamasoft through sweat equity and their own revenue for its first decade. Last year they started to explore options to fuel its rapid growth, such as venture capital investment. What they discovered is that there are a plethora of opportunities to find capital through strategic partnerships. Brzoznowski expects LLamasoft to announce a significant strategic partnership or two with its multi-national corporation customers next month.

"Those companies are going to get access and a seat at the table with us," Brzoznowski says.

Source: Toby Brzoznowksi, executive vice president and co-founder of LLamasoft
Writer: Jon Zemke

Pure Michigan: Ann Arbor area executives featured in video promotion

The new Pure Michigan campaign showcasing Washtenaw County isn’t just targeting tourists.

The latest four-minute promotional video — which is featured on Ann Arbor SPARK’s website — has a different goal in mind: promoting the city’s thriving business climate.

“I think people have always thought about the University of Michigan first, but the fact is, there is a fantastic business community here,” says Patrick Doyle, CEO of Ann Arbor Township-based Domino’s Pizza, in the video.

Barracuda Networks, located on Depot Street in Ann Arbor, employs roughly 140 people here with plans to at least double that.
Google was co-founded by University of Michigan alum Larry Page.
The promotion features other executives from flourishing companies in Washtenaw County, including Rich Sheridan of Menlo Innovations, Jan Garfinkle of Arboretum Ventures, Michael Miller of Google, Sean Heiney of Barracuda Networks and Mark Sutter of Terumo Cardiovascular Systems.

“We still see and have the same kind of ingenuity, entrepreneurship and really strong engineering core talent that really allows us to create products that will change the world,” says Ann Arbor SPARK CEO Paul Krutko.

The video is part of the $1 million Pure Michigan campaign showcasing Washtenaw County’s opportunities for business and tourism.

The campaign, which was announced in February, also features the county in national cable TV ads and on the state’s Pure Michigan website. Four articles will appear on the site throughout the year, written by the local Convention and Visitor Bureaus (CVBs) and featuring various local attractions.

A 30-second TV spot featuring Ann Arbor was posted to the Pure Michigan YouTube channel in March. The ad’s message: “Ann Arbor does it up different.”

The Michigan Economic Development Corp. is contributing $500,000 to the campaign, with Ann Arbor SPARK allocating $70,000. The CVBs are allocating the remaining $430,000.

The new promotional video on SPARK’s website shows a variety of visuals in Washtenaw County, including downtown Ann Arbor streets, Depot Town in Ypsilanti, The Ravens Club, Prickly Pear, Palio, Nickels Arcade, Michigan Stadium, U-M’s Law Quad, State Theater and the well-known “Welcome to Ann Arbor” sign at the Main Street Party Store on North Main Street.

Sean Heiney, director of new product initiatives for Barracuda Networks — an information technology security company that announced plans last year to hire 300 to 500 employees at an expanded Ann Arbor office — says Ann Arbor has a great pool of talent and a “savvy” business community.

“Our employees love coming into work and they’re happy to live in Ann Arbor,” he says. “It’s a low cost of living with a high amount of happiness; they live a Silicon Valley-like culture.”

Arboretum Ventures co-founder Jan Garfinkle, whose Ann Arbor-based venture capital firm has become one of the most influential in the Midwest, said she chose Ann Arbor over San Francisco because she wanted her kids to grow up here.
“The thing I love about Ann Arbor is the fact that it is such a nice combination of being able to have a great work and family balance,” she says.

She later adds: “There are a lot of universities here with a lot of really smart people developing a lot of really cool technologies.”

Watch the “Ann Arbor does it up different” TV ad spot.

Lizzy Alfs is a business reporter for AnnArbor.com.

Barracuda Networks photo by Melanie Maxwell, AnnArbor.com
Google photo by Angela Cesere, AnnArbor.com

Commerce Guys plans Ann Arbor expansion after $5 million VC investment

A software company that recently secured a $5 million venture capital investment is moving its Jackson office to Ann Arbor to capitalize on the local talent pool.
Commerce Guys, which also has an office in France, plans to shift its Michigan operation to Ann Arbor within months and plans to expand the office from 14 to 30 people by the end of the year, said Mike O’Connor, co-founder and president of North America.

Michael O'Connor, president of Commerce Guys in North America, said the company would add about 16 jobs to its 14-person Michigan office by the end of the year.

The company, which has developed a version of an open-source content management system called Drupal for e-commerce applications, reported that the number of websites running its software recently surpassed 10,000.
O'Connor said the company needs software developers to help it maintain its pace of growth — and that the Ann Arbor area offers a better chance than Jackson to recruit that talent.

"We've got a very aggressive growth strategy," O'Connor said. "The e-commerce market is really waiting for a great open-source solution."

He cited the talent generated by the University of Michigan as a key reason for the company's decision to locate here. He also said the company was lured by discussions with economic development group Ann Arbor SPARK about a Michigan Economic Development Corp. program called Shifting Code, which offers computer programming training to individuals looking to make a career transition.

Commerce Guys, officially founded in Jackson in 2008, recently landed $5 million from Paris-based Alven Capital, Finland-based Open Ocean Capital and Paris-based ISAI, which invested $1 million in 2010.

The company has 37 employees split between its Paris and Michigan offices.

Commerce Guys executives said they've already toured vacant offices in the Briarwood Mall area. O'Connor said the company would likely sign a lease for a space in the "I-94 corridor" because it's accessible from the Jackson area, where most of its employees live.

Commerce Guys has leveraged an open-source platform — that is, a software program that can be tweaked for free and for commercial purposes — to manage the development of a customizable digital sales system for online products.
O'Connor said the company's software, dubbed Drupal Commerce, is free — but the company gets revenue by charging large users for support services and consulting.

"A lot of times the feedback we get from merchants is they're tired of making business decisions based on what their e-commerce framework can do," O'Connor said. "What we've done is created a really powerful e-commerce framework that enables merchants to deploy stores."

Nathan Bomey is the business news director at AnnArbor.com.

Photo courtesy of Commerce Guys

Ann Arbor area to add 11,000 jobs over 3-year stretch

For the Ann Arbor area, the late 1990s are back — at least when it comes to job growth.

Washtenaw County is expected to add 11,038 jobs overall in 2012, 2013 and 2014, according to a forecast conducted by University of Michigan economists for AnnArbor.com.

The forecast indicates that Washtenaw has entered a prolonged period of job growth — starting in the fourth quarter of 2009 and extending through 2014 — that resembles the robust period of 1995 to 2000.

Construction continues at a new hotel near Briarwood Mall. Washtenaw County's leisure and hospitality sector is expected to add 684 jobs over the next three years.
Larry Freed, CEO of customer satisfaction measurement firm ForeSee, said his Ann Arbor company has hired about 20 former Borders employees. ForeSee has enjoyed revenue growth of at least 25 percent for 40 consecutive quarters.
The study, conducted by economists George Fulton and Don Grimes, predicts Washtenaw County will have more jobs by the end of 2013 than it had at its previous peak in summer 2002. The study examined the local economy through 2014.

“Knowing where we were in 2009, that’s when it really hit home to me that we’re seeing a pretty good recovery here,” Fulton said in an interview. “I wasn’t surprised at all by the recovery, but I was surprised by the pace of it.”

The county is expected to add 3,004 jobs in 2012, 3,591 in 2013 and 4,443 in 2014, according to the forecast. That would come after the county added 5,178 jobs in 2010 and 3,268 jobs in 2011.

The economists, who have been conducting the forecast since 1986, have projected local job growth with an annual average error of 0.7 percent.

Washtenaw’s unemployment rate is expected to fall from an average of 5.5 percent in 2012 to 5.2 percent in 2013 and 4.7 percent in 2014. The rate in January 2012 was 5.6 percent, according to the Michigan Department of Technology, Management & Budget.The economists found that the fastest growing segment of the Washtenaw County economy is high-wage jobs.

“Getting the job growth in the higher paying industries is really what you want to have,” Grimes said. “Eventually that shows up in the long run in the prosperity of the community.”

The forecast reflects an improved economic outlook for the U.S. and for the state of Michigan, whose unemployment rate hit 8.8 percent in February, the lowest it’s been since August 2008. The state’s manufacturing sector has surged from its low point in 2009, when General Motors and Chrysler filed for bankruptcy.

Manufacturers are expected to add 1,149 jobs in Washtenaw over the next three years. Local manufacturers — which shed 17,814 jobs from 1999 to 2009, a 60 percent decline caused mainly by the auto industry’s contraction — added about 1,618 jobs in 2010 and 2011. But the pace of job growth in the local manufacturing sector is projected to slow — and U-M economists expect future economic growth to be spread out among many industries, with non-manufacturing sources generating 58 percent of the new jobs.

“This isn’t just a one-trick pony — something doing really well,” Fulton said. “And that’s always a good sign in the recovery when it’s diffusing throughout the sectors.”

Fulton said it’s common for manufacturing to lead the early stages of a recovery, boosting many sectors of the economy.
“We see a resurgence obviously from the autos, but what we’re seeing, particularly in Ann Arbor, is a diversification of our economy across a variety of technologies,” said Paul Krutko, CEO of economic development group Ann Arbor SPARK.

Tim Bristle, a recruiter for financial products firm Primerica, which spun off of Citigroup more than two years ago, said he's hiring 90 employees throughout Michigan.

Primerica, which operates a training office in Ann Arbor, is hiring independent financial advisers for offices in Hillsdale, Kalamazoo and Detroit. Primerica, a publicly traded company, is also considering opening an office in Chelsea.

“We’re going through a huge expansion,” Bristle said while meeting job seekers at Washtenaw Community College’s 15th annual Spring Job Fair and Nonprofit Showcase on March 20.

Private sector growth
About 63 percent of Washtenaw jobs are in the private sector, while 37 percent of positions are classified as government jobs, a figure that includes the massive U-M Health System, which is often hiring.

With the exception of job growth at the U-M Health System and U-M campus, which are expected to power the state government sector to 3,633 more jobs over the next three years, very few job gains are expected in the rest of government. Most of the job growth comes in the private sector.

The economists project Washtenaw will add 19,484 private and public jobs from 2009-14, compared to 20,008 new jobs from 1995-2000.

Those numbers, albeit encouraging, shroud the major contraction in the local economy that occurred during a four-year stretch starting in 2006. Washtenaw lost 13,429 jobs from 2006 through 2009, including 5,712 in 2009, as Michigan’s economy collapsed in the midst of the auto and financial crises.

And to be sure, job losses continue to occur in pockets of the local economy. In 2011, Ann Arbor-based bookstore chain Borders Group Inc. filed for bankruptcy and eventually liquidated, eliminating about 400 corporate jobs and another 125 retail jobs in Washtenaw County.

Web technologies, online retail and software innovation are presenting challenges for some industries — like retailers and the book-printing sector.

Longtime independent Ann Arbor area book printers Edwards Brothers and Malloy, which collectively employ about 600 local workers, announced in February that they had merged to create a more efficient, sustainable company.

Internet-based innovation offers opportunities for many other companies, such as Ann Arbor-based customer satisfaction measurement firm ForeSee, AnnArbor.com Business Review’s 2011 Company of the Year, and Ann Arbor-based Mobiata, which manages mobile software development for Expedia.com.

ForeSee, which employs about 200 people in Ann Arbor, has hired about 20 former Borders employees, CEO Larry Freed told AnnArbor.com. The company has enjoyed revenue growth of at least 25 percent for 40 consecutive quarters since its founding in 2001.

“Basically anything that involves paper seems to be suffering in the destruction phase, and the electronic stuff seems to be in the creative phase,” Grimes said.

Indeed, the forecast depicts a dynamic local economy that has reached a stage where new jobs in promising industries are offsetting job losses in struggling sectors.

By the end of 2013, Washtenaw will have more jobs than it had at its peak in summer 2002, according to the forecast.

Good jobs?
The fastest-growth segment of the economy over the next three years will be in high-wage industries, which the economists define as more than $57,000. The number of high-wage jobs is expected to rise 7.7 percent through 2014. The number of jobs with wages of $27,000 to $57,000 will increase 5.9 percent, while the number of jobs with salaries below $27,000 will rise 4.4 percent.

Grimes cautioned that growth in the number of high-wage jobs “doesn’t necessarily mean that people that were already in the higher-wage sectors were getting a raise,” he said.

In fact, many residents are still discouraged by depressed housing prices and stagnant investment accounts.

“People may feel a lot poorer,” Grimes said. “So the asset side of the balance sheet is still making people unhappy.”

Fulton said the shifting economy is also widening the gap between workers who have an education and people who don’t. It’s getting harder to get a job without an education.

“A number of residents are still not invested in the recovery,” Fulton said.

Still, Washtenaw is outperforming the rest of the state — mostly because of the stability provided by local universities, a thriving health care industry, a growing entrepreneurial sector and a service sector that’s enjoying momentum.

Much of the growth is possible because about 60.4 percent of county residents ages 25-64 have at least a two-year degree, compared with 35.6 percent of Michigan residents, according to U.S. Census data studied by the Lumina Foundation for Education. Washtenaw has the lowest unemployment rate of Michigan’s 83 counties.

But getting an education doesn’t necessarily guarantee a job.

Siyuan Xing, who earned a biomedical engineering degree from the University of Michigan in 2011, is hunting for a research position from a local company. After graduation, he spent a year working for his family business — which, he said, set him back in his job search.

If he can’t get a job, he said, “I might have to leave” the area.

Service industries
Manufacturing dominated high-wage job growth in Washtenaw over the last two years, but U-M projects that service industries will account for most of the high-wage growth in the next few years.

The professional and business services sector — a broad segment that often reflects the general health of the private sector — is expected to add 2,290 jobs in 2012, 2013 and 2014. Most of those are scientific and technical jobs, such as computer systems design and engineering services.

Krutko, CEO of SPARK, said the economic development group’s experience shows that much of the job growth is coming from small- to mid-sized companies that are adding 5 to 10 employees at a time.

“Our emphasis is on those kind of jobs — jobs that are selling goods and services to the rest of the nation or globally,” he said. “If you’re creating jobs there, then all the supporting jobs in the economy happen — the business support, the accounting firms, people who are working in legal firms and all the retail firms that have those customers.”

The private education and health services industry — which includes the approximately 5,000 employees of the St. Joseph Mercy Health System in Washtenaw County — is expected to add 1,193 jobs over the next three years.
Nursing homes and residential care facilities will add 405 jobs during that period.

Nonprofit senior care service providers like Evangelical Homes of Michigan, which employs several hundred workers in Saline, and Glacier Hills Senior Living Community, which is completing a $25 million expansion in Ann Arbor, are contributing toward that growth.

The economists predicted that the leisure and hospitality segment would add 684 positions over the next three years. Two new hotels — Hilton Garden Inn and Towne Place Suites by Marriott — are currently under construction near Briarwood Mall.

The employment services sector, which includes temporary workers, is expected to add 757 jobs by 2014.

The United States Postal Service is poised to cut jobs, but those losses will be offset by other new federal jobs. The local government sector will cut 108 jobs in 2012, but add 203 in 2014, “as the finances of local governments and K-12 school districts slowly improve,” according to the report.

Nathan Bomey is the business news director of AnnArbor.com

Photos by Angela Cese, AnnArbor.com

Graphics courtesy of University of Michigan economists

Hyundai lands $2.5M business incentive for expansion at Superior Twp. facility

The Hyundai-Kia Technical Center in Superior Township is one step closer to its $15 million expansion on Geddes Road.
The Michigan Economic Development Corp. announced this week that the Michigan Strategic Fund will provide $2.5 million in capital to support the expansion — which is expected to add 50 new jobs over the next five years.

The expansion involves the construction of a new environmental chamber, called a “Hot/Cold Weather Dynamometer Test” facility, which will be used to test vehicles in extreme temperatures.

Hyundai already employs about 170 workers at the 200,000-square-foot facility, which conducts powertrain testing, calibration and some general engineering and design activities for Hyundai vehicles. The center opened on Geddes Road in 2005.

Central to the expansion was that the Michigan Strategic Fund provided the $2.5 million in capital. Those funds will be repaid over time using tax dollars from a Local Development Financing Authority (LDFA) recently established by the Superior Township Board of Trustees in consultation with economic development group Ann Arbor SPARK.

The State of Michigan will fund construction of a new power substation at the Superior Township center that will improve the power output to the building — an upgrade Hyundai desperately needed. Superior Township has offered support to the project in the form of a tax abatement, according to a release.

Because the company uses sensitive testing equipment like a dynamometer, the Superior Township facility is prone to electrical outages when current fluctuates, which also causes problems for the company’s network infrastructure.
Hyundai had indicated that it would not launch an expansion without a reliable electrical system.

The company announced its plans for expansion in January at the 2012 North American International Auto Show.

At the time, Sung Hwan Cho, president of the technical center, said the news “reinforces Hyundai and Kia’s commitment to U.S. vehicle development and American jobs.”

Ann Arbor SPARK worked with Hyundai to help the company secure the more than $2.5 million in new business development incentives from the state and Superior Township, according to the release.

“The expansion of Hyundai’s North American Technical Center here shines a light on the talent, business development and other unique assets that this region offers advanced engineering and research operations,” said SPARK CEO Paul Krutko, in the release.

Lizzy Alfs is a business reporter for AnnArbor.com.

Photo courtesy of Hyundai

Venture Michigan Fund II attracts Mass.-based Flagship Ventures to open Metro Detroit office

A Massachusetts-based venture capital firm is looking to set up an office in Metro Detroit, thanks to an investment from the Venture Michigan Fund II.

The Venture Michigan Fund II, a fund of funds that in invests in other venture capital funds, made an undisclosed investment in Flagship Ventures Fund IV. Flagship Ventures is a 12-year-old venture capital firm based in Cambridge, Massachusetts. It manages more than $900 million in capital and has invested in a number of successful startups, such as Joule Unlimited, Acceleron Pharma, and Accuri Cytometers.

"It's a larger fund," says Sean O'Donnell, vice president of Credit Suisse's Michigan office. "It really speaks to the quality of investors and historical success stories that they have seen in Michigan."

Flagship Ventures makes investments in early stage startups in three principal business sectors: therapeutics, medical technologies, and sustainability/clean technology. It is currently looking to staff a satellite office in Metro Detroit. O'Donnell says that office will probably be located in Ann Arbor, where there is a growing cluster of venture capital activity.

"They're in the process of selecting the individual to staff that office," O'Donnell says.

Credit Suisse co-manages the Venture Michigan Fund II. The fund invests in venture capital funds targeting seed and early stage capital Michigan companies in a wide variety of high growth, emerging industries. These include advanced manufacturing, health care and life sciences, information technology, alternative energy, and homeland security and defense. Venture capital fund managers participating in the Venture Michigan Fund II will be required to invest at least as much in Michigan-based companies as they receive in capital commitments from Venture Michigan Fund II.

Source: Sean O'Donnell, vice president of Credit Suisse's Michigan office
Writer: Jon Zemke
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