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How will Toyota's expansions impact the Ann Arbor-area economy?

Roughly 18 months from now, more than 300 Toyota employees will be moving into new digs at the company's Ann Arbor Township and York Township campuses as part of a $126 million investment by the company.

The company is transferring an estimated 330 jobs from California and Kentucky into roughly 440,000 square feet of new space in the Ann Arbor area.

And while a $126 million investment will help the tax bases of the two townships, the addition of 330 employees and their families to the area could have a much bigger impact on the region.

Eighty-five of the relocating workers will move to the Ann Arbor Township facility, and 250 will relocate to the new York Township buildings.

Those new workers will help Washtenaw County recover from an unexpected loss of jobs in the transportation equipment (motor vehicle) manufacturing industry in 2014.

According to the 2015-2017 economic forecast conducted by University of Michigan economists George Fulton and Donald Grimes for The Ann Arbor News, the county lost 16.7 percent of jobs in that sector in 2014, thanks to the closing of a handful of auto parts suppliers.

The forecast called for just 34 jobs to be added to the industry by 2017, but Toyota's plan will increase that number by roughly 10 times the projections.

Before the announcement about the expansions was made last December, Toyota worked with Ann Arbor SPARK to collaborate with the state of Michigan and the townships to help secure incentive programs and tax incentives from the state as part of the investment projects.

Once those incentives were in place, the Japanese automaker announced it was expanding the powertrain operations at the Ann Arbor Township campus and constructing the two new building at the Toyota Technical Center in York Township.
A prototype facility for vehicle development and a supplier center will be built at the Technical Center and was approved earlier in the week by York Township.

The Toyota plans are particularly beneficial to the county because the average wage for people in that industry in 2013 was $65,890, significantly higher than the $51,867 average wage in Washtenaw County.

"There is no question that when jobs come to your community that are not in your community, it's a net gain and these people are coming in at much higher salaries," said Paul Krutko the president of Ann Arbor SPARK.

With more than 300 people coming to the area, the relocations also will likely have an impact on Washtenaw County's already tight real estate market.

According to the Ann Arbor Area Board of Realtors, the average residential sale price in the month of May 2015 was $280,830. For the year, the average sale price for a single-family home is $268,406, meaning the potential economic impact on the real estate market alone in the county could be millions of dollars.

Krutko said he would expect the real estate market will benefit significantly from the relocations, as most employees will be looking for homes in and around Washtenaw County.

SPARK has also sent representatives to California and Kentucky to help Toyota employees who are interested in relocating. SPARK has helped answer questions about the area and assisted in helping people find potential homes and other information to help them make a decision about transferring.

The jobs will also help stimulate the economy as the relocated employees and their families spend money on various lifestyle and entertainment options in the surrounding areas.

A study by the Bay Area Council in December 2012 showed that for every technology job created, four other jobs are created in the goods and services sectors for the region.

Krutko said he didn't want to speculate on a potential economic impact, but said he would expect the jobs to help make a similar impact in the region.

However, Krutko said he does not anticipate the areas immediately surrounding the two campuses to see any significant growth in terms of housing or retail developments.

That's particularly true for the Ann Arbor Township campus as most property in the area is already built up, or under ownership that isn't likely to change the dynamic of the area.

"I can't say it really impacts the development of the tech park, because most of the vacant land is owned by the University of Michigan," said Ann Arbor Township Supervisor Michael Moran about the powertrain expansion.

Moran did say the campus continues to be an anchor in the tech park and he's excited that Toyota is increasing its commitment to the region.

"Toyota's had a presence here for in excess of 30 years. The fact that they're willing to continue the relationship with the township and expand the facility is a vote of confidence in the township and a tax base that benefits from it," Moran said.

This article originally appeared in MLive
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