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Flint water crisis could threaten Pure Michigan campaign success

LANSING — The Pure Michigan campaign, in many ways, is about water.

The state’s pristine lakes — the Great and the inland kind — are the frequent stars of television ads that portray Michigan as a recreation lover’s paradise, a freshwater coastal destination.

Lately, the popular state tourism brand name is being linked, particularly on social media, to water of a different sort — the corrosive Flint River and the lead-tainted drinking water that poisoned the blood of Flint kids in what has become a public health crisis.

Bottom line: A company that relies heavily on water won’t think about setting up in Flint right now, said Kate McEnroe, a Grosse Pointe native and president of Kate McEnroe Consulting, a corporate site selection firm with offices in Chicago and Atlanta.

“There are other choices of places to go almost 100 percent of the time,” said McEnroe, who heard an NPR report about Flint while driving through rural Georgia. “Right now, people will wait until the dust settles, so to speak, and say, ‘I’m not risking it right now.’

“The question right now is: How long does ‘right now’ last?”

The emergency in Flint has, for a time, been a knock against the award-winning brand that has shown up on TV, radio, print ads, billboards and even license plates since it launched in 2006 during Gov. Jennifer Granholm’s administration.

Under Gov. Rick Snyder, the state adopted the Pure Michigan slogan for use in its business marketing. So if the brand is tarnished for the long term, it affects corporate recruitment and other efforts.

Economic development professionals say any damage done by the Flint crisis won’t be permanent. But in the meantime, they added, the state and its individual regions need to coalesce around a consistent message that Michigan remains open to business and tourists.

“It is too early to tell how much impact the Flint water crisis will have on the state’s image. Certainly with our brand being Pure Michigan, it is more of an image problem,” said Doug Rothwell, president and CEO of Business Leaders for Michigan, the state’s business roundtable.

“We worked so hard to have Detroit not be a negative issue,” Rothwell said. “Now, Flint puts a damper on it.”
Corporate site selectors like McEnroe say they’re increasingly having to offer out-of-state companies more nuance about Michigan when answering questions about Flint, similar to how they explained the state several years ago as Detroit headed closer to, and eventually through, bankruptcy.

Business development

The Michigan Economic Development Corp., which manages the $33-million Pure Michigan campaign, said the number of potential business deals in its pipeline has been down since the fall, which is when news of the Flint drinking water crisis began to break. But that’s also the same time the MEDC cut its budget by 27 percent and laid off 65 employees due to a drop in tribal gaming revenue, which has contributed to fewer staff members working on company outreach.

MEDC spokeswoman Emily Guerrant said deals now are generally smaller, more complicated and take longer to close; the state also has fewer resources available for large incentive packages. Taken together, she said, it’s difficult to pinpoint the Flint crisis as the reason for a drop in business prospects.

On the tourism side, Guerrant said it’s too early to have any tangible data to show whether the Flint emergency is keeping some would-be vacationers away. The state won’t receive estimates on the economic impact of this year’s Pure Michigan campaign until next year, for one. But the winter season also suffered from lower-than-typical snowfall levels.

Steve Arwood, CEO of the MEDC and director of the new Michigan Department of Talent and Economic Development, said out of all the selling efforts put forth by the MEDC through the years, nothing tops the Pure Michigan campaign.

“It’s iconic and award-winning,” he said. “It has done more to market the state than anything we have done after that. It is the one thing that is continuing.

“When you do something for 10 years without interruption, it becomes very deep-seated and immediately recognizable. It’s our brand in most of the U.S. and internationally.”

Additionally, Arwood pointed to the success of the state with direct business marketing — the result of balanced budgets, improvements to workers’ compensation administration and a flat corporate tax.

He said it is not hard to market Michigan as the automotive center of the country because few would question that it is. But newer industries are showing strength in the state as well, such as aerospace, natural resources, agriculture and high-end food products.

He pointed to successes such as a Clemens Food Group pork processing facility in Coldwater that is under construction, a $325 million Arauco particleboard manufacturing facility in Grayling Township and the American Center for Mobility at Willow Run. This project plans to transform the former Ford Motor Co. B-24 bomber plant at Willow Run in Ypsilanti Township into the nation’s first autonomous vehicle testing site.

Other priorities

But how much money and effort for damage control and positive branding is appropriate and available as the state continues to reel from Flint stories? Funding for the next round of economic development work has been on the table before when lawmakers faced large budget priorities. Last year, legislators in the House proposed diverting money from the MEDC to pay for a $1.2 billion road-funding plan; MEDC administrators warned that could limit the Pure Michigan campaign. That proposal didn’t wind up as part of the final package.

This year, Flint and a proposed $720 million debt restructuring of Detroit Public Schools are dominating funding talks, though neither issue is expected to siphon money away from Pure Michigan, said state Rep. Al Pscholka, chairman of the House Appropriations Committee.

Snyder’s executive budget proposed leaving Pure Michigan funding flat at $33 million in 2017.

“I’m not advocating for any reduction to Pure Michigan,” Pscholka, R-Stevensville, told Crain’s. “Generally, I know in the House there’s a lot of support for Pure Michigan. A lot of it’s going to depend on fiscally where we’re at, because we do have some challenges.”

Economic development agencies across Michigan say they have not noticed any real loss of business interest because of Flint, though in some cases they are working harder to sell the state to prospective companies.

In Kalamazoo, where Ron Kitchens’ team at Southwest Michigan First can talk with as many as 230 site consultants over the course of a year, they now are making roughly three times as many phone calls to companies and site selectors telling them not to discount Michigan in their location search.

Deals are in the pipeline, he said, but he doesn’t know how many will close.

“We’re about selling the whole state. So when the water crisis broke, when the Detroit Public Schools hit the national news, there was a palpable gasp,” said Kitchens, CEO of the regional economic development organization.

“I don’t think it’s any intentional redlining,” he said. “I just think when people are in crisis, states are in crisis or regions are in crisis, the human reaction is not to run to the fire.”

Marketing vs. sales

Some economic development experts told Crain’s they’re concerned about the implications of using one brand to serve multiple types of marketing, especially in periods of negative attention, because the functions can’t easily be distinguished.

Still others have suggested using recognized business leaders in Michigan to strengthen a corporate attraction campaign. Others say cuts to the MEDC, both in terms of dollars and staff, have had an impact.

“For Michigan to be the place that we need it to be, it’s going to take a significant increase in the marketing and sales,” Kitchens said. “Pure Michigan is a good marketing plan, but it’s not a sales strategy. Sales strategies are people pounding the pavement, people who are at keyboards, looking at where companies are locating and how we can be more competitive than those locations.”

Mark Winter, president and a founding partner of Identity, a public relations and marketing firm in Bingham Farms, said the multi-pronged approach of Pure Michigan has an upside: It allows the MEDC to use its scant resources effectively.

He added that such an interconnected strategy, despite the single-brand risk, also helps the state engage companies that employ millennials, for whom the live-work-play lines are blurred.

That could be important in the Flint recovery, said McEnroe, the site selector.

Positive messages

Several people told Crain’s that one of the main messages being shared in defense of Michigan is that Flint, much like Detroit before it, is an isolated event that is not affecting other cities or regions in the state — while stressing that it does not downplay the severity of the water crisis.

While at a restaurant in Atlanta a couple of weeks ago, “the waiter made a joke about the table water and referenced Flint,” Winter said.

“The first thing I did was stand up and support our state and all the things we’re doing right,” Winter said.

The Pure Michigan campaign this spring will release a TV commercial focusing on Detroit’s post-bankruptcy momentum. It has been described as more visually edgy than most Pure Michigan ads, including recent spots depicting Michigan’s craft beer industry and farm-to-table restaurants.

State tourism promoters waited to tell Detroit’s story until after the resolution of bankruptcy. They point to highlights such as improved city services, and construction of the M-1 Rail (now called QLine) and Detroit Red Wings hockey development.

Armed with the updated compelling messages, Dave Lorenz, vice president of state tourism agency Travel Michigan, said easing off the Pure Michigan throttle now would cause Michigan “to lose out on all that economic activity, and we would have then helped cause the problem that they’re currently dealing with.”

“The day that we somehow look at scaling back is the day we’re going to slip back,” Lorenz said.

Tourism and economic development promoters should continue to tell Michigan’s positive stories while rallying followers of official social media channels to help spread the good word, Winter said.

“Social media has provided an opportunity for people to vent and to share their thoughts, but unfortunately, more times than not, it’s not balanced with the positive,” he said. “Every bad message in a marketplace is just helping create distractions for the good things we’re trying to say.

“If that positive information outweighs the negative, then we’re going to be ahead of the game.”

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