Better roads boost economy, business groups say

Birgit Klohs, CEO of The Right Place, a West Michigan economic development agency, hears complaints firsthand from business visitors about Michigan’s roads. (courtesy photo)

Not long ago, a group of German business executives landed at Detroit Metropolitan Airport and drove across the state to Grand Rapids for a meeting with Birgit Klohs, CEO of The Right Place, a West Michigan economic development agency.

When they arrived, “they just shook their heads,” Klohs recalled. “They said, ‘Why would anybody drive a good car on these roads?’”

As a native of Germany, Klohs knew the visiting execs were comparing Michigan’s freeways to the German autobahn. “You wouldn’t find a pothole in a German freeway if you looked with a magnifying glass,” she said. (See related story)

Sound infrastructure, including roads, is one of the top factors business executives consider when looking for a new location, she said. In a 2011 survey of corporate executives by Area Development Magazine, highway accessibility was the number one site-selection factor.

Klohs and other economic development officials could not name a specific company that decided against locating in Michigan because of the roads, but first impressions matter, they said, particularly when you’re trying to lure more business to the state. Potholed roads are like graffiti on abandoned buildings, creating the sense that an area is in decline.

“When we have a prospect visiting here, it’s hard to find good roads to drive them to a site,” Klohs said. “By the way, I already popped a good tire this year.”

Michigan’s top three business sectors – manufacturing, agribusiness and tourism – all rely on well-maintained roads, Michigan Chamber of Commerce President Rich Studley said. He said he was recently driving on U.S.-131 for a meeting in Cadillac when a piece of broken concrete hit his windshield.

“I’ve watched that little chip become a bigger crack,” he said. “I’m looking at a $400 to $500 repair bill.”

Better roads, more jobs

Spending more on roads not only would avoid cracked windshields, but would create jobs directly and indirectly, he said. That’s why the Michigan chamber, which normally advocates for lower taxes and smaller government, supports Gov. Rick Snyder’s proposal to raise $1.3 billion a year for highway improvements through increased fuel taxes and vehicle registration fees.

That plan would lead to a net increase of 11,000 jobs, the Anderson Economic Group concluded in a 2012 study commissioned by the chamber. That includes 25,000 direct and indirect jobs gained for road construction and maintenance, against 14,000 jobs lost due to decreased household and business spending.

Nearly all additional jobs would be in the private sector, Studley said, since most of Michigan’s road construction is not done by state employees, but is subcontracted to private companies. In the early 1970s, the Michigan Department of Transportation had about 5,000 employees. Today it employs half that many, partly because it contracts out much of the work.

Most chamber’s members are willing to pay higher taxes (he prefers the term “user fees”) on gasoline and diesel fuel, as well as increased vehicle registration fees, because “they believe it’s worth it,” Studley said. “They’re tired of seeing their trucks beat to hell.”

Michigan allows trucks weighing up to 164,000 pounds, more than twice the national limit. State transportation officials argue that, because Michigan requires more axles on heavy trucks, the weight is spread more evenly, minimizing damage. Trucking companies can pay a flat $50 fee to exceed the 164,000-pound limit.

“I think an argument can be made that heavy vehicles cause more damage,” Studley said, “and, yes, they should pay more.”

Tourism worries

Michigan spends more than $13 million a year on out-of-state advertising for the Pure Michigan campaign to attract more tourists. “And then we put them on third-world quality roads,” Studley said.

George Zimmerman, vice president in charge of the Michigan Economic Development Corporation’s Travel Michigan department, said he worries about negative comments out-of-state visitors might post on social media. More than half the $18.1 billion spent in Michigan by tourists in 2012 was by out-of-state visitors, he said. That includes $13 billion in leisure travel with the rest by business travelers.

The quality of Michigan’s roads is “certainly part of how visitors are going to evaluate their experience here,” Zimmerman said. “I do believe the Pure Michigan brand portrays a certain image of Michigan. Given how we’re promoting tourism with the Pure Michigan campaign, one of the things we do worry about is that the experience should live up to the advertising promises.”