Detroit Races San Jose for Tech as Snyder Sees Jobs Convergence

Photographer: Robert Nickelsberg/Getty Images

Less than three miles from Governor Rick Snyder’s Ann Arbor office, he can see Michigan’s pursuit of technological mastery. A 23-acre mock city will soon put driverless cars through the paces of urban hazards, complete with darting robot pedestrians and real snow.

Carved into the University of Michigan campus and near the technology labs of the big automakers, the test course called M City is designed to compete with Silicon Valley’s drive for innovation. As Google Inc. works to market an electric, self-driving car, Snyder said the marriage of computer science and automotive metal-bending means higher-paying jobs for his state, which weathered the 18-month recession and the bankruptcies of General Motors Corp., Chrysler LLC and the city of Detroit.

“Our biggest constraint compared to Silicon Valley is we’re crummy at marketing,” Snyder said in an interview at his Ann Arbor office. “Much of perception is Google and their car driving around Silicon Valley. We have exponentially more research going on within a few miles of here.

‘‘If you want to be cutting edge in technology in our country, the auto is probably the best place to go.’’

Technology is becoming a bigger part of the automotive industry, which accounts directly or indirectly for almost 20 percent of jobs in Michigan, according to a 2014 study by the Center for Automotive Research in Ann Arbor. More than 32,000 in metro Detroit work in computer-systems design, much of it tied to the automotive industry, according to the Washington-based Brookings Institution.

GM Software

Fifteen percent of patents filed by GM from 2007 through 2012 were for software, according to Brookings. Among Mountain View, California-based Google’s patents during the same period, 39 percent were for hardware, including mechanical devices for the driverless car.

Google’s sales office in Ann Arbor, 40 miles (64 kilometers) west of Detroit, demonstrates how technology industries are blending in with southeast Michigan’s manufacturing and education sectors, said Bruce Katz, a Brookings vice president.

‘‘It really shows how much the economy is converging,” Katz said. “Cars are computers on wheels, essentially.”

‘Balanced Metro’

Detroit in 2013 had the fourth-highest concentration of advance industry employment -- 14.8 percent of its work force -- among 100 of the largest U.S. metropolitan regions, according to Brookings. San Jose, known as the capital of Silicon Valley, ranked first, with 30 percent. The study examined 50 industries that employ 80 percent of U.S. engineers, produce 90 percent of private-sector research and development, and generate 85 percent of all U.S. patents.

“Detroit really stands out, along with Silicon Valley, as a very balanced metro,” Katz said in an interview. “It’s got huge assets in manufacturing and huge assets in the service-software sector. That’s where you want to be.”

In motor vehicles, computers control everything from engine and braking systems to lane-change sensors to dashboard touch-screens for entertainment and communication. Technology is the top allure for 39 percent of car buyers, compared with 14 percent who care most about horsepower and handling, according to a 2013 survey from the Accenture consulting firm.

The number of cars connected to the Internet worldwide will grow to 152 million by 2020 from 36 million today, according to IHS, the research and consulting firm.

‘Cities Matter’

Katz said that in order to supply the demand, Michigan should ramp up education for skilled jobs that don’t necessarily require a four-year degree, a track Snyder promotes. Detroit and other cities must foster urban amenities that lure young people who can fill technology and research openings, he said.

“Cities matter again in innovation,” Katz said. “That’s a real signal to Michigan to invest in its core cities.”

Michigan’s economic health has improved at a faster rate than every state except North Dakota since June 2009, according to the Bloomberg Economic Evaluation of States. Its March unemployment rate of 5.6 percent was the lowest in 13 years.

As the Michigan economy rebounds, investors are demanding less compensation to own its debt. Ten-year state general obligations yield 0.31 percentage point more than benchmark munis, compared with an average spread of 0.5 percentage point over the past two years, data compiled by Bloomberg show.

Even so, the Great Lakes State’s per capita income lags behind the nation, said Lou Glazer, president of Michigan Future Inc., a nonprofit organization in Ann Arbor that studies the state economy. Michigan’s 2014 per capita personal income of $40,556 was 36th highest in the U.S. and 88 percent of the national average, according to the Bureau of Economic Analysis. The per capita rank is down from 18th in 2000.

‘Fruitful Interchange’

Last year, the auto industry invested more than $1.5 billion in Michigan facilities, 15 percent of its U.S. investments, according to the Center for Automotive Research. GM is considering spending $1 billion to renovate its 60-year-old Tech Center campus in Warren, just north of its Detroit headquarters.

At the same time, Michigan-based auto companies are opening offices in Silicon Valley, said Richard Wallace, director of transportation systems analysis at the Center for Automotive Research.

“It’s definitely a fruitful interchange,” Wallace said in an interview. “It’s a little premature to judge how it’s going to end up, whether you see a massive migration of auto to the West Coast or a large infusion of West Coast high tech into Michigan. It seems to be both.”

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