Michigan: the Next North American Tech Hub

The convergence of manufacturing and software development in the Great Lakes State is creating an environment for the technology sector to thrive.

Michigan’s reputation as a maker state is expanding far beyond the automobile and into software-focused technology industries, like computer programming, and computer hardware manufacturing. When combined with the state’s historical dominance in hardware R&D and manufacturing and a robust pipeline of talent Michigan offers a unique value proposition for tech companies looking to expand and grow in the Midwest, and across the nation.

"The strongest evidence for a state's commitment to building its technology industry rests with companies that are actively seeking to do business there," said MEDC Chief Business Development Officer and Executive Vice President Josh Hundt. "From tech giants like Amazon, Microsoft, and Google, to homegrown tech startups like Orbion Space Technology and Duo Security, companies of all sizes are showing their eagerness to locate and grow here in Michigan thanks to our top-notch talent and leadership in research and development."

In fact, with Michigan's impressive assets - including a deep bench of high-tech talent with the country's highest concentration of engineers, a pipeline full of tech students trained at top-ranked universities, a friendly business climate with an affordable cost of doing business, and an unparalleled quality of life - it's hard to imagine why a tech company or startup looking to locate or expand would go anywhere else.

Michigan offers a density of engineering talent, with the highest concentration of engineers in the nation.

Michigan has the third highest concentration of electrical engineers in the nation and ranks fourth in the number of employees in this occupation. Many of those engineers are employed doing what Michigan has long done exceedingly well: innovating. The state's commitment to innovation is strong enough that Business.org ranks Michigan fourth in the nation for most innovative states, based on its amount of R&D spending per 100,000 people.

Michigan is also a top state for net employment in the technology industry, with more than 80,000 workers employed in technology industries throughout the state.

Of course, every company wants, expects, and plans to grow. And growing companies need to feel confident that, along with available talent, new talent that is well-versed in the latest technologies will be available when it is required. Michigan has both.

Michigan is among the top ten states nationally for graduates with degrees in computer science, engineering, and math. In particular, University of Michigan IT programs consistently rank among the top programs annually for their focus on computer engineering, artificial intelligence and electrical engineering, among others.

Michigan is also looking to develop tech talent earlier in the educational pipeline.

For example, Michigan Statewide Educational Network (MISEN) brings 10-gigabit capability to Michigan intermediate school districts, giving instructors the tools they need to train K-12 students in technology, cybersecurity, and other technology fields.

Michigan also has more FIRST Robotics teams than any other state and is home to the 2018-2020 world championship robotics competitions. FIRST Robotics is a nonprofit that encourages students to enter STEM fields.

Leadership in cybersecurity.

Notably, at a time when cybersecurity is of vital interest to governments and companies across industry lines, Michigan is taking a leading role in developing innovative solutions for protecting the security of systems and people statewide, nationally, and internationally.

Michigan's Cyber Range offers the nation's largest unclassified range, providing virtual training to help students and specialists learn to deal with the most dangerous known cyber threats. Cyber Range hubs are located throughout the state and offer more than 40 industry-recognized certifications, exercises, and workshops to develop cybersecurity talent.

Michigan’s efforts to develop a robust cybersecurity community focused on connecting the interests of the cyber, automotive, defense, and aerospace industries led, Business Facilities magazine to recognize its strengths in IT and cybersecurity, ranking the state 9th both for tech jobs growth and for cybersecurity leaders.

Consider Michigan’s very own unicorn startup, Duo Security, which was born and bred in the state. Even after it was acquired by Cisco, Duo remains committed to staying in Michigan and hiring and training talent right here, thanks to the state’s efforts to strengthen its tech and cybersecurity talent pipeline even further.

An ecosystem that supports growth.

Michigan’s high-tech ecosystem offers a number of assets of particular interest for tech companies and startups looking to grow. For example, Michigan is home to several business incubators and tech innovation hubs that facilitate commercializing tech and tech-enabled ideas. Resources include 21 SmartZones and five innovation hubs through the Michigan Translational Research and Commercialization (MTRAC) program.

Information technology startups received 32% of venture capital invested in Michigan in 2020 and accounted for nearly half of the startup companies receiving venture capital funds. Meanwhile, the state as a whole continues to make national headlines for its venture capital growth, as the fastest growing state for VC investment, with an increase in venture dollars from $300 million in 2016 to $3.1 billion in 2020. Given that support, plus Michigan's historically friendly business climate, it is not surprising that Michigan is home to five Unicorn companies, including OneStream Software, Rivian, Duo Security, Llamasoft, and StockX.

More broadly, Michigan offers a favorable business tax structure to business generally, contributing to its position as one of the top states for doing business, according to the Tax Foundation's 2021 State Business Tax Climate Index.

A wide range of tech industry companies are discovering for themselves just how much opportunity awaits for them to grow and thrive in Michigan. For example:

Nexient, LLC offers a product-minded software development approach focused on revenue growth and customer experience. Its customers include Fortune 500 and high-tech clients in utilities, retailing, financial services, healthcare, hospitality, and entertainment and media companies.

Nexient's Michigan experience began in 2010 when it set up its Ann Arbor Product Development Center, which grew from a few dozen coders to hundreds of software professionals. It expanded on its presence in 2018, committing to create 300 additional tech jobs, pledging a $4.1 million investment.

Recently, it announced a second Michigan expansion, this time with a project in Scio Township that will generate a total private investment of $12.45 million and create 100 new jobs, where it continues to grow Michigan’s tech footprint.

Lineage Logistics, ranked by Fast Company magazine as the No. 1 Data Science company in its 2019 list of the world's most innovative companies, is an international warehousing and logistics company. It works with clients like Amazon, Walmart, and PepsiCo to revolutionize temperature-controlled supply chain and logistics for moving, storing, and preparing food. When the company decided to move its headquarters from Irvine, CA, the outstanding supply chain and logistics programs at the University of Michigan and Michigan State University helped Michigan stand out over competitors like Chicago and Dallas, along with a rich pipeline of high-tech talent.

With its Hall-effect plasma thruster, Aurora, Orbion Space Technology did what might have seemed almost unimaginable not long ago: It showed that it is possible and affordable for a startup company to launch satellites into space. Dr. Brad King and Dr. Jason Summerville started the homegrown company and approached the Michigan Technical Education Center (MTEC) SmartZone in Houghton, Michigan, with little more than a business concept. Funded by the state, the SmartZone provided Orbion with a wealth of business development support and resources. They also received MEDC support through the Tech Transfer Talent Network's (T3N) Mentors-in-Residence program, where they worked with experienced tech entrepreneurs to identify opportunities and venture creation programs. Later, funds won through MEDC-supported pitch competitions helped the company raise $10 million in an early round of venture funding, and today it continues to make a name for itself throughout the industry.

The Pure Michigan advantage.

Of course, tech industry companies are attracted to Michigan for many of the same reasons companies in other industries are: with the cost of living 10% lower than the national average, Michigan is the fourth most affordable state in the country, meaning a dollar goes farther when invested in Michigan. And with remote work becoming a larger consideration for more tech companies and the tech industry workforce, Michigan offers a Pure Michigan playground in addition to its tech-friendly business environment to support workings and companies navigating these new workplace realities.

To learn more about how Michigan is driving the next generation of high-tech industry innovation, go to michiganbusiness.org/tech.

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