It’s Time to Woo More Foreign Students and Companies, Says Paul Krutko

8/31/12Follow @XconomyDET

Paul Krutko is the president and CEO of Ann Arbor SPARK, the city’s economic development agency. He’s just back from Washington, D.C., where he was part of a delegation—along with the Michigan Economic Development Corporation’s Mike Finney; JoAnn Crary, president of Saginaw Future; and Ray Byers, Wayne County’s chief economic development officer—who attended this week’s White House Business Council Economic Development Forum.

Krutko is also the vice chair of the International Economic Development Council, and he was at the forum to report to the Obama administration the council’s findings on how to grow the manufacturing sector, which is experiencing a cautious resurgence. Yesterday, Krutko and I discussed his experience in D.C., and it didn’t take long before our conversation drifted to topics other than manufacturing.

Krutko was adamant that SPARK is not a political entity, and he says he and other forum participants had no shortage of suggestions for the administration on how it could improve matters. But he did have some unabashed words of praise for how the Obama administration has approached economic development, particularly as it relates to foreign investment. He’s also a firm believer in the need to keep gifted foreign students who attend American universities in the U.S. after they graduate, lest they return home and become our competitors. As the presidential election looms, with its so-called referendum on the kind of role government should play in the lives of its citizens, there seems to be plenty to be both optimistic and apprehensive about.

But first, some good news. “There’s been a significant uptick in manufacturing,” Krutko says. “For many years, we were seeing a decline but now we’re seeing it move in the other direction.” And if you’re wondering what a discussion about manufacturing is doing in a tech publication like Xconomy, Krutko says there’s a definite parallel between manufacturing and innovation. “The statistics are pretty compelling [about] how important manufacturing is to innovation,” he explains. “If we don’t keep as much manufacturing [in the United States] as we can, then we’ll lose our innovative edge.”

What’s different, he says, is having an administration that “gets it” and has taken leadership in the effort to keep U.S. companies from moving manufacturing operations overseas. “We’ve seen growth in manufacturing jobs under Obama, and that’s very encouraging,” he adds.

What’s missing from federal policy, Krutko says, is the kind of immigration reform that recognizes people with “great skills.” According to Open Doors Data, during the 2010-2011 school year, both the University of Michigan and Michigan State University were in the top ten among the country’s universities in terms of the enrollment of foreign-born students. (U-M was No. 8 with 5,995 students and MSU was No. 9 with 5,748. Harvard, incidentally, was No. 10.)

“The immigration debate in terms of economic development is an important one,” Krutko notes. The big issue, he says, is that immigration should be talked about in an intelligent fashion. “You can’t paint all immigration with the same brush, and Canada has really benefitted from the fact that we have tougher immigration rules,” he says.

American universities are already training some of the world’s best and brightest minds.  A study by Anderson and Platt reported that between 1990 and 2005, immigrants started 25 percent of venture-backed U.S. public companies. These companies are concentrated in cutting-edge sectors—high-tech manufacturing, information technology, and life sciences—with market capitalization exceeding $500 billion in 2005, and they include giants like eBay, Google, Intel, Yahoo, and Sun Microsystems.

Echoing longstanding calls for a “startup visa” program, Krutko says it should be easier for foreign-born entrepreneurial students to stay and start their companies here. “It’s important to speed up the visa process and take a hard look at who we’re training,” he says. “Why aren’t we handing foreign students who want to stay green cards along with their diplomas? Instead, they’re going home and creating companies that the U.S. will have to compete with.”

When it comes to competing foreign companies, one area where Krutko sees “tremendous potential” is in the Obama administration’s new SelectUSA program. Designed to complement the efforts of state economic development agencies, SelectUSA was created to attract foreign investment by touting the United States as the world’s premier business location and providing easier access to federal incentives and services related to business investment.

For example, Krutko says if Michigan were trying to lure a foreign company to locate in the state, the federal government would come to the table as a partner in the courtship. Government officers might send a letter on official letterhead inviting the company to its country’s U.S. embassy for a discussion on the benefits of a Michigan office. Or the U.S. government might arrange for a senior administration official—only the president himself is unavailable for this task—to call the company’s CEO and deliver a sales pitch. (“Can you imagine getting a call from Hillary Clinton?” Krutko marvels.) The idea of SelectUSA is to use all of the tools of the American government in the wooing process, which is something state economic development officials have never had the opportunity to access.

“I’ve been in economic development for 30 years, and we’ve never had a commitment like this from an administration,” Krutko says. Given that fact, is he worried that the new tools laid out under SelectUSA would fall by the wayside as the result of a presidential leadership change? “I would hope that whatever administration is in power would agree it’s not a bad thing to have companies invest in America,” he says.

No matter what the outcome of the November election, Krutko hopes it will give Congress a renewed call to action. “As we talk to companies, they’re optimistic, but they’re uncertain over the election and federal fiscal issues, like the budget, that have to be resolved,” he adds. “What’s interesting is that a lot of companies are running at full capacity and they’d like to grow, but the ground seems a little unsteady. Whatever happens, Washington needs to work hard to solve those problems because it’s holding investment back. It’s a real drag on potential growth.”

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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