Departments

Canada / Michigan

Canada Viewed as First Step
to Exporting

by Rick Haglund
October 17, 2011

Canada is Michigan’s largest export market, but experts say there’s a lucrative opportunity for Michigan companies to sell far more than the $14.9 billion in goods they sent to their northern neighbor last year.

That’s particularly true for small companies that may not have a clue how to participate in cross-border trade.

“You don’t have to be a General Motors or a Ford or a major tier-one supplier to be an exporter,” said J.D. Snyder, project director at Michigan State University’s Center for Community and Economic Development. “But I would tend to doubt a small company knows about the service ecosystem that’s available to them if they’re not already exporting.”

Armed with a $179,654 grant from the U.S. Economic Development Administration MSU won in July, Snyder is spreading the word in the eastern Upper Peninsula and central northeast Lower Michigan.

His center is working with the Eastern Upper Peninsula Regional Planning and Development Commission and the East Michigan Council of Governments to encourage small businesses to sell goods and services abroad.

Snyder said those regions were selected because of their proximity to neighboring Canada, which has legal and regulatory systems similar to those in the United States.

Starting out by selling to Canada can help small business become comfortable with international trade. “It’s a relatively low bar to exporting,” Snyder said.

The MSU-led project is designed to support President Barack Obama’s goal of doubling U.S. exports by 2014.

As a first step, the MSU center developed a detailed online questionnaire for businesses throughout the two regions that asks them what barriers they face in exporting.

Results of those surveys are scheduled to be revealed November 4 at the group’s first exporting strategy workshop, to be held at Delta College near Saginaw. The workshop will be live streamed to Lake Superior State University in Sault Ste. Marie.

Snyder said five such workshops are planned over the next 18 months, when the project will end. MSU hopes to get at least 25 companies to start exporting by the end of the project and develop a comprehensive exporting strategy for others that want to explore new markets.

Jeff Hagan, executive director of the Eastern Upper Peninsula Planning and Development Commission, said even though his region is just across the St. Mary’s River from Ontario, businesses in the region could export more goods and services to Canada.

An earlier MSU survey of 20 manufacturing companies in the eastern Upper Peninsula found that 10 were exporting and the other 10 wanted to get involved in international trade but needed assistance.

“Exporting is not as prevalent as you think it would be,” Hagan said. “We import more from Canada than we export.”

Canada sold $28.4 billion in goods and services to Michigan last year, but bought just $14.9 billion in merchandise from Michigan companies, according to the Canadian Consulate General’s office in Detroit.

Hagan said there’s also an opportunity to sell accounting and other services to companies in Ontario.

Officials on the Canadian side of the border don’t see that as a threat to jobs and economic activity there, said Randy Tallon, director of international relations and global logistics at the Sault Ste. Marie (Ontario) Economic Development Corporation.

“We would never discourage it. The United States is one of our most important trading partners,” he said. “We have our differences, but we’re family.”

Jane Fitzpatrick, program coordinator for economic and community development at EMCOG, said increased exports could create much-needed jobs in the economically depressed 14-county region.

The EMCOG region includes the Thumb, the Saginaw Valley and several counties in northeast Michigan where unemployment consistently runs higher than the state average.

Fitzpatrick said about 90 percent of businesses in the region have fewer than 10 employees. Many of them are sole proprietorships.

“We want to pull together resources and identify what the roadblocks are to exporting,” Fitzpatrick said. “Small business managers are doing a lot to run their businesses. They don’t have the staff to delegate this to.”

One of those businesses is Dynamic Manufacturing Corp., a small manufacturer of wood chipping machines in Weidman, near Mt. Pleasant.

Tom Gross, who was the company’ president until it was sold to a Minnesota company last year, said he exported his first chipper in 2005 after teaching himself how to sell in other countries.

Today, about 70 percent of Dynamic’s $8 million in annual revenues come from international sales. The company’s major markets are in Australia, Russia and Japan.

Exporting helped keep Dynamic going during the Great Recession, which took down hundreds of Michigan manufacturers.

Gross, who is now the company’s vice president of international sales, said having an attractive website has been critical to Dynamic’s export business.

“We get inquiries from virtually all over the world through our website,” he said. “It opens the door to a worldwide market.”

Vetting potential customers and setting up payment mechanisms are big concerns in exporting, Gross said. He has utilized U.S. Small Business Administration and Export-Import Bank programs in dealing with those issues.

For the Mackinac Straits Fish Co., selling abroad is little different than selling to customers at home in St. Ignace, said owner Jill Bentgen.

She’s exporting caviar made from whitefish eggs to a company in Sweden that can’t get enough of it.

“I could sell everything I make and ship it overseas right now,” said Bentgen, a former process engineer with Procter & Gamble.

Bentgen started exporting several years ago when she was approached by a Swedish company looking to purchase caviar. She said she now exports several tons of it a year.

“It’s just normal business,” she said. “The Swedish companies speak English. We do business through electronic transfers. And we get paid in dollars.”

To get started, Bentgen said, she had to apply for a health certificate through the Department of Commerce and get her products certified for export through the Food and Drug Administration.

“It was quite easy,” she said.

MSU’s Snyder said he’s hoping his project will simplify the exporting process for many other Michigan companies and, in doing so, promote economic growth in the hard-hit eastern Upper Peninsula and Lower Michigan regions.

“We’re hoping in our own modest way to make a difference for these communities,” he said.

Rick Haglund is a freelance writer and former business reporter and columnist for Booth Newspapers.

Departments

Canada / Michigan

Cross-Border Public-Private Partnerships

by Rick Haglund
July 18, 2011

If the proposed New International Trade Crossing bridge connecting Detroit and Windsor gets built, Canada’s contribution to Michigan’s economy could go well beyond the $550 million our northern neighbor has pledged to pay for the state’s costs.

The bridge project could usher in a new era of cross-border, public-private partnerships used to expand transportations systems, Great Lakes environmental clean-ups and border security systems.

“The sky’s the limit. What you can turn into economic development opportunities using public-private partnerships is incredible,” said Lieutenant Governor Brian Calley, the governor’s point man on winning legislative approval for the bridge.

Public-private partnerships, known as P3s, often are mischaracterized as a privatization of government services or simply contracting for goods and services provided by private companies.

A P3 is a contractual agreement between a governmental entity and a private-sector company in which the risks and profits of building and operating public use projects, such as roads, bridges, municipal water systems and wastewater treatment plants, are shared.

As with the New International Trade Crossing plan, a private contractor or developer often finances the entire project and earns a return from the revenue generated by tolls or user fees.

“It’s a methodology using the best attributes of a strong government with the assets of the private sector in being innovative and taking risks, with the opportunity of making a profit,” said David Lick, a P3 legal expert at the Lansing law firm Foster Swift Collins & Smith.

Lick has been involved in structuring P3s since the 1980s, but they are not widely known in Michigan. One such project he worked on recently was a recycling and material recovery plant for the Resource Recovery and Recycling Authority of Southwest Oakland County.

In that project, the authority purchased the land for the plant, which was financed and built by a private contractor. The authority and the contactor share in the profits from the recycled material that’s produced and sold.

“I think we could make more use of P3s than we do now,” Lick said.

In Canada, P3s have been used to build 157 projects since the early 1990s, including hospitals, schools and sports stadiums. Canada is considered one of the world’s leaders in using such partnerships.

“The United States is a little behind the curve in using P3s,” said Sarah Hubbard, president of Acuitas, a Lansing lobbying firm, and former lobbyist for the Detroit Regional Chamber, another champion of the bridge project. “It can be a tough concept to understand.”

Indeed, the National Council for Public-Private Partnerships lists 18 types of P3s and says no two projects are alike.

P3s can be an attractive option for state and local governments that are dealing with aging infrastructures and tight budget.

Last year, the Michigan Department of Transportation rebuilt a section of the I-69 freeway in St. Clair County and a portion of I-75 near Flint using one type of P3 known as design-build-finance, or DBF.

In those projects, the contractor financed the construction and is being repaid over four years. The arrangement provided an acceptable financial return to the contractor and “allowed the project to go from concept to bid-letting much more quickly,” Lick said.

“The main benefit of a design-build project is to allow for innovative ideas to be implemented faster and in a competitive environment,” said state Transportation Director Kirk Steudle. “Once the bids are received and the plans approved, work proceeds quicker.”

P3s have been controversial, in part, because of the amount of power given to private developers, or concessionaires, who often operate the public works projects that they build.

One of the bills in the Michigan Legislature enabling the construction of the New International Trade Crossing specifically establishes it as P3. The legislation is needed, officials say, because it is unclear whether a private company has the legal authority to collect tolls on a bridge that has public involvement.

“There is an outstanding legal question,” Calley said. “I don’t believe there is a prohibition for a private company to collect tolls, but it’s a question that’s open for debate.”

In Canada, questions have also arisen about whether or not P3s save money for taxpayers.

For instance, a 2008 Ontario Auditor General’s report found that $200 million could have been saved in the construction of the Brampton Civic Hospital had the province financed the project itself, rather than letting a private developer finance it.

And public employee unions have criticized P3s, saying they cut jobs for government workers.

Lick said borrowing costs by private companies doing P3s can be higher than for government-financed projects, but they sometimes can qualify for tax-free municipal bond interest rates.

Other advantages of such partnerships make them a viable choice for constructing and operating public works projects, he said.

Cost overruns, common in such projects, usually are minimized when P3s are used.

“I think the issue of cost overruns is mitigated because the private sector does not have an open checkbook,” Lick said. “It has to produce the best value for every dollar spent.”

They keys to successful projects are having competent contractors and savvy government partners, according to Lick.

“Make no mistake — the use of a public-private partnership takes a government that has a strong backbone and knows what it is doing,” he said.

Calley and others say the potential for cross-border P3s between Canada and Michigan lies mostly in areas such as transportation and logistics.

Phil Power, chairman of The Center for Michigan, an Ann Arbor-based “think-and-do tank,” wrote in a recent column that creating a “multi-modal logistical hub” linking southeast Michigan and Ontario could create 200,000 jobs and billions of dollars in economy activity.

Such a hub would link air, water, rail and road transportation and could turn the region into the most efficient freight-moving center in the Midwest.

Gov. Rick Snyder also has said he’d like to see the proposed high-speed rail link between Chicago and Detroit extended to Toronto. A P3 could be used for such a project.

“There are a lot of transportation assets located in this area,” Calley said. “I think it is important to keep in mind the potential of building a continental transportation hub here.”

Rick Haglund is a freelance writer and former business reporter and columnist for Booth Newspapers.

Departments

Canada / Michigan

Canada’s Mercifully Short Election Campaign

by Rick Haglund
April 15, 2011

Congressional Republicans and Tea Party types who’d like to oust President Barack Obama might be wishing the United States had Canada’s form of government.

While we elect a president every four years, Canada’s leader — the prime minister — is subject to an election at almost any time unless his party can retain or capture a majority of seats in Parliament.

That’s the fate facing Canadian Prime Minister Stephen Harper, the Conservative Party head who is campaigning for re-election for the second time in just three years.

Canada’s minority government was toppled March 25 when the opposition parties passed a no-confidence vote against Harper for failing to disclose financial details about his anti-crime legislation, corporate tax cuts and plans to buy 65 American-made stealth fighter jets.

This will be the fourth federal election in Canada in seven years, a result of the powers opposition parties hold in that country’s political system. The election will be held May 2.

“It’s a totally different system than the one we have,” said former Michigan Gov. James Blanchard, who served as U.S. ambassador to Canada from 1993 to 1996.

Voters in Canada don’t directly elect the prime minister. They vote for local members of the House of Commons. The party winning the most seats forms the government and the party leader, also a member of a member of the House, becomes prime minister.

If the ruling party in Canada has a minority government, meaning that it does not hold the majority of seats in the House, opposition parties can force an election through a successful “no confidence” vote against the prime minister.

It’s the second time since 2008 that the Liberal, New Democratic and Bloc Quebecois parties have forced Harper and the Conservatives to submit to an election. Together, those parties hold the majority of seats in Canada’s House of Commons.

“If you think you can win it, you call it,” Jim McNiven, a visiting Canadian Fulbright Scholar at Michigan State University, said about Canada’s election process.

But McNiven and others expect the election likely will keep Harper and his Conservative Party in power, although polls have shown that the party will likely fall just short of winning a majority of seats in Parliament.

“Many people believe the Conservatives are happy to have an election,” Blanchard said. “The Conservatives don’t mind the opportunity to try to win a majority.”

Blanchard described the Conservative Party as similar to moderate Republicans in the United States.

In Canada’s system, the party with the most votes controls Parliament and the cabinet. Members of the Canadian Senate are appointed.

“It’s a fusion-of-power system where both the legislative and executive branches are run by the same bunch,” McNiven said.

Blanchard and others say the election, whatever its outcome, likely will have little effect on Canada’s relations with Michigan and the rest of the United States.

“The relationship Canada has with the United States is the most important relationship in the world historically and it will continue to be after the election,” said Roy Norton, Canada’s consul general in Detroit.

Political pundits describe Harper as a bland leader who nevertheless has survived because Canada came through the recent global recession relatively unscathed.

And what is happening in Canada bears no resemblance to the political upheaval in Egypt, Libya, Yemen and other Middle East countries where citizens are rebelling against repressive regimes.

Richard Adams, a political columnist in Britain’s Guardian newspaper, described the call for another election in Canada as simply “all part of the convoluted nature of Canadian politics and its electoral structure.”

Harper and the Conservatives were elected as a minority government in 2006 and have since failed to win a majority. That has left them vulnerable to calls for election any time opposition parties wanted one.

Canada has no set dates for regular federal elections, but they take place at least every five years when a majority government is in power. That’s because the government’s appropriations power ends after four years and the money runs out in the fifth year. (Wouldn’t advocates for smaller government in the United States love that?)

Minority governments last, on average, two and a half years, said McNiven, who has worked for several governmental agencies in Canada.

Some think there is much to admire in Canada’s mercifully short election campaigns, compared to the campaign marathons that characterize U.S. elections.

The current one in Canada will last just 38 days. In the United States, the race for the presidency effectively starts the day after the election. Obama formally declared his run for re-election on April 4, 19 months ahead of the November 2012 election.

But Canada’s recent history of minority governments means that members of Parliament essentially never stop campaigning to hang on to their seats.

“Canadians are always campaigning in a minority government because you never know when it’s going to fall apart,” McNiven said.

Laid-back Canadians regard these frequent elections as “a bit of a nuisance,” he said, but generally accept them as part of the country’s system of government.

While observers don’t expect much impact on border issues in the upcoming Canadian election, Blanchard said Canadian party squabbles over such issues as energy policy and a troop withdrawal date from Afghanistan could cause minor disputes with the United States.

But the election should have no effect on Canada’s strong political and financial support for a new bridge connecting Detroit and Windsor, Blanchard said.

Formerly called the Detroit River International Crossing, the proposed span is now known as the New International Trade Crossing. Gov. Rick Snyder also has thrown his support behind the bridge.

“The big issue is getting the new bridge,” Blanchard said. “All the parties have supported The New International Trade Crossing. It started under the Liberal Party.”

Rick Haglund is a freelance writer and former business reporter and columnist for Booth Newspapers.

Departments

Canada / Michigan

Building a Stronger
Michigan-Canada Region

by Rick Haglund
February 20, 2010

Imagine a Great Lakes region revitalized by the states and Ontario cooperating to boost the economy, rather than competing by using costly tax incentives of questionable effectiveness.

Manufacturing would thrive and new knowledge jobs would be created as major corporations strengthen relationships with their smaller vendors, known as the supply chain.

A seamless transportation system would bring back thousands of jobs lost to China as businesses discover that lower logistics costs here outweigh savings from cheaper labor costs in Asia.

Sure, it sounds like a fantasy. But some government officials, academic experts and business leaders say greater economic growth in the region depends on just those kinds of cooperative ventures.

“Regional economies are becoming more and more important,” said Steven Melnyk, a business professor and supply chain management expert at Michigan State University. “We have an infrastructure here that is potentially able to make us very powerful.”

Already, more than 700,000 jobs in Michigan, Indiana, Kentucky and Ohio depend on two-way trade with Canada, according to the Canadian Consulate General’s office in Detroit. A quarter of the $550 billion in annual trade between Canada and the United States passes through border crossings between Michigan and Ontario.

Promoting the region as a transportation, distribution and logistics cluster could bring 70,000 new jobs to Southeast Michigan, according to a recent MSU study.

“The bottom line is we live in a global economy,” said Daniel Lynch, director of the Centre for International Trade & Transportation at Delhousie University in Halifax, Nova Scotia. “We have to work together.”

But too often we don’t, Melnyk said.

“Instead of seeing the Great Lakes area work together, you see a lot of competition between the states,” he said. “Nobody is coordinating anything. Everybody is doing their own thing.”

Michigan governors going back to at least James Blanchard have tried to convince their fellow Great Lakes governors to work more closely as a region in economic development. But, if anything, the states are competing with each other more vigorously than ever to attract business investments using increasingly lucrative financial incentives.

That competition could soon ease, though, as severe budget problems are forcing the states to consider pulling back on costly tax breaks and other financial incentives.

Gov. Rick Snyder’s proposed 2012 budget, for instance, eliminates most tax incentives for businesses and replaces the complex Michigan Business Tax with a simplified 6 percent corporate income tax he says will bring more jobs to Michigan.

Mike Finney, the recently installed president of the Michigan Economic Development Corp., said he wants to take a more regional approach to economic development.

“The world is our competition,” he said. “For us to fight over limited resources in the Midwest doesn’t make a lot of sense to me philosophically. It really doesn’t contribute to the economic vitality of the Midwest.”

Melnyk said states could start the process of regional cooperation by jointly developing an in-depth database of suppliers and their capabilities.

“We need a capabilities index for the Great Lakes region,” he said.

And states can improve education to better prepare workers for the reality of a global economy that depends heavily on companies linked in complex supply chains.

“We live in a world of assemblers,” Lynch said. “Subassemblies come from all over the world. People want to buy American, but that doesn’t work anymore.”

Suppliers have become critically important because automakers and others have outsourced so much of the product development and innovation to them. The speed, efficiency and security of their supply chains often determine how successful manufacturers are in global competition, Melnyk said.

“A supply chain is like a fast racing car,” he said. “If it’s used properly, you can win the race. If it’s used poorly, it can get you killed.”

In a world where supply chains are increasingly important, the Great Lakes region is poised to capitalize on the greater economic growth they could produce.

The auto industry, for example, is made up of hundreds of companies that do business with each other across several Midwest states and Ontario. Although Michigan is the intellectual capital of the industry, it ranks second to Ontario in the production of cars and trucks. Yet suppliers and manufacturers in the two countries are tightly linked.

Melnyk said the region might be able to win back lost manufacturing-related jobs from China through the strength of its supply chains if it improves its transportation infrastructure.

Supply chain-based manufacturing relies on security, innovation and speed, all of which are lacking in China and other low-cost countries, according to Melnyk.

General Electric, Caterpillar and AT&T are among companies that have announced they’re bringing back jobs, or at least considering doing so, from China to the United States. They’re “onshoring” or “reshoring” jobs for a variety of reasons, including high shipping costs, complex logistics and quality concerns.

But Melnyk and others said the Great Lakes region needs to improve its transportation systems to attract more jobs. Roads and bridges in the region are generally in poor shape, especially in Michigan. And bottlenecks at the borders connecting Michigan to Canada are hurting trade, some say.

Experts say there is a delicate balance between a secure border and one in which trade flows freely. Border security has become a huge issue since the Sept. 11, 2001, terrorist attacks. But there are ways to ensure both, some say.

Lynch said the Halifax airport has instituted a pre-clearance system in which Canadians traveling to the United States can clear U.S. customs there, saving time when they arrive at, say, Detroit Metro airport.

“If I’m a consultant or a support person, it makes it much easier for me to travel,” he said.

And Canada is aggressively promoting construction of the proposed Detroit River International Crossing bridge that would link Windsor and Detroit, the busiest U.S.-Canada crossing.

Canada has offered to pay Michigan’s $550 million bridge-related costs, an offer that Gov. Rick Snyder wants to accept. He also announced in his State of the State Address last month that federal officials have agreed to allow Michigan to use that $550 million as a match to leverage $2 billion in federal highway funds. The project could help greatly improve the Great Lakes region’s economic competitiveness, supporters say.

“No one state or province has all the assets necessary to meet companies’ needs,” Melnyk said. “The reality is we need a strong, competitive region.”

Rick Haglund is a freelance writer and former business reporter and columnist for Booth Newspapers.

Departments

Canada / Michigan

‘Canadian Sensibilities
are Michigan Sensibilities’

by Rick Haglund
December 16, 2010

Roy Norton, well versed in Canadian and U.S. politics, diplomacy and public policy, was named counsel general of Canada in Detroit in August.

He had most recently served in the Canadian Embassy in Washington, D.C. as minister in charge of relations with Congress, as well as media and public relations and cultural and academic affairs. An Ottawa native, he holds masters degrees from Harvard University’s Kennedy School of Government and Johns Hopkins University’s School of Advanced International Studies, as well as a doctorate from Johns Hopkins in International Relations.

Mr. Norton spoke with Rick Haglund about his duties in Detroit and key issues in the vital relationship between Canada and Michigan. Following is an edited version of that conversation.

For starters, what does a counsel general do?

Canada has 13 counsel generals in the United States. In Detroit we oversee relations with four states [Michigan, Ohio, Indiana and Kentucky] that have a total population of 32 million people, almost exactly the population of Canada.

The United States and Canada have the largest two-way trade relationship in the world, some $550 billion U.S. a year. That one-quarter of that trade would cross one of the bridges joining Canada and Michigan is somewhat of a phenomenon.

We advance Canadian interests here. We try to get folks in the four states to recognize that the interests of Canada and the region are integrated. The more likely the states are aware of the linkages, the less likely they are to advocate policies that hurt us.

We also have a substantial visa operation. U.S. citizens don’t need visas to travel in Canada, but we process visa applications for third-country nationals. We issue in excess of 20,000 visas a year.

We look after Canadians in need. People get into car accidents and they get into trouble.

What are your impressions so far of Michigan?

I started my assignment here on 13 September. I come from Ontario. I was born in Ottawa and lived a good chunk of my life in Toronto.

There’s nothing foreign to me here. I feel very welcome. Washington lacks, should we say, Midwestern sincerity. It’s a delight to be in the company of like-minded people who pretty much realize how interdependent Michigan and Ontario are.

Anything you’ve seen since September that surprises you?

I’ve been asked that question before and, sadly, I’ll confess not. Michigan’s economy seems to be improving. I detect considerable hopefulness now. It’s a good thing to come into a setting where you sense things are on an uptick.

How would you characterize the overall relationship between Canada and Michigan these days?

I think it’s superior on almost every level, save maybe one [the Detroit Regional International Crossing, or DRIC]. It’s the one that happens to be Canada’s number one national infrastructure priority. That’s a source of some considerable frustration for Canadian officials, Canadian business people and average travelers.

(Editor’s note: Canada has proposed paying up to $550 million of Michigan’s costs for a second bridge over the Detroit River, the DRIC. The project is opposed by Ambassador Bridge owner Manual “Matty” Maroun, who has been heavily lobbying the Michigan Legislature to scuttle the plan and has so far succeeded in preventing bridge approval.)

We can’t fathom how the legislature would fail to grasp the benefits of 10,000 short-term jobs and, long-term, the certainty and confidence of investors and businesses on both sides of the border.

There’s a tendency to look at this as a Detroit issue. We point out that Canada-Michigan trade was about $45 billion last year, slightly less than a tenth of U.S.-Canada trade of $550 billion. It’s really about the Canada-U.S. trade relationship and putting in infrastructure that works reliably on an ongoing basis.

The Michigan Senate refused to vote on the bridge project before ending business for the year. What are its prospects for next year?

I hope it turns out with the new governor and the new legislature recognizing that it’s time to get on with it. Governments change in Canada, too. Right now the $550 million to Michigan is just an offer. We hope prudent legislators and administrators in Michigan will recognize it’s time to accept this opportunity. Because we’re hopeful people, that also is our expectation.

Concerning environmental protection of the Great Lakes, what are the areas of agreement and conflict between Michigan and Canada?

There are issues of ballast water regulations [on ocean-going ships coming into the Great Lakes]. We don’t have an issue with Michigan. Canada and New York have an issue. New York has drafted regulations that are unimplementable. We have an issue with them.

There was a conflict between Ontario and Michigan on the export of garbage to Michigan. An agreement was worked out in 2006. All municipal waste importation will be eliminated by 2010. That will happen. That’s a good news story of jurisdictions coming together to reach an agreement.

Canada and the United States have been involved in a decades-long trade dispute over the importation of Canadian lumber into the United States. What’s the status of that dispute?

Canada and the United States in 2006 signed an agreement on softwood lumber. Since then we have taken each other to international tribunals because of disputes. Canada almost always wins.

The 2006 agreement called for Canada to place an export duty on softwood lumber. The objective to significantly drive down the consumption of softwood lumber in the United States has been met. We tax the exports, meaning the Canadian government keeps the revenue when exports go above a certain amount.

Everybody in the industry is hurting because of the housing slump. We think there should be free trade. But the United States does not want free trade in lumber, it seems. The managed trade agreement in 2006 has worked out pretty well.

How would you assess the border security issues, specifically involving linkages between Canada and Michigan?

It’s definitely more restrictive than it was before 9/11. That’s for entirely understandable reasons. It’s one of the reasons, frankly, for adding new infrastructure here. The level of security can’t be reached with current infrastructure.

If there are 8,000 trucks a day crossing the border between Detroit and Windsor and you add 30 seconds per truck because of increased security measures, it adds up. You end up with a considerable backlog.

But I think at the operational level, people are working extremely well together.

What are your ideas for expanding trade or for other areas of cooperation?

We try to do it every day, at the micro level — company by company — and also at the policy level. One of the ways to grow trade is not put barriers in its way. When that happens, companies and governments perceive the need to retaliate.

We aren’t China or India. We are Canada, your free-trade partner with comparable rules and laws. We pay comparable wages. No one could take the rational position that we are undercutting you. Canadian sensibilities are Michigan sensibilities. We try to make the point that we are like you.

What personal details about yourself can you share with us?

I’m one of those pathetic people who works all the time. I enjoy my work. It’s how I am fulfilled. I work 75 to 80 hours a week. I like sports. In my three months, I’ve been to one Tiger game. It was the second-to-last game of the season and they won. It was a spectacular evening.

My late grandmother was a fanatical Gordie Howe fan, but I haven’t been to a Red Wings game yet.

Your favorite hockey team?

I cheered for the Boston Bruins for a long time, but later I became an Ottawa Senators fan, and I remain a Senators fan. I will go to Red Wings games and cheer enthusiastically for the Red Wings unless they are playing the Senators.

Rick Haglund is a freelance writer and former business reporter and columnist for Booth Newspapers.

Departments

Canada / Michigan

Looking Out for the Great Lakes

by Rick Haglund
October 16, 2010

Lana Pollack doesn’t lack for controversial Great Lakes water issues to grapple with in her new job as U.S. Section Chair of the International Joint Commission.

Asian carp with voracious appetites are swimming closer to Lake Michigan through the Mississippi River system, threatening to wipe out native species.

In July, an oil pipeline break spilled nearly a million gallons of crude oil into a creek that feeds the Kalamazoo River, raising larger concerns about the safety of hundreds of underground pipelines in the state.

And a variety of pollutants resulting from farming, manufacturing and human waste continue to foul the lakes despite years of effort to clean them up.

“The lakes are not healthy,” said Pollack, a former state lawmaker and past president of the Michigan Environmental Council “There is plenty of pollution entering the lakes, some of it in an increasing amount.”

Pollack, appointed by President Barack Obama, took over as the top U.S official at the IJC in June. The commission works to prevent and resolve water disputes between the United States and Canada under the Boundary Waters Treaty of 1909.

Its jurisdiction covers the 5,000-mile U.S.-Canada border and 300 shared bodies of water. The organization also serves as an advisor to the U.S. and Canadian governments on pollution and water quality issues.

Water quality is a major issue in the special economic and social relationship between the United States and Canada, and the health of the Great Lakes is of critical concern to Michigan and Ontario. Problems on one side of the border affect both nations and their political subdivisions; pollution and invasive species don’t respect map boundaries.

That’s the chief reason a number of formal mechanisms exist to foster cooperation on these tough water issues.

The IJC was involved in the drafting of the 1972 Great Lakes Water Quality Agreement in which the two countries agreed to control pollution and clean up waste from industry and communities.

“It’s still seen as one of best water compacts in the world when looking at water quality,” said Joan Rose, co-director of the Center for Water Sciences at Michigan State University.

Renewed attention
The Great Lakes, which contain nearly 20 percent of the world’s surface fresh water, are getting renewed attention from a number of groups and officials, not the least of which is the Obama administration on this side of the border.

Earlier this year, the administration announced the Great Lakes Restoration Initiative, a $475 million effort to clean up the lakes and deal with invasive species. It’s the largest federal spending project on the lakes in two decades.

Michigan so far has been awarded more than $2 million from the initiative, administered by the Environmental Protection Agency. Among the grant winners were researchers at Michigan State University and Wayne State University; the state Department of Natural Resources and Environment; and the Southeast Michigan Council of Governments.

“If the Great Lakes are to continue to take care of us, we need to continue to invest in them,” said Cameron Davis, known unofficially as Obama’s Great Lakes czar and officially as special advisor to EPA Administrator Lisa Jackson.

Thirty million Americans get their drinking water from the Great Lakes. The lakes also support multibillion-dollar commercial fishing, shipping and recreation industries on both sides of the liquid border.

The United States isn’t the only one undertaking cleanup actions. Earlier this year, Canada and the province of Ontario extended a 2007 Great Lakes protection funding agreement, set to expire this year, until March 31, 2011.

The two governments will spend $16 million through next year in projects to keep invasive species from entering Lake Superior and deal with algae blooms that foul Lake Huron beaches. The money also will be spent on keeping polluting nutrients out of Lake Erie and protecting biodiversity along Lake Ontario shorelines and watersheds.

World interest
The importance of protection and wise use of the Great Lakes was among topics discussed at the World Water Congress held in September in Montreal.

Nearly 5,000 water experts, including Rose and several IJC commissioners, attended the conference, sponsored by the International Water Association, a group of private and public water system professionals.

Rose said one of the issues discussed there was aging infrastructures in the states and provinces of the Great Lakes region. In host city Montreal, for example, millions of gallons of drinking water from the St. Lawrence River are “lost” because of old, leaky pipes.

The $475 million allocated by the Obama administration to restore the Great Lakes is the equivalent of a few drops of rainwater in Lake Superior in addressing the need, some say.

Estimates run as high as $20 billion to replace leaking water and sewer pipes, and to halt pollutants such as mercury and phosphates from entering the lakes.

“We’re using technologies from the 1970s. It hasn’t advanced much,” Rose said. “It’s going to cost us a lot in our communities to keep moving forward and not move backwards.”

But in addition to increased spending, Davis said numerous groups need to work closely in improving the Great Lakes environment. A major part of his job is coordinating the work of 16 different federal agencies charged with regulating the lakes.

Eight states, two provinces and two federal governments have jurisdiction over the Great Lakes.

In addition to those, there are multiple Canadian government agencies and a variety of other groups, such as the Great Lakes Commission and National Wildlife Foundation, that work to improve the lakes.

But Pollack said the Great Lakes Water Quality Agreement and the healthy relationship between the U.S. and Canada are strengths in protecting the lakes.

“We really do have an amazing relationship with Canada,” she said. “We share a 5,000-mile boundary, 40 percent of which is water. We get along remarkably well.”

Occasional tensions
But there are occasional tensions between the two countries, as well as differences in regulations.

Michigan and the United States, for example, ban oil and gas drilling in the Great Lakes. Canada allows it.

And the pipeline that spilled oil into the Kalamazoo River last summer is owned by Canada-based Enbridge Inc. (Former Michigan governor and U.S. ambassador to Canada James Blanchard sits on Enbridge’s board of directors.)

“These pipelines have been out of sight and out of mind,” said Andy Buchsbaum, regional executive director of the National Wildlife Federation’s Ann Arbor office. “They’re not going to be out of mind very much longer, though, because of their potential to do enormous damage.”

Pollack said most of the conflicts involve the various users of the lakes, not political jurisdictions.

Homeowners living on Great Lakes shorelines want their beaches protected. Shipping companies want deeper navigational water for their freighters. Environmentalists want stiffer regulations protecting wetlands and habitat.

Greater cooperation among those groups will be needed to improve the quality of the lakes, Davis said.

“The only way we’re going to save the Great Lakes is if we’re all moving in the same direction,” he said.

Great Lakes restoration efforts will be further complicated by climate change, experts say.

Warmer air temperatures are creating faster-developing, more intense storms that overwhelm storm sewer systems and dump pollutants into the lakes, Pollack said.

And the resulting warmer water temperatures from climate change are likely contributing to oxygen-depleted dead zones in Lake Erie, Saginaw Bay and Green Bay, Buchsbaum said.

These are [areas] of the Great Lakes that are sick and unable to heal themselves,” he said. “The sense of urgency is higher than at any time I’ve been working on these issues over the past 20 years.”

Pollack said citizens cannot take the future of the lakes for granted.

“We live in a terrific place. We have fewer water problems than most places on earth,” she said. “But the lakes should not be considered a free, endless resource.”

Rick Haglund is a freelance writer and former business reporter and columnist for Booth Newspapers.

Border Security Trumps Local Economic Opportunity

Is Michigan doing enough to make sure Port Huron and other border communities connect with their Canadian neighbor?

by John Foren
April 16, 2010

PORT HURON — It is early afternoon on a beautiful Friday, the last vestiges of ice floes are streaming down the St. Clair River and if Port Huron wanted to pose for a postcard, today would be the day. Downtown — just a couple blocks off the water — looks abandoned, however. There are only a few scattered walkers and a man on a street corner with a sandwich-board sign hawking a going-out-business sale.

Kathleen Smith is admiring the water outside the Great Lakes Maritime Center off of downtown and talking about the days when Port Huron was bustling and heading over the border to Canada didn’t arouse international suspicion.

Smith, a 66-year-old poet, is speaking of the ties between the two countries, citing her poem “Under the Blue Water Bridge.” Its verse includes the lines, “There is a magical, captivating beauty. The United States and Canada connect here, sharing river and the great lakes it reaches. It is an area enjoyed and loved.”

The question is, is Michigan doing enough to make sure Port Huron and other border communities connect with their Canadian neighbor?

Those who have studied Michigan’s border communities say Port Huron, in particular, has huge assets as an international hub that few, if any, communities in the nation can claim. That includes the twin spans of the Blue Water Bridge and the Canadian National Railway’s rail tunnel under the St. Clair River, an entry point for international goods.

But in the wake of the September 11 terrorist attacks, the border has tightened and security, not economics, rules the day.

The same kind of gridlock that cripples the lines at the bridge seems to have commandeered any efforts to play on the border’s assets, some say.

“You can’t be talking about any other city in Michigan in terms of the infrastructure already in place — double-decker bridges, underwater railroad tunnel. How long would it take to put that stuff in place today?” said Lawrence Molnar, who heads the Michigan Business Incubation Association.

“Port Huron has a competitive advantage over any other communities that are located on the Canadian border, both in Michigan and probably across the entire border between Canada and the United States. It’s really a global crossing point for commerce, trade, intermodal and just about anything else you can think of.”

Molnar, also of the University of Michigan’s Institute for Research on Labor, Employment and the Economy, has been working with St. Clair Community College on the possibility of starting an incubator tied to transportation, distribution and warehousing firms. That’s directly tied to Port Huron’s border crossing status.

U.S. Rep. Candace Miller (R-Harrison Township) is a member of the House Homeland Security Committee and stresses that border safety trumps everything. “Let me be pretty frank: my job is to protect America,” she says.

Still, as the Port Huron area’s congressional representative she bridles at what she sees as missed opportunities to use the economic advantages of the crossing. While state officials engage in an almost-daily debate on a second international bridge in Detroit, they are ignoring the potential a few miles up the road, she says.

“It’s unbelievable the potential that is there,” says Miller, who sits on the U.S.-Canada Interparliamentary Exchange Group, which promotes interaction between lawmakers on both sides. “You have to play to your strength.”

Port Huron, she says, has “tremendous assets. You can’t just drive anywhere and find those assets.”

Port Huron is one of the top trade crossings in the country and is the busiest international rail entry point in the U.S. Nearly 22 million tons of goods was expected to cross the bridge last year.

Some 8 percent of St. Clair County’s total payroll comes from workers in businesses dependent on the border, according to a December study financed by state and local economic development officials. The study identified 62 firms in the county as relying on border business, such as freight.

About 700,000 visitors from Canada were expected to visit the county in 2009, spending an estimated $57 million.

The study, by Chmura Economics & Analytics of Richmond, Va., said the border gave the area several clear economic advantages, namely access to a larger labor pool, and would help the region replace manufacturing jobs with trade-related work.

The study largely buttressed local officials’ arguments in favor of the massive Blue Water Bridge Plaza Project, a $600-million plan to expand the plaza on the American side of the bridge and improve 2.5 miles of the I-94/I-69 corridor west of the site.

The federally approved project, scheduled for completion in 2017, involves replacing and widening the bridge to nine lanes to separate local and international traffic. It will accommodate what could be a doubling in truck traffic across the bridge and provide an intermodal facility that will make it easier to shift goods by rail to truck or other means.

Proponents say there also will be hundreds of construction jobs and, once the project is finished, dozens of new businesses that benefit from the increased traffic.

Most important, perhaps, the expanded bridge is projected to decrease the average delay in crossing from 28 minutes to 3 minutes in the year 2030.

The project comes in the wake of increasing grumbling about security tie-ups at the bridge in the wake of the 2001 terrorist attacks. On a recent day, traffic volume on the bridge seemed relatively light but still the trucks lined up and caused a quarter-mile backup.

It’s the chief reason cited by residents and businesses for why they don’t partake more often in their international neighbor.

The last time Dale Myers, of nearby Peck, was across the bridge in in Sarnia, Ontario, was just after 9/11. Myers, 68 and retired from the Navy, says he’d cross the border more often “if they didn’t make it so difficult.”

“We’re neighbors, we’re not enemies,” he says.

Another longtime area resident, Paula Rosenthal, 61, says she understands the concerns after 9/11, “but we need to do something to allow for easier access to the public.”

Rosenthal also says the American and Canadian sides should market themselves better to capitalize on the jewel they have.

Canadians make up about 10 percent of the business at the Office Lounge, which is just off the exit at Water Street near the bridge. That’s dropped in the last year after passport laws tightened, said Norm Krol, who owns the place.

Krol also is not looking forward to the May 1 enactment of Michigan’s smoke ban in bars and restaurants. He said being able to puff is another attraction to Canadians, who face public bans in their own country.

The Canadian influence on local business shouldn’t be underestimated, says Krol.

“It’s pretty strong,” he says. “You get a lot of people who come over shopping, they get things they can’t normally get in Canada…The regulars we get are here to get fuel, stop by and get some steaks at Sam’s Club, come here for a beer, have a couple smokes.”

Check the parking lot of the Birchwood Mall, in Fort Gratiot, a northern Port Huron suburb, and you’ll get an instant reminder of how much the area relies on Canadian consumers.

Ontario license plates are omnipresent — not the majority of shoppers by any means but plentiful enough to make a difference.

Toby and Sally Zimmerman of London, Ontario, had a choice on a recent open afternoon: drive a couple hours to Toronto for some shopping or head almost directly west more than an hour to Port Huron. The Michigan city won, and so did their pocketbook.

The Zimmermans, both in their 30s and with a young son, said they paid $20 less to fill their gas tank than they would have in their country.

“I think generally almost everything is less,” Toby Zimmerman said.

They are the kind of people Port Huron’s economy relies on (Canadians spend an average of $77 per day when they visit St. Clair County, according to the Chmura study). And that’s who Vickie Ledsworth, president of the Blue Water Area Chamber of Commerce, is working to keep.

Ledsworth has been meeting with Sarnia chamber leaders on developing stronger commercial ties between the two border communities. One priority is allaying Americans’ fears about border hang-ups and exchange rates so they frequent Canadian businesses, including Sarnia’s Hiawatha horse track.

“We’ve always had a very strong relationship with Canada, it’s just become more complicated,” Ledsworth says.

How complicated?

In the old days, Dan Lockwood would swim a half-mile across the St. Clair River into Canada. The last time he tried it, about three years ago, he was told firmly by a border patrol agent not to do it again.

In another sign of the times, a Homeland Security camera is being installed in his neighborhood to keep an eye on the waterfront and border. The images will be sent to Selfridge Air National Guard Base in Harrison Township.

Lockwood, president of the Downtown Development Authority in the city of St. Clair, south of Port Huron, says business between the two sides isn’t what it used to be.

“Canadians think twice about crossing the border because of the difficulty of coming across,” he says. “We used to think absolutely nothing of going to Sarnia for dinner. You have to think about those things now.”

John Foren is the former editor of The Flint Journal and spent years as a reporter for Booth Newspapers in Washington D.C., Lansing and Flint. He is an instructor at the Michigan State University School of Journalism.

Canadian Railroads Key to State’s Trade Future

Rail freight isn’t sexy, but it’s part of a complex trade network with Canada offering huge potential for Michigan

by John Foren
February 5, 2010

Editor’s note: In this increasingly global economy, Michigan’s most important “foreign” relationship is close at hand, with neighboring Canada. This is part of a regular series of features exploring major political, policy and cultural issues between Michigan and Canada and the importance of this relationship to the state’s future. The series is made possible through a sponsorship by the Canadian Studies Center at Michigan State University.

The freight cars lumber down from the port of Halifax, Nova Scotia, or from Montreal and emerge from the rail tunnels at Port Huron and Detroit or cross the bridge at Sault Ste. Marie.

They chug through Michigan’s towns and intersections, perhaps stopping here to pick up freight, but just as likely — and here’s what state economic development leaders want to change — heading on to Chicago or Toledo for unloading.

Rail freight might seem antiquated to some, a wheezing and dated symbol of a can-do industrial past. But it’s part of a complex trade network with Canada that offers huge potential and economic impact for Michigan, state business and trade experts say.

A crane prepares to load a container onto a train at CN’s Montreal Intermodal Terminal at Taschereau.

They see rail — and several new freight initiatives — as a sizable component of Michigan’s burgeoning trade exchange with Canada, which now totals $68 billion annually.

“Our relationship with Canada is very, very important,” said Carmine Palombo, transportation director for the Southeast Michigan Council of Governments (SEMCOG).

And freight is an often overlooked component of that relationship, business leaders say.

“There is huge potential,” said Sarah Hubbard, senior vice president of the Detroit Regional Chamber of Commerce. Freight is already important “and could be more significant,” she adds. “It’s just below the radar.”

It’s no accident that Canadian National Railway is taking a lead role in the 2010 CN Forum, a major trade policy gathering Feb. 9-10 at Michigan State University. CN is the biggest rail freight player in Michigan and is central to plans by state policymakers to build intermodal trade and to become a global logistics hub. In effect, that means turning the state into an inland port that’s a centerpiece for all kinds of goods — via rail, road and water — and creating thousands of new jobs and billions of dollars in investment.

Dozens of policymakers and experts are expected to attend the forum, which will focus on U.S. and Canadian border trade, travel and security, emphasizing the importance of the international border to Michigan’s economic well-being.

Karen Phillips, CN’s vice president for North American government affairs, is keynote speaker at Tuesday’s 4-7 p.m. legislative reception. Other speakers include Robert Noble, consul general of Canada in Michigan.

“One objective is how can we come together and really catapult Michigan into some great ideas on trade,” said AnnMarie Schneider, acting director of MSU’s Canadian Studies Center and an organizer of the conference.

The forum also aims to encourage policymakers to plan with an eye toward the economic similarities between Michigan and Canada.

“The state of Michigan and a certain region of Canada have very similar natural resources, as well as business resources and university resources, that we share on a day-to-day basis. The trend that’s up and rising is to look at the regional economy and how all of those different sectors can benefit from a regional outlook,” Schneider said.

CN provided an endowment for the forum, which also received support from the Canadian government, the Detroit Regional Chamber, and state associations and agencies.

Rail freight is only part of the Michigan-Canada trade picture, but it’s no afterthought. Michigan received about one-third of all rail freight traffic from Canada in 2005, some 10,000 trains and 730,000 containers, according to the U.S. Bureau of Transportation Statistics.

Those Amtrak passenger trains speeding through the intersections of Michigan towns are a relatively small piece of the transit picture. There are literally thousands of miles of train tracks in Michigan — about 3,900 in all — and nearly all of it is used for freight.

Nearly 20 percent of the freight tonnage that comes through Michigan is by rail; trucks still comprise the vast majority.

There are 25 private rail freight companies operating in the state, with dominant players CN and competitor Canadian Pacific hailing from across the border. CN is the leading presence on the freight scene, moving 30-40 trains through Michigan every day. Most come from Canada through Port Huron and the $200-million tunnel that opened in 1993 to accommodate larger loads.

Autos are the heart of CN’s Michigan business. “The auto industry wouldn’t be in Michigan unless you had good railroads,” said Robert Chaprnka, president of the Michigan Railroads Association, a trade group.

In fact, 70 percent of finished automobiles leave the state by rail. Much like Michigan’s economy, though, being so closely aligned to the struggling auto industry might seem like a death knell.

But business and transportation leaders hope to transition the Canadian rail traffic into a new area of economic growth in Michigan.

“In Michigan, as well as nationwide, there’s reason for optimism about rail freight,” said Larry Karnes, a freight policy specialist with the Michigan Department of Transportation. “Rail is very important to us, there’s no question about that.”

Karnes and other officials cite two potential developments, both of which rely on Canadian railroads.

Canadian Pacific hopes to build an expanded $400-million rail tunnel under the Detroit River at the Windsor crossing, permitting more and larger freight to come through.

“There are two functions at the border we have to try to balance,” says SEMCOG’s Palombo. “One is safety and security. One is free flow of traffic. We have to try to encourage as much freight across the border as possible.”

The other major project is a unique collaboration between the state, other agencies and the notoriously competitive railroad companies — including CN, Canadian Pacific, CSX and Norfolk Southern — on an intermodal freight terminal in southwest Detroit.

The potential $650-million project would be the largest public/private venture in Michigan history, state officials say, with the railroads paying some 40 percent of the cost. The goal is for the railroads to use the site as a stopping point to transport goods, linking rail and truck freight, instead of hustling it to other locales outside of Michigan.

“We have a lot of freight in this region that’s rubber-tired out of this state that goes to Chicago and other regions,” Palombo said.

For instance, officials explain, envision a rail car from Canada filled with containers of goods, such as auto parts. The so-called Detroit Intermodal Freight Terminal would have the space and capacity for those parts to be unloaded from the rail cars onto trucks and head on to Michigan highways.

About 300 acres of the property is already being used for intermodal operations, but the entire project — still awaiting federal environmental and other approvals — could take 10-15 years to complete.

A study by MDOT and the Federal Highway Administration projects the development will provide an average of 300 construction jobs over a 10-year period and create some 4,500 new jobs throughout Detroit and Michigan. MDOT’s Karnes said those jobs would include loaders and administrative staff to run the facility.

The intermodal project taps into TranslinkeD, a vision being pushed by the Detroit Regional Chamber to use southeast Michigan’s geographic advantages — and proximity to Canada— to refashion the state’s economy.

Chamber leaders say Detroit has all the right pieces — including transcontinental railroads — to be a global logistics hub, a stopping point for goods from all over the world. It’s a matter of better connecting railroads, waterways and roads, they say. The result could be lots of high-tech logistic jobs.

“We think we have the talent here to transition very well from manufacturing to those kinds of jobs,” said the Chamber’s Hubbard.

According to most policymakers, Canada and the freight trains running across its borders are at the center of that transition.

John Foren is the former editor of The Flint Journal and spent years as a reporter for Booth Newspapers in Washington D.C., Lansing and Flint. He is an instructor at the Michigan State University School of Journalism.

Bordering on Greatness

Michigan’s relationship with its Canadian neighbor provides a major economic advantage

by John Foren
November 16, 2009

Editor’s note: In this increasingly global economy, Michigan’s most important “foreign” relationship is close at hand, with neighboring Canada. This is the first in a regular series of features in which Dome explores major political, policy and cultural issues between Michigan and Canada and the importance of this relationship to the state’s future. The series is made possible through a sponsorship by the Canadian Studies Center at Michigan State University.

From his office at Northern Michigan University in Marquette, Michael Broadway looks out over the roiling waters of Lake Superior and admits, “Canada seems so far away.”

It’s a telling comment from someone who not only teaches about U.S.-Canada relations but is a board member of the Association for Canadian Studies in the United States, devoted to raising awareness about relations between the two countries.

Even Broadway admits selling Americans, notably Michiganians, on the importance of Canada is difficult.

“It doesn’t appear on their radar screens. [Americans] say, ‘They’re just like us,’ ” he says.

That’s the perception, at least. Canadians would be the first to tell you how different they are from their American neighbors, both culturally and politically — not to mention how much more they are aware of the United States than vice versa.

Broadway recalls the surprise NMU students felt when he took them on a trip to the Canadian capital of Ottawa.

“They were amazed that Canada was different from the U.S. and had a parliamentary system,” he said.

The two sides at least have numerous common interests, and that’s a key distinction for those pushing for stronger ties between Michigan and its international neighbor to the north, east and, yes, even a bit south.

Critical Importance
The relationship and proximity between the Great Lakes State and Canada may be critically important to Michigan’s future.

At a time when Michigan is scrambling, fumbling and grasping for any economic advantage, the state has a couple of huge geographic advantages: Canada and the Great Lakes they share.

More trade flows between Windsor and Detroit than any other border crossing in the world, reaching tens of billions of dollars annually. Canada is Michigan’s most important trading partner, which means thousands of state jobs are tied to economic activity between the two sides. A recent fact sheet distributed by the Canadian government pegged the amount of Michigan-Canada trade at $78 billion annually, and the number of trade-related jobs in Michigan at 221,500.

Michigan may be looked upon nationally as a has-been, tied to an antiquated industrial economy. But experts say there’s huge untapped potential in working closer with Canada in the new economic world order.

“The proximity to Canada is a competitive advantage for Michigan,” said Sarah Hubbard, senior vice president of government relations for the Detroit Regional Chamber.

Without many Michigan residents realizing it, our relationship with Canada helps shape not only our economics, but segments of our social life, identity and even our politics.

The latter is most evident in the debate over Canadian trash coming to Michigan landfills — more than 10 million cubic yards, or about 20 percent of all garbage in the state. And, yes, expect to hear those figures a lot in the coming election year as some state lawmakers fume about imported waste threatening Michigan residents.

But Canada is, and can be, so much more to Michigan, many economists and trade experts say.

Border Issues
“My economic vision is to see the border between us and Canada no different than the border between Michigan and Ohio,” said former state Treasurer Doug Roberts, who’s now director of the Institute for Public Policy & Social Research at Michigan State University. “My goodness, what are we waiting for?”

The border — and how to make it secure while maximizing trade — is one huge issue for Michigan and Canada. After all, the Ambassador Bridge in Detroit is the nation’s top border crossing, handling a quarter of all trade between the U.S. and Canada.

Tweaking the transportation network of highways, rail lines and air freight terminals also is on the agenda of policymakers from both sides.

Among other things that make the Michigan-Canada relationship unique:

• The state’s several border communities, such as Port Huron, and how they are shaped by their international neighbor.
• Shared environmental issues, such as protecting the Great Lakes.
• Efforts to work together to produce new energy sources, using the natural resources they share as neighbors in the Great Lakes basin.
• Extraordinarily close ties in agriculture.

Michigan exported $24 billion in goods to Canada last year, more than half of its overall exports. Much of that is in vehicle parts as auto plants trade supplies between the borders. But there’s also computers, furniture, and iron and steel.

In addition, Michigan buys more than $1 billion of Canadian oil and another $1 billion in natural gas annually — far more than comes in from the Mideast.

Business advocates believe the amount of trade can grow significantly. But they point to border policies between the U.S. and Canada since the September 11 terrorist attacks as being a hindrance to open and expanded commerce.

The U.S. and Canadian chambers of commerce jointly issued a strongly worded report in July called “Finding the Balance: Shared Border of the Future.” As the title suggests, the report called for ways to reduce border backups that have trucks sometimes waiting hours to cross the bridge or tunnel. Chief among the recommendations: allowing so-called low-risk travelers and trusted shippers to speed through quicker, instead of holding everyone to the same security standard.

The business community is putting on a full-court press over the issue, buoyed by impatience from everyone who’s ever been stuck in an achingly long border line. The trouble, say those pushing for changes, is that post-9/11 security concerns are going too far and treating every family, day traveler and businessperson as a potential terrorist.

“My wife and I go to Port Huron, spend the night there and decide to spend a couple hours in Canada,” Roberts recalls in frustration. “When coming back, the American border agent says to us, ‘Where are you from?’ and starts questioning us. After a couple of those [incidents], you don’t want to go back.”

Adds Roberts: “There’s got to come a time when we appreciate Canada is not the same problem as the southern border [with Mexico].”

This isn’t just a matter of a few minutes, or hours, of inconvenience for everyday drivers, business leaders say. It represents significant and unnecessary restrictions on trade and commerce.

The federal government has had a legitimate reason to focus on border security since 9/11, conceded the Detroit Chamber’s Hubbard. But the effort “has been, for the most part, trumping trade,” she said.

That’s led to some shippers being overdone by paperwork or undergoing rigorous searches that detain them at the border for hours, Hubbard said. And that can cause a huge ripple through a supply line, as evidenced on 9/11 when the closed border in Detroit started impacting auto plants in the south within hours, she said.

“There’s an across-the-board approach to security that everyone has to go through the same protocol, when in reality a lot of freight is at low risk,” Hubbard said.

The net effect, she said: “We definitely aren’t able to capitalize as much as we should be on our proximity to Canada.”

Still, Michigan has seemingly boundless opportunities to benefit economically from its ties to Canada.

Hubbard cites the major railways that share lines between the two entities and the edge Michigan has as a U.S. entryway for goods from the crucial port of Halifax, Nova Scotia. The port of Detroit is ripe for bulk shipping and to take on goods that have traditionally entered the Great Lakes through Chicago, she said.

“We think the opportunity is huge and it’s something we’re really trying to get everyone to focus on. And we’re gaining traction,” Hubbard said.

Michigan’s proximity to Canada gives it a clear competitive advantage. Now, she said, it’s a matter of bringing together many regional forces to improve the area’s infrastructure and work on technology that can track and move shipments more efficiently.

Bioenergy
Technology is at the heart of a less obvious but a potentially critical part of Michigan’s relationship with Canada: bioenergy.

Michigan’s woodland and its geography have more in common with Canada than with its Midwestern brethren, said Steven Pueppke, director of MSU’s Office of Biobased Technologies and of the university’s Michigan Agricultural Experiment Station.

Instead of turning to corn, Canadian and Michigan researchers are working on how to convert their woods into ethanol and meet the federal mandate to increase renewable energy.

MSU works with Canadian firms on improving their bioenergy technologies and helps link them with corporate partners in the U.S. Pueppke hopes the relationship will extend farther, to Canadian higher education institutions, such as the University of Guelph in Ontario, that have major agriculture and bioeconomic programs such as MSU.

“We’re in a very, very good geographic position,” he said. “Again, it’s the trees and the land that can grow biomass (plant and animal material used as fuel), and that’s probably not very good agricultural land that is an immense asset we share with Canada.”

It’s one of many links between Michigan and Canada that could hold the key to the state’s economic future.

John Foren is the former editor of The Flint Journal and spent years as a reporter for Booth Newspapers in Washington D.C., Lansing and Flint. He is an instructor at the Michigan State University School of Journalism.