The Pfizer Emergency

In just its second year of being operational, the 21st Century Jobs Fund program turned its focus away from long-term investing and diversifying the economy and shifted its efforts to try to minimize a localized economic shock. In January 2007, Pfizer announced that it was closing its Ann Arbor facility and downsizing other operations in Michigan.[40] In response, the SEIC Board issued RFPs specifically aimed at retaining the people and infrastructure Pfizer had employed, and the Michigan Strategic Fund board allocated $12 million for the newly created Retention of Pfizer Assets Toward the Advancement of Life Sciences Technologies program.[41]

The Retention of Pfizer Assets program would award loans of $50,000 for every former Pfizer worker a company hired. The largest loan amount was for $450,000. There were a total of 41 loans worth a combined $8 million awarded under this program between 2007 and 2010 to companies and startups, mostly in Kalamazoo and Ann Arbor.[42] There were also grants offered to local economic development agencies to find uses for vacated Pfizer properties and to distribute lab equipment donated by the exiting company.[43] The total amount of money dedicated to the Retention of Pfizer Assets was $14.9 million.[44]

An analysis done by The Kalamazoo Gazette in 2009 found that, of the 2,400 Michigan jobs the company shed, loans through the 21st Century Jobs Fund to companies accounted for the retention of only 50 employees.[45] The 2015 21st Century Jobs Fund legislative report states that there were 124 people employed at firms that received loans from this program.[46]

The Pfizer incident demonstrates the lack of long-term investing strategies guiding the efforts of the 21st Century Jobs Fund. In just its second year, the program turned into a rescue operation for a local economic downturn. It’s hard to demonstrate that there was much merit in this effort, as it ended up only impacting 7 percent of the employees who were laid off as a result of the Pfizer program. And the opportunity costs of attempting to alleviate the impact of the Pfizer closing are impossible to calculate, because it is unknown what other opportunities might have existed at the time that could have yielded a greater economic return for the state.