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March 22nd, 2004, Permalink

Gov. Jennifer Granholm signed two executive directives Monday that give preferences for state contracts to Michigan-based companies that employ American workers, but some Republican leaders said the orders don’t do enough to protect jobs.

The directives, which Granholm signed during a Warren news conference, encourage the Department of Management and Budget to ensure that state contracts are awarded to Michigan-based companies that employ workers living in the United States whenever possible. They’re intended to prevent companies from moving Michigan jobs to other states and countries.

Granholm said the directives mean that, if the state has relatively similar bids from a Michigan company and an out-of-state company, the state will choose the Michigan company. Officials also will consider a Michigan company’s offshore operations when deciding between bids.

“The state of Michigan must extend legal preferences for Michigan-produced goods over those of other states and other countries,” Granholm said. “The procurement process for state government should include provisions that take the state’s best interests, including the economy and supporting American jobs, into consideration when a purchase is made or a contract is let.”

International trade expert Alan Deardorff said he understands the political pressure on Granholm to try to protect Michigan workers from global competition, but said such moves block the kind of free trade that ultimately benefits the state and nation.

“It’s a form of protectionism,” said Deardorff, professor of economics at the University of Michigan. “It lessens the well-being of the country.”

Granholm said the global economy makes it impossible to eliminate business with Michigan companies, such as the Big Three automakers, that have operations overseas. The policy changes let officials make exceptions when it is in the best interest of the state.

The state Department of Management and Budget will begin collecting information from vendors related to outsourcing, mostly through tax records filed with the Treasury Department.

Twenty-four other states provide some kind of legal preference for in-state bidders. Michigan law also gives preference to Michigan companies bidding for state contracts, but those provisions have not been actively enforced in the past, Granholm said.

Republican leaders were skeptical that the directives would do much to protect Michigan jobs.

State Sen. Nancy Cassis, R-Novi, agreed the state should try to contract with Michigan-based companies, but said Granholm’s orders don’t break any new ground.

“I don’t support outsourcing, and we all are concerned about the loss of jobs in Michigan,” Cassis said. “But restating Michigan law just to sound like you’re taking action is as effective as trying to catch an elephant with a butterfly net.”

Cassis said a package of pending Republican-sponsored bills, which includes tax breaks for businesses that hire new workers in Michigan, would do more to protect jobs. Democratic lawmakers have introduced their own proposal to cut taxes for businesses that hire more workers.

Granholm’s directives also drew criticism from the Detroit Regional Chamber, which said the orders could block companies that outsource from doing business with the state. Officials for the chamber said if more regulations are added to the bidding process, fewer companies will bid for state contracts, resulting in higher costs.

“We must engage the rest of the world, not isolate ourselves from it,” said chamber President and CEO Richard E. Blouse Jr.

But state Rep. Steve Beida, D-Warren, who has introduced legislation that addresses outsourcing, argued that Granholm’s directives “have teeth.” He said they will help keep jobs in the state and collect data that eventually could provide the impetus to push through new laws.

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